Document Missoula_doc_8a12e8b366

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 a resolution entitled: ―RESOLUTION AMENDING ORDINANCE NO. 1547 AS AMENDED AND SUPPLEMENTED BY CITY RESOLUTIONS NO. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, 7060 AND 7495 TO INCLUDE FEDERAL PAYMENTS AS A GROSS REVENUE OF THE CITY’S SANITARY SEWER SYSTEM; RESTATING THE ORDINANCE AS PREVIOUSLY AMENDED AND SUPPLEMENTED; APPROVING THIS AMENDED AND RESTATED RESOLUTION; AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE‖ (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 1, 2010, 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notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed.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, Houseman, Jaffe, Marler, Mitchell, Rye, Strohmaier, Walzer, Wiener and Wilkins; voted against the same: Haines and Hellegaard; abstained from voting thereon: none; or were absent: none. WITNESS my hand officially this 1st day of November, 2010. Martha L. Rehbein Martha L. Rehbein, CMC City Clerk ---PAGE BREAK--- AMENDED AND RESTATED SANITARY SEWER SYSTEM BOND RESOLUTION RESOLUTION AMENDING ORDINANCE NO. 1547 AS AMENDED AND SUPPLEMENTED BY CITY RESOLUTIONS NO. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, 7060 AND 7495 TO INCLUDE FEDERAL PAYMENTS AS A GROSS REVENUE OF THE CITY’S SANITARY SEWER SYSTEM; RESTATING THE ORDINANCE AS PREVIOUSLY AMENDED AND SUPPLEMENTED; APPROVING THIS AMENDED AND RESTATED RESOLUTION; AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE CITY OF MISSOULA Adopted: November 1, 2010 ---PAGE BREAK--- i TABLE OF CONTENTS Page ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES 2 Section 1.1. Definitions 2 Section 1.2. Other Rules of Construction 7 Section 1.3. Appendices 8 ARTICLE II THE BONDS 8 Section 2.1. General Title 8 Section 2.2. General Limitations; Issuable in 8 Section 2.3. Terms of Particular Series 9 Section 2.4. Form and Denominations of Particular Series 9 Section 2.5. Execution and Authentication 9 Section 2.6. Temporary Bonds 10 Section 2.7. System of Registration 10 Section 2.8. Priority of Payments 11 ARTICLE III THE OUTSTANDING SRF BONDS 11 Section 3.1. Issuance and Sale of the Outstanding SRF Bonds 11 Section 3.2. Terms 12 Section 3.3. Negotiability, Transfer and Registration 12 Section 3.4. Execution and Delivery 12 ARTICLE IV REPRESENTATIONS AND COVENANTS 12 Section 4.1. Representations 12 Organization and Authority 13 Pending Litigation 13 Borrowing Legal and Authorized 13 No Defaults 13 Governmental Consent 14 Binding Obligation 14 Full Disclosure 14 Compliance With Law 14 Section 4.2. Outstanding SRF Bonds Covenants 14 14 Insurance 14 Right of Inspection and Notice of Change of Location 15 Further Assurance 15 Maintenance of Security, if Any; Recordation of Interest 15 Financial Information 16 Project Accounts 17 Records 17 Compliance with Clean Water Act 17 Program Covenant 17 Section 4.3. Covenants Relating to the Tax-Exempt Status of the State Bonds 17 ARTICLE V SRF BONDS; LOANS 19 ---PAGE BREAK--- ii Section 5.1. Disbursement of Loans 19 Section 5.2. Commencement of Loan Term 20 Section 5.3. Termination of Loan Term 21 Section 5.4. Commencement of Loan Term 21 Section 5.5. Disbursement of Loans 21 ARTICLE VI REPAYMENT OF SRF LOANS 21 Section 6.1. Repayment of Loan 21 Section 6.2. Additional Payments 22 Section 6.3. Prepayments 22 Section 6.4. Obligations of City Unconditional 23 Section 6.5. Limited Liability 23 ARTICLE VII INDEMNIFICATION OF DNRC, DEQ AND TRUSTEE; ASSIGNMENT 23 Section 7.1. Indemnification 23 Section 7.2. Assignment by City 23 Section 7.3. Assignment by DNRC 23 Section 7.4. State Refunding Bonds 24 ARTICLE VIII AGREEMENTS OF THE CITY 24 Section 8.1. Maintenance of System; Liens 24 Section 8.2. Maintenance of Existence; Merger, Consolidation, Etc; Disposition of Assets 24 Section 8.3. Competing Service 24 Section 8.4. Property Insurance 24 Section 8.5. Liability Insurance and Surety 25 Section 8.6. Disposition of Property 25 Section 8.7. Books and Records 25 Section 8.8. Handling of Funds 26 Section 8.9. Billing and Collections 26 Section 8.10. Remedies 26 Section 8.11. Rate Covenant 27 ARTICLE IX SUPPLEMENTAL RESOLUTIONS 27 Section 9.1. General 27 Section 9.2. Consent of Holders 27 Section 9.3. Notice 27 Section 9.4. Manner of 28 ARTICLE X DEFEASANCE 28 Section 10.1. General 28 Section 10.2. Maturity 28 Section 10.3. Prepayment 28 Section 10.4. Escrow 28 ARTICLE XI PRIORITIES AND ADDITIONAL OBLIGATIONS 29 Section 11.1. Priority of Bond Payments 29 Section 11.2. Refunding Revenue Bonds 29 Section 11.3. Other Parity Bonds 29 Section 11.4. Subordinate Obligations 30 ---PAGE BREAK--- iii ARTICLE XII SEWER SYSTEM FUND 30 Section 12.1. Bond Proceeds and Revenues Pledged and Appropriated 30 Section 12.2. Acquisition and Construction Account 30 Section 12.3. Operating Account 30 Section 12.4. Revenue Bond Account 31 Section 12.5. Reserve Account 31 Section 12.6. Replacement and Depreciation Account 31 Section 12.7. Surplus Account 32 Section 12.8. Rebate Account 32 Section 12.9. Deposit and Investment of Funds 32 ARTICLE XIII TAX MATTERS 33 Section 13.1. Use of Project and System 33 Section 13.2. General Covenant 33 Section 13.3. Arbitrage 33 Section 13.4. Arbitrage Rebate 33 Section 13.5. ―Qualified Tax-Exempt Obligations‖ 34 ARTICLE XIV CONTINUING DISCLOSURE 34 ARTICLE XV MISCELLANEOUS 34 Section 15.1. Notices 34 Section 15.2. Binding Effect 35 Section 15.3. Severability 35 Section 15.4. Amendments 35 Section 15.5. Applicable Law 35 Section 15.6. Captions; References to Sections 35 Section 15.7. No Liability of Individual Officers, Directors or Council Members 35 Section 15.8. Payments Due on Holidays 35 Section 15.9. Right of Others to Perform City’s Covenants 35 Section 15.10. Authentication of Transcript 35 Section 15.11. Effective Date 36 APPENDIX A—Forms of Outstanding SRF Bonds ---PAGE BREAK--- RESOLUTION NUMBER 7578 RESOLUTION AMENDING ORDINANCE NO. 1547 AS AMENDED AND SUPPLEMENTED BY CITY RESOLUTIONS NO. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, 7060 AND 7495 TO INCLUDE FEDERAL PAYMENTS AS A GROSS REVENUE OF THE CITY’S SANITARY SEWER SYSTEM; RESTATING THE ORDINANCE AS PREVIOUSLY AMENDED AND SUPPLEMENTED; APPROVING THIS AMENDED AND RESTATED RESOLUTION; AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE WHEREAS, the City of Missoula, Montana (the ―City‖) pursuant to authority conferred by Montana Code Annotated, Title 7, Chapter 13, Parts 43 and 44 and Title 7, Chapter 7, Parts 44 and 45, as amended (the ―Act‖), and other laws of the State of Montana, has established and presently owns and operates a municipal sanitary sewer system (the ―System‖); and WHEREAS, under provisions of the Act, the City 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 a municipal sewer system and to issue refunding bonds to refund bonds issued for such purposes, provided that the bonds and the interest thereon are to be payable solely out of the income and revenues to be derived from rates, fees and charges for the services, facilities and commodities furnished by such sewer system, and are not to create any obligation for the payment of which taxes may be levied except to pay for services provided by the sewer system to the City; and WHEREAS, pursuant to Ordinance No. 1547, adopted on March 19, 1973 (the ―Ordinance‖), as amended or supplemented by Resolution Nos. 4484, 5247, 5307, 6250, 6359, 6408, 6500, 6589, 6707, 6752, 6831, 7060 and 7495 of the City 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, May 8, 2006 and November 23, 2009, respectively (the Ordinance, as so amended and supplemented, the ―Original Resolution‖), the City has issued from time to time its Sewer System Revenue Bonds of which the certain bonds described in Section 3 of this Resolution are currently outstanding and held by the Department of Natural Resources and Conservation (the ―Outstanding SRF Bonds‖); and WHEREAS, the City proposes to issue after the date hereof an additional series of its Sewer System Revenue Bonds, Taxable Series 2010 (Build America Recovery Zone Economic Development Bonds – Direct Payment To Issuer) (the ―Series 2010 Bonds‖), which would provide the City with a payment directly from the United States Department of Treasury in connection with each interest payment date in respect of the Series 2010 Bonds in an amount equal to 45% of such interest payment, such payment to be a Federal Payment, as hereafter defined; and WHEREAS, the City wishes to amend the Original Resolution in order, among other things, to amend the definition of ―Gross Revenues‖ to include Federal Payments, as hereafter defined; and WHEREAS, the City reserved the right to amend the Original Resolution upon approval of the holders of two-thirds or more of any outstanding bonds issued under and secured thereby; and WHEREAS, the DNRC has agreed to the amendment of the Original Resolution to include Federal Payments as Gross Revenues; and WHEREAS, the DNRC has agreed that it would be more convenient and efficient for it, as the Holder of the Outstanding SRF Bonds, and the City for the City to restate the Original Resolution as amended and supplemented in its entirety and has consented to the amendment and restatement of the Original Resolution in the following form (the ―Amended and Restated Resolution‖). ---PAGE BREAK--- 2 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MISSOULA, MONTANA THIS AMENDED AND RESTATED RESOLUTION SHALL READ AS FOLLOWS AND SHALL SUPERSEDE ORDINANCE NO. 1547 OF THE CITY ADOPTED ON MARCH 19, 1973 AS PREVIOUSLY AMENDED AND SUPPLEMENTED: ARTICLE I DEFINITIONS, RULES OF CONSTRUCTION AND APPENDICES Section 1.1. Definitions. In this Amended and Restated Resolution, unless a different meaning clearly appears from the context: ―Additional Bonds‖ means any Bonds issued pursuant to Article XI of this Amended and Restated Resolution, excluding Subordinate Obligations. ―Amended and Restated Resolution‖ means this Amended and Restated Resolution as it may from time to time be amended or supplemented in accordance with its terms. ―Accountant‖ or ―Accountants‖ means an independent certified public accountant or a firm of independent certified public accountants satisfactory to the DNRC. ―Acquisition and Construction Account‖ means the account within the Fund established and maintained pursuant to Sections 12.1 and 12.2. ―Act‖ means Montana Code Annotated Title 7, Chapter 7, Parts 44 and 45, as amended. ―Administrative Expense Surcharge‖ means, with respect to any SRF Bond, a surcharge on the Loan charged by the DNRC to the City equal to seventy-five hundredths of one percent (0.75%) per annum on the outstanding principal amount of the Loan, payable by the City on the same dates that payments of interest on the Loan are due. ―Authorized DNRC Officer‖ means the Director or Deputy Director of the DNRC, and, when used with reference to an act or document, also means any other individual authorized by resolution of the Department of Natural Resources and Conservation to perform such act or sign such document. If authorized by the Department of Natural Resources and Conservation, an Authorized DNRC Officer may delegate all or a portion of his authority as an Authorized DNRC Officer to another individual, and such individual shall be deemed an Authorized DNRC Officer for purposes of exercising such authority. ―Bond Counsel‖ means any Counsel acceptable to the Bondholder which is nationally recognized as bond counsel. Counsel is nationally recognized as bond counsel if it has rendered a legal opinion as to the validity and enforceability of state or municipal bonds and as to the exclusion of interest thereon from gross income for federal income tax purposes (short-term issues excluded) during the two- year period preceding the date of determination. ―Bondholder‖ means, with respect to a Bond, the Holder of such Bond. ―Bond Register‖ means, with respect to any Outstanding SRF Bond, the registration books maintained by the Registrar pursuant to Section 3.3, or, with respect to a series of Additional Bonds, the register to be maintained by the Registrar pursuant to Section 2.7 or the Supplemental Resolution authorizing the issuance of such Bonds. ―Bonds‖ means the Outstanding SRF Bonds and any Obligations to be issued on a parity therewith pursuant to Article XI. ---PAGE BREAK--- 3 ―Business Day‖ means any day which is not a Saturday or Sunday and is not a day on which banks in Montana are authorized or required by law to close. ―City‖ means the City of Missoula, Montana. ―Clean Water Act‖ means the Federal Water Pollution Control Act, 33 U.S.C. 1251- 1387, as amended, and all regulations, rules and interpretations issued by the EPA thereunder. ―Code‖ means the Internal Revenue Code of 1986, as amended. ―Collateral Documents‖ means, with respect to any SRF Bond, any security agreement, guaranty or other document or agreement delivered to the DNRC securing the obligations of the City under this Amended and Restated Resolution or any SRF Bond. If no Collateral Documents secure such obligations, any reference to Collateral Documents in this Amended and Restated Resolution shall be without effect. ―Committed Amount‖ means, with respect to any SRF Bond, the amount of a Loan committed to be lent by the DNRC to the City, as such amount may have been reduced in respect of such Loan. ―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 a Project, selected by the City and satisfactory to the DNRC. ―Counsel‖ means an attorney duly admitted to practice law before the highest court of any state and satisfactory to the Bondholder. ―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 SRF Act or any of its Agreements with the EPA in respect of the Program. ―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 SRF 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. ―Federal Payments‖ means amounts received from the United States Department of the Treasury as federal credit payments under Section 6431 of the Code in respect of any Bonds. ―Fiscal Year‖ means the period commencing on the first day of July of any year and ending on the last day of June of the next year, or any other specified twelve-month period, authorized by law and specified by the Council as the City’s fiscal year. ―Fund‖ means the Sewer System Fund Set forth pursuant to Section 12.1. ―Governmental Unit‖ means governmental unit as such term is used in Section 145(a) of the Code. ―Gross Revenues‖ means all revenues and receipts from rates, fees, charges and rentals imposed for the availability, benefit and use of the System, and from penalties and interest thereon, and from Federal Payments, and from any sales of property which is a part of the System and income received from the investment of such revenues and receipts, including interest earnings on the Reserve ---PAGE BREAK--- 4 Account and the Operating Account, but excluding interest earnings on the Construction Account, Repair and Replacement Account and Surplus Account, and excluding any special assessments or taxes levied for construction of any part of the System and the proceeds of any grant or loan from the State or the United States, and any investment income thereon, to the extent such exclusion is a condition to such grant or loan. ―Holder‖ means, with respect to an Obligation, the holder of record of such Obligation. ―Indenture‖ means, with respect to any SRF Bond, the Indenture of Trust, dated as of June 1, 1991, between the Board of Examiners of the State and the Trustee, as such may