Resolution 6316 - Amends Reso 6315 - $6,000,000 Water System Revenue BondsCERTIFICATE 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:
"AMENDING RESOLUTION NO. 6315 RELATING TO $6,000,000 WATER SYSTEM REVENUE
BONDS (DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM), CONSISTING OF (I)
$3,000,000 SUBORDINATE LIEN TAXABLE SERIES 2026A BOND, AND (II) $3,000,000 TAX-
EXEMPT SERIES 2026B 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
March 16, 2026 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not as of the date hereof been amended or repealed.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:
Council Members Gabriel, Nunnally, Blank, Fisher, Walker, Daoud, Waterman, Leftridge, and
Mayor Hunter
voted against the same: None
abstained from voting thereon: None
or were absent: None
WITNESS my hand and seal officially this 16 day of March, 2026.
City Vlerk
(SEAL)
AMENDING SUPPLEMENTAL RESOLUTION
Relating to
Resolution No. 6315, adopted March 2, 2026,
in connection with the issuance of the
$6,000,000
WATER SYSTEM REVENUE BONDS
(DNRC DRINKING WATER STATE ,REVOLVING LOAN PROGRAM),
$3,000,000 SUBORDINATE LIEN TAXABLE SERIES 2026A
$3,000,000 TAX-EXEMPT SERIES 2026B
CITY OF KALISPELL, MONTANA
Adopted: March 16, 2026
RESOLUTION NO.6316
AMENDING RESOLUTION NO. 6315 RELATING TO S6,000,000 WATER
SYSTEM REVENUE BONDS (DNRC DRINKING WATER STATE REVOLVING
LOAN PROGRAM), CONSISTING OF (I) $3,000,000 SUBORDINATE LIEN
TAXABLE SERIES 2026A BOND, AND (II) $3,000,000 TAX-EXEMPT SERIES
2026B BOND; AUTHORIZING THE ISSUANCE AND FIXING THE TERMS AND
CONDITIONS THEREOF
RECITALS:
WHEREAS, on March 2, 2026, the City Council of the City of Kalispell, Montana (the "City")
adopted Resolution No. 6315 ("Resolution 6315") authorizing the issuance of and setting the terms of its
(i) Water System Revenue Bonds (DNRC Drinking Water State Revolving Loan Program), Subordinate
Lien Taxable Series 2026A, in the maximum principal amount of $3,000,000 (the "Series 2026A Bond"),
and (ii) Water System Revenue Bonds (DNRC :Drinking Water State Revolving Loan Program), Tax -
Exempt Series 2026B, in the maximum principal amount of $3,000,000 (the "Series 2026B Bond," and
together with the Series 2026A Bond, the "Series 2026 Bonds"), to be used, along with other funds of the
City, in order to fund the 2026 Lower Zone Tank 2 Project (as described in the Original Resolution); and
WHEREAS, the City desires to amend Resolution 6315 to conform such resolution to the final
maturity date and certain payment terms for the Series 2026A Bond and the Series 2026B Bond and the
date principal payments end as set forth in Sections 5.1.2(a) and 5.1.3 of Resolution 6315 to correctly match
the payment schedule.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF KALISPELL,
MONTANA, AS FOLLOWS:
follows:
Section 1. Section 5.1.2(a) of Resolution 6315 is hereby amended in its entirety to read as
5.1.2. Repayment of 2026A 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 2026A Loan, unless the DNRC
forgives the City's obligation to repay the principal of the 2026A 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 2026A 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 2026A Loan shall be payable on each
Payment Date following the date of delivery of the DNRC of a Noncompliance Statement
and concluding on July 1, 204-56; and
(ii) The principal of the 2026A Loan shall be payable on each Payment Date
beginning on the Payment Date that is the first to occur following deliver by the DNRC of
Noncompliance Statement and concluding on July 1, 204-56, and the amount of each
principal payment shall be calculated on the basis of a substantially level debt service at
follows:
the rate of 2.00% per annum; provided that principal of the 2026A Loan is payable only in
amounts that are multiples of $1,000.
Section 2. Section 5.1.3 of Resolution 6315 is hereby amended in its entirety to read as
5.1.3. Repayment of 2026B Loan. The Loan Repayments and surcharges on the 2026B
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 2026B Loan shall be payable on each
January 1 and July 1, beginning on July 1, 2026, and concluding on January 1, 204-56; and
(ii) the principal of the 2026B Loan shall be repayable on each Payment Date,
beginning on July 1, 2026 and concluding January 1, 204-6, 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 2026B Loan is payable only in
amounts that are multiples of $1,000.
