Resolution 4685 - Authorizing Issuance of Sewerage System Revenue Refunding 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
Resolution No. 4685, entitled: "RESOLUTION RELATING TO $2,355,000 SEWERAGE
SYSTEM REVENUE REFUNDING BONDS, SERIES 2002; 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 meeting on March 18, 2002, and that the meeting
was duly held by the City Council and was attended throughout by a quorum, pursuant to call
and notice of such meeting given as required by law-, and that the Resolution has not as of the
date hereof been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said meeting, the
following Council Members voted in favor thereof: Don Counsell, Bob Hafferman, Randy
Kenyon, Duane Larson, Fred Leistiko, Hank Olson, Jayson Peters and Pamela B. Kennedy;
voted against the same: none ; abstained from voting thereon: none; or were absent: Jim
Atkinson .
WITNESS my hand officially this day of March, 2002.
City Clerk
RESOLUTION NO. 4685
RESOLUTION RELATING TO $2,355,000 SEWERAGE SYSTEM
REVENUE REFUNDING BONDS, SERIES 2002; AUTHORIZING
THE ISSUANCE AND FIXING THE TERMS AND CONDITIONS
THEREOF
BE IT RESOLVED by the City Council (the "Council") of the City of Kalispell,
Montana (the "City"), as follows:
Section 1. Authorization and Recitals.
1.01 Authorization. The City pursuant to authority conferred by Montana Code
Annotated, Title 7, Chapter 7, Parts 44 and 45, as amended (the "Act"), and other laws of the
State of Montana, has established and presently owns and operates a municipal sewerage system
(the "System"). Under the provisions of the Act, the City is authorized to issue and sell its
revenue bonds payable during a term not exceeding forty years from their date of issue, to
provide fiords for the reconstruction, improvement, betterment and extension of the System and
to refund its revenue bonds issued for such purpose; provided that the bonds and the interest
thereon are to be payable solely out of the net. income and revenues to be derived from rates, fees
and charges for the services, facilities and commodities furnished by the undertaking, and are not
to create any obligation for the payment of which taxes may be levied except to pay for services
provided by the System to the City.
1.02 Outstanding Bonds. In accordance with the authorization described in Section 1
and pursuant to Ordinance Nos. 859 and 1011 and Resolution Nos. 2861, 3649, 3980, 4022 and
4329 the City issued and sold the following bonds which are currently outstanding: its Sewerage
System Revenue Bonds, Series 1991A, dated as of November 15, 1991 (the "Series 1991A
Bonds"), currently outstanding in the aggregate principal amount of $2,517,000 for the purpose
of financing part of the costs of construction of improvements to the System; its Sewerage
System Revenue Bonds, Series 1991, dated as originally issued as of April 15, 1991 (the "Series
1991 Bonds"), currently outstanding in the aggregate principal amount of $1,850,000; and its
Sewerage System Refunding Revenue Bonds, Series 1997, dated as originally issued as of May
15, 1997 (the "Series 1997 Bonds"), issued for the purpose of refunding the City's outstanding
Sewerage System Revenue Bonds, Series 1986, and currently outstanding in the aggregate
principal amount of $585,000.
1.03 Parity Bonds. In Section 4.03 of Ordinance No. 859, the City reserved the right to
issue additional bonds payable from and secured by the net revenues of the System on a parity
with the Outstanding Bonds on certain terms and conditions and to issue refunding bonds. It is
determined that the City is authorized to issue a series of bonds (the "Series 2002 Bonds") in the
aggregate principal amount of $2,355,000 to refund the Series 1991 Bonds and Series 1997
Bonds, which bonds would be payable from and secured by the Net Revenues of the System on a
parity with the Outstanding Bonds.
1.04 Defined Terms. Capitalized terms, used but not defined herein, shall have the
meanings ascribed to them in Ordinance No. 859, as amended and supplemented.
1.05 Net Revenues Available. The City is authorized to charge just and equitable
rates, charges and rentals for all services directly or indirectly furnished by the System, and to
pledge and appropriate to the Outstanding Bonds and the Series 2002 Bonds the Net Revenues to
be derived from the operation of the System, including improvements, betterments or extensions
thereof hereafter constructed or acquired. The Net Revenues to be produced by such rates,
charges and rentals during the term of the Series 2002 Bonds and the useful life of the
improvements financed or refinanced thereby will be more than sufficient to pay the principal
and interest when due on the Outstanding Bonds and the Series 2002 Bonds, and to create and
maintain reasonable reserves therefor and to provide an allowance for replacement and
depreciation, as herein prescribed.
1.06 No Other Bonds. After the refunding authorized herein, the only Bonds payable
from the System will be the Series 1991A Bonds and Series 2002 Bonds.
1.07 Sale of Sewerage System Revenue Refunding Bonds. Pursuant to the authority
recited in Sections 1.01 and 1.03 and for the purpose of refunding the Series 1991 Bonds and
Series 1997 Bonds, this Council authorized the sale of the Series 2002 Bonds to D.A. Davidson
& Co., of Great Falls, Montana (the "Purchaser") pursuant to Resolution No. 4680 adopted by
the Council on February 19, 2002, subject to certain terms and conditions stated therein. The
City hereby ratifies and confirms the issuance and sale of revenue bonds to be designated as
Sewerage System Revenue Refunding Bonds, Series 2002, in the aggregate principal amount of
$2,355,000 in accordance with the provisions of Ordinance Nos. 859, this Resolution, and a
Bond Purchase Agreement dated as of March 8, 2002, between the City and the Purchaser.
1.08 Sources of Fundin • Refunding the Series 1991 Bonds and Series 1997 Bonds.
The City will refund the Series 1991 Bonds and the Series 1997 Bonds from the proceeds of
revenue bonds hereinafter authorized in the approximate principal amount of $2,355,000. The
debt service savings to result from the refunding of the Series 1991 Bonds and Series 1997
Bonds is presently estimated to be $236,504.06, calculated on a present -value basis, and using a
discount rate of 3.5094% over the term of bonds herein authorized. As required by Montana
Code Annotated, Section 7-7-4502(1), the average annual interest rate on the bonds herein
authorized is more than three -eighths of one percent (0.375%) less than the average annual
interest rate on the Series 1991 Bonds and Series 1997 Bonds.
Section 2. The Series 2002 Bonds.
2.01 Denominations, Maturities, Interest. The Sewerage System Revenue Refunding
Bonds, Series 2002, to be issued hereunder, in the aggregate principal amount of $2,355,000,
shall be issued in fully registered form only, in denominations of $5,000 or any integral multiple
thereof of single maturities, shall mature on July 1 in the following respective years and amounts
and shall bear interest from April 1, 2002 to their respective maturities or prior dates upon which
they have been duly called for redemption at the rates per annum set forth opposite such years
and amounts, as follows:
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Interest
Year
Amount
Rate
2002
$ 75,000
1.80%
2003
290,000
1.90
2004
295,000
2.30
2005
310,000
2.85
2006
315,000
3.15
2007
200,000
3.45
2008
205,000
3.65
2009
215,000
3.85
2010
220,000
4.00
2011
230,000
4.10
2.02 Payment. The Series 2002 Bonds shall be issuable only in fully registered form,
and the ownership of the Series 2002 Bonds shall be transferred only upon the bond register of
the City hereinafter described. Interest on the Series 2002 Bonds shall be payable on January 1
and July 1 in each year, commencing July 1, 2002, to the owners of record of the Series 2002
Bonds as such appear on the bond register as of the close of business on the fifteenth day of the
immediately preceding month, whether or not such day is a business day. The interest on, and,
upon presentation and surrender thereof, the principal of, each Series 2002 Bond, the amount
payable with respect thereto, shall be payable in lawful money of the United States of America
by check or draft issued by the Registrar described herein.
2.03 Datingof f Bonds. Each Series 2002 Bond shall be dated, as originally issued, as
of April 1, 2002. Upon the original delivery of the Series 2002 Bonds pursuant to Section 2.08
or upon the delivery of a Series 2002 Bond upon an exchange or transfer pursuant to Section
2.05, the Registrar shall date each Series 2002 Bond so delivered as of the date of its
authentication.
2.04 System of Registration. The City shall appoint, and shall maintain, a bond
registrar, transfer agent and paying agent for the Bonds (the "Registrar"). This Section 2.05 shall
establish a system of registration for the Series 2002 Bonds as defined in the Model Public
Obligations Registration Act of Montana. The effect of registration and the rights and duties of
the City and the Registrar with respect thereto shall be as follows:
(a) Bond Register. The Registrar shall keep at its principal office a Bond
Register in which the Registrar shall provide for the registration of ownership of Series
2002 Bonds and the registration of transfers and exchanges of Series 2002 Bonds entitled
to be registered, transferred or exchanged.
(b) Transfer of Series 2002 Bonds. Upon surrender for transfer of any Series
2002 Bond duly endorsed by the registered owner thereof or accompanied by a written
instrument of transfer, in form satisfactory to the Registrar, duly executed by the
registered owner thereof or by an attorney duly authorized by the registered owner in
writing, the Registrar shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Series 2002 Bonds of a like aggregate
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principal amount and maturity, as requested by the transferor. The Registrