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Resolution 5883 - Amends Reso 5879 - $14,400,000 Sewer System Revenue Bonds (Westside Interceptor)CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Kalispell, Montana (the "City"), hereby certify that the attached resolution is a true copy of a Resolution entitled: "RESOLUTION AMENDING RESOLUTION NO. 5879 RELATING TO $14,400,000 SEWERAGE SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), CONSISTING OF $400,000 SUBORDINATE LIEN TAXABLE SERIES 2018A BOND, $7,000,000 TAXABLE SERIES 2018B BOND and $7,000,000 TAXABLE SERIES 2018C BOND; AUTHORIZING THE ISSUANCE AND FIXING THE TERMS AND CONDITIONS THEREOF" (the "Resolution" ), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council of the City at a regular meeting on August 20, 2018 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notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed.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 City Council members voted in favor thereof: GRM k 0.m I t _ 0L+4,V M0-V1 , S G, VI? ncd I c-, ,.�f,.,da, k(w-espiety, C cJoy;eJ, voted against the same: C A✓(S o v� abstained from voting thereon: or were absent: WITNESS my hand and seal officially this 20 day of August, 2018. (SEAL) �MDA �* 79PIWA��� - Aimee Brunckhorst, CMC City Clerk i SEAL 1892 FONT P� • . ��`� /lllllllll AMENDING SUPPLEMENTAL RESOLUTION 5883 Relating to Resolution No. 5879, adopted July 2, 2018, in connection with the issuance of the $14,400,000 SEWERAGE SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM) CONSISTING OF $400,000 SUBORDINATE LIEN TAXABLE SERIES 2018A BOND, $7,000,000 TAXABLE SERIES 2018B BOND AND $7,000,000 TAXABLE SERIES 2018C BOND CITY OF KALISPELL, MONTANA Adopted: August 20, 2018 RESOLUTION NO. 5883 AMENDING RESOLUTION NO. 5879 RELATING TO $14,400,000 SEWERAGE SYSTEM REVENUE BONDS (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), CONSISTING OF $400,000 SUBORDINATE LIEN TAXABLE SERIES 2018A BOND, $7,000,000 TAXABLE SERIES 2018B BOND AND $7,000,000 TAXABLE SERIES 2018C BOND; AUTHORIZING THE ISSUANCE AND FIXING THE TERMS AND CONDITIONS THEREOF RECITALS: WHEREAS, on July 2, 2018, the City Council of the City of Kalispell, Montana (the "City"), adopted Resolution No. 5879 ( "Resolution 5879") authorizing the issuance of its (i) Sewerage System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program), Subordinate Lien Taxable Series 2018A, in the maximum principal amount of $400,000 (the "Series 2018A Bond"), (ii) Taxable Sewerage System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program), Series 2018B Bond, in the maximum principal amount of $7,000,000 (the "Series 2018B Bond"), and (iii) the Taxable Sewerage System Revenue Bonds (DNRC Water Pollution Control State Revolving Loan Program), Series 2018C Bond, in the maximum principal amount of $7,000,000 (the "Series 2018C Bond"), in order to fund the 2018 Project (as described in the Resolution); and WHEREAS, the City desires to amend Resolution 5879 to conform such resolution to the final maturity date and certain payment terms for the Series 2018A Bond, Series 2018B Bond, and the Series 2018C Bond and the date principal payments begin as set forth in Sections 5.1.2(a) and 5.1.3 of Resolution 5879 to correctly match the payment schedule. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY, AS FOLLOWS: Section 1. Section 5.1.2(a) of the Resolution 5879 is hereby amended in its entirety to read as follows: 5.1.2. Repayment of 2018A Loan; Principal Forgiveness. (a) The City is obligated to repay the principal of and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 2018A Loan, unless the DNRC forgives the City's obligation to repay the principal of the 2018A Loan as provided in Section 5.1.2(b) below. Subject to the provisions of Section 5.1.2(b) hereof, the Loan Repayments and the Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the 2018A Loan shall be due on each Payment Date, as follows: (i) Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal balance of the 2018A Loan shall be payable on each Payment Date following the date of delivery by the DNRC of a Noncompliance Statement and concluding on July 1, 2048 and (ii) the principal of the 2018A Loan shall be payable on each Payment Date, beginning on the Payment Date that is the first to occur following delivery by the DNRC of a Noncompliance Statement and concluding on July 1, 2048, and the amount of each principal payment shall be calculated on the basis of a substantially level debt service at the rate of 2.00% per annum; provided that principal of the 2018A Loan is payable only in amounts that are multiples of $1,000. Section 2. Section 5.1.3 of the Resolution 5879 is hereby amended in its entirety to read as follows: 5.1.3. Repayment of 2018B Loan and 2018C Loan. The Loan Repayments and surcharges on the 2018B Loan and 2018C Loan required by this Section 5.1 shall be due on each Payment Date, as follows: (i) interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal balance of the 2018B Loan shall be payable on each Payment Date, beginning on January 1, 2019, and concluding on July 1, 2048; (ii) the principal of the 2018B Loan shall be repayable on each Payment Date, beginning on January 1, 2019 and concluding July 1, 2048, and the amount of each principal payment shall be calculated on the basis of a substantially level debt service at a rate of 2.50% per annum; provided that principal of the 2018B Loan is payable only in amounts that are multiples of $1,000; (iii) interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal balance of the 2018C Loan shall be payable on each Payment Date, beginning on January 1, 2019, and concluding on July 1, 2048; and (iv) the principal of the 2018C Loan shall be repayable on each Payment Date, beginning on January 1, 2019 and concluding July 1, 2048, and the amount of each principal payment shall be calculated on the basis of a substantially level debt service at a rate of 2.50% per annum; provided that principal of the 2018C Loan is payable only in amounts that are multiples of $1,000. Section 3. Appendix B-1 of Resolution 5879 is hereby amended to correct the date the obligation to repay the principal amount of the 2018A Loan, if not forgiven, is July 1, 2048. Section 4. Appendix B-2 of Resolution 5879 is hereby amended such that the form of the Series 2018B Bond has a final maturity date of July 1, 2048. Section 5. Appendix B-3 of Resolution 5879 is hereby amended such that the form of the Series 2018B Bond has a final maturity date of July 1, 2048. Section 6. Except as specifically amended by this Amending Supplemental Resolution, Resolution No. 5879 is hereby ratified and confirmed and remains in full force and effect. Section 7. This Amending Supplemental Resolution shall take effect immediately. 2 PASSED AND ADOPTED by the City Council of the City of Kalispell, Montana, this 20th day of August, 2018. Mark Johnson, yor ►_Vr-mw Ailnee Brunckhorst, CMC City Clerk�� ORATE e llllllll APPENDIX B-1 [Form of the Series 2018A Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF FLATHEAD CITY OF KALISPELL CITY OF KALISPELL SUBORDINATE LIEN SEWERAGE SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), TAXABLE SERIES 2018A No. R-1 $400,000 FOR VALUE RECEIVED, the City of Kalispell, Montana (the "City"), a duly organized and existing municipal corporation in Flathead County, Montana, acknowledges itself to be specially indebted and, for value received, hereby promises to pay to the Department of Natural Resources and Conservation of the State of Montana (the "DNRC"), or its registered assigns, solely out of available Surplus Net Revenues in the Replacement and Depreciation Account or the Surplus Account of its Sewerage System Fund (the "Fund"), the sum of the principal amounts entered on Schedule A attached hereto under "Total Amount Advanced," with interest on each such amount from the date such amount is advanced hereunder at the rate of two percent (2.00%) per annum on the unpaid balance until paid, together with an Administrative Expense Surcharge and Loan Loss Reserve Surcharge on the outstanding principal amount of this Subordinate Series 2018A Bond from the date of each advance of principal, each at the rate of twenty-five hundredths of one percent (0.25%) per annum, all subject to the effect of the immediately following paragraph. Principal, interest, Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be payable in semiannual installments payable on each January 1 and July 1 (each a "Payment Date") commencing with the Payment Date that is the first to occur following delivery by the DNRC to the City of a statement that the City's obligation to repay the principal amount of the 2018A Loan is not forgiven and ending on July 1, 2048, all as described in the Supplemental Resolution (as hereinafter defined), subject to earlier redemption. Each installment shall be in the amount set forth opposite its due date in Schedule B attached hereto under "Total Loan Payment." The portion of each such payment consisting of principal, of interest, of Administrative Expense Surcharge and of Loan Loss Reserve Surcharge shall be as set forth in Schedule B attached hereto. Upon each disbursement of the 2018A Loan, the DNRC shall enter (or cause to be entered) the principal amount advanced on Schedule A under "Advances" and the total amount advanced under the Supplemental Resolution, including such advance, under "Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Supplemental Resolution, and the final Schedule B will reflect repayments under Section 5.1.4 of the Supplemental Resolution. Schedule B shall be calculated and recalculated on a level debt service basis assuming an interest rate of two and one-half percent (2.50%) per annum. Past -due payments of principal and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be calculated on the basis of a 360-day year comprising 12 months of 30 days each. All payments under this Subordinate Series 2018A Bond shall be made to the registered holder of this Subordinate Series 2018A Bond, at its address as it appears on the bond register, in lawful money of the United States of America. B-1-1 NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SUBORDINATE SERIES 2018A BOND, IN THE EVENT THAT THE CITY TIMELY DELIVERS A COMPLIANCE CERTIFICATE AND REQUEST (AS DEFINED IN THE SUPPLEMENTAL RESOLUTION) IN FORM AND SUBSTANCE SATISFACTORY TO THE DNRC AND THE DNRC IN RESPONSE THERETO SUPPLIES TO THE CITY A FORGIVENESS STATEMENT, THEN THEREUPON INTEREST SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS BOND FROM THE DATE OF EACH ADVANCE AT THE RATE OF ZERO PERCENT (0.00%) PER ANNUM AND THE CITY'S OBLIGATION TO REPAY PRINCIPAL ADVANCED HEREUNDER SHALL BE FORGIVEN, AND THE CITY SHALL HAVE NO OBLIGATION TO REPAY THE DNRC OR ITS REGISTERED ASSIGNS ANY AMOUNTS ADVANCED HEREUNDER OR INTEREST OR ANY SURCHARGE THEREON. THIS SUBORDINATE SERIES 2018A BOND SHALL THEREUPON BE MARKED "CANCELLED" AND RETURNED BY THE HOLDER TO THE CITY, AND THIS SUBORDINATE SERIES 2018A BOND SHALL NO LONGER CONSTITUTE AN OBLIGATION OF THE CITY OR OF THE SYSTEM (AS HEREINAFTER DEFINED). IN ADDITION, UNTIL THE DELIVERY OF A DETERMINATION STATEMENT BY THE DNRC TO THE CITY, THE OBLIGATION OF THE CITY TO REPAY THE OUTSTANDING PRINCIPAL AMOUNT HEREOF SHALL BE DEFERRED UNTIL THE PAYMENT DATE FIRST OCCURRING AFTER DELIVERY OF A NONCOMPLIANCE STATEMENT AND INTEREST SHALL BE DEEMED TO ACCRUE ON THE PRINCIPAL OF THIS BOND FROM THE DATE OF EACH ADVANCE UNTIL DELIVERY OF SUCH A NONCOMPLIANCE STATEMENT AT THE RATE OF ZERO PERCENT (0.00%) PER ANNUM. This Subordinate Series 2018A Bond is one of an issue of Sewerage System Revenue Bonds of the City authorized to be issued in one or more series from time to time, and constitutes a series in the maximum authorized principal amount of $400,000 (the "Series 2018A Bond"). This Subordinate Series 2018A Bond is issued to finance costs of the construction of certain improvements to the Sewerage System of the City (the "System") and to pay costs of issuance of the Series 2018 Bonds (as defined herein). This Subordinate Series 2018A Bond is issued pursuant to and in full conformity with the Constitution and laws of the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part 44 and 45, as amended, and ordinances and resolutions duly adopted by the governing body of the City, including Ordinance No. 859 of the City adopted on June 1976, as amended and supplemented by Ordinance Nos. 862 (August 4, 1976), 1002 (February 1, 1982), 1011 (May 3, 1982), 1421 (May 20, 2002), and 1476 (August 18, 2003), all as duly passed and adopted by the City Council of the City, and by Resolution Nos. 2861 (April 10, 1972), 3649 (April 21, 1986), 3980 (April 15, 1991), 4022 (November 4, 1991), 4685 (March 18, 2002), 4910 (July 6, 2004), 5246 (October 15, 2007), 5577 (August 20, 2012), and 5617 (May 6, 2013) (collectively, the "Original Ordinance"), and Resolution No. 5879, adopted by the City Council of the City on July 2, 2018 (the "Supplemental Resolution," and together with the Original Ordinance, the "Ordinance"). Terms used with initial capital letters but not defined herein have the meanings given to them in the Ordinance. This Subordinate Series 2018A Bond is issuable only as a single, fully registered bond. This Subordinate Series 2018A Bond is issued as a Subordinate Obligation payable out of available Surplus Net Revenues in the Replacement and Depreciation Account or the Surplus Account in the Fund. Simultaneously herewith, the City is issuing its (i) $7,000,000 Sewerage System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2018B (the "Series 2018B Bond") and (ii) $7,000,000 Sewerage System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2018C (the "Series 2018C Bond," and together with the Series 2018B Bond and the Series 2018A Bond, the "Series 2018 Bonds"), each of which are payable from the Revenue Bond Account in the Fund on a parity with the City's outstanding Series 2004 Bond, the Series 2007 Bond, and the Series 2013 Bond (together with the Series 2018B Bond and the Series 2018C Bond, the "Outstanding Bonds"). Following the 2018B First Advance, the total amount of each advance will be split equally between the Series 2018A Bond and the Series 2018B Bond, until the entire amount of the Series 2018A Bond is advanced; provided that the initial advance shall include the 2018B First Advance, and once the Series 2018B Bond is fully advanced, then the 2018C First Advance will occur. f: VA Reference is made to the Ordinance for a more complete statement of the terms and conditions upon which this Subordinate Series 2018A Bond has been issued, the conditions upon