be supplemented or amended from time to time in accordance with the provisions thereof, pursuant to which, among other things, the State Bonds are to be or have been issued. ―Interest Payment Date‖ means, with respect to Bonds that are not SRF Bonds, each January 1 and July 1. ―Loan‖ means any loan made to the City by the DNRC pursuant to an SRF Bond to provide funds to pay all or a portion of the costs of a Project under the Program. ―Loan Loss Reserve Surcharge‖ means, with respect to any SRF Bond, a fee equal to one percent per annum on the outstanding principal amount of the Loan, payable on the same dates that payments of interest on the Loan are due. ―Loan Repayments‖ means, with respect to any SRF Bond, periodic installments of principal and interest by City in repayment of a Loan, at the rate and times with respect to such Loan specified in Article VI. ―Net Revenues‖ means the entire amount of the Gross Revenues of the System, (including Federal Payments received by the City in respect of any Bonds,) remaining upon each semiannual apportionment, after crediting to the Operating Account the amount required hereby, including sums required to maintain the Operating Reserve in the minimum amount herein stated. ―Obligations‖ means all Bonds and any other debt payable solely from the revenues of the System incurred to acquire, construct, extend, improve, add to or otherwise pay expenses of or related to the System. ―Operating Account‖ means the account within the Fund established and maintained pursuant to Sections 12.1 and 12.3. ―Operating Expenses‖ means those expenses of the System defined as such in Section 12.3. ―Operating Reserve‖ means the reserve to be maintained in the Operating Account as required by Section 12.3. ―Opinion of Counsel‖ means a written opinion of Counsel. ―Original Purchaser‖ means, with respect to any series of Bonds, the original purchaser or underwriter of such Series of Bonds. ―Outstanding‖ means, when used with reference to Bonds, as of the date of determination, all Bonds theretofore issued except: Bonds theretofore cancelled by the City or the Registrar or delivered to the City or the Registrar cancelled or for cancellation; ---PAGE BREAK--- 5 (ii) Bonds and portions of Bonds for whose payment or redemption money or Government Obligations (as provided in X) shall have been theretofore deposited in trust for the Holders of such Bonds; provided, however, that if such Bonds are to be redeemed, notice of such redemption shall have been duly given pursuant to this Resolution or irrevocable instructions to call such Bonds for redemption at a stated Redemption Date shall have been given to the City; and (iii) Bonds in exchange for or in lieu of which other Bonds shall have been issued and delivered pursuant to this Resolution; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Bonds have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the City shall be disregarded and deemed not to be Outstanding. ―Outstanding SRF Bonds‖ means the bonds described in Section 3 hereof. ―Payment Date‖ means, with respect to any Outstanding SRF Bond, each January 1 and July 1 when any Outstanding SRF Bonds are outstanding. ―Person‖ means any Private Person or public entity. ―Principal and Interest Requirements‖ means, with respect to any Outstanding Bonds and for any Fiscal Year, the amount of principal of and interest on such Bonds due and payable during such Fiscal Year, assuming that Outstanding Serial Bonds are to be paid at their Stated Maturities, the SRF Bonds are to be paid on the Payment Dates and Outstanding Term Bonds are to be paid on their Sinking Fund Payment Dates according to the mandatory redemption requirements established by the Resolution. ―Principal Payment Date‖ means the Stated Maturity of principal of any Serial Bond and the Sinking Fund Payment Date for any Term Bond. ―Private Person‖ means an individual, corporation, partnership, association, joint venture, joint stock company or unincorporated organization, except a public entity. ―Program‖ means the State’s Water Pollution Control State Revolving Loan Program established by the SRF Act. ―Project‖ means an improvement, betterment, reconstruction or extension of the System financed in whole or in part from Bonds. ―Rebate Account‖ shall mean the account within the Fund established and maintained pursuant to Sections 12.1 and 12.3. ―Rebate Certificate‖ shall mean the rebate certificate executed by the City and filed in the office of the City Clerk, if any, in connection with the issuance of any series of Additional Bonds, as such may be amended or supplemented from time to time in accordance with the provisions thereof. ―Redemption Date‖ means, with respect to any Obligation to be redeemed, the date on which it is to be redeemed pursuant hereto. ―Redemption Price‖ means, when used with respect to any Bond to be redeemed, the price at which it is to be redeemed pursuant hereto. ―Regulations‖ means the Treasury Regulations, whether final, temporary or proposed, promulgated under the Code or otherwise applicable to the Outstanding SRF Bonds. ---PAGE BREAK--- 6 ―Replacement and Depreciation Account‖ means the account within the Fund established and maintained pursuant to Sections 12.1 and 12.6. ―Reserve Account‖ means the account within the Fund established and maintained pursuant to Sections 12.1 and 12.5. ―Reserve Requirement‖ means, as of the date of calculation, an amount equal to the maximum amount of principal and interest payable on the Bonds in any future Fiscal Year (giving effect to mandatory sinking fund redemption, if any). ―Revenue Bond Account‖ means the account within the Fund established and maintained pursuant to Sections 12.1 and 12.4. ―Serial Bonds‖ means Bonds which are not Term Bonds. ―Series 1999A Bond‖ means the City’s $1,820,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 1999A, which is outstanding as of October 1, 2010 in the amount of $997,000. ―Series 2000B Bond‖ means the City’s $718,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2000B, which is outstanding as of October 1, 2010 in the amount of $430,000. ―Series 2001A Bond‖ means the City’s $537,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2001A, which is outstanding as of October 1, 2010 in the amount of $283,000. ―Series 2002A Bond‖ means the City’s $1,395,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002A, which is outstanding as of October 1, 2010 in the amount of $854,000. ―Series 2002B Bond‖ means the City’s $5,000,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2002B, which are outstanding as of October 1, 2010 in the amount of $3,458,000. ―Series 2003 Bond‖ means the City’s $3,800,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Series 2003, which are outstanding as of October 1, 2010 in the amount of $2,776,000. ―Series 2004 Bond‖ means the City’s $3,688,000 Sewerage System Revenue Bond (DNRC Revolving Loan Program), Amended and Restated Series 2004, which is outstanding as of October 1, 2010 in the amount of $2,783,000. ―Series 2005 Bond‖ means the City’s $1,731,833 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2005, which is outstanding as of October 1, 2010 in the amount of $1,368,000. ―Series 2006A Bond‖ means the City’s $310,190 Sewer System Revenue Bond (DNRC Revolving Loan Program), Series 2006A, which is outstanding as of October 1, 2010 in the amount of $251,000. ―Series 2009B Bond‖ means the City’s $925,000 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009B, which is deemed to be outstanding as of October 1, 2010 in the amount of $925,000. ---PAGE BREAK--- 7 ―Series 2009C Bond‖ means the City’s $64,000 Sewer System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Series 2009C, which is outstanding as of October 1, 2010 in the amount of $63,485. ―Sinking Fund Payment Date‖ means mean one of the dates set forth in any applicable provisions of a Supplemental Resolution (as to any series of Additional Bonds) for the making of mandatory principal payments for Additional Bonds which are Term Bonds. ―SRF Act‖ means Montana Code Annotated, Title 75, Part 5, Chapter 11, as amended from time to time. ―SRF Bonds‖ means the Bonds issued to the DNRC under the Program. ―State‖ means the State of Montana. ―State Bonds‖ means the State’s General Obligation Bonds (Water Pollution Control State Revolving Fund Program), issued pursuant to the Indenture. ―Stated Maturity‖ means, with respect to any Obligation, the date specified in such Obligation as the fixed date on which the principal of such Obligation is due and payable. ―Subordinate Obligation‖ means any additional Obligation issued pursuant to Section 11.4. ―Supplemental Resolution‖ means any resolution supplemental to or amendatory of this Amended and Restated Resolution adopted in accordance with the requirements of Article IX. ―Surplus Account‖ means the account within the Fund established and maintained pursuant to Sections 12.1 and 12.7. ―Surplus Net Revenues‖ shall mean that portion of the Net Revenues in excess of the current requirements of the Operating Account, the Revenue Bond Account and the Reserve Account. ―System‖ means the existing sanitary sewer system of the City and all extensions, improvements and betterments thereof hereafter constructed and acquired, including, without limitation, each Project. ―Term Bond‖ means any Bond for the payment of the principal of which mandatory payments are required by this Amended and Restated Resolution or the Supplemental Resolution pursuant to which the Bond is issued to be made at times and in amounts sufficient to redeem all or a portion of such Bond prior to its Stated Maturity. ―Trustee‖ means, with respect to any Outstanding SRF Bonds, U.S. Bank National Association, in Seattle, Washington, or any successor trustee under the Indenture. Section 1.2. Other Rules of Construction. For all purposes of this Amended and Restated 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. ---PAGE BREAK--- 8 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 Amended and Restated Resolution and hereby made a part hereof are the following Appendices: Appendix A-1: The Series 1999A Bond Appendix A-2: The Series 2000B Bond Appendix A-3: The Series 2001A Bond Appendix A-4: The Series 2002A Bond Appendix A-5: The Series 2002B Bond Appendix A-6: The Series 2003 Bond Appendix A-7: The Series 2004 Bond Appendix A-8: The Series 2005 Bond Appendix A-9: The Series 2006A Bond Appendix A-10: The Series 2009B Bond Appendix A-11: The Series 2009C Bond ARTICLE II THE BONDS Section 2.1. General Title. The general title of the Bonds of all series shall be ―Sewer System Revenue Bonds.‖ Bonds of each series shall be titled so as to distinguish them from Bonds of all other series. Section 2.2. General Limitations; Issuable in Series. The aggregate principal amount of Bonds that may be authenticated and delivered and Outstanding under this Resolution is not limited, except as provided in Article XI or any Supplemental Resolution under which any series of Bonds is issued and except as may be limited by law. The Bonds may be issued in series as from time to time authorized by the Council. With respect to the Bonds of any particular series, the City may incorporate in or add to the general title of such Bonds any words, letters or fixtures designed to distinguish that series. The Bonds shall be special, limited obligations of the City. Principal of, premium, if any, and interest on the Bonds shall be payable solely from Net Revenues (other than to the extent payable out of proceeds of the Bonds). The Bonds shall not be or constitute a pledge of the general credit or taxing powers of the City of any kind whatsoever. Neither the Bonds nor any of the agreements or ---PAGE BREAK--- 9 obligations of the City contained herein shall be construed to constitute an indebtedness of the State or the City within the meaning of any constitutional or statutory provisions whatsoever. If the Stated Maturity for the payment of any interest on or principal of any Bond or if any Redemption Date or Sinking Fund Payment Date shall be a day which is not a Business Day, then such payment may be made on the next succeeding Business Day, with the same force and effect as if made on such Stated Maturity, Redemption Date or Sinking Fund Payment Date (whether or not such next succeeding Business Day occurs in a succeeding month). Section 2.3. Terms of Particular Series. Each series of Bonds (except the Outstanding SRF Bonds, which were created under the Original Resolution and which exist and are confirmed and ratified pursuant to this Amended and Restated Resolution) shall be created by a Supplemental Resolution. The Bonds of each series (other than the Outstanding SRF Bonds, as to which specific provision is made in this Amended and Restated Resolution) shall bear such date or dates, shall be payable at such place or places, shall have such Stated Maturities and Redemption Dates, shall bear interest at such rate or rates, from such date or dates, shall be payable in such installments and on such dates and at such place or places, and may be redeemable at such price or prices and upon such terms (in addition to the prices and terms herein specified for redemption of all Bonds) as shall be provided in the Supplemental Resolution creating that series, all upon such terms as the City may determine. The City may, at the time of the creation of any series of Bonds or at any time thereafter, make, and the Bonds of that series may contain provision for: a sinking, amortization, improvement or other analogous fund; limiting the aggregate principal amount of the Bonds of that series and of additional Bonds thereafter to be issued; exchanging Bonds of that series, at the option of the Holders thereof, for other Bonds of the same series of the same aggregate principal amount of a different authorized kind or authorized denomination or denominations; or registration, transfer and delivery. Section 2.4. Form and Denominations of Particular Series. The form of the Bonds of each series (other than the Outstanding SRF Bonds, as to which specific provision is made in this Amended and Restated Resolution) shall be established by the provisions of the Supplemental Resolution creating such series. The Bonds of each series shall be distinguished from the Bonds of other series in such manner as the Council may determine. The Bonds of each series shall be in such denominations as shall be provided in the Supplemental Resolution creating such series (other than the Outstanding SRF Bonds, as to which specific provision is made in this Amended and Restated Resolution). In the absence of any such provision with respect to the Bonds of any particular series, the Bonds of such series shall be in the denomination of $5,000 or any integral multiple thereof of single maturities. Section 2.5. Execution and Authentication. The Bonds and any additional interest certificates relating thereto shall be executed on behalf of the City by the manual or facsimile signature of the Mayor, and attested by the signature of the City Clerk (or other officers of the City authorized by resolution); provided that if required by applicable laws, one such signature on each Bond and certificate shall be a manual signature. The seal of the City need not be affixed to or imprinted on any Bond or certificate. Any Bond or certificate bearing the manual or facsimile signature of an individual who was at any time an appropriate officer of the City shall be valid and sufficient for all purposes, regardless whether such individual held such office as of the date of sale, issue or delivery of such Bond or certificate. No Bond or certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Amended and Restated Resolution unless and until a certificate of authentication on such ---PAGE BREAK--- 10 Bond or certificate has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on each Bond or certificate need not be signed by the same representative. The executed certificate of authentication on each Bond or certificate shall be conclusive evidence that it has been authenticated and delivered under this Amended and Restated Resolution and in accordance with the provisions hereof. Section 2.6. Temporary Bonds. Pending the preparation of Bonds, the City, if authorized by law, may execute and deliver temporary Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the Bonds in lieu of which they are issued, with such appropriate insertions, omissions, substitutions and other variations as the officers of the City executing such Bonds may determine, as evidenced by their signing of such Bonds. If temporary Bonds are issued, the City will cause Bonds to be prepared without unreasonable delay. After the preparation of Bonds, the temporary Bonds shall be exchangeable for Bonds upon surrender of the temporary Bonds, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Bonds the City shall execute and deliver in exchange therefor a like principal amount of Bonds of authorized denominations. Until so exchanged the temporary Bonds shall in all respects be entitled to the same security and benefits under this Amended and Restated Resolution as Bonds. Section 2.7. System of Registration. The City shall appoint, and shall maintain, a bond registrar, transfer agent and paying agent for any series of additional Bonds (with respect to such Bonds, the ―Registrar‖). This Section 2.7 shall, except as amended or supplemented by a Supplemental Resolution, establish a system of registration for any series of Additional Bond, as defined in the Model Public Obligations Registration Act of Montana. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: Bond Register. The Registrar shall keep at its principal office a Bond Register in which the Registrar shall provide for the registration of ownership of such Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. Transfer of Bonds. Upon surrender for transfer of any such Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bond of the same series and a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of the transfer of such Bond or portion thereof selected for redemption. Exchange of Bonds. Whenever any such Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of the same series and a like aggregate principal amount and maturity, as requested by the registered owner or the owner’s attorney in writing. Cancellation. All Bonds surrendered upon any transfer or exchange shall be cancelled by the Registrar and thereafter disposed of as directed by the City. Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. ---PAGE BREAK--- 11 Persons Deemed Owners. The City and the Registrar may treat the Person in whose name any Bond is at any time registered in the Bond Register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, premium, if any, and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner’s order shall be valid and effectual to satisfy and discharge the liability of the City upon such Bond to the extent of the sum or sums to paid. Taxes, Fees and Charges. For every transfer or exchange of a Bond (except for an exchange upon a partial redemption of any Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new Bond of like series, amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond lost, stolen or destroyed, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond lost, stolen or destroyed, upon receipt by the Registrar of evidence satisfactory to it that such Bond was lost, stolen or destroyed, and of the ownership thereof, and upon receipt by the Registrar of an appropriate bond of indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Bond has already matured or such Bond has been called for redemption in accordance with its terms, it shall not be necessary to issue a new Bond before payment. Section 2.8. Priority of Payments. Each and all of the Bonds shall be equally and ratably secured without preference or priority of any one Bond over any other by reason of serial number, date of issue, series designation or otherwise; provided that if at any time the Net Revenues on hand in the Sewer System Fund are insufficient to pay principal and interest then due on all such Bonds, any and all Net Revenues and taxes then on hand shall be first used to pay the interest accrued on all outstanding Bonds, and the balance shall be applied toward payment of the maturing principal of such Bonds to be paid first, and, pro rata, in payment of Bonds maturing on the same date. ARTICLE III THE OUTSTANDING SRF BONDS Section 3.1. Issuance and Sale of the Outstanding SRF Bonds. Pursuant to the Original Resolution and Resolution No. 6250 of the City adopted by the Council on May 24, 1999 (the ―1999A Resolution‖), the City issued its Series 1999A Bond. Pursuant to the Original Resolution and Resolution No. 6359 of the City adopted by the Council on August 28, 2000 (the ―2000B Resolution‖), the City issued its Series 2000B Bond. Pursuant to the Original Resolution and Resolution No. 6408 of the City adopted by the Council on March 26, 2001 (the ―2001A Resolution‖), the City issued its Series 2001A Bond. Pursuant to the Original Resolution and Resolution No. 6500 of the City adopted by the Council on April 15, 2002 (the ―2002A Resolution‖), the City issued its Series 2002A Bond. Pursuant to the Original Resolution and Resolution No. 6589 of the City adopted by the Council on October 21, 2002 (the ―2002B Resolution‖), the City issued its Series 2002B Bond. Pursuant to the Original Resolution and Resolution No. 6707 of the City adopted by the Council on September 15, 2003 (the ―2003 Resolution‖), the City issued its Series 2003 Bond. Pursuant to the Original Resolution and Resolution No. 6752 of the City adopted by the Council on February 23, 2004, as further amended by Resolution No. 6831 of the City duly enacted by the Council on August 16, 2004 (the ―2004 Resolution‖), the City issued its Series 2004 Bond. Pursuant to the Original Resolution and Resolution No. 6985 of the City adopted by the Council on October 24, 2005 (the ―2005 Resolution‖), the City issued its Series 2005 Bond. Pursuant to the Original ---PAGE BREAK--- 12 Resolution and Resolution No. 7060 of the City adopted by the Council on May 8, 2006 (the ―2006A Resolution‖), the City issued its Series 2006A Bond. Pursuant to the Original Resolution and Resolution No. 7495 of the City adopted by the Council on November 23, 2009 (the ―2009 Resolution‖), the City issued its Series 2009B Bond and its Series 2009C Bond. The bonds described in this paragraph are, collectively, the ―Outstanding SRF Bonds.‖ Each of the Outstanding SRF Bonds has been issued to the DNRC without public sale pursuant to Montana Code Annotated, Section 7-7-4433(2)(a). The Outstanding SRF Bonds and their terms are hereinafter set forth and governed pursuant to this Amended and Restated Resolution. Section 3.2. Terms. Each of the Outstanding SRF Bonds was issued in the maximum principal amount equal to the original Committed Amount of the respective Loan, as set forth on the face of such Bond as shown in Appendix A hereto. The principal amount of each Loan actually disbursed and the principal of the Bond deemed issued is shown appended as Final Schedule B to each Bond in Appendix A. Each of the Outstanding SRF Bonds was issued as a single, fully registered bond numbered R-1, was dated as of the date of delivery to the DNRC, and was issued bearing interest at the rate charged by the DNRC on the respective Loan as shown on the face of each Bond. Each of the Outstanding SRF Bonds, other than the Series 2009B Bond, has been fully disbursed. For purposes of the representations herein, it is assumed that the full $925,000 of the Series 2009B Bond will be disbursed and be outstanding. The principal of and interest on each of the Outstanding SRF Bonds shall be payable on the same dates and in the same amounts on which principal and interest of the corresponding Loan Repayments are payable, as shown on the Final Schedule B to each Bond. Section 3.3. Negotiability, Transfer and Registration. Each of the Outstanding SRF Bonds was issued fully registered as to both principal and interest, and was initially registered in the name of and payable to the DNRC. While so registered, principal of and interest on each of the Outstanding SRF Bonds shall continue to be payable to the DNRC at the Office of the Department of Natural Resources and Conservation, 1625 Eleventh Avenue, Helena, Montana 59620 or such other place as may be designated by the DNRC in writing and delivered to the City. Each of the Outstanding SRF Bonds was issued as a negotiable Bond, subject to the provisions for registration and transfer contained in this section. No transfer of any the Outstanding SRF Bonds shall be valid unless and until the holder of such Outstanding SRF Bond, or his duly authorized attorney or legal representative, has executed the form of assignment appearing on such Outstanding SRF Bond, and the City Clerk of the City (the ―Registrar‖), as Bond Registrar, has duly noted the transfer on such Outstanding SRF Bond and recorded the transfer in the Bond Register 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 City shall be entitled to deem and treat the person in whose name each of the Outstanding SRF Bonds is registered as the absolute owner of such Outstanding SRF Bond for all purposes, notwithstanding any notice to the contrary, and all payments to the registered holder shall be valid and effectual to satisfy and discharge the City’s liability upon such Outstanding SRF Bond to the extent of the sum or sums so paid. Section 3.4. Execution and Delivery. Each of the Outstanding SRF Bonds shall have been executed on behalf of the City by the manual signatures of the Mayor and the City Clerk. Any or all of such signatures may have been affixed at or prior to the date of delivery of such Outstanding SRF Bonds in accordance with the Outstanding Resolutions. Each of the Outstanding SRF Bonds were delivered to the DNRC, or its attorney or legal representative. ARTICLE IV REPRESENTATIONS AND COVENANTS Section 4.1. Representations. The City represents as of the date hereof as follows: ---PAGE BREAK--- 13 Organization and Authority. The City: is duly organized and validly existing as a municipal corporation and political subdivision of the State; (ii) has all requisite power and authority and all necessary licenses and permits required as of the date hereof to own and operate the System and to carry on its current activities with respect to the System, to adopt this Amended and Restated Resolution and to carry out and consummate all transactions contemplated by this Amended and Restated Resolution; (iii) is a Governmental Unit; and (iv) has taken all proper action to authorize the execution, delivery and performance of its obligations under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents and the incurrence of the debt evidenced by the Outstanding SRF Bonds. Pending Litigation. There is no litigation or proceeding pending, or to the knowledge of the City threatened, against or affecting the City 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 City, or the ability of the City to make all payments and otherwise perform its obligations under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents, or the financial condition of the City, or the transactions contemplated by this Amended and Restated Resolution, the Bond and the Collateral Documents or the validity and enforceability of this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents. No referendum petition has been filed with respect to any resolution or other action of the City relating to the Outstanding SRF Bonds or any Collateral Documents. Borrowing Legal and Authorized. The adoption of this Amended and Restated Resolution, the execution and delivery of the Outstanding SRF Bonds and the Collateral Documents and the consummation of the transactions provided for in this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents and compliance by the City with the provisions of this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents: are within the powers of the City and have been duly authorized by all necessary action on the part of the City; and (ii) do not and will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the City pursuant to any ordinance, resolution, indenture, loan agreement or other agreement or instrument (other than this Amended and Restated Resolution and any Collateral Documents) to which the City is a party or by which the City 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 City, its properties or operations are subject. No Defaults. The City 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 City with the terms hereof or of the Outstanding SRF Bonds and the Collateral Documents. ---PAGE BREAK--- 14 Governmental Consent. The City has obtained or made all permits, findings and approvals required to the date of adoption of this Amended and Restated Resolution by any governmental body or officer for the making and performance by the City of its obligations under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents (including any necessary sewer rate increase) or for Projects, the financing or refinancing thereof or the reimbursement of the City 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 City as a condition to adopting this Amended and Restated Resolution or the performance of the City’s obligations hereunder and under the Outstanding SRF Bonds or the Collateral Documents. Binding Obligation. This Amended and Restated Resolution, the Outstanding SRF Bonds and any Collateral Documents to which the City is a party are the valid and binding obligations and agreements of the City, enforceable against the City 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. Full Disclosure. There is no fact that the City has not specifically disclosed in writing to the DNRC that materially and adversely affects or (so far as the City 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 City’s status as a Governmental Unit, its ability to own and operate the System in the manner it is currently operated or the City’s ability to perform its obligations under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents and to pledge any revenues or other property pledged to the payment of the Outstanding SRF Bonds. Compliance With Law. The City: 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 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 City to conduct the operation of the System as presently conducted or the condition (financial or otherwise) of the System or the City’s ability to perform its obligations under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents. Section 4.2. Outstanding SRF Bonds Covenants. During the time that any of the Outstanding SRF Bonds remain outstanding: Payment. The City will continue to make payment on the Outstanding SRF Bonds on the Payment Dates as set forth in each Bond from the Sewer System Fund in accordance with Section 12 hereof. Insurance. The City 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 City and similarly situated and shall carry and maintain, ---PAGE BREAK--- 15 or cause to be carried and maintained, and pay or cause to be paid timely the premiums for all such insurance. Nothing herein shall be construed to prohibit or preclude the City from self- insuring or participating in a self-insurance program in compliance with the provisions of Montana law. All such insurance policies shall name the DNRC as an additional insured. Each policy must provide that it cannot be cancelled by the insurer without giving the City and the DNRC 30 days’ prior written notice. During the time that any of the Outstanding SRF Bonds remain outstanding, the City shall give the DNRC prompt notice of each insurance policy it obtains or maintains to comply with this Section 4.2(a) and of each renewal, replacement, change in coverage or deductible under or amount of or cancellation of each such insurance policy and the amount and coverage and deductibles and carrier of each new or replacement policy. Such notice shall specifically note any adverse change as being an adverse change. 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 City for the purpose of inspecting the System or any or all books and records of the City relating to the System. Further Assurance. The City shall execute and deliver to the DNRC all such documents and instruments and do all such other acts and things as may be necessary or required by the DNRC to enable the DNRC to exercise and enforce its rights under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents and to realize thereon, and record and file and re-record and refile all such documents and instruments, at such time or times, in such manner and at such place or places, all as may be necessary or required by the DNRC to validate, preserve and protect the position of the DNRC under this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents. Maintenance of Security, if Any; Recordation of Interest. The City shall, at its expense, take all necessary action to maintain and preserve the lien and security interest of this Amended and Restated Resolution and the Collateral Documents so long as any amount is owing under this Amended and Restated Resolution or the Outstanding SRF Bonds; (ii) The City shall forthwith, after the execution and delivery of the Outstanding SRF Bonds and thereafter from time to time, cause this Amended and Restated Resolution and any Collateral Documents granting a security interest in revenues or real or personal property and any financing statements or other notices or documents relating thereto to be filed, registered and recorded in such manner and in such places as may be required by law in order to perfect and protect fully the lien and security interest hereof and thereof and the security interest in them granted by this Amended and Restated Resolution and, from time to time, shall perform or cause to be performed any other act required by law, including executing or causing to be executed any and all required continuation statements and shall execute or cause to be executed any further instruments that may be requested by the DNRC for such perfection and protection; and (iii) Except to the extent it is exempt therefrom, the City shall pay or cause to be paid all filing, registration and recording fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment of the documents described in subparagraph (ii), and all federal or state fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Outstanding SRF Bonds and the Collateral Documents and the documents described in subparagraph (ii). ---PAGE BREAK--- 16 Financial Information. The City 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 Project shown separately; and when adopted, the final budget for the System, with items for the Project shown separately. The City 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 this Amended and Restated Resolution, in such reasonable detail as may be determined by the City 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 City. The City 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 City 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; A balance sheet as of the end of the Fiscal Year; The number of premises connected to the System at the end of the Fiscal Year; 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 A determination that the report shows full compliance by the City with the provisions of this Amended and Restated Resolution during the Fiscal Year covered thereby, including proper segregation of the capital expenditures from operating expenses, maintenance of the required balance in the Revenue Bond Account (as hereinafter defined), and receipt of Net Revenues during each Fiscal Year at least equal to 125% of the maximum amount of principal and interest payable on outstanding Bonds in any subsequent Fiscal Year, or, if the report should reveal that the revenues have been insufficient for compliance with this Amended and Restated Resolution, or that the methods used in accounting for such revenues were contrary to any provision of this Amended and Restated 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 City 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 City’s compliance with the provisions of this Amended and Restated Resolution. ---PAGE BREAK--- 17 Project Accounts. The City shall maintain a Project account for each Project financed from an SRF Loan 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, the City shall make available to the EPA such records as the EPA reasonably requires to review and determine compliance with Title VI of the Clean Water Act, as provided in Section 606(e) of the Clean Water Act. Compliance with Clean Water Act. The City has complied and shall comply with all conditions and requirements of the Clean Water Act pertaining to the loans made pursuant to the Outstanding SRF Bonds and the projects financed thereby. Program Covenant. The City agrees that neither it nor any ―related person‖ to the City (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 Outstanding SRF Bonds. Section 4.3. Covenants Relating to the Tax-Exempt Status of the State Bonds. The City covenants and agrees that, during the time that any of the Outstanding SRF Bonds remain outstanding, it will not use or permit to be used any of the proceeds of the Outstanding SRF Bonds or any other funds of the City, directly or indirectly, in a manner that would cause, or take any other action that would cause, any State Bond to be an ―arbitrage bond‖ within the meaning of Section 148 of the Code or would otherwise cause the interest on the State Bonds to be included in gross income for purposes of federal income taxation. In addition, the City 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. During the time that any of the Outstanding SRF Bonds remain outstanding, the City shall not use or permit the use of any Project in respect of such Outstanding SRF Bonds directly or indirectly in any trade or business carried on by any Person who is not a Governmental Unit. For the purpose of this subparagraph, use as a member of the general public shall not be taken into account and any activity carried on by a Person other than a natural person shall be treated as a trade or business. Any portion of a Project being refinanced or the cost of which is being reimbursed was acquired by and is now and shall, during the time that the Outstanding SRF Bond in respect of such Project remains outstanding, be owned by the City and not by any other Person. Any portion of the Project being financed shall be acquired by and shall, during the term of its respective Loan, be owned by the City and not by any other Person. Notwithstanding the previous two sentences, the City may transfer such Project or a portion thereof to another Governmental Unit which is also a public entity if such transfer is otherwise permitted hereunder and if such organization agrees with the DNRC to comply with Sections 4.1(g) and 4.1(h) hereof and if the DNRC receives an Opinion of Bond Counsel that such transfer will not violate the SRF Act or the Clean Water Act or adversely affect the exclusion of interest on such Outstanding SRF Bonds from gross income for purposes of federal income taxation. In addition, except as otherwise provided herein or in any Collateral Documents, the City may sell or otherwise dispose of any portion of the Project which has become obsolete or outmoded or is being replaced or for other reasons is not needed by the City or beneficial to the general public or necessary to carry out the purposes of the Clean Water Act. ---PAGE BREAK--- 18 During the time that any of the Outstanding SRF Bonds remain outstanding, the City shall comply with the arbitrage rebate requirements of Section 148 of the Code (the ―Arbitrage Rebate Instructions‖), if any, delivered to it by the DNRC at the Closing of such Outstanding SRF Bonds, as such Instructions may be amended or replaced by the DNRC from time to time. The Arbitrage Rebate Instructions may be amended or replaced by new Arbitrage Rebate Instructions delivered by the DNRC and accompanied by an Opinion of Bond Counsel to the effect that the use of said amended or new Arbitrage Rebate Instructions will not adversely affect the excludability of interest on the State Bonds or any Additional State Bonds (except Additional State Bonds the interest on which the State did not intend to be excluded from gross income for federal income tax purposes) from gross income of the recipients thereof for federal income tax purposes. The City agrees that during the time that any of the Outstanding SRF Bonds remain outstanding, it will not contract with or permit any Private Person to manage a Project in respect of such Outstanding SRF Bond or any portion thereof except according to a written management contract which complies with the following provisions: If any contract between the City and the Private Person with respect to the Project provides for compensation based on a percentage of fees charged for services rendered by the Private Person, the contract may not exceed a term of five years (including any renewal options). At least 50% of the compensation to the Private Person must be based upon a periodic fixed fee. In addition, the City must be able to cancel the contract without penalty or cause at the end of any three-year period of the contract term. The compensation must be reasonable, and it may not be based on a percentage of the net profits of such Project or the System or any portion thereof or any other division or activity of the City. If any contract between the City and the Private Person with respect to such Project provides for compensation based on a periodic flat fee, the compensation must be reasonable and the contract may not exceed a term of five years (including any renewal options). In addition, the City must be able to cancel the contract without penalty or cause at the end of any three-year period of the contract term. If the contract provides for automatic increases in the periodic flat fee, the increases may not exceed the percentage increases determined by particular external standards for computing such increases that are mutually agreed upon in the contract. The percentage increases reflected in the Consumer Price Index compiled by the Bureau of Labor Statistics, U.S. Department of Labor, or the actual percentage increases for services that result from the application of external criteria (for example, increases in rates paid by insurance companies) are illustrations of two external standards that may be used. If a Private Person and the City enter into a contract described in subparagraph or above and the governing body of the City contains five or more members, no more than one member of the governing body of the City may be the Private Person or a related person (as described in Section 144(a)(3) of the Code) (a ―Related Person‖), an employee of the Private Person or a Related Person, or a member of the governing body of the Private Person or a Related Person. However, such Private Person or a Related Person, employee of the Private Person or a Related Person or a member of the governing body of the Private Person or a Related Person may not serve as the chief executive of the City. If a Private Person and the City enter into a contract described in or above and the governing body contains less than five members, no member of the governing body may be the Private Person or a Related Person, an employee of the Private Person or a Related Person or a member of the governing body of the Private Person or a Related Person. The City may depart from any of its agreements contained in subparagraphs through if it delivers to the DNRC, at the City’s expense, an ---PAGE BREAK--- 19 Opinion of Bond Counsel that to do so would not adversely affect the exclusion of interest on the State Bonds from gross income for purposes of federal income taxation. During the time that any of the Outstanding SRF Bonds remain outstanding, the City may not lease any Project in respect of such Outstanding SRF Bonds or any portion thereof to any Person other than a Nonexempt Person which agrees in writing with the City and the State not to cause any Default to occur under this Amended and Restated Resolution, provided the City may lease all or any portion of such 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. During the time that any of the Outstanding SRF Bonds remain outstanding, the City shall not change the use or nature of any Project in respect of such Outstanding SRF Bonds 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. ARTICLE V SRF BONDS; LOANS Section 5.1. Disbursement of Loans . The DNRC has, with respect to each SRF Bond, agreed to lend to the City, from time to time as the requirements of this Section 5.1 are met, an amount up to the Committed Amount for the purposes of financing, refinancing or reimbursing the City for a portion of the costs of a Project. The Committed Amount may be reduced as provided in Section 5.5. Each Loan shall be disbursed as provided in this Section 5.1. The DNRC intends to disburse each Loan through the Trustee. In consideration of the issuance of an SRF Bonds by the City, the DNRC shall make, or cause the Trustee to make, a disbursement of all or a portion of the respective Loan upon receipt of the following documents. an Opinion of Bond Counsel as to the validity and enforceability of the SRF Bond and the security therefor and stating in effect that interest on the SRF 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 SRF Bond, fully executed and authenticated; a certified copy of a resolution of the City authorizing the issuance and fixing the terms and conditions of such SRF Bond; any other security instruments or documents required by the DNRC or DEQ as a condition to their approval of the Loan; if all or part of a Loan is being made to refinance a Project or reimburse the City for the costs of a Project paid prior to the closing of such SRF Bond, evidence, satisfactory to the DNRC and the Bond Counsel referred to in above, of the City’s title to the Project, of the costs of such Project and that such costs have been paid by the City and if such costs were paid in a previous fiscal year of the City, that the City intended at the time it incurred such costs to finance them with tax-exempt debt or a loan under a state revolving fund program such as the Program; ---PAGE BREAK--- 20 the items required