Tab 08 Continuing Disclosure Undertaking$4.1520,000
City of Kalispell, Montana
Special Improvement District No. 344 Bonds
Series 2006
CONTINUING DISCLOSURE UNDERTAKING
June 29, 2006
This Continuing Disclosure Undertaking (the "Disclosure Undertaking") is executed and
delivered by the City of Kalispell, Montana, a municipal corporation and a political subdivision of the
State of Montana (the "Issuer"), in connection with the issuance of its Special Improvement District
No. 344 Bonds, Series 2006 (the "Bonds"), in the original aggregate principal amount of $4,520,000. The
Bonds are being issued pursuant to (I*) an authorizing resolution adopted by the City Council of the Issuer
on April 3, 2006, (ii) an award resolution adopted by the City Council of the Issuer on June 13, 2006, and
(iii) a bond resolution adopted by the City Council of the Issuer on June 19, 2006 (collectively, the
"Resolutions") and delivered to the Purchaser (defined herein) on the date hereof Pursuant to the
Resolutions,, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial
inforination and operating data and timely notices of the occurrence of certain events. The Issuer is an
"obligated person" with respect to the Bonds, within the meaning of SEC Rule 15c2-12(b)(5) (the
"Rule"). In addition, the Issuer hereby covenants and agrees as follows.:
Section 1. Pun2ose of the Disclosure Undertaking. This Disclosure Undertaking is being
executed and delivered by the Issuer for the benefit of the Holders (defined herein) of the Bonds in order
to assist the Participating Underwriters (defined herein) in complying with the Rule promulgated by the
Securities and Exchange Commission (the "SEC"). This Disclosure Undertaking, together with the
Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that
is required by the Rule.
If the Issuer fails to comply with any provisions of this Disclosure Undertaking, any person
aggrieved thereby, including the Owners of.any Outstanding Bonds, may take whatever action at law or in
equity may appear necessary or appropriate to enforce performance and observance of any agreement or
covenant, contained in this Disclosure Undertaking, 'including an action for a writ of mandamus or
specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for
any default hereunder. Notwithstanding anything to the contrary contained herein, in no event shall a
default under this Disclosure Undertaking constitute a default under the Bonds or under any other
provision of the Resolutions.
Section 2. Definitions. In addition to the defined terms set forth in the Resolutions,, which
apply to any capitalized term used in this Disclosure Undertaking unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
"Annual ReporC' means any annual report provided by the Issuer pursuant to, and as described in,
Sections 3 and 4 of this Disclosure Undertaking.
"Audited Financial Statements" means the Issuer's annual financial statements, prepared in
accordance with generally accepted accounting principles ("GAAP") for Governmental Units as Prescribed
by the Governmental Accounting Standards Board ("GASB"),
'.'Bonds" means the Issuer's Special Improvement District No. 344 Bonds, Series 2006, in the
original aggregate princi al amount of $4,520,000.
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"Disclosure Information" means the same as- defiried in Section 4 hereof
"Disclosure Representative" shall mean the City Finance Director of the Issuer or his or her
designee, or such other person as the Issuer shall designate from time to time.
"Dissemination Agent' 'shall mean any Dissemination Agent designated in writing by the Issuer and
which has filed with the Issuer a written acceptance of such designation.
"Final Official Statement" means the deemed final Preliminary Official Statement, dated
May 31, 2006, plus the Official Statement, dated June 13, 2006, which constitutes the final official
statement delivered in connection with the Securities, which is available fTom the MSRB.
"Fiscal Yeax" means the fiscal year of the Issuer, which currently ends on June 30.
"Holder" means the person in whose name a security is registered or a beneficial owner of a
Security.
"Issuee' means the City of Kalispell, Montana which is the obligated person with respect to the
Securities.
"Material Event" means any of the events listed in Section 5(a) of this Disclosure Undertaking.
"MSRB" means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600,
Alexandria, VA 22314.
'NRMSIW' means any nationally recognized municipal securities information repository as
recognized from time to time by the SEC for purposes of the Rule.
"Participating Underwriter" means any of the original underwriter(s) of the Bonds (including the
Purchaser(s)) required to comply with the Rule in connection with the offering of the Bonds.
"Purchaser" means D.A. Davidson & Co.
"Repository" means each NRMSIR and each SID, if any.
"Rule" means SEC Rule l5c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act
of 1934, as the same may be amended from time to time, and including written interpretations thereof by the
SEC.
"SEC" means Securities and Exchange Commission.
"Securities" means the Bonds.