which the Ordinance may be amended, the rights, duties and obligations of the City, and the rights of the owners of this Subordinate Series 2018A Bond. The City may prepay the principal of this Subordinate Series 2018A Bond only if (i) a Determination Statement has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC must be accompanied by payment of accrued interest, and Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If this Subordinate Series 2018A Bond is prepaid in part, such prepayments shall be applied to principal payments in inverse order of maturity. This Subordinate Series 2018A Bond, including interest and any premium, are payable solely from the Surplus Net Revenues available for the payment hereof and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision. The City may deem and treat the person in whose name this Series 2018A Bond is registered as the absolute owner hereof, whether this Subordinate Series 2018A Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and the City shall not be affected by any notice to the contrary. This Subordinate Series 2018A Bond may be transferred as hereinafter provided. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly authorized and will forthwith construct and complete the improvements to the System hereinabove described; that it will prescribe and collect reasonable rates and charges for all services and facilities afforded by the System, including all additions thereto and replacements and improvements thereof, and has created a special Fund into which the gross revenues of the System will be paid, and a separate and special Replacement and Depreciation Account and Surplus Account in that Fund, into which will be paid, subject to the prior lien thereon of the Operating Account, the Revenue Bond Account and the Reserve, Surplus Net Revenues; that the rates and charges for the System will from time to time be made and kept sufficient, to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the System, to produce in each fiscal year Net Revenues in excess of such current expenses, equal to at least 110% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year, and to produce in each fiscal year adequate Surplus Net Revenues to pay the principal of and interest on this Subordinate Series 2018A Bond as and when due; that additional Parity Bonds and refunding Bonds may be issued and made payable from the Revenue Bond Account on a parity with the Outstanding Bonds and other parity Bonds upon certain conditions set forth in the Ordinance, but no obligation will be otherwise incurred and made payable from the Net Revenues of the System, unless the lien thereof shall be expressly made subordinate to the lien of the Outstanding Bonds and additional parity Bonds on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the case with this Subordinate Series 2018A Bond); that all provisions for the security of the holder of this Subordinate Series 2018A Bond set forth in the Ordinance will be punctually and faithfully performed as therein stipulated; that all acts, conditions and things required by the Constitution and laws of the State of Montana and the ordinances and resolutions of the City to be done, to exist, to happen and to be performed in order to make this Subordinate Series 2018A Bond a valid and binding special obligation of the City according to its terms have been done, do exist, have happened and have been performed as so required; and that this Subordinate Series 2018A Bond and the premium, if any, and interest hereon are payable solely out of available Surplus Net Revenues in the Replacement and Depreciation Account or the Surplus Account of the Fund and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision and the issuance of this Subordinate B-1-3 Series 2018A Bond does not cause either the general or the special indebtedness of the City to exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council, has caused this Subordinate Series 2018A Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor, City Manager and Finance Director and has caused this Subordinate Series 2018A Bond to be dated as of the date set forth below. Dated: July 19, 2018 CITY OF KALISPELL, MONTANA Mayor ATTEST: �\\11111ifIfJJ///� LISPS ���i�/i Cit Jerk �NN'' y �O O )� B-1-4 REGISTRATION AND TRANSFER The Subordinate Series 2018A Bond shall be fully registered as to both principal and interest. No transfer of the Subordinate Series 2018A Bond shall be valid unless and until (1) the registered holder of the Bond, or his duly authorized attorney or legal representative, executes the form of assignment appearing on the Subordinate Series 2018A Bond, and (2) the Finance Director, as bond registrar (the "Registrar"), has duly noted the transfer on the Subordinate Series 2018A Bond and recorded the transfer on the Registrar's registration books. The City shall be entitled to deem and treat the person in whose name the Subordinate Series 2018A Bond is registered as absolute owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the Subordinate Series 2018A Bond shall be made only to the order of the registered holder thereof, and all such payments shall be valid and effectual to satisfy and discharge the City's liability upon the Subordinate Series 2018A Bond to the extent of the sum or sums so paid. REGISTER The ownership of the outstanding principal balance of the Subordinate Series 2018A Bond and the interest accruing thereon is registered on the books of City of Kalispell, Montana in the name of the registered holder appearing on the first page hereof or as last noted below: Date of Registration July 19, 2018 Name and Address of Registered Holder Department of Natural Resources and Conservation 1625 Eleventh Avenue Helena, MT 59620 Signature of Finance Director THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE REGISTRAR UPON REGISTRATION OF EACH TRANSFER The Finance Director of the City of Kalispell, Montana, acting as Bond Registrar, has transferred, on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued interest on the Subordinate Series 2018A Bond to the new registered holder noted next to such date, except for amounts of principal and interest theretofore paid. Name of New Signature of Date of Transfer Registered Holder Bond Re ig strar B-1-5 FORM OF ASSIGNMENT For value received, the Subordinate Series 2018A Bond is hereby transferred and assigned by the undersigned holder, without recourse, to of on this day By: (Authorized Signature) For: (Holder) mm 6Y11,61" 1IJIRW\ SCHEDULE OF AMOUNTS ADVANCED Total Amount Date Advances Advanced Notation Made MOM Date Principal Interest SCHEDULE B Administrative Expense Surcharge Loan Loss Reserve Total Loan Surcharge Payment APPENDIX B-2 [Form of the Series 2018B Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF FLATHEAD CITY OF KALISPELL CITY OF KALISPELL SEWERAGE SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), TAXABLE SERIES 2018B No. R-1 $7,000,000 FOR VALUE RECEIVED, the City of Kalispell, Montana (the "City"), a duly organized and existing municipal corporation in Flathead County, Montana, acknowledges itself to be specially indebted and hereby promises to pay to the Department of Natural Resources and Conservation of the State of Montana (the "DNRC"), or its registered assigns, solely from the Revenue Bond Account of its Sewerage System Fund (the "Fund"), the principal sum equal to the sum of the amounts entered on Schedule A attached hereto under "Total Amount Advanced," with interest on each such amount from the date such amount is advanced hereunder at the rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City shall pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the outstanding principal amount of this Series 2018B Bond, each at the rate of twenty-five hundredths of one percent (0.25%) per annum. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be payable in semiannual installments payable on each January 1 and July 1 (each a "Loan Repayment Date") commencing on January 1, 2019 and concluding on July 1, 2048. Principal shall be payable on the dates set forth in Schedule B hereto. Each installment shall be in the amount set forth opposite its due date in Schedule B attached hereto under "Total Loan Payment." The portion of each such payment consisting of principal, the portion consisting of interest, the portion consisting of Administrative Expense Surcharge, and the portion consisting of Loan Loss Reserve Surcharge shall be as set forth in Schedule B hereto. Upon each disbursement of Loan amounts to the City pursuant to the Resolution described below, the DNRC shall enter (or cause to be entered) the amount advanced on Schedule A under "Advances" and the total amount advanced under the Supplemental Resolution (as hereinafter defined), including such disbursement, under "Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Supplemental Resolution, and the final Schedule B will reflect repayments under Section 5.1.4 of the Supplemental Resolution. Schedule B shall be calculated and recalculated on a level debt service basis assuming an interest rate of 2.50% per annum. Past -due payments of principal and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate often percent (10.00%) per annum, until paid. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be calculated on the basis of a 360-day year comprising 12 months of 30 days each. All payments under this Series 2018B Bond shall be made to the registered holder of this Series 2018B Bond, at its address as it appears on the Bond register, in lawful money of the United States of America. This Series 2018B Bond is one of an issue of Sewerage System Revenue Bonds of the City authorized to be issued in one or more series from time to time, and constitutes a series in the maximum authorized principal amount of $7,000,000 (the "Series 2018B Bond"). The Series 2018B Bond is issued to finance a portion of costs of the construction of certain improvements to the Sewerage System of the City (the "System") and to pay costs of issuance of the Series 2018 Bonds (as defined herein). The Series 2018B Bond is issued pursuant to and in full conformity with the Constitution and laws of the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part 44 and 45, as amended, and ordinances and resolutions duly adopted by the governing body of the City, including Ordinance No. 859 of the City adopted on June 1976, as amended and supplemented by Ordinance Nos. 862 (August 4, 1976), 1002 (February 1, 1982), 1011 (May 3, 1982), 1421 (May 20, 2002), and 1476 (August 18, 2003), all as duly passed and adopted by the City Council of the City, and by Resolution Nos. 2861 (April 10, 1972), 3649 (April 21, 1986), 3980 (April 15, 1991), 4022 (November 4, 1991), 4685 (March 18, 2002), 4910 (July 6, 2004), 5246 (October 15, 2007), 5577 (August 20, 2012), and 5617 (May 6, 2013) (collectively, the "Original Ordinance"), and Resolution No. 5879, adopted by the City Council of the City on July 2, 2018 (the "Supplemental Resolution," and together with the Original Ordinance, the "Ordinance"). Terms used with initial capital letters but not defined herein have the meanings given to them in the Ordinance. The Series 2018B Bond is issuable only as a single, fully registered bond. The Series 2018B Bond is issued on a parity with the City's outstanding Series 2004 Bond, the Series 2007 Bond, and the Series 2013 Bond. Simultaneously herewith, the City is issuing its (i) $400,000 Subordinate Lien Sewerage System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2018A (the "Series 2018A Bond") and (ii) $7,000,000 Sewerage System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2018C (the "Series 2018C Bond," and together with the Series 2018A Bond and the Series 2018B Bond, the "Series 2018 Bonds"). The 2018B First Advance has been advanced at Closing. Following the 2018B First Advance, the total amount of each advance will be split equally between the Series 2018A Bond the Series 2018B Bond, until the entire amount of the Series 2018A Bond has been advanced; provided that the initial advance shall include the 2018B First Advance, and once the Series 2018B Bond is fully advanced, then the 2018C First Advance will occur. Reference is made to the Ordinance for a more complete statement of the terms and conditions upon which the Series 2018B Bond has been issued, the Net Revenues of the System pledged and appropriated for the payment and security thereof, the conditions upon which additional Bonds may be issued under the Ordinance and made payable from such Net Revenues on a parity with the Series 2004 Bond, the Series 2007 Bond, and the Series 2013 Bond, this Series 2018B Bond, the Series 2018C Bond, and any other parity Bond (collectively, the "Bonds") or otherwise, the conditions upon which the Ordinance may be amended, the rights, duties and obligations of the City, and the rights of the owners of the Series 2018B Bond. The City may prepay the principal of the Series 2018B Bond only if (i) a Determination Statement has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC must be accompanied by payment of accrued interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the Series 2018B Bond is prepaid in part, such prepayments shall be applied to principal payments in inverse order of maturity. The Series 2018B Bond, including interest and any premium, are payable solely from the Net Revenues pledged for the payment hereof and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision. The City may deem and treat the person in whose name this Series 2018B Bond is registered as the absolute owner hereof, whether this Series 2018B Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and the City shall not be affected by any notice to the contrary. The Series 2018B Bond may be transferred as hereinafter provided. B-2-2 IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly authorized and will forthwith construct and complete the improvements to the System hereinabove described, that it will prescribe and collect reasonable rates and charges for all services and facilities afforded by the System, including all additions thereto and replacements and improvements thereof, and has created a special Fund into which the gross revenues of the System will be paid, and a separate and special Revenue Bond Account in that Fund, into which will be paid each month, from and as a first and prior lien on the Net Revenues then on hand, an amount equal to not less than the sum of one- sixth of principal and the interest to become due within the next six months with respect to all Bonds payable semi- annually from the Revenue Bond Account; that the City has created a Reserve in the