Section 3. Appendix B-1 of Resolution 6315 is hereby amended to correct the date the
obligation to repay the principal amount of the 2026A Loan, if not forgiven, is July 1, 2046.
Section 4. Appendix B-2 of Resolution 6315 is hereby amended such that the form of the
Series 2026B Bond has a final maturity date of January 1, 2046.
Section 5. Except as specifically amended by this Amending Supplemental Resolution,
Resolution 6315 is hereby ratified and confirmed and remains in full force and effect.
Section 6. This Amending Supplemental Resolution shall take effect immediately.
(The remainder of this page is intentionally left blank.)
2
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL THIS 16TH DAY OF MARCH, 2026.
`�/ ,.,e
Ryan Hunter
Mayor
ATTEST:
N,
Aime Brunekhorst
City lerk
i,
� � O�.4�r •.'�` i
`�?p N�
[Form of the Series 2026A Bond]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
CITY OF KALISPELL
SUBORDINATE LIEN WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
TAXABLE SERIES 2026A
No. R-1 $3,000,000
Dated: 12026
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 out of available Surplus Net Revenues in its Water
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, together with an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the
outstanding principal amount of this Series 2026A 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 I (each
a "Loan Repayment 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
2026A Loan is not forgiven and ending on July 1, 2046, 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 hereto. Upon each disbursement of 2026A 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
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 2026A
Bond shall be made to the registered holder of this Series 2026A Bond, at its address as it appears on the
Bond register, in lawful money of the United States of America.
NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SERIES 2026A 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 ON 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 SERIES
2026A BOND SHALL THEREUPON BE MARKED "CANCELLED" AND RETURNED BY THE
HOLDER TO THE CITY, AND THIS SERIES 2026A 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 NONCOMPLIANCE STATEMENT AT THE RATE OF ZERO PERCENT
(0.00%) PER ANNUM:
This Series 2026A Bond is one of an issue of Water 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 $3,000,000 (the "Series 2026A Bond"). The Series 2026A Bond is issued to finance a
portion of costs of the construction of a replacement water storage tank in the Water System of the City
(the "System") in the City of Kalispell Lower Zone and to pay costs of issuance of the Series 2026A Bond.
The Series 2026A Bond is issued pursuant to and in full conformity with the Constitution and laws of the
State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part 44, as
amended, and ordinances and resolutions duly adopted by the governing body of the City, including
Resolution No. 4273 of the City adopted on June 17, 1996 (the "Original Resolution"), as amended and
supplemented by a Supplemental Resolution adopted on March 2, 2026 (the "Supplemental Resolution,"
and together with the Original Resolution, as so amended and supplemented, the "Resolution"). Terms
used with initial capital letters but not defined herein have the meanings given to them in the Resolution.
The Series 2026A Bond is issuable only as a single, fully registered bond. This Series 2026A Bond is
issued as a Subordinate Obligation payable out of available Surplus Net Revenues in the Fund.
Simultaneously herewith, the City is issuing its $31,000,000 Water System Revenue Bond (DNRC Drinking
Water State Revolving Loan Program), Series 2026B (the "Series 2026B Bond," and together with the
Series 2026A Bond, the "Series 2026 Bonds"), which is payable from the Debt Service Account in the Fund
on a parity with the City's outstanding Amended Series 2007B Bond, Series 2017A Bond, Series 2020B
Bonds, the Series 2023B Bond, the Series 2023C Bond, and the Series 2024B Bond (as defined in the
Resolution) (together with the Series 2026B Bond, the "Outstanding Bonds"). Following the 2026B First
Advance, the total amount of each advance will be split equally between the Series 2026A Bond and the
Series 2026B Bond, until the entire amount of the Series 2026A Bond is advanced.
Reference is made to the Resolution for a more complete statement of the terms and conditions
upon which the Series 2026A Bond has been issued, the conditions upon which additional Bonds may be
issued under the Resolution, the conditions upon which the Resolution may be amended, the rights, duties
and obligations of the City, and the rights of the owners of the Series 2026A Bond.
The City may prepay the principal of this Series 2026A 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
B-1-2
Administrative Expense Surcharge and Loan Loss Reserve Surcharge to the date of prepayment on the
amount of principal prepaid. If this Series 2026A Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity.