"SID" means any public or private repository or entity designated by the State of. Montana as. a state
information depository for the purpose of the Rule. As of the date of this Certificate, there is no SID.
"State" means the State of Montana.
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"Tax Exemption" shall mean the interest component of the payment on the Bonds that is
excludable from gross income for federal income tax purposes, whether or not such interest is includable
as an item of tax preference or otherwise includable directly. or indirectly for purposes of calculating any
other tax liability, including any alternative minimum tax or environmental tax.
Section 3. Delivem-of Annual Reports. The Issuer will at least annually provide the
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information required in Section 4. The Disclosure Information may be in the form of Audited Financial
Statements or may be unaudited and which, for financial statement information, shall be for the most
recent Fiscal Year of the Issuer, commencing for the Fiscal Year ended June 30, 2006 (if in response to a
request, the most recent Fiscal Year ending not less than 270 days before the date of the request), and, for
other such 'Information, the information most recently compiled by the Issuer on a customary basis and
publicly available under applicable data privacy or other laws.
Section 4. Content of Annual Re s. The Issuer's Annual Report shall contain or
incorporate by reference the following financial information and operating data (the "Disclosure
Information" in the Annual Report for. the Issuer:
(A) the Audited Financial Statements of the Issuer for the most recent Fiscal Year
and the audit report and opinion of the accountant or government auditor relating thereto, as
permitted or required by the laws of the State, containing balance sheets as of the end of such
Fiscal Year and a statement of operations, changes in fund balances and cash flows for the Fiscal
Year then ended for required funds, prepared in accordance with generally accepted accounting
principles promulgated by the Financial Accounting Standards Board as modified in accordance
with the governmental accounting standards promulgated by the Governmental Accounting
Standards Board or as otherwise provided under State law, as 'in effect from time to time, or, if
and to the extent such financial statements have not been prepared in accordance with such
generally accepted accounting principles for reasons beyond the reasonable control of the Issuer,
noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and
completeness in all material respects by the Disclosure Representative; and
(B) to the extent not included in the -financial statements referred to in paragraph (A)
hereof, the information of the type set forth below contained in the Official Statement for such
Fiscal Year or for the period most recently available, which information may be unaudited, but is
to be certified as to accuracy and completeness in all material respects by the Disclosure
Representative to the best of his or her knowledge which certification may be based on the
reliability of information obtained from third. party sources:
(i) updated information for the then most recent completed fiscal year as
provided in the table in the Official Satatment under the section captioned "Revolving
Fund" concerning the Revolving Fund Cash Balance and outstanding Bonds secured
thereby;
(ii) a description of any special improvement district bonds issued by the
Issuer during the Fiscal Year; and
*11 i) updated information for the then most recent completed Fiscal Year in
format similar to the table under the section captioned "Special Improvement District
Assessment Billings and Collections" in the Official Statement; and
(iv) updated information for the then most recent completed Fiscal Year as
provided in the table under the section captioned "Statement of Changes in Fund Balance
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of the Revolving Fund" of the Official Statement; and
(v) the market and taxable valuations of the City for the then current Fiscal
Year; and
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(vi) tax collection information for the then most recent completed Fiscal Year
in format similar to the table under the section captioned "Tax Collections" in the Official
Statement.
Any or all of the items listed above may be incorporated by reference from other documents,
including official statements of debt issues of the Issuer or related public entities, which have been
submitted to each of the Repositories, the SID, or the SEC. If the document incorporated by reference is a
final official statement it must be available from the MSRB. The Issuer shall clearly identify each such
other document so incorporated by reference.
Section 5. &qporting of Material Events.
(a) Material Events. This Section 5(a) shall govern the giving of notices of the occurrence of
any of the following applicable events (each a "Material Event"):
principal and interest payment deliquencies;
(ii) non-payment related defaults,*
(iii) unscheduled draws on debt service reserves reflecting financial difficulties;
(iv) unscheduled draws on credit enhancements reflecting financial difficulties;
(v) substitution of credit or liquidity providers, or their failure to perform;
(vi) adverse tax opinions or events affecting the tax-exempt status of the security;
(vii) modifications to rights of security holders;
(viii) Bond calls other than for a scheduled sinking fund redemption;
(ix) defeasances;
(x) release, substitution or sale of property securing repayment of the securities; and
(XI) rating changes.
Whenever a Material Event occurs, the Issuer shall as soon as possible determine if such event would
constitute material 'information for Owners of Bonds, provided, that any event under subsection subsections
(aXviii), (ix) or (XI) will always be deemed to be material.
If the Issuer has determined that the occurrence of a Material Event would be material, the Issuer
shall file a notice of such occurrence with the MSRB and each SID, if any.
(b) Other Events. In a timely manner, the Issuer shall give notice of the occurrence of any of
the following events or conditions:
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0) the failure of the Issuer to provide the Annual Report at the time specified under
"Delivery of Annual Reports" in Section 3;
( *10 the amendment or supplementing of this Disclosure Undertaking, together with a
copy of such amendment or supplement and any explanation provided by the Issuer under
"Amendments; Waiver" below;
(Ili) the termination of the obligations of the Issuer under this Disclosure
Undertaking; and
(iv) any change in the Fiscal Year of the Issuer.
(c) Manner isclosure. The issuer agreed to make available the information described
above in this Section 5 and in Section 4 to the following entities by telecopy, overnight delivery, mail,
electronic mail, or other means, as appropriate:
(i) the Disclosure Information'. to each of the Repositories, the SID, if any, or, 'if no
SID then exists as was the case in State as of the date of the Final Official Statement, to any
person or entity upon request*
01) the information in Sections 5(a) and 5(b), to the MSRB and to the SID, if any;
and
(1 *10 the Disclosure Information and the information in Sections 5(a) and 5(b), to any
rating agency then maintaining a rating of the Bonds and to any bondowner, at the expense of
such bondowner, who requests in writing such information at the time of the transmission under
clauses (c)(i) or (c)(10 above as the case may be, or, if such Disclosure Information or
information is transmitted with a subsequent time of release, at the time such Disclosure
Information or information is to be released.
Any filing under this Disclosure Undertaking may be made solely by transmitting such filing to the
Texas Municipal Advisory Council (the "MAC") as provided at http://www.disclosureusa.org unless the SEC
has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004.
Section 6. Termination of Reporting Obligation. The Issuer's obligations under the
Resolutions and this Disclosure Undertaking shall terminate upon the legal defeasance, or upon the
redemption or payment in fall of all the Bonds.
Section 7. Dissemination -Agent. The Issuer may, from time to time,, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under the Resolutions and this Disclosure
Undertaking, and may discharge any Dissemination Agent, with or without appointing a successor
Dissemination Agent.
Section 8. Amendmen
,t--Waiver. Notwithstanding any other provision of the Resolutions or
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this Disclosure Undertaking, the Issuer may amend this Disclosure Undertaking, and any provision of this
Disclosure Undertaking may be waived, if such amendment or waiver is supported by an opinion of
nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself,
cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the
date hereof but taking into account any subsequent change 'in or official interpretation of the Rule
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Section 9. ' Additional Information. Nothing in this Disclosure Undertaking shall be deemed to
prevent the Issuer from disseminating any other information, using the means of dissemination set forth in
this Disclosure Undertaking or any other means of communication,, or including any other *information in any
Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this
Disclosure Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of
occurrence of a Material Event in addition to that which is specifically required by this Disclosure
Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking to update such
infortnation or include it In any future Annual Report or notice of occurrence of a Material Event.
Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this
Disclosure Undertaking any Holder of the Bonds may take such actions as may be necessary and appropriate,
including seeking mandamus or specific perfonnance by court order, to cause the Issuer to comply with its
obligations under the Resolutions and this Disclosure Undertaking. A default under this Disclosure
Undertaking shall not be deemed an event of default with respect to the Bonds and the sole remedy under this
Disclosure Undertaking in the event of any failure of the Issuer to comply with this Disclosure Undertaking
shall be an action to compel perfort-nance.
Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the
Issuer, the Participating Underwriters and Holders from time to time of the Bonds, and shall create no rights
in any other person or entity.
Section 12. Counterparts. This Disclosure Undertaking may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 13. Governing 0 This Disclosure Undertaking shall be interpreted in accordance
with the laws of the State of Montana.
Section 14. Severab If any portion of this Disclosure Undertaking shall be held invalid or
inoperative, then, so far as is reasonable and possible (i) the remainder of this Disclosure Undertaking
shall be considered valid and operative, and (ii) effect shall be given to the intent manifested by the
portion held invalid or inoperative.
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IN WITNESS WHEREOF, the following officials of the City of Kalispell, Montana have
executed this CONTINUING DISCLOSURE UNDERTAKING as of the date and year first written
above.
KA225-1 (BWJ)
281136v.3
CITY OF KALISPELL, MONTANA
By
Its M`ia`-1ii"%r
Bc
Its City M6nager
Its City Fiiaafnce Director
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