by the Indenture for the portion of the Loan to be disbursed at Closing; and 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 a Loan to pay costs of a Project, the City 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 City may obtain disbursements only for costs which have been legally incurred and are due and payable. All Loan disbursements will be made to the City only upon proof that cost was incurred. For refinancings, a disbursement schedule complying with the requirements of the Clean Water Act shall be established by the DNRC and the City at Closing. The Trustee shall disburse Loan amounts directly to the holder of the debt being refinanced according to such schedule. If the City should repay all or a portion of the debt to be refinanced from other sources or should otherwise not need any portion of the Loan which was to have been used to refinance such debt, it shall inform the DNRC and the Trustee of such fact pursuant to Section 5.5(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 the City for Project costs paid by it prior to the closing of such SRF Bond, the City shall present at closing the items required by Section 5.1(b) relating to such costs. The Trustee shall disburse such amounts to the City pursuant to a disbursement schedule complying with the requirements of the Clean Water Act established by the DNRC and the City at the closing. Notwithstanding anything else provided herein, the Trustee shall not be obligated to disburse a Loan any faster or to any greater extent than it has available EPA Capitalization Grants, Bond proceeds and other amounts available therefor in the Revolving Fund. The DNRC shall not be required to do ―overmatching‖ pursuant to Section 5.04(b) of the Indenture, but may do so in its discretion. The City acknowledges that if Project costs are incurred faster than the City projected at the closing of the respective SRF Bond, there may be delays in making Loan disbursements for such costs because of the schedule under which EPA makes EPA Capitalization Grant money available to the DNRC. The DNRC will use its commercially reasonable efforts to obtain an acceleration of such schedule if necessary. Upon making each Loan disbursement, the Trustee shall note such disbursement on Schedule A to the respective SRF Bond. The City agrees that it will deposit in the Reserve Account upon receipt thereof, either on the closing date of the Loan or upon any disbursement date, any proceeds of the Loan borrowed for the purpose of increasing the balance in the Reserve Account to the Reserve Requirement. The City further acknowledges and agrees that any portion of the Loan representing capitalized interest shall be advanced only on Payment Dates and shall be transferred by the Trustee on the Payment Date directly to the Revenue Bond Account. The amount of any such transfer shall be a credit against the interest payments due on the such SRF Bond and interest thereon shall accrue only from the date of transfer. Section 5.2. Commencement of Loan Term . The City’s obligations under such applicable Supplemental Resolution and any related Collateral Documents shall commence on the date of such Loan unless otherwise provided in such Supplemental Resolution. However, the obligation to ---PAGE BREAK--- 21 make payments under Article VI hereof shall commence only upon the first disbursement by the Trustee of Loan proceeds. Section 5.3. Termination of Loan Term . The City’s obligations under this such applicable Supplemental Resolution and any related Collateral Documents shall terminate upon payment in full of all amounts due under the respective SRF Bond and such Supplemental Resolution; provided, however, that the covenants and obligations provided in Article VII and Section 13.4 shall survive the termination of such Supplemental Resolution. Section 5.4. Commencement of Loan Term . On or prior to the closing of such SRF Bond, the City will have delivered to the DNRC and the Trustee the closing submissions required by Section 7.05 of the Indenture. Section 5.5. Disbursement of Loans . Upon completion of a Project, the City shall deliver to the DNRC a certificate stating that the Project is complete, stating the amount, if any, of the Loan that has not been disbursed to the City, and releasing the remaining amount, if any, of the Committed Amount. If all or any portion of the Project is cancelled or cut back or its costs are reduced or for any other reason the City will not require the full Committed Amount, the City shall notify the DNRC in writing of such fact and release the portion of the Committed Amount which will not be needed. ARTICLE VI REPAYMENT OF SRF LOANS Section 6.1. Repayment of Loan. During the time that any of the Outstanding SRF Bonds remain outstanding, the City shall repay the amounts of any Loan in respect of each such Outstanding SRF Bond, plus interest on the unpaid amounts lent at the rate of two percent (2.00%) per annum, in semiannual Loan Repayments. In addition, the City shall pay an Administrative Expense Surcharge on the outstanding principal amount of the Loan at the rate of seventy-five hundredths of one percent (0.75%) per annum and a Loan Loss Reserve Surcharge equal to one percent (1.00%) per annum on the outstanding principal amount of the Loan. For purposes of this Amended and Restated Resolution and the Program, the term ―interest‖ on the Loan shall include the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge. The City shall pay all Loan Repayments and Administrative Expense Surcharges and Loan Loss Reserve Surcharge in lawful money of the United States of America to the DNRC. Interest and 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. The Loan Repayments required by this Section 6.1, and the Administrative Expense Surcharge and the Loan Loss Reserve Surcharge, shall be due on each January 1 and July 1 (the ―Payment Dates‖), as follows: interest and the Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal balance of the Loan shall be payable on each January 1 and July 1, beginning on the first Payment Date after the closing of the Loan and ending upon the final Payment Date; and the principal of the Loan shall be repayable on each Payment Date, beginning on the first Payment Date after the closing of the Loan and ending upon the final Payment Date, and the amount of each principal payment shall be calculated as provided in the form of respective Bond. ---PAGE BREAK--- 22 The payments of principal of and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on any Loan shall be due on the dates and in the amounts shown in Schedule B to each respective Outstanding SRF Bond as such schedule shall be modified from time to time as provided below. The portion of each such Loan Repayment consisting of principal and the portion consisting of interest and the amount of each Administrative Expense Surcharge and the amount of each Loan Loss Reserve Surcharge shall be set forth in Schedule B to each such Outstanding SRF Bond. Upon each disbursement of Loan amounts to the City pursuant to Section 6.1 hereof, the Trustee shall enter or cause to be entered the amount advanced on Schedule A to such Outstanding SRF Bond under ―Advances‖ and the total amount advanced under Section 6.1, including such disbursement, under ―Total Amount Advanced.‖ If the advance was made to pay costs of a Project pursuant to Section 6.1(b), interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on such advance shall accrue from the date the advance is made and shall be payable on each Payment Date thereafter. Once the completion certificate for a Project has been delivered to the DNRC, the Trustee shall revise Schedule B to the respective Outstanding SRF Bond in accordance with this Section 6.1 and the Trustee shall send a copy of such Schedule B to the City within one month after delivery of the completion certificate. Past-due payments of principal and interest and Administrative Expense Surcharges and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Any payment of principal, interest or Administrative Expense Surcharge and Loan Loss Reserve Surcharge under this Section 6.1 shall also be credited against the same payment obligation under the respective Outstanding SRF Bonds. Section 6.2. Additional Payments. The City 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 City so chooses, all reasonable expenses of the DNRC and the Trustee in connection with any Loan, any Collateral Document and any Outstanding SRF Bond, including, but not limited to: the cost of reproducing this Amended and Restated Resolution, any Collateral Documents and any Outstanding SRF Bonds; the fees and disbursements of Bond Counsel and other Counsel utilized by the DNRC and the Trustee in connection with any Loan, this Amended and Restated Resolution, the Collateral Documents and the Outstanding SRF 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 Outstanding SRF Bonds, whether or not the Outstanding SRF Bonds is then outstanding, including all recording and filing fees relating to the Collateral Documents and the pledge of the State’s right, title and interest in and to the Outstanding SRF Bonds, the Collateral Documents and this Amended and Restated Resolution and all expenses, including attorneys’ fees, relating to any amendments, waivers, consents or collection or enforcement proceedings pursuant to the provisions hereof or thereof. Section 6.3. Prepayments. The City may not prepay all or any part of the outstanding principal amount of any Outstanding SRF Bond unless it obtains the prior written consent of the DNRC thereto, and (ii) no Loan Repayment or Administrative Expense Surcharge in respect of such Outstanding SRF Bond is then delinquent. Any prepayment permitted by the DNRC must be accompanied by payment of any accrued interest and Administrative Expense Surcharge in respect of such Outstanding SRF Bond to the date of prepayment on the amount of principal prepaid. If an Outstanding SRF Bond is prepaid in part pursuant to this Section 6.3, such prepayments shall be applied to principal payments in inverse order of maturity. ---PAGE BREAK--- 23 Section 6.4. Obligations of City Unconditional. The obligations of the City to make the payments required by this Amended and Restated Resolution and the Outstanding SRF Bonds and to perform its other agreements contained in this Amended and Restated Resolution, the Outstanding SRF Bonds and Collateral Documents shall be absolute and unconditional, except as otherwise provided herein or in such documents. The City shall not suspend or discontinue any payments provided for in this Amended and Restated Resolution and the Outstanding SRF Bonds, shall perform all its other agreements in this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents and shall not terminate this Amended and Restated Resolution, the Outstanding SRF 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 System, commercial frustration of purpose, any dispute with the DNRC or the EPA, any change in the laws of the United States or of the State or any political subdivision of either or any failure of the DNRC to perform any of its agreements, whether express or implied, or any duty, liability or obligation arising from or connected with this Amended and Restated Resolution. Section 6.5. Limited Liability. All payments of principal of and interest on any Loan and other payment obligations of the City hereunder and under the Outstanding SRF Bonds shall be special, limited obligations of the City payable solely out of the Net Revenues or out of the Revenue Bond Account and shall not be payable out of any other funds or revenues of the City. The obligations of the City under this Amended and Restated Resolution and the Outstanding SRF Bonds shall never constitute an indebtedness of the City within the meaning of any state constitutional provision or statutory limitation and shall never constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing power. The taxing powers of the City are not pledged to pay principal of or interest on any Outstanding SRF Bond, and no funds or property of the City other than the Net Revenues are pledged to pay principal of or interest on any Outstanding SRF Bond. ARTICLE VII INDEMNIFICATION OF DNRC, DEQ AND TRUSTEE; ASSIGNMENT Section 7.1. Indemnification. During the time that any of the Outstanding SRF Bonds remain outstanding, the City shall defend, indemnify and save and hold harmless the DNRC, the DEQ, the Trustee 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, resulting from or in any way connected with the condition, use, possession, conduct, management, planning, design, acquisition, construction, installation or financing of any Project in respect of such Outstanding SRF Bonds and the City shall also defend, indemnify and save and hold harmless the Indemnified Parties against and from all costs, reasonable counsel 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 any such claim or demand, the City shall, upon notice from the Indemnified Party, defend such proceeding on behalf of the Indemnified Party. Notwithstanding the foregoing, the City shall not be obligated to indemnify an Indemnified Party or any of its officers, employees or agents or hold any of them harmless against or from or in respect of any claim, damage, demand, expense, liability or loss arising from the intentional or willful misconduct or gross negligence of the Indemnified Parties. Section 7.2. Assignment by City. During the time that any of the Outstanding SRF Bonds remain outstanding, the City may not assign its rights and obligations under this Amended and Restated Resolution or the Outstanding SRF Bonds, except as provided in Section 6.3. Section 7.3. Assignment by DNRC. During the time that any of the Outstanding SRF Bonds remain outstanding, the DNRC will pledge its rights under and interest in this Amended and Restated Resolution, the Outstanding SRF Bonds and the Collateral Documents (except to the extent otherwise provided in the Indenture) as security for the payment of the State Bonds. ---PAGE BREAK--- 24 Section 7.4. State Refunding Bonds. In the event the State Bonds are refunded, all references in this Amended and Restated Resolution to State Bonds shall be deemed to refer to the refunding bonds and any bonds of the State on a parity with such refunding bonds (together, the ―Refunding Bonds‖) or, in the case of a crossover refunding, to the State Bonds and the Refunding Bonds. In the event the State Bonds are refunded by an issue of bonds other than State Bonds, all references in this Amended and Restated Resolution to the State Bonds shall be deemed to refer to such other bonds or, in the case of a crossover refunding, both the State Bonds and such other bonds. ARTICLE VIII AGREEMENTS OF THE CITY Section 8.1. Maintenance of System; Liens. The City shall maintain the System in good condition and make all necessary renewals, replacements, additions, betterments and improvements thereto, and the City shall not grant or permit to exist any lien on the Project or any other property making up part of the System, other than liens securing debt where a parity lien secures Outstanding Bonds; provided that this Section 8.1 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 City uses its best efforts to obtain the discharge of such lien and reports to the Holder the filing of such lien and the steps it plans to take and does take to discharge such lien. Section 8.2. Maintenance of Existence; Merger, Consolidation, Etc; Disposition of Assets..The City 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 City) is a public entity and (ii) assumes in writing all of the obligations of the City under this Amended and Restated Resolution, any Outstanding Bonds and any 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 City under this Amended and Restated Resolution, the Outstanding Bonds and the Collateral Documents, while any Outstanding SRF Bonds remain outstanding, such action does not violate the SRF Act or the Clean Water Act and does not adversely affect the exclusion of interest on the Outstanding SRF Bonds or the State Bonds from gross income for federal income tax purposes and the City delivers to the Bondholders on the date of such action an Opinion of Bond Counsel that such action complies with this Section 8.2. Other than pursuant to the preceding paragraph, the City 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 City delivers to the Bondholders an Opinion of Bond Counsel to that effect and, in addition, the DNRC consents to such transfer. Section 8.3. Competing Service. The City will not establish or authorize the establishment of any other system for the public supply of service or services in competition with any or all of the services supplied by the facilities of the System. Section 8.4. Property Insurance . The City will cause all buildings, properties, fixtures and equipment constituting a part of the System to be kept insured with a reputable insurance carrier or carriers, qualified under the laws of Montana, in such amounts as are ordinarily carried, and against loss or damage by such hazards and risks as are ordinarily insured against, by public bodies owning and operating properties of a similar character and size; provided that if at any time the City is unable to obtain insurance, it will obtain insurance in such amounts and against risks as are reasonably obtainable. The proceeds of all such insurance shall be available for the repair, replacement or reconstruction of damaged or destroyed property, and until paid out in making good such loss or damage, are pledged as security for the Outstanding Bonds. All insurance proceeds received in excess of the amount required for restoration of the loss or damage compensated thereby shall be and become part of the revenues ---PAGE BREAK--- 25 appropriated to the Sewer System Fund. If for any reason insurance proceeds are insufficient for the repair, replacement and reconstruction of the insured property, the City shall supply the deficiency from revenues on hand in the Repair and Replacement Account and the Surplus Account. Section 8.5. Liability Insurance and Surety Bonds. The City will carry insurance against liability of the City and its employees for damage to persons and property resulting from the operation of the System in such amounts as the City determines from time to time to be necessary or advisable by reason of the character and extent of such operation. This covenant shall not preclude the City’s ability to participate in the self-insurance program established by the Montana Municipal Insurance Association. It will also cause all persons handling money and other assets of the Sewer System Fund to be adequately bonded for the faithful performance of their duties and to account for and pay over such money to the City. All amounts received under such insurance and bonds shall be applied to the payment of the loss or damage covered thereby. The premiums for all insurance and bonds required by this Section 8.5 constitute part of the operating expenses of the System, but no insurance liabilities of the City in excess of amounts received under such insurance and bonds shall constitute a lien or charge on revenues or any other assets herein or otherwise pledged to the Sewer System Fund. Section 8.6. Disposition of Property . The City will not mortgage, lease, sell or otherwise dispose of any real or personal properties of the System, unless: Prior to or simultaneous with such mortgage, lease, sale or other disposition, all of the Bonds then Outstanding shall be discharged as provided in Article X; or The properties to be mortgaged, leased sold or otherwise disposed of are unserviceable, inadequate, obsolete or no longer required for use in connection with the System; and (ii) the mortgage, lease, sale or other disposition will not prevent the City from complying with the provisions of this Resolution; and (iii) all proceeds of the mortgage, lease, sale or other disposition of such properties are deposited into the Sewer System Fund. Section 8.7. Books and Records. The City 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 Net Revenues derived from its operation, and the segregation and application of the Net Revenues in accordance with this Amended and Restated Resolution, in such reasonable detail as may be determined by the City in accordance with generally accepted accounting practice and principles. It will cause such books to be maintained on the basis of a Fiscal Year. The City shall, within 180 days after the close of each Fiscal Year, cause to be prepared and supply to the Original Purchasers of any Series of Bonds then Outstanding, and the Registrar a financial report with respect to the System for such Fiscal Year. The report shall be prepared at the direction of the Finance Director in accordance with applicable generally accepted accounting principles and, in addition to whatever matters may be thought proper by the Finance Director to be included therein, shall include the following: A statement or statements showing in detail of the income and expenditures of the System for the Fiscal Year, identifying capital expenditures and separating them from operating expenditures; A balance sheet as of the end of the Fiscal Year; The amount on hand in each account of the Sewer System Fund at the end of the Fiscal Year; ---PAGE BREAK--- 26 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 A determination that the report shows full compliance by the City with the provisions of this Amended and Restated Resolution during the Fiscal Year covered thereby, including proper segregation of the capital expenditures from Operating Expenses, maintenance of the Reserve Requirement in the Reserve Account, and receipt of Net Revenues during each Fiscal Year as herein required, or, if the report should reveal that the Net Revenues have been insufficient for compliance with this Resolution, or that the methods used in accounting for such revenues were contrary to any provision of this Resolution, the report shall include a full explanation thereof, together with recommendations for such change in rates or accounting practices or in the operation of the System as may be required. The City shall also have prepared and supplied to the Original Purchaser of any Series of Bonds then Outstanding, the Registrar, within 180 days of the close of each Fiscal Year, an audit report prepared by an independent certified public accountant or an agency of the state in accordance with generally accepted accounting principles and practice with respect to the financial statements and records of the System. The audit report shall include an analysis of the City’s compliance with the provisions of this Amended and Restated Resolution. Section 8.8. Handling of Funds. The employees of the City, under the direction and control of the Finance Director, shall keep books of accounts and collect the rates, charges and rentals for the services and facilities provided by the System and for other money currently receivable on account thereof. All money collected with respect to the System shall be deposited as received with the Finance Director. The Finance Director shall be bonded at all times with a surety company authorized to do business in Montana, in the amount of at least $100,000, to assure the faithful carrying out of such duties, which requirement may be satisfied by a blanket bond covering other City employees as well as the Finance Director. Section 8.9. Billing and Collections. The charges for sewer services shall be made and collected on an annual basis, to be billed semiannually (or, upon the request of commercial and certain other large accounts, quarterly) in advance. Those accounts that are flow-based shall be billed in advance based on previous usage. [If a sewer customer does not pay its sewer bill within 60 days of the date of billing,] notice to the owner of such lot or parcel of real estate shall be provided by the City in writing stating the amount of the assessment owing and in arrears, including any penalty and interest assessed. If such amount is not paid within 30 days of the notice, the amount will be levied as a tax against such lot or parcel of real estate. The City may also bring suit to collect past-due assessments, interest, and penalties against such owners in any court of competent jurisdiction. Section 8.10. Remedies. The owners of not less than 25% in principal amount of Outstanding Bonds shall have the right, either at law or in equity, through suit, action or other proceedings, to protect and enforce the rights of all owners of such Outstanding Bonds and to compel the performance of any and all of the covenants required herein to be performed by the City, and its officers and employees, including but not limited to the fixing and maintaining of rates, fees and charges and the collection and proper segregation of gross revenues and the application and use thereof. The owners of a majority in principal amount of such Outstanding Bonds shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Bondholders or the exercise of any power conferred on them and the right to waive a default in the performance of any such covenant, and its consequences, except a default in the payment of the principal of, premium, or interest on any Outstanding Bond when due. However, nothing herein shall impair the absolute and unconditional right of the owner of each such Outstanding Bond to receive payment of the principal of, premium, if any, and interest on such Outstanding Bond as such principal and interest respectively become payable, and to institute suit for any such payment. Any court having jurisdiction of the action may appoint a receiver to administer the System on behalf of the City with power to charge and collect rates, fees and charges sufficient to provide for the payment of any Outstanding Bonds, and to apply the gross revenues in conformity with this Amended and Restated Resolution and the laws of the State. ---PAGE BREAK--- 27 Section 8.11. Rate Covenant. While any Bonds are Outstanding and unpaid, the rates, charges and rentals for all services and facilities furnished and made available by the System to the City and its inhabitants, and to all customers within or without the boundaries of the City, shall be reasonable and just, taking into consideration the cost and value of the System and the cost of maintaining and operating it, and the amounts necessary for the payment of all Outstanding Bonds and the interest accruing thereon and all Subordinate Obligations and interest accruing thereon, and the proper and necessary allowances for the depreciation of the System. No free service shall be provided to any Person. It is covenanted and agreed that the rates, charges and rentals to be charged to all recipients of sewer services shall be maintained and shall be revised whenever and as often as may be necessary, according to schedules such that the Revenues for each Fiscal Year will be at least sufficient to pay the current expenses of operation and maintenance as herein defined, to maintain the Operating Reserve herein established, to produce Net Revenues during each Fiscal Year commencing with the Fiscal Year, not less than 125% of the maximum Principal and Interest Requirements for any Outstanding Bonds in the current or any future Fiscal Year, to pay the principal of and interest on any Subordinate Obligations and to provide reserves for the repair and replacement of the System If at the close of any Fiscal Year the Net Revenues actually received during such year have been less than required hereby, the City will forthwith prepare a schedule of altered rates, charges and rentals which are just and equitable and sufficient to produce Revenues and Net Revenues in such amount, and will do all things necessary to the end that such schedule will be placed in operation at the earliest possible date. ARTICLE IX SUPPLEMENTAL RESOLUTIONS Section 9.1. General. The City reserves the right to adopt Supplemental Resolutions from time to time and at any time, for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained herein, or of making such provisions with regard to matters or questions arising hereunder as the City may deem necessary or desirable and not inconsistent with this Amended and Restated Resolution, and which shall not adversely affect the interests of the Holders of outstanding Obligations, or for the purpose of adding to the covenants and agreements herein contained, or to the Net Revenues or Surplus Net Revenues herein pledged, other covenants and agreements thereafter to be observed and additional revenues or income thereafter appropriated to the Fund, or for the purpose of surrendering any right or power herein reserved to or conferred upon the City, or for the purpose of authorizing the creation and issuance of a series of additional Obligations (including subordinate obligations issued pursuant to Section 11.4), as provided in and subject to the conditions and requirements of Article XI. Any such Supplemental Resolution may be adopted without notice to or the consent of the Holder of any of the Bonds issued hereunder. Section 9.2. Consent of Holders. With the consent of two-thirds of the Holders of Obligations issued hereunder as provided in Section 9.4, the City may from time to time and at any time adopt a Supplemental Resolution for the purpose of amending this Amended and Restated Resolution by adding any provisions hereto or changing in any manner or eliminating any of the provisions hereof or of any Supplemental Resolution, except that no Supplemental Resolution shall be adopted at any time without the consent of the Holders of all Obligations issued hereunder which are then Outstanding and affected thereby, if it would extend the time of payment of interest thereon or principal thereof, would reduce the interest rate thereon or the amount of the principal or the redemption price thereof, would give to any Bond or Bonds any privileges over any other Bond or Bonds, would reduce the sources of revenues or income appropriated to the Fund, or would reduce the percentage in principal amount of such Obligations required to authorize or consent to any such Supplemental Resolution. Section 9.3. Notice. Notice of the Supplemental Resolution to be adopted pursuant to Section 9.2 shall be mailed by first class mail to the Holders of all outstanding Obligations at their addresses appearing in the Bond Register, and shall become effective only upon the filing of written consents with the City Clerk, signed by the Holders of not less than two-thirds in principal amount of the ---PAGE BREAK--- 28 Obligations then Outstanding and affected thereby. Any written consent to the Supplemental Resolution may be embodied in and evidenced by one or any number of concurrent written instruments of substantially similar tenor signed by Holders in person or by agent duly appointed in writing, and shall become effective when delivered to the City Clerk. Any consent by the Holder of any Bond shall bind him and every future Holder of the same Obligation with respect to any Supplemental Resolution adopted by the Town pursuant to such consent; provided that any Holder may revoke his consent with reference to any Obligation by written notice received by the City Clerk before the Supplemental Resolution has become effective. In the event that unrevoked consents of the Holders of the required amount of Obligations have not been received by the City Clerk within one year after the mailing of notice of the Supplemental Resolution, the Supplemental Resolution and all consents theretofore received shall be of no further force and effect. Section 9.4. Manner of Consent. Proof of the execution of any consent, or of a writing appointing any agent to execute the same, or of the ownership by any Person of Obligations shall be sufficient for any purpose of this Amended and Restated Resolution and shall be conclusive in favor of the City if made in the manner provided in this Section 9.4. The fact and date of the execution by any Person of any such consent or appointment may be proved by the affidavit of a witness of such execution or by the certification of any notary public or other officer authorized by law to take acknowledgment of deeds, certifying that the Person signing it acknowledged to him the execution thereof. The fact and date of execution of any such consent may also be proved in any other manner which the City may deem sufficient; but the City may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. The ownership of Bonds shall be proved by the Bond Register. ARTICLE X DEFEASANCE Section 10.1. General. When the liability of the City on all Obligations issued under and secured by this Amended and Restated Resolution and all interest thereon has been discharged as provided in this Article X, all pledges, covenants and other rights granted by this Amended and Restated Resolution to the Holders of such Obligations shall cease, other than to the payment of such Obligations from money segregated for such purpose. The City may also discharge its liability with respect to one or more Obligations in accordance with this Article X. Section 10.2. Maturity. The City may discharge its liability with reference to any Obligations and interest thereon which are due on any date by depositing with the Registrar for such Obligations on or before the date a sum sufficient for the payment thereof in full; or if any Obligation or interest thereon shall not be paid when due, the City may nevertheless discharge its liability with reference thereto by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. Section 10.3. Prepayment. The City may also discharge its obligations with respect to any prepayable Obligations called for redemption on any date when they are prepayable according to their terms, by depositing with the Registrar therefor on or before the Redemption Date a sum sufficient for the payment thereof in full; provided that notice of the redemption thereof has been duly given as provided in this Amended and Restated Resolution or any Supplemental Resolution relating thereto. Section 10.4. Escrow. The City may at any time discharge its liability with reference to any Obligations, subject to the provisions of law now or hereafter authorizing and regulating such action and the following paragraphs of this Section, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or Government Obligations authorized by law to be so deposited, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without reinvestment, to provide funds sufficient to pay all principal, interest and redemption premiums, if any, to become due on such Obligations at their Stated Maturities or, if such Obligations are prepayable and notice of redemption thereof has been duly given or irrevocably provided for, to such earlier Redemption Date. No defeasance shall be made pursuant to this Section 10.4 unless there has ---PAGE BREAK--- 29 first been presented to the escrow agent a written opinion of Bond Counsel to the effect that such defeasance shall not cause the interest on any outstanding Obligations to be included in the gross income of the holders thereof for federal income tax purposes. ARTICLE XI PRIORITIES AND ADDITIONAL OBLIGATIONS Section 11.1. Priority of Bond Payments. Each and all of the Bonds shall be equally and ratably secured without preference or priority of any one Bond over any other by reason of serial number, date of issue, or otherwise; provided that if at any time the Net Revenues on hand in the Fund are insufficient to pay principal and interest then due on all such Bonds, any and all Net Revenues then on hand shall be first used to pay the interest accrued on all outstanding Bonds, and the balance shall be applied toward payment of the maturing principal of such Bonds to be paid first, and pro rata in payment of Bonds maturing on the same date. Section 11.2. Refunding Revenue Bonds. The City reserves the right and privilege of refunding any or all of the Bonds subject to the following terms and conditions: Any matured Bonds may be refunded if moneys available for the payment thereof at maturity, within the limitation prescribed in Section 11.1, should at any time be insufficient to make such payment in full. Any Bonds may be refunded prior to maturity as and when they become prepayable according to their terms. Provision may be made for the payment and refunding of any unmatured Bonds by the deposit with a duly qualified depository bank, as escrow agent, of cash sufficient, or of securities of the kinds authorized by law, the payments of interest on and principal of which are sufficient, to pay the principal amount of and premium, if any, on such Bonds with interest to maturity or to any prior date or dates on which they are prepayable, and have been called for redemption or provision has been irrevocably made for their redemption, on such date or dates. Any refunding revenue Bonds issued for the above purposes may be made payable from the Net Revenues on a parity as to interest with all then outstanding Bonds; provided that if not all of the Bonds of a series are refunded, the maturity of each refunding revenue Bond shall be subsequent to the last maturity of any then outstanding Bonds of such series which are not refunded or to be refunded out of moneys on deposit with such escrow agent, and no Bondowner shall be required to accept a refunding revenue Bond in exchange for any Bond owned by him. Section 11.3. Other Parity Bonds. The City reserves the right to issue additional Bonds payable from the Revenue Bond Account of the Fund, on a parity as to both principal and interest with the Outstanding SRF Bonds, if the Net Revenues of the System for the last complete Fiscal Year preceding the date of issuance of such additional Bonds have equaled at least 125% of the maximum amount of principal and interest payable from said Revenue Bond Account in any subsequent Fiscal Year during the term of the outstanding Bonds, on all Bonds then outstanding and on the additional Bonds proposed to be issued. For the purpose of the foregoing computation, the Net Revenues for the Fiscal Year preceding the issuance of additional Bonds shall be those shown by the financial reports caused to be prepared by the City pursuant to Section 4.2(f), except that if the rates and charges for services provided by the System have been changed since the beginning of such preceding Fiscal Year, then the rates and charges in effect at the time of issuance of the additional Bonds or finally authorized to go into effect within 60 days thereafter shall be applied to the quantities of service actually rendered and made available during such preceding Fiscal Year to ascertain the gross revenues, from which there shall be deducted to determine the Net Revenues, the actual operation and maintenance cost plus any additional ---PAGE BREAK--- 30 annual costs of operation and maintenance which the Consultant estimates will be incurred because of the improvement or extension of the System to be constructed from the proceeds of the additional Bonds proposed to be issued. In no event shall any additional Bonds be issued and made payable from the Revenue Bond Account if the City is then in default in any payment of principal of or interest on any outstanding Bonds payable therefrom or if there then exists any deficiency in the balances required by this Amended and Restated Resolution to be maintained in any of the accounts of the Fund, which will not be cured or restored upon the issuance of the additional Bonds. In connection with the issuance of a series of additional Bonds, the City shall cause the Reserve Account in the Revenue Bond Account to be increased, from the proceeds of the additional Bonds or from Surplus Net Revenues, to an amount equal to the Reserve Requirement during the term of the outstanding Bonds or so much thereof as will not cause the City to violate the provisions of Section 13.2 hereof. Section 11.4. Subordinate Obligations. Nothing in this Amended and Restated Resolution shall preclude the City from issuing additional Obligations which are expressly made a charge on only the Surplus Net Revenues of the System subordinate to the pledge of Net Revenues to the Revenue Bond Account. ARTICLE XII SEWER SYSTEM FUND Section 12.1. Bond Proceeds and Revenues Pledged and Appropriated. A special Sewer System Fund is hereby created and shall be maintained as a separate and special bookkeeping account on the official books of the City until all Bonds and interest and redemption premiums due thereon have been fully paid, or the City’s obligations with reference to such Bonds have been discharged as provided in this Amended and Restated Resolution. All proceeds of Bonds issued hereunder and all other funds presently on hand derived from the operation of the System are irrevocably pledged and appropriated to the Fund. In addition, there is hereby irrevocably pledged and appropriated to the Fund all Gross Revenues. The Fund shall be subdivided into separate accounts as designated and described in Sections 12.2 through 12.7, to segregate income and expenses received, paid and accrued for the respective purposes described in those sections. The Gross Revenues received in the Fund shall be apportioned semiannually, on the first day of January and July. Section 12.2. Acquisition and Construction Account. The City shall maintain a Acquisition and Construction Account in the Fund. The Acquisition and Construction Account shall be used only to pay as incurred and allowed costs which under accepted accounting practice are capital costs of a Project and of such future reconstructions, improvements, betterments or extensions of the System as may be authorized in accordance with law, including but not limited to payments due for 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 City funds, and all other expenses incurred in connection with the acquisition, construction and financing of any such undertaking. To the Acquisition and Construction Account shall be credited as received all proceeds of Bonds issued hereunder (except proceeds of refunding bonds appropriated to the payment of outstanding Bonds and amounts required to be credited to the Revenue Bond Account), all other funds appropriated by the City for the System and any other funds appropriated by the City to the Acquisition and Construction Account for improvements to the System, and all income received from the investment of the Acquisition and Construction Account. Upon completion of a capital improvement or program of capital improvements for the System the balance remaining in the Acquisition and Construction Account shall be credited to the reserve balance in the Revenue Bond Account to the extent required to establish the required balance therein and, to the extent not so required, to the Replacement and Depreciation Account. Section 12.3. Operating Account. The City shall maintain an Operating Account in the Fund. On each semiannual apportionment there shall first be set aside and credited to the Operating Account, as a first charge on the Gross Revenues of the System, such amount as may be required over and above the balance then held in the account to pay the reasonable and necessary operating expenses ---PAGE BREAK--- 31 of the System which are then due and payable, or are to be paid prior to the next semiannual apportionment. The term ―Operating Expenses‖ shall mean the current expenses, paid or accrued, of operation, maintenance and current repair of the System and its facilities, as calculated in accordance with sound accounting practices, and shall include, without limitation, administrative expenses of the City relating solely to the System, premiums for insurance on the properties thereof, labor and the cost of materials and supplies used for current operation and for maintenance, and charges for the accumulation of appropriate reserves for current expenses which are not recurrent but may reasonably be expected to be incurred in accordance with sound accounting practices. Such expenses shall not include any allowance for interest expense or depreciation, renewals or replacements of capital assets of the System and shall not include any portion of the salaries or wages paid to any officer or employee of the City, except such portion as shall represent reasonable compensation for the performance of duties necessary to the operation of the System. The City shall establish and maintain within the account an Operating Reserve equal to the estimated average operating expenses for a sixty day period of the System, which sum shall be maintained by additional transfers upon each semiannual apportionment or from the Surplus Account whenever necessary. The Operating Reserve may be augmented by transfers of additional amounts from the Surplus Account described below if determined by the governing body of the City to be necessary to meet contingencies arising in the operation and maintenance of the System. Money in the Operating Account shall be used solely for the payment of current operating expenses of the System. Section 12.4. Revenue Bond Account. The City shall maintain a Revenue Bond Account in the Fund. Upon each semiannual apportionment there shall be set aside and credited to the Revenue Bond Account out of the Net Revenues an amount equal to not less than one-half of the interest and principal to become due within the next twelve months with respect to outstanding Bonds payable from the Revenue Bond Account; provided that the City shall be entitled to reduce any credit by the amount of any surplus previously credited and then on deposit in the Revenue Bond Account. Money from time to time held in the Revenue Bond Account shall be disbursed only to meet payments of principal of, premium, if any, and interest on the Bonds payable therefrom as such payments become due. If any payment of principal or interest becomes due when moneys in the Revenue Bond Account are temporarily insufficient therefor, such payment shall be advanced out of any Net Revenues theretofore segregated and then on hand in the Reserve Account, the Replacement and Depreciation Account or the Surplus Account. Section 12.5. Reserve Account. The City shall maintain a Reserve Account in the Fund. Upon each semiannual apportionment, from the Net Revenues remaining after the apportionment to the Revenue Bond Account, the City shall credit to the Reserve Account such Net Revenues as may be required to establish and thereafter maintain the balance in an amount equal, as of the date of calculation, to the Reserve Requirement. If the Reserve Account falls below the Reserve Requirement, the City shall transfer thereto amounts on hand in the Replacement and Depreciation Account or the Surplus Account. Money in the Reserve Account shall be used only to pay maturing principal, premium and interest when money within the Revenue Bond Account is insufficient therefor; provided that on any date when all outstanding Bonds of a series are due or prepayable by their terms, if the amount then on hand in the Reserve Account allocable to such Bonds and available for such appropriation is sufficient with money available for the purpose to pay all such Bonds and the interest accrued thereon in full, it may be used for that purpose; and provided, further, that so long as the amount on hand in the Reserve Account is not less than the Reserve Requirement, the City may credit earnings on investment of the Reserve Account to the Replacement and Depreciation Account. Section 12.6. Replacement and Depreciation Account. There shall next be set aside and credited, upon each semiannual apportionment, to a Replacement and Depreciation Account in the Fund such Surplus Net Revenues of the System as the governing body of the City shall determine to be required for the accumulation of a reasonable allowance for depreciation of the System and for replacement or renewal of worn out, obsolete or damaged properties and equipment thereof. Money in this account shall be used only for the purposes above stated or, if so directed by the governing body of the City, to redeem Bonds which are prepayable according to their terms, to pay principal or interest when due thereon as required in Section 12.5, or to restore a balance in the Reserve Account, or to pay the ---PAGE BREAK--- 32 cost of improvements to the System; provided that in the event construction and installation of additional improvements or additions to the System are financed other than from proceeds of Bonds payable from the Revenue Bond Account, Surplus Net Revenues from time to time received may be segregated and paid into one or more separate and additional accounts for the repayment of such indebtedness and interest thereon, in advance of payments required to be made into the Replacement and Depreciation Account. Section 12.7. Surplus Account. Any amount of the Surplus Net Revenues from time to time remaining after the above required applications thereof shall be credited to a Surplus Account (or such other account in the Fund as the City may establish for bookkeeping purposes to account for surplus money in accordance with the purposes of this Amended and Restated Resolution), and the money from time to time in that account, when not required to restore a current deficiency in the Revenue Bond Account as provided in Section 12.4, may be used for any of the following purposes and not otherwise: To redeem bonds payable from the Net Revenues when and as such bonds become prepayable according to their terms; or To purchase Bonds on the open market, whether or not the Bonds or other such Bonds may then be prepayable according to their terms; or To be held as a reserve for redemption of bonds payable from the Net Revenues which are not then but will later be prepayable according to their terms; or To pay for repairs of or for the construction and installation of improvements or additions to the System; or To restore the Operating Reserve or increase the same when determined to be necessary by the governing body of the City. No money shall at any time be transferred from the Surplus Account or any other account of the Fund to any other fund of the City, nor shall such moneys at any time be loaned to other municipal funds or invested in warrants, special improvement bonds or other obligations payable from other funds, except as provided in Section 12.9. Section 12.8. Rebate Account. The Rebate Account is hereby established as a separate account within the Sewer System Fund. The City shall make deposits to and disbursements from the Rebate Account pursuant to the Rebate Certificate, and for such purposes may make transfers, in the following order of priority, from the Surplus Account, the Repair and Replacement Account and the Reserve Account, as necessary, to meet the requirements of the Rebate Account. The City shall invest the Rebate Account in accordance with the provisions of the Rebate Certificate and shall deposit income from such investments immediately upon receipt thereof in the Rebate Account. Section 12.9. Deposit and Investment of Funds. The Finance Director of the City shall cause all money appropriated to the Fund to be deposited as received with one or more depository banks duly qualified in accordance with the provisions of Montana Code Annotated, Section 7-6-201, in a deposit account or accounts. The balance in such accounts, except such portion thereof as shall be guaranteed by federal deposit insurance, shall at all times be secured to its full amount by bonds or securities of the types set forth in said Section 7-6-201. Any of such moneys not necessary for immediate use may be deposited with such depository banks in savings or time deposits. No money shall at any time be withdrawn from such deposit accounts except for the purposes of the Fund as defined and authorized in this Amended and Restated Resolution; except that money from time to time on hand in the Fund may at any time, in the discretion of the governing body of the City, be invested in securities which are direct, general obligations of, or obligations the prompt payment of the principal of and the interest on which is fully and unconditionally guaranteed by, the United States of America, bank repurchase agreements with respect to such obligations, certificates of deposits of national banks having a combined ---PAGE BREAK--- 33 capital and surplus of at least $1,000,000 or in the Montana short-term investment program administered by the Board of Investments, which investments mature and bear interest at the times and in the amounts estimated to be required to provide cash when needed for the purposes of the respective accounts; provided that funds on hand in the Reserve Account, the Replacement and Depreciation Account and the Surplus Account may be invested in said securities maturing not later than five years from the date of the investment; and provided, further, that money on hand in the Surplus Account of the Fund may, in the discretion of the governing body of the City, be invested in any securities which are direct, general obligations of the City. Income received from the deposit or investment of moneys in said accounts shall be credited to the account from whose moneys the deposit was made or the investment was purchased, and handled and accounted for in the same manner as other moneys in that account. ARTICLE XIII TAX MATTERS Section 13.1. Use of Project and System. During the time that any of the Outstanding SRF Bonds remain outstanding, each Project in respect of such Outstanding SRF Bonds and the System will be owned and operated by the City and available for use by members of the general public on a substantially equal basis, and the City shall not enter into any lease, use or other agreement with any non-governmental person relating to the use of such Project or the System or security for the payment of such Outstanding SRF Bond which might cause such Outstanding SRF Bond to be considered a ―private activity bond‖ or ―private loan bond‖ within the meaning of Section 141 of the Code. Section 13.2. General Covenant. The City covenants and agrees with the owners from time to time of the Outstanding SRF Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Outstanding SRF Bonds 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 Outstanding SRF Bonds will not become includable in gross income for federal income tax purposes under the Code and the Regulations. Section 13.3. Arbitrage Certification. The Mayor and the City Clerk, being the officers of the City charged with the responsibility for issuing the Outstanding SRF Bonds pursuant to this Amended and Restated 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 Outstanding SRF Bonds, it is reasonably expected that the proceeds of the Outstanding SRF Bonds will be used in a manner that would not cause the Outstanding SRF Bonds to be an ―arbitrage bond‖ within the meaning of Section 148 of the Code and the Regulations. Section 13.4. Arbitrage Rebate. The City acknowledges that the Outstanding SRF Bonds are subject to the rebate requirements of Section 148(f) of the Code. The City covenants and agrees during the time that any of the Outstanding SRF Bonds remain outstanding, 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 such Outstanding SRF Bonds from gross income for federal income tax purposes, unless such Outstanding SRF Bonds qualify for the exception from the rebate requirement under Section 148(f)(4)(B) of the Code and no ―gross proceeds‖ of the Outstanding SRF Bonds (other than amounts constituting a ―bona fide debt service fund‖) arise during or after the expenditure of the original proceeds thereof. In furtherance of the foregoing, the City Administrator is hereby authorized and directed to execute a Rebate Certificate, substantially in the form of the Rebate Certificate currently on file in the office of the City Clerk of Council, 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. ---PAGE BREAK--- 34 Section 13.5. ―Qualified Tax-Exempt Obligations‖. Pursuant to Section 265(b)(3)(B)(i)(III) of the Code, each of the Outstanding SRF Bonds were designated as a ―qualified tax-exempt obligation‖ for purposes of Section 265(b)(3) of the Code. ARTICLE XIV CONTINUING DISCLOSURE The City understands and acknowledges that the DNRC has acquired the Outstanding SRF Bonds under the Program pursuant to which the State issues from time to time State Bonds to provide funds therefor. The City covenants and agrees that, during the time that any of the Outstanding SRF Bonds remain outstanding, upon written request of the DNRC from time to time, the City 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 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12) or otherwise. Such information shall include, among other things and if so requested, financial statements of the City 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 City, 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 City will also provide, with any information so furnished to the DNRC, a certificate of the Mayor and the City Clerk to the effect that, to the best of their knowledge, such information does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein to make the statements made, in light of the circumstances under which they are made, not misleading. ARTICLE XV MISCELLANEOUS Section 15.1. Notices. So long as any SRF Bonds are Outstanding, 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 Helena, Montana 59620 Attention: Conservation and Resource Development Division Trustee: U.S. Bank National Association c/o Corporate Trust Services 1420 – 5th Avenue, 7th Floor Seattle, Washington 98101 Attn: Corporate Trust Department City: City of Missoula P.O. Box 1178 Missoula, Montana 59103 Attention: City Clerk 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. ---PAGE BREAK--- 35 Section 15.2. Binding Effect. This Amended and Restated Resolution shall inure to the benefit of and shall be binding upon the DNRC with respect to the SRF Bonds, the City and its respective permitted successors and assigns. Section 15.3. Severability. If any provision of this Amended and Restated Resolution shall be determined to be unenforceable at any time, it shall not affect any other provision of this Amended and Restated Resolution or the enforceability of that provision at any other time. Section 15.4. Amendments. During the time that any of the Outstanding SRF Bonds remain outstanding, this Amended and Restated Resolution may not be effectively amended without the written consent of the DNRC. Section 15.5. Applicable Law. This Amended and Restated Resolution shall be governed by and construed in accordance with the laws of the State. Section 15.6. Captions; References to Sections. The captions in this Amended and Restated Resolution are for convenience only and do not define or limit the scope or intent of any provisions or Sections of this Amended and Restated Resolution. References to Articles and Sections are to the Articles and Sections of this Amended and Restated Resolution, unless the context otherwise requires. Section 15.7. No Liability of Individual Officers, Directors or Council Members. No recourse under or upon any obligation, covenant or agreement contained in this Amended and Restated Resolution shall be had against any director, officer or employee, as such, past, present or future, of the DNRC or the Trustee, either directly or through the DNRC or the Trustee, or against any officer, or member of the governing body or employee of the City, 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 City is hereby expressly waived and released by the City and by the DNRC as a condition of and in consideration for the adoption of this Amended and Restated Resolution. Section 15.8. 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 Amended and Restated Resolution or the Outstanding SRF Bonds, shall not be a Business Day, such payments may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Amended and Restated Resolution or the Outstanding SRF Bonds. Section 15.9. Right of Others to Perform City’s Covenants. In the event the City shall fail to make any payment or perform any act required to be performed hereunder with respect to any Outstanding SRF Bond, 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 City and make advances for that purpose. No such performance or advance shall operate to release the City 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 from the date of the advance until repaid. The DNRC and the provider of any Collateral Document shall have the right to enter any facility which is a part of the System in order reasonably to effectuate the purposes of this Section. Section 15.10. Authentication of Transcript. The officers of the City have furnished to the DNRC and to Bond Counsel certified copies of all proceedings relating to the issuance of the Outstanding SRF Bonds and such other certificates and affidavits as required to show the right, power and authority of the City to issue the Outstanding SRF Bonds. All statements contained in and shown by such instruments, including any heretofore furnished, are hereby confirmed as representations of the City as to the truth of the statements purported to be shown thereby. ---PAGE BREAK--- 36 Section 15.11. Effective Date. This Amended and Restated Resolution shall take effect immediately. Adopted by the City Council of the City of Missoula, Montana, on this 1st day of November, 2010. John Engen John Engen Mayor Attest: Martha L. Rehbein Martha L. Rehbein, CMC City Clerk (SEAL) ---PAGE BREAK--- A-1 APPENDIX A Appendix A-1: The Series 1999A Bond Appendix A-2: The Series 2000B Bond Appendix A-3: The Series 2001A Bond Appendix A-4: The Series 2002A Bond Appendix A-5: The Series 2002B Bond Appendix A-6: The Series 2003 Bond Appendix A-7: The Series 2004 Bond Appendix A-8: The Series 2005 Bond Appendix A-9: The Series 2006A Bond Appendix A-10: The Series 2009B Bond Appendix A-11: The Series 2009C Bond