Fund into which shall be paid additional Net Revenues, after required credits to the Revenue Bond Account, sufficient to establish and maintain a reserve therein equal to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account will be used only to pay the principal of, premium, if any, and interest on the Series 2004 Bond, the Series 2007 Bond, the Series 2013 Bond, the Series 2018B Bond, the Series 2018C Bond, and any other additional Bonds issued pursuant to the Ordinance on a parity therewith; that the rates and charges for the System will from time to time be made and kept sufficient, to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the System and to produce in each fiscal year Net Revenues in excess of such current expenses equal to at least 110% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year; that additional Bonds and refunding Bonds may be issued and made payable from the Revenue Bond Account on a parity with the Series 2004 Bond, the Series 2007 Bond, the Series 2013 Bond, the Series 2018B Bond, the Series 2018C Bond, and other parity Bonds upon certain conditions set forth in the Ordinance, but no obligation will be otherwise incurred and made payable from the Net Revenues of the System, unless the lien thereof shall be expressly made subordinate to the lien of the Series 2004 Bond, the Series 2007 Bond, the Series 2013 Bond, the Series 2018B Bond, the Series 2018C Bond, and additional Parity Bonds on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the case with the Series 2018A Bond); that all provisions for the security of the holder of this Series 2018B Bond set forth in the Ordinance will be punctually and faithfully performed as therein stipulated; that all acts, conditions and things required by the Constitution and laws of the State of Montana and the ordinances and resolutions of the City to be done, to exist, to happen and to be performed in order to make this Series 2018B Bond a valid and binding special obligation of the City according to its terms have been done, do exist, have happened and have been performed as so required; and that this Series 2018B Bond and the premium, if any, and interest hereon are payable solely from the Net Revenues of the System pledged and appropriated to the Revenue Bond Account and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision and the issuance of the Series 2018B Bond does not cause either the general or the special indebtedness of the City to exceed any constitutional or statutory limitation. (The remainder of this page is intentionally left blank.) B-2-3 IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council, has caused this Series 2018B Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor, City Manager and Finance Director and has caused this Series 2018B Bond to be dated as of the date set forth below. Dated: July 19, 2018 ATTEST: City Jerk CITY OF KALISPELL, MONTANA Mayor moo. or-AAr, M;0t'j A! REGISTRATION AND TRANSFER The Series 2018B Bond shall be fully registered as to both principal and interest. No transfer of the Bond shall be valid unless and until (1) the registered holder of the Series 2018B Bond, or his duly authorized attorney or legal representative, executes the form of assignment appearing on the Series 2018B Bond, and (2) the Finance Director as bond registrar (the "Registrar"), has duly noted the transfer on the Bond and recorded the transfer on the Registrar's registration books. The City shall be entitled to deem and treat the person in whose name the Series 2018B Bond is registered as absolute owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the Series 2018B Bond shall be made only to the order of the registered holder thereof, and all such payments shall be valid and effectual to satisfy and discharge the City's liability upon the Bond to the extent of the sum or sums so paid. REGISTER The ownership of the outstanding principal balance of the Series 2018B Bond and the interest accruing thereon is registered on the books of City of Kalispell, Montana in the name of the registered holder appearing on the first page hereof or as last noted below: Date of Registration July 19, 2018 Name and Address of Registered Holder Department of Natural Resources and Conservation 1625 Eleventh Avenue Helena. MT 59620 Signature of Finance Director THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND REGISTRAR UPON REGISTRATION OF EACH TRANSFER The Finance Director of the City of Kalispell, Montana, acting as Bond Registrar, has transferred, on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued interest on the Series 2018B Bond to the new registered holder noted next to such date, except for amounts of principal and interest theretofore paid. Name of New Signature of Date of Transfer Registered Holder Bond Registrar B-2-5 W1aUTEGI=II �C ►I►e7� �i:lOVI For value received, the Series 2018B Bond is hereby transferred and assigned by the undersigned holder, without recourse, to of on this day By: (Authorized Signature) For: (Holder) SCHEDULE OF AMOUNTS ADVANCED Total Amount Date Advances Advanced Notation Made B-2-7 SCHEDULE B PAYMENT SCHEDULE [Attached] mm SRF49441 Preliminary Schedule STATE OF MONTANA GENERAL OBLIGATION BONDS WATER POLLUTION CONTROL (REVOLVING FUND PROGRAM) BORROWER: Kalispell lnterceptorB PROJECT NAME: LOAN COMMITMENT: $7,W0,0W LOAN AMOUNT: 7,C00,0W INTEREST RATE: 2.50% FINAL LOAM PAYMENT: 7/112048 d OF LOAN PAYMENTS: 60 PROJECT WIMBER: DATE OF FUNDING: 7/19MA ll PAYMENT LOAN LOSS ADM EXPENSE INTEREST PRINCIPAL O/S LOAN TOTAL AMOWr DUE RESERVE SURCHARGE PAYN \T PAYMENT BALANCE OF PAYMENT 1 1/12019 7,875.00 7,975,00 63,000.00 79,OW.W 6,921,000.00 SIS7,750.00 $ 157,750.W 2 7/12019 8,651,25 8,651,25 69,210.00 80,000.00 6,941,000.00 S166,512.50 3 I/12020 8,551.25 8,551.25 68,410.00 81,000,00 6,760,000.00 S166,512.50 $ 333.025.00 4 7112020 8,450,00 8,450.00 67,600.00 82.000.00 6,678,000.00 S166,500.00 5 I/l2021 8,347.50 8,347.50 66,790,00 83,000.00 6,595,000.00 S166,475.00 S 332,975.00 6 7/l2021 8,243.75 8,243.75 65,950.00 84,000.00 6,511,000.00 S166,437.50 7 I/l2022 8.138.75 8,138.75 65,110.00 95,000.00 6,426,000.00 S166,387.50 S 332,825.00 8 7/l2022 8,032.50 8,032.50 64,260.00 86,000.00 6,340,000.00 S166,325.00 9 1112023 7,925.00 7,925.00 63,400,00 87,000.00 6,253,OW.00 S166,250.00 $ 332573.00 10 7/l2023 7,816.25 7,816.25 62,530,00 88,000.00 6,165,000.00 S166,162.50 11 1/1/2024 7,706.25 7,70625 61,650.00 89,0o0.00 6,076,OW.00 S166,O62.50 S 332.2-15.00 12 7/1/2024 7,595.00 7.595.00 60,760.00 91,000.00 5,985,000.00 S166,950.00 13 1112025 7,48125 7,481.25 59,850.00 92,00.W 5,893,000.00 S166,812.50 S 333,762.50 14 7112025 7,366.25 7,366.25 59,930.00 93,0W.00 5,800,000.00 S166,662.50 15 111/2026 7,250.00 7,250.00 58,00000 94,000.00 5,706,000.00 S166,500.00 S 333,162.50 16 711/2026 7,132,50 7.132.50 57,060.00 95,000,00 3.611,0W.00 S166,325.00 17 1/112027 7,013.75 7,01375 56,110.00 96,000.00 5,515,000.00 $166,137.50 S 332,462.50 18 7112027 6,993.75 6,893.75 55,150.00 98,000.00 5,417,000.00 $166,937.50 19 I/i2028 6,77L25 6,771.25 54,170,00 99,0W.00 5,31.8,000.00 S166,712.50 $ 333,650.00 20 7/1/2029 6,647.50 6,647.50 53,190.00 100,000.00 5,218,000.00 S166,475.00 21 I/IP2029 6,522.50 6.522.50 52,190.00 101,000.00 5,117,000.00 S166,225.00 S 332,700.00 22 7/l2029 6,396,25 6,396,25 51,17000 103,000.00 5,014,000.00 S166,962.50 23 1112030 6,267.50 6,267.50 50,140.00 104,000,00 4,910,000.00 S166,675.00 S 333,637.50 24 7/1/2030 6,137.50 6,137.50 49,100.00 105,000.00 4,805,000.00 S166,375.00 25 111/2031 6,006.25 6,006.25 48,050,00 106,000 GO 4,699,000.00 5166,062.50 S 332,437.50 26 7/12031 5,973,75 5,873.75 46,99000 108,000.00 4,591,000.00 S166,737,50 27 l/L2032 5,738.75 S,738.75 45,910.00 109,000.0,0 4,482,000.00 S166,38T50 S_ 333,125.00 28 7/12032 5,602.50 5,60250 44,820.00 111,000.00 4,371,000.00 $167,025.00 29 1/112033 5,463.75 5,463.75 43,710.00 112,OG0.00 4,259,000.00 S166,63TS0 S 333,662.50 30 7112033 5.323.75 5,323.75 44590.00 113,OM.00 4,146,000.00 $166,237.50 31 l/l2034 5,182.50 5,182.50 41,460.00 115,000.W 4,031,000.00 $166,925.00 S 333.062,50 32 7/12034 5,038.75 5,038.75 40,310,00 116,000.00 3,913,000.00 S166,387.50 33 1112035 4,893.75 4,99375 39,130.00 118,000.00 3,797,000.00 $166,937.50 S 333325.00 34 7112035 4,746.25 4,746.25 37,970.00 119,01DO.00 3,678,000.00 $166,462.50 35 1/1/2036 4,597.50 4,597.50 36,780.W 121,000.00 3,557,000.00 $166,975.00 S 333,43T50 36 7112036 4,446.25 4,44625 35,570.00 122,000.Co 3,435,000.00 $166,462.50 37 1/12037 4,293.75 4,293.75 34,350.00 124,000.00 3,311,000,00 $166,937.50 $ 333A00.00 38 7112037 4,138.75 4,138.75 33,110.00 125,000.00 3,186,000.W S166,38T50 39 1/12038 3,982.50 3,992.50 31,860.00 127,000.00 3,059,000. 00 S166,825.00 S 333,21250 40 7/12038 3,823.75 3,823.75 30,590.00 128,000.00 2,931,000.00 S166,237.50 41 1112039 3,663.75 3,663.75 29,310.00 130,0001)0 2,801,000.W S166,63TS0 S 332.875.00 42 7112039 3,501.25 3,501,25 29,010.00 132,000,00 2,669,000.00 $167,012,50 43 1112040 3,336.25 3,336.25 26,690.00 133,000.00 2,536,000.00 S166,362.50 S 333,375.00 44 7/12040 3,170.00 3,170.00 25,360.00 135,000.00 2,401,000.00 S166,700.00 45 1/12041 3,001.25 3,001.25 24,010.00 137,000.00 2,264,000.00 5167,012.50 S 333,712.50 46 7112041 2,830.W 2,830.00 22,640.00 138,000.00 2,126,000.00 S166,300.W 47 1112042 2,6S7.50 2,657.50 21,260.00 140,000.00 1,986,000.00 S166,575.00 $ 332.875.00 48 7112042 2,492.50 2,432.50 19,860.00 142,000.00 1,844,000.00 $166,825.00 49 1112043 2,305.00 2,305.00 18,440.00 143,000.00 1,701,000.00 S166,050.00 S 332,875,00 50 7/12043 2,126.25 2,126.25 17,010.00 145,OW.00 1,556,000.00 S166,262.50 51 I/12044 1,945.00 1,945,00 15,56000 147,000.00 1,409,000.00 $166,450.00 S 332,712.50 52 7i12044 1.76125 1,761,25 14,090.00 149,000.00 1,260,000.00 $166,612,50 53 1/1,2045 1,575.W 1,575.00 12,600.W 151,000.00 1,109,000.00 $166,750.W S 333.362.50 54 7/l2045 1,386.25 1,386.25 11,090.00 153,000.00 956,000.00 $166,862.50 55 lit2046 1, 195.W 1, 195.W 9,560.00 ISS,OW.00 801,000.W $166,950.00 S 333812.50 56 7/l2046 1,001,25 1,001.25 8,010.00 157,000.00 644,W0.00 S167,012.50 57 1/12047 805.00 805.30 6,440.00 158.000.00 486,0W W S166.050.00 S 333,062.50 58 7/12047 60750 WTSO 4,860.00 160,000.00 326,000.00 $166,075.00 59 1/12048 407.50 40750 3,260.00 162,000.00 164,000.00 $166,075.00 $ 332I50.00 60 711/2C48 205.00 205.00 1,640.00 164,000.00 0.00 $166,050.00 S 166,050.00 298,327,50 298,32TS0 2,386,620,00 7,000,0W.00 9,983,27500 9,983,275.00 9,983,275. W - APPENDIX B-3 [Form of the Series 2018C Bond] UNITED STATES OF AMERICA STATE OF MONTANA COUNTY OF FLATHEAD CITY OF KALISPELL CITY OF KALISPELL SEWERAGE SYSTEM REVENUE BOND (DNRC WATER POLLUTION CONTROL STATE REVOLVING LOAN PROGRAM), TAXABLE SERIES 2018C No. R-1 $7,000,000 FOR VALUE RECEIVED, the City of Kalispell, Montana (the "City"), a duly organized and existing municipal corporation in Flathead County, Montana, acknowledges itself to be specially indebted and hereby promises to pay to the Department of Natural Resources and Conservation of the State of Montana (the "DNRC"), or its registered assigns, solely from the Revenue Bond Account of its Sewerage System Fund (the "Fund"), the principal sum equal to the sum of the amounts entered on Schedule A attached hereto under "Total Amount Advanced," with interest on each such amount from the date such amount is advanced hereunder at the rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City shall pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the outstanding principal amount of this Series 2018C Bond, each at the rate of twenty-five hundredths of one percent (0.25%) per annum. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be payable in semiannual installments payable on each January 1 and July 1 (each a "Loan Repayment Date") commencing on January 1, 2019 and concluding on July 1, 2048. Principal shall be payable on the dates set forth in Schedule B hereto. Each installment shall be in the amount set forth opposite its due date in Schedule B attached hereto under "Total Loan Payment." The portion of each such payment consisting of principal, the portion consisting of interest, the portion consisting of Administrative Expense Surcharge, and the portion consisting of Loan Loss Reserve Surcharge shall be as set forth in Schedule B hereto. Upon each disbursement of Loan amounts to the City pursuant to the Resolution described below, the DNRC shall enter (or cause to be entered) the amount advanced on Schedule A under "Advances" and the total amount advanced under the Supplemental Resolution (as hereinafter defined), including such disbursement, under "Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Supplemental Resolution, and the final Schedule B will reflect repayments under Section 5.1.4 of the Supplemental Resolution. Schedule B shall be calculated and recalculated on a level debt service basis assuming an interest rate of 2.50% per annum. Past -due payments of principal and interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall bear interest at the rate of ten percent (10.00%) per annum, until paid. Interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge shall be calculated on the basis of a 360-day year comprising 12 months of 30 days each. All payments under this Series 2018C Bond shall be made to the registered holder of this Series 2018C Bond, at its address as it appears on the Bond register, in lawful money of the United States of America. This Series 2018C Bond is one of an issue of Sewerage System Revenue Bonds of the City authorized to be issued in one or more series from time to time, and constitutes a series in the maximum authorized principal amount of $7,000,000 (the "Series 2018C Bond"). The Series 2018C Bond is issued to finance a portion of costs of the construction of certain improvements to the Sewerage System of the BI City (the "System") and to pay costs of issuance of the Series 2018 Bonds. The Series 2018C Bond is issued pursuant to and in full conformity with the Constitution and laws of the State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part 44 and 45, as amended, and ordinances and resolutions duly adopted by the governing body of the City, including Ordinance No. 859 of the City adopted on June 1976, as amended and supplemented by Ordinance Nos. 862 (August 4, 1976), 1002 (February 1, 1982), 1011 (May 3, 1982), 1421 (May 20, 2002), and 1476 (August 18, 2003), all as duly passed and adopted by the City Council of the City, and by Resolution Nos. 2861 (April 10, 1972), 3649 (April 21, 1986), 3980 (April 15, 1991), 4022 (November 4, 1991), 4685 (March 18, 2002), 4910 (July 6, 2004), 5246 (October 15, 2007), 5577 (August 20, 2012), and 5617 (May 6, 2013) (collectively, the "Original Ordinance"), and Resolution No. 5879, adopted by the City Council of the City on July 2, 2018 (the "Supplemental Resolution," and together with the Original Ordinance, the "Ordinance"). Terms used with initial capital letters but not defined herein have the meanings given to them in the Ordinance. The Series 2018C Bond is issuable only as a single, fully registered bond. The Series 2018C Bond is issued on a parity with the City's outstanding Series 2004 Bond, the Series 2007 Bond, and the Series 2013 Bond. Simultaneously herewith, the City is issuing its (i) $400,000 Subordinate Lien Sewerage System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2018A (the "Series 2018A Bond") and (ii) $7,000,000 Sewerage System Revenue Bond (DNRC Water Pollution Control State Revolving Loan Program), Taxable Series 2018B (the "Series 2018B Bond," and together with the Series 2018A Bond and the Series 2018C Bond, the "Series 2018 Bonds"). The 2018A First Advance and the 2018B First Advance have been advanced at Closing. Following the 2018B First Advance, the total amount of each advance will be split equally between the Series 2018A Bond and the Series 2018B Bond, until the entire amount of the Series 2018A Bond is advanced; provided that the initial advance shall include the 2018B First Advance, and once the Series 2018B Bond is fully advanced, then the 2018C First Advance will occur. Reference is made to the Ordinance for a more complete statement of the terms and conditions upon which the Series 2018C Bond has been issued, the Net Revenues of the System pledged and appropriated for the payment and security thereof, the conditions upon which additional Bonds may be issued under the Ordinance and made payable from such Net Revenues on a parity with the Series 2004 Bond, the Series 2007 Bond, and the Series 2013 Bond, the Series 2018B Bond, this Series 2018C Bond, and any other parity Bond (collectively, the "Bonds") or otherwise, the conditions upon which the Ordinance may be amended, the rights, duties and obligations of the City, and the rights of the owners of the Series 2018C Bond. The City may prepay the principal of the Series 2018C Bond only if (i) a Determination Statement has been delivered, (ii) it obtains the prior written consent of the DNRC thereto, and (iii) no Loan Repayment or Administrative Expense Surcharge or Loan Loss Reserve Surcharge is then delinquent. Any prepayment permitted by the DNRC must be accompanied by payment of accrued interest and Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the amount of principal prepaid. If the Series 2018C Bond is prepaid in part, such prepayments shall be applied to principal payments in inverse order of maturity. The Series 2018C Bond, including interest and any premium, are payable solely from the Net Revenues pledged for the payment hereof and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision. The City may deem and treat the person in whose name this Series 2018C Bond is registered as the absolute owner hereof, whether this Series 2018C Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and the City shall not be affected by any notice to the contrary. The Series 2018C Bond may be transferred as hereinafter provided. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City has duly authorized and will forthwith construct and complete the improvements to the System hereinabove described, that it will prescribe and collect reasonable rates and charges for all services and facilities afforded by the System, including all additions thereto and replacements and improvements thereof, and has created a special Fund into which the gross revenues of the System will be paid, and a separate and special Revenue Bond Account in that Fund, into which will be paid each month, from and as a first and prior lien on the Net Revenues then on hand, an amount equal to not less than the sum of one- sixth of principal and the interest to become due within the next six months with respect to all Bonds payable semi- annually from the Revenue Bond Account; that the City has created a Reserve in the Fund into which shall be paid additional Net Revenues, after required credits to the Revenue Bond Account, sufficient to establish and maintain a reserve therein equal to, as of the date of calculation, the Reserve Requirement; that the Revenue Bond Account will be used only to pay the principal of, premium, if any, and interest on the Series 2004 Bond, the Series 2007 Bond, the Series 2013 Bond, the Series 2018B Bond, the Series 2018C Bond, and any other additional Bonds issued pursuant to the Ordinance on a parity therewith; that the rates and charges for the System will from time to time be made and kept sufficient, to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the System and to produce in each fiscal year Net Revenues in excess of such current expenses equal to at least 110% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year; that additional Bonds and refunding Bonds may be issued and made payable from the Revenue Bond Account on a parity with the Series 2004 Bond, the Series 2007 Bond, the Series 2013 Bond, the Series 2018B Bond, the Series 2018C Bond, and other parity Bonds upon certain conditions set forth in the Ordinance, but no obligation will be otherwise incurred and made payable from the Net Revenues of the System, unless the lien thereof shall be expressly made subordinate to the lien of the Series 2004 Bond, the Series 2007 Bond, the Series 2013 Bond, the Series 2018B Bond, the Series 2018C Bond, and additional Parity Bonds on such Net Revenues and such obligations are payable only from Surplus Net Revenues (as is the case with the Series 2018A Bond); that all provisions for the security of the holder of this Series 2018C Bond set forth in the Ordinance will be punctually and faithfully performed as therein stipulated; that all acts, conditions and things required by the Constitution and laws of the State of Montana and the ordinances and resolutions of the City to be done, to exist, to happen and to be performed in order to make this Series 2018C Bond a valid and binding special obligation of the City according to its terms have been done, do exist, have happened and have been performed as so required; and that this Series 2018C Bond and the premium, if any, and interest hereon are payable solely from the Net Revenues of the System pledged and appropriated to the Revenue Bond Account and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision and the issuance of the Series 2018C Bond does not cause either the general or the special indebtedness of the City to exceed any constitutional or statutory limitation. (The remainder of this page is intentionally left blank.) B-3-3 IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council, has caused this Series 2018C Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor, City Manager and Finance Director and has caused this Series 2018C Bond to be dated as of the date set forth below. Dated: July 19, 2018 CITY OF KALISPELL, MONTANA Mayor ATTEST: City Clerk ����`�"� ' Prr Mot% ilIll REGISTRATION AND TRANSFER The Series 2018C Bond shall be fully registered as to both principal and interest. No transfer of the Bond shall be valid unless and until (1) the registered holder of the Series 2018C Bond, or his duly authorized attorney or legal