The Series 2026A 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 2026A Bond is registered as the
absolute owner hereof, whether this Series 2026A 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 2026A 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, subject to the prior lien
thereon of the Operating Account, the Debt Service Account and the Reserve Account, Surplus Net
Revenues; that the rates and charges of 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%0 of the maximum amount of principal and interest payable from the Debt
Service 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 Series 2026A Bond as and when due; that additional
Parity Bonds and refunding Bonds may be issued and made payable from the Debt Service Account on a
parity with the Outstanding Bonds and other parity Bonds upon certain conditions set forth in the
Resolution, but no obligation will be otherwise incurred and made payable from the Net Revenues of the
System, unless the lien thereof shall be expressly made subordinate to the lien of 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 Series 2026A .Bond); that all provisions for the security of the holder of
this Series 2026A Bond set forth in the Resolution will be punctually and faithfiully 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 2026A 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
2026A Bond and the premium, if any, and interest hereon are payable solely out of available Surplus Net
Revenues in 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 Series 2026A Bond does not cause either the
general or the special indebtedness of the City to exceed any constitutional or statutory limitation.
mm
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City Council,
has caused this Series 2026A 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 2026A Bond to be dated as of
the date first written above.
ATTEST:
City Clerk
CITY OF KALISPELL, MONTANA
Mayor
City Manager
Finance Director
B-1-4
REGISTRATION AND TRANSFER
The Series 2026A Bond shall be frilly registered as to both principal and interest. No transfer of
the Series 2026A Bond shall be valid unless and until (1) the registered holder of the Series 2026A Bond,
or his duly authorized attorney or legal representative, executes the form of assignment appearing on the
Series 2026A Bond, and (2) the Finance Director as bond registrar (the "Registrar"), has duly noted the
transfer on the Series 2026A 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 2026A Bond is registered as absolute
owner thereof for all purposes, notwithstanding any notice to the contrary. Payments on account of the
Series 2026A 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 Series 2026A Bond to the
extent of the sum or sums so paid.
The ownership of the outstanding principal balance of the Series 2026A 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 Name and Address
Registration of Registered Holder
Department of Natural.
Resources and Conservation
1625 Eleventh Avenue
, 2026 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 2026A Bond to the new registered holder noted next to such date, except for amounts
of principal and interest theretofore paid.
Date of Transfer
Name of New
Registered Holder
Signature of
Bond Registrar
FORM OF ASSIGNMENT
For value received, the Series 2026A Bond is hereby transferred and assigned by the undersigned
holder, without recourse,
to
of
on this day
By:
(Authorized Signature)
For:
(Holder)
SCHEDULE A
SCHEDULE OF AMOUNTS ADVANCED
Total Amount
Date Advances Advanced Notation Made
B-1-7
SCHEDULE B
Date
Principal
Interest
Administrative
Expense
Surcharge
Loan Loss
Reserve
Surcharge
Total Loan Payment
B-1-8
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
CITY OF KALISPELL
WATER SYSTEM REVENUE BOND
(DNRC DRINKING WATER STATE REVOLVING LOAN PROGRAM),
SERIES 2026B
No. R-1 $3,000,000
Dated: 2026
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 Debt Service Account of its Water System
Fund, the principal sum equal to the sum of the amounts entered on Schedule A attached hereto under "Total
Amount Advanced," with interest on each such amount from the date such amount is advanced hereunder
at the rate of two percent (2.00%) per annum on the unpaid balance until paid. In addition, the City shall
pay an Administrative Expense Surcharge and a Loan Loss Reserve Surcharge on the outstanding, principal
amount of this Series 2026B 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 I and July I (each a "Loan Repayment Date")
commencinC, a on July 1, 2026 and concludingon January 1, 2046. 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 Amount of 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 2026B Loan amounts to the City pursuant to the Resolution (as
hereinafter defined), the DNRC shall enter (or cause to be entered) the amount advanced on Schedule A
under "Advances" and the total amount advanced under the Resolution, including such disbursement, under
"'Total Amount Advanced." The DNRC shall prepare Schedule B and any revised Schedule B, or cause
Schedule B and any revised Schedule B to be prepared, as provided in Section 5.1 of the Resolution, and
the final Schedule B will reflect repayments under Section 5.1.3 of the 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 2026B Bond shall be
made to the registered holder of this Series 2026B Bond, at its address as it appears on the Bond register,
in lawful money of the United States of America.
This Series 2026B Bond is one of an issue of Water System Revenue Bonds of the City authorized
to be issued in one or more series from t ' ime to time, and constitutes a series in the maximum authorized
principal amount of $3,000,000 (the "Series 2026B Bond,"). The Series 2026B Bond is issued to finance a
portion of costs of the construction of a replacement water storage tank in the Water System of the City
B-2-1
(the "System") in the City of Kalispell Lower Zone and to pay costs of issuance of the Series 2026B Bond.
