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PAYING AGENT AND REGISTRAR AGREEMENT THIS PAYING AGENT AND REGISTRAR AGREEMENT, dated as of the 24th day of May, 2001 between City of Moscow, of Latah County, IDAHO (the "Issuer") and U.S. BANK NATIONAL ASSOCIATION, Salt Lake City, Utah office, ("US Bank"). WITNESSETH The Issuer intends to issue its Securities described as follows: Name oflssue: Date of Issue: Total Issue: Interest Payment Dates: City of Moscow, of Latah County, IDAHO Consolidated Local Improvement District No. 1 Refunding Bonds, Series 2001 May 15, 2001 $350,000 May I, beginning May I, 2002 The Issuer desires to appoint US Bank as paying agent, transfer agent, authenticating agent and registrar for the purposes of performing services for the payment of principal and interest on the Securities issued or to be issued by the Issuer and for US Bank to act as registrar of the Securities and to transfer and exchange the Securities, and US Bank desires to render the services in its capacity as paying agent, transfer agent, authenticating agent and registrar. NOW, THEREFORE, the Issuer and US Bank agree as follows: 1. The Issuer shall remit, or cause to be remitted, to US Bank, in immediately available and collected funds, the full amount necessary to pay the interest on the Securities due on each of the related interest dates at least 1 business day prior to the respective interest payment dates, and the full amount necessary to pay the principal of the Securities due on each of the related maturity or redemption dates at least I day prior to the stated maturity or earlier redemption date. US Bank is authorized to pay from monies so deposited with it the principal of and interest on the Securities to the registered owner of the Securities whose name and address appears on the registration books of the Issuer maintained by US Bank. The duty of US Bank for the payment of the principal of and interest on the Securities shall be to receive funds for payment therefor, and to pay from funds so deposited with it the interest on the Securities and principal of the Securities when due and presented for payment. Under no circumstances shall US Bank be obligated to make principal and/or interest payments next due unless and until the Issuer has caused to be delivered to US Bank, in immediately available funds, the full amount of Principal and/or interest next due. In the event a principal and/or interest payment date is not a business day, US Bank shall make the principal and/or interest payment on the following business day without additional interest accruing to the holder. 2. Monies deposited with US Bank prior to the payment date for payment of principal of and interest on the Securities shall be held uninvested by US Bank in a US Bank paying agency account. If any of the Securities are not presented for payment when due, and funds sufficient to pay such Security 1 2001-26 ---PAGE BREAK--- shall have been paid to US Bank, US Bank shall hold such funds for the benefit of the registered owner of the Securities, without liability for interest thereon. Any monies held by US Bank for such payment after five years from the due date thereof shall be paid by US Bank to the Issuer and the registered owner of the Securities shall thereafter seek payment only from the Issuer. 3. All matured and fully paid Securities shall be canceled by US Bank and, unless otherwise directed in writing by the Issuer, destroyed. A Certificate of Destruction evidencing the destruction of the Securities shall be furnished to the Issuer. 4. If applicable, the Issuer shall furnish to US Bank a sufficient supply of blank certificates for the Securities in appropriate form acceptable to US Bank, and, from time to time, will renew such supply upon the request of US Bank. Such blank certificates shall be signed manually or by facsimile by the officials of the Issuer duly authorized to sign certificates for the Issuer. 5. Upon appropriate instructions received by US Bank from the underwriter, or the Securities purchaser or the Issuer, and the receipt of a sufficient supply of the original supply of blank certificates for the Securities, US Bank shall complete the Securities as to registered owner, denomination, and such other matters as so directed. US Bank shall authenticate the Securities upon request by the Issuer and shall deliver the Securities in accordance with the instructions of the Issuer. 6. US Bank shall maintain for the Issuer appropriate registration books for the registration of the Securities and the registration of transfer and exchange of the Securities. Transfer and exchange of the Securities shall be registered and new certificates issued upon surrender of the outstanding certificates if the Securities are duly endorsed by, or accompanied by a written instrument or instruments of transfer in a form satisfactory to US Bank duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, together with a guarantee of the signature satisfactory to US Bank and such other documentation as US Barile may reasonably require. 7. (Intentionally left blank) 8. US Bank may rely upon the documents of the Issuer authorizing the Securities and upon the Uniform Commercial Code of the State of Idaho or any other statutes which, in the opinion of counsel for US Bank, to protect US Bank and the Issuer without requiring complete documentation, or in registering transfers without inquiry into adverse claims, or in the transfer or registration of Securities standing in the name of the decedent in small estates where no administration is contemplated and documentation furnished conforms with the laws of the descendant's domicile, or in refusing registration where, in the judgment of US Bank , an adverse claim requires such refusal. US Bank reserves the right to refuse to transfer Securities until it is satisfied that the requested transfer is legally authorized; and shall incur no liability for a good faith refusal to make a transfer, which it, in its sole judgment deems improper or unauthorized. US Bank shall not be obligated to register any transfer of Securities after the record date fixed for any redemption of such Securities. 9. US Bank shall pay interest as is due on each stated interest payment date, with the funds received from the Issuer, to the registered owners of the Bonds as of the close of business on the 15th day (whether or not a business day) of the preceding month, at their addresses as they appear on the bond register; if the Issuer provides US Bank with sufficient funds to make such payment prior to any 2 ---PAGE BREAK--- interest payment date, US Bank shall wire or mail such checks or drafts on the interest payment date. US Bank shall pay the principal of the Securities as is due on the stated payment dates, with the funds received by the Issuer, upon surrender of the Securities to the corporate trust office for payment. "Principal Corporate Trust Office" or "corporate trust office" means the principal corporate trust office of the Paying Agent at 15 West South Temple, Salt Lake City, Utah, Attention: US Bank Corporate Trust Services (except with respect to payments on the Securities and any exchange, transfer or other surrender of the Securities, in which case c/o US Bank Trust National Association, 180 Fifth Street, St. Paul, Minnesota 55101), or such other or additional offices as may be designated by the Paying Agent. 10. As applicable in connection with mandatory Securities redemptions that are scheduled and fixed in amount under the documents authorizing issuance of the Securities or upon timely receipt of written notification from the Issuer of any other Securities redemption, together with a certified copy of the authorizing resolution, if any, US Bank shall send notice of redemption by first class mail to the registered owner of any Securities to be redeemed not more than (60) days and not less than thirty (20) days prior to the redemption date. Wherever necessary, US Bank will comply with the minimum standards endorsed by the Securities and Exchange Commission for securities redemption notices, including notice to all registered securities depositories and to national information services that disseminate redemption notices. 11. US Bank may authenticate and deliver new certificates in substitution for certificates for any Securities represented to have been lost, destroyed or stolen, or in exchange for any certificate represented to have been mutilated, upon receiving indemnity satisfactory to the Issuer and US Bank. All expenses associated with procuring such indemnity and with the preparation, authentication and delivery of a new certificate shall be borne by the registered owner of the lost, destroyed, stolen or mutilated Securities. In the event that a lost, destroyed, stolen or mutilated certificate shall have matured or been called for redemption, such Securities shall be paid, and no new Securities shall be issued in lien thereof or in exchange therefor. 12. Securities bearing the manual or facsimile signatures of individuals who were, at any time, authorized to execute such Securities shall bind the Issuer. US Bank may issue and register such Securities as the Securities of the Issuer, notwithstanding that such individuals have ceased to hold office with the Issuer prior to the authentication and delivery of such Securities or did not hold such office at the date of transfer of such Securities. 13. At any time, US Bank may apply to an official of the Issuer for instruction, and may consult counsel for the Issuer or bond counsel in respect to any matter arising in connection with any agency hereunder, and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with such instructions or with the advise or opinion of such counsel. US Bank shall be protected in treating as duly executed certificates for Securities that it reasonably believes to bear the proper manual or facsimile signatures of the officials of the Issuer. US Bank shall not be responsible, for any reason, for any action taken or omitted to be taken by it in good faith or for anything whatever in connection with this Agreement or any of the Securities except for its own negligence, willful misconduct or bad faith in the performance of any duty to be performed by US Bank hereunder. US Bank and its employees are acting solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust, for or with any of the registered owners or holders of the Securities, 3 ---PAGE BREAK--- except that all funds held by US Bank shall be held in the paying agency account and subject to the provisions hereof. 14. The Issuer agrees to pay US Bank reasonable compensation for services rendered by US Bank hereunder in accordance with the schedule of fees attached hereto as Exhibit or as otherwise agreed to from time to time. The Issuer agrees to reimburse US Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by US Bank in accordance with any provision hereof, including the reasonable compensation, expenses and disbursements of its employees and counsel, except any such expenses, disbursements or advances as may be attributable to US Bank's own negligence, willful misconduct or bad faith. The Issuer and US Bank specifically agree that the fees of US Bank paid hereunder have been negotiated with US Bank. The obligations of the Issuer under this paragraph shall survive payment of the Securities and the resignation or removal of US Bank. US Bank shall invoice the Issuer for its services, expenses, advances and disbursements May of each year during the term of this Agreement. 15. US Bank will supply all necessary tax reporting to the security holders and to the Internal Revenue Service in accordance with applicable regulations. 16. The Issuer agrees to indemnify and US Bank shall be protected, in the absence of negligence, willful misconduct or bad faith, in acting upon or relying on any paper or document reasonably believed by it to be genuine and to have been signed by the proper person or persons. US Bank shall also be protected in acting upon or recognizing Securities that it reasonably believes to bear the manual or facsimile signature of authorized representative of the Issuer and the genuine counter signature of the Registrar or any Co-registrar. The Issuer assumes full responsibility and shall indemnify US Bank and save it harmless from and against any and all actions and suits, whether groundless or otherwise and from and against any and all losses, damages, charges, costs, counsel fees, payments, expenses and liabilities arising directly or indirectly out of its agency relationship to the Issuer, so long as it acted without negligence, willful misconduct or bad faith. 17. US Bank shall take all reasonable precautions to safeguard all materials in its possession, including Securities being held by it. 18. US Bank may resign as paying agent and registrar or may be removed by the Issuer, such resignation or removal to be effective sixty (60) days after written notice to the other party. The Issuer, prior to the effective date of such resignation or removal, shall appoint a successor agent and, upon such appointment, US Bank shall deliver to the successor agent all its funds, documents, files and records relating to the Securities. The successor agent shall notify the registered owner of the Securities of any change in agents as soon as the successor agent is appointed. 19. The files and materials kept by US Bank pursuant to this Agreement, including registration books and the records of registered Securities ownership, are not public records and US Bank shall not release to or disclose to other persons the registered ownership of the Securities of the Issuer, except as directed by the Issuer. Any ftles, records or materials in the possession of US Bank pursuant to this Agreement shall be used only for performance of this Agreement. 4 ---PAGE BREAK--- 20. Any duties required of US Bank pursuant to the terms of this Agreement, including payment of interest and/or principal, shall be performed on the date specified, or, if said date is not a business day, the following business day. 2 1. The Issuer has the authority to make this appointment and it is not in contravention of any other documents that the Issuer has signed in connection with the issuance of the Securities. 22. This Paying Agent and Registrar Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Idaho. ACCEPTED: U.S. Bank National Association, Salt Lake City, Utah By: 5