representative, executes the form of assignment appearing on the Series 2018C Bond, and (2) the Finance Director as bond registrar (the "Registrar"), has duly noted the transfer on the Bond and recorded the transfer on the Registrar's registration books. The City shall be entitled to deem and treat the person in whose name the Series 2018C Bond is registered as absolute owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the Series 2018C Bond shall be made only to the order of the registered holder thereof, and all such payments shall be valid and effectual to satisfy and discharge the City's liability upon the Bond to the extent of the sum or sums so paid. REGISTER The ownership of the outstanding principal balance of the Series 2018C Bond and the interest accruing thereon is registered on the books of City of Kalispell, Montana in the name of the registered holder appearing on the first page hereof or as last noted below: Date of Registration July 19, 2018 Name and Address of Registered Holder Department of Natural Resources and Conservation 1625 Eleventh Avenue Helena, MT 59620 Signature of Finance Director THE FOLLOWING ENTRIES ARE TO BE MADE ONLY BY THE BOND REGISTRAR UPON REGISTRATION OF EACH TRANSFER The Finance Director of the City of Kalispell, Montana, acting as Bond Registrar, has transferred, on the books of the City, on the date last noted below, ownership of the principal amount of and the accrued interest on the Series 2018C Bond to the new registered holder noted next to such date, except for amounts of principal and interest theretofore paid. Name of New Signature of Date of Transfer Registered Holder Bond Registrar B-3-5 FORM OF ASSIGNMENT For value received, the Series 2018C Bond is hereby transferred and assigned by the undersigned holder, without recourse, to of on this day By: (Authorized Signature) For: (Holder) mm SCHEDULE A SCHEDULE OF AMOUNTS ADVANCED Total Amount Date Advances Advanced Notation Made B-3-7 SCHEDULE B PAYMENT SCHEDULE [Attached] SRF-19441 Prelimioary Schedule STATE OF MONTANNA GENERAL OBLIGATION BONDS WATER POLLUTION CONTROL (REVOLVING FUND PROGRAM) BORROWER: Kalispell lnterceptor B PROJECT NAME. LOAN COMMITMENT: $7,OW,000 LOAN AMOUNT: 7,OW,000 INTEREST RATE T50% FINAL LOAN PAYMENT: 7112048 6 OF LOAN PAYMENTS: 60 PROJECT NUMBER: DATE OF FUNDING: 7/192018 PAYMENT LOAN [ASS ADM EXPENSE INTEREST PRINCIPAL O/S LOAN TOTAL AMOUNT DUE RESERVE SURCHARGE PAYMENT PAYMENT BALANCE OF PAYMENT 1 1112019 7,875.00 7,875.00 63,00.00 79,000,00 6,921,000.00 $157,750.00 S I5"1,750.00 2 7/L2019 8,651.25 8,651.25 69,210.00 80,000.00 6,941,000.00 $166,512.50 3 I/l2020 8,55125 8,551.25 68,410,00 81.000,00 6,760,000.00 $166,51250 S 333.025.W 4 7112020 8.450.00 8,450.00 67,6CO.00 82,000.00 6,678,0W.00 5166,500.00 5 1/1/2021 8,347.50 8.347.50 66,780.00 93,000.00 6,595,000.00 $166,475.00 S 332,975.CO 6 7/l/2021 8,243.75 8.243.75 65,950.00 84,000.00 6,511,000.00 5166,437.50 7 1/12022 9,138.75 8,138.75 65,110.00 85,000.00 6,426,000.00 $166,33750 S 332.825.00 8 7/12022 8,03250 8,03250 64,260.00 86,000.00 6,340,000,00 $166,325.00 9 1/12023 7,925.00 7,925.00 63,400.00 87,000.00 6,253,000.00 $166.25000 S 33205.00 10 7/12023 7,816.25 7,816.25 62,530,00 88,000.00 6,165,000.00 $166162.50 11 U12024 7,706.25 7.70625 61,650.00 89,000,00 6,076,000.00 S 166:062.50 5 332,225.00 12 7/l2024 7,595.00 7,595.00 60.760.00 91,000,00 5,985,OW.00 $166,950.00 13 1/12025 7,481.25 7,481.25 59,850.00 92,O00.00 5,893,000.00 $166,812.50 S 333,762.50 14 7/12025 7,366.25 7,M6.25 58,930.00 93,OGO.00 5,800,000.00 $166,662.50 15 111/2026 7.250,00 7,250.00 58,000.00 94,000.00 5,706,OW.00 $166,500.00 S 333,16250 16 7112026 7,13250 7,132.50 57,060.00 95,000.00 5,611,000.00 $166,325.00 17 1/12027 7,013.75 7,013.75 56,110.00 96,000-00 5,515,000.00 5166,137.50 S 332,462.50 18 7/l2027 6,893.75 6,893.75 55,150.00 98,000.00 5,417,000.00 $166,937.50 19 1112028 6,771.25 6,771.25 54,170.00 99,000.00 5,318,000.00 5166,712.50 S 333,650.00 20 7/1/2028 6,647.50 6,647.50 53,180.00 100,000.00 5,218,OW.CO $166,475.00 21 1/12029 6,522.50 6522.50 52.180.00 101,000.00 5.117,O00.00 5166,225.00 S 332,700.00 22 7/12029 6,396.25 6,396.25 51,170.00 103,00.00 5,014,000.00 $166,96250 23 I/12030 6267.50 6,267.50 50,140.00 104,000.00 4,910,000.00 $166,675.00 S 333,637.50 24 7/1/2030 6,137.50 6,137.50 49,100.00 105,000.00 4,805,MO.00 5166,375.00 25 1/1/2031 6,006.25 6,006.25 48.050.00 106,000,00 4,699,000.00 5166,062.50 S 332.437.50 26 7/1/2031 5,873.7E 5,973.75 46,990.GO 108,000.00 4,591,O00.00 $166,737.50 27 1/1/2032 5,738.75 5,738.75 45,910,00 109,000.00 4,482,000.00 $166.387.50 S 333,125.00, 28 7/12032 5,602.50 5,602.50 44,820.00 111.000.00 4,371,000.00 $167,025.00 _ 29 1/1/2033 5,463.75 5,463.75 43,710.00 112,000.00 4,259,000.00 $166.637,50 5 333,662.50 30 7/12033 5,323.7E 5,323.75 42,590.00 113,OW.00 4,146,000.00 $166,237.50 31 1112034 5,182.50 5,182.50 41,460.00 115,000.00 4,031,000.00 $166,925.00 S 333,062.50 32 7/12034 5,038.75 5,038.75 40,310.00 116,000.00 3,915,000.00 $166,38T50 33 1112035 4,893.75 4,89375 39,130.00 118,0C.O.W 3,797,000.00 $166,937.50 S 333,325W 34 7112035 4,746.25 4,746.25 37,970.00 119,000,00 3,678,000.00 $166,462.50 ^^ _ 35 1/1/2036 4,59750 4,59750 36,780.00 121,000.00 3357,000.00 5166.975.00 S 333.437.50 36 71112036 4,446.25 4,4462E 35,570.00 122,000.(X) 3,435,000.00 $166,462.50 37 1112037 4,293.75 4.293,75 34,350.00 124,000,W 3,311,000.00 5166,93750 S 333,400,00 38 7112037 4,138.75 4,138.75 33,1 i0.00 125,000.00 3,186,600.00 $166,387.50 --- 39 1/l2038 3982.50 3,982.50 31,860.00 127,000.00 3,OS9,000.00 $166,825.00 S 333,2i2.50 40 7/l2038 3,823,75 3,923.75 30.590.00 128,000.00 2,931,000.00 5166,237.50 41 1112039 3,663.75 3,663.75 29,3!0.00 130.000.00 2,801,000.00 $166,63750 $ 332,975.00 42 7/12039 3,50125 3,501.25 28,010.00 132,000.00 2,669,OOO.W 5167,O 12.50 43 1/12040 3,33625 3.336.25 26,690.00 133,000.00 2,536,000.00 $166,362.50 S 333,375.00 44 7/12040 3,170.00 3,170.00 25,360.00 135,QOO.W 2,401,000.00 $166,700,00 45 1112041 3,001.25 3,001.25 24,O10.00 137,000.00 2,264,OOO.0 $167.012,50 S 333,712.50 46 7112041 2,930.00 2,830,W 22,640.00 138,000.00 2, 126,000.00 $166,300.00 47 VU2042 2,657.50 2,657,50 21,260.00 140,000.00 1,996,000,00 $166,575.00 S 332,875.00 48 711 i2042 2,48250 2,482.50 19,860-00 142,000.00 1,944,000.00 $166,825,00 49 1/12N3 2,305.00 2,305.00 i8,440.00 143,00000 1,701,000.00 $166,050,00 S 332,975.00 50 7/12043 2,126.25 4126.25 17,010,00 145,000.00 1,556,000.00 5166,262,50 51 I/12044 1,945.00 1,945.00 15,560 W 147,000,00 1,409,000.00 5166,450O0 S 332.712.50 52 7/1/2044 1,76125 1,761,25 14,090.00 149,000.00 1260,000.00 5166,612.50 53 1/12045 1,575.00 1.575.00 12,600.00 151,000.00 11109,000AO $166,750.00 S 333.362.50 54 7112045 1,386.25 1.38625 11,090.0c 153,000.00 956,000.00 $166,862.50 55 Iil2046 1,195.W 1,195,00 9,560.W 155,000.00 801,000.00 S166,95000 $ 333.812.50 56 7112046 1,001.25 1,001.25 8,010.00 157,000.0D 644,000.00 5167,012.50 57 1/12047 805.00 805.00 6,440.00 158,000.00 486,000A0 5166,050,00 S 333,062.50 58 7112047 607.50 607.50 4,860.00 160,000,00 326,000.00 $166,075.00 59 I/l2048 407.50 407.50 326000 162,000.00 164,000.W 5166,075.00 $ 332,150.00 60 7112048 205.00 205.00 1,640.00 164,00000 0.00 5166,050.00 S 166,050.00 298,327.50 298.327.50 2,386,62000 7,WO,000.00 9,983,275.00 9.983.275.00 9,983,275.00 i st 66139-6 (BWJ) 1293905lv2 B-3-10