The Series 2026B Bond is issued pursuant to and in full conformity with the Constitution and laws of the
State of Montana thereunto enabling, including Montana Code Annotated, Title 7, Chapter 7, Part 44, as
amended, and ordinances and resolutions duly adopted by the governing body of the City, including
Resolution No. 4273 of the City adopted on June 17, 1996 (the "Original Resolution"), as amended and
supplemented by a Supplemental Resolution adopted on March 2, 2026 (the "Supplemental Resolution,"
and together with the Original Resolution, as so amended and supplemented, the "Resolution"). Terms
used with initial capital letters but not defined herein have the meanings given to them in the Resolution.
The Series 2026B Bond is issuable only as a single, fully registered bond. Simultaneously herewith, the
City is issuing its $3,000,000 Water System Revenue Bond (DNRC Drinking Water State Revolving Loan
Program), Subordinate Lien Taxable Series 2026A (the "Series 2026A Bond, and together with the Series
2026B Bond, the "Series 2026 Bonds"), which is a Subordination Obligation (as defined in the Resolution)
and is payable solely out of Surplus Net Revenues in the Fund. The Series 2026B Bond is payable from
the Debt Service Account in the Fund on a parity with the City's outstanding Amended Series 2007B Bond,
Series 2017A Bond, Series 2020B Bonds, the Series 2023B Bond, the Series 2023C Bond, and the Series
2024E Bond (as defined in the Resolution) (together with the Series 2026A Bond, the "Outstanding
Bonds"). Following the 2026B First Advance, the total amount of each advance will be split equally
between the Series 2026A Bond and the Series 2026B Bond, until the entire amount of the Series 2026A
Bond is advanced.
Reference is made to the Resolution for a more complete statement of the terms and conditions
upon which the Series 2026B Bond has been issued, the Net Revenues of the System pledged and
appropriated for the payment and security thereof, the conditions upon which additional Bonds may be
issued under the Resolution and made payable from such Net Revenues on a parity with the Amended
Series 2007B Bond, the Series 2017A Bond, the Series 2020B Bonds, the Series 2023B Bond, the Series
2023C Bond, the Series 2024B Bond, this Series 2026B Bond, and any other parity Bond (collectively, the
"Bonds") or otherwise, the conditions upon which the Resolution may be amended, the rights, duties and
obligations of the City, and the rights of the owners of the Series 2026B Bond.
The City may prepay the principal of the Series 2026B 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 2026B Bond is prepaid in part, such prepayments shall be applied
to principal payments in inverse order of maturity.
The Series 2026B 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 2026B Bond is registered as the
absolute owner hereof, whether this Series 2026B 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 2026B 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 Water System Fund into which the Revenues (as defined in the Resolution) of the
B-2-2
System will be paid, and a separate and special Debt Service Account in that Water System 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 Debt Service Account; that the
City has created a Reserve Account in the Water System Fund into which shall be paid additional Net
Revenues, after required credits to the Debt Service Account, sufficient to establish and maintain a reserve
therein equal to, as of the date of calculation, the Reserve Requirement; that the Debt Service Account will
be used only to pay the principal of, premium, if any; and interest on the Amended Series 2007B Bond, the
Series 2017A Bond, the Series 2020B Bonds, the Series 2023B Bond, the Series 2023C Bond, the Series
2024B Bond, this Series 2026B Bond, and any other additional Bonds issued pursuant to the Resolution 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 l 10% of the maximum amount of principal and interest payable
from the Debt Service Account in any subsequent fiscal year; that additional Bonds and refunding Bonds
may be issued and made payable from the Debt Service Account on a parity with the Amended Series
2007B Bond, the Series 2017A Bond, the Series 2020B Bonds, the Series 2023B Bond, the Series 2023C
Bond; the Series 2024E Bond, this Series 2026B Bond, and other parity Bonds upon certain conditions set
forth in the Resolution, but no obligation will be otherwise incurred and made payable from the Net
Revenues of the System, unless the lien thereof shall be expressly made subordinate to the lien of the
Amended Series 2007B Bond, the Series 2017A Bond, the Series 2020B Bonds, the Series 2023B Bond;
the Series 2023C Bond, the Series 2024B Bond, this Series 2026B Bond, and additional parity Bonds on
such Net Revenues; that all provisions for the security of the holder of this Series 2026B Bond set forth in
the Resolution will be punctually and faithfully performed as therein stipulated; that all acts, conditions and
things required by the Constitution and laws of the State of Montana and the ordinances and resolutions of
the City to be done, to exist, to happen and to be performed in order to make this Series 2026B 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 2026B Bond and the premium, if any, and
interest hereon are payable solely from the Net Revenues of the System pledged and appropriated to the
Debt Service 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 2026B Bond does not cause either the general
or the special indebtedness of the City to exceed any constitutional or statutory limitation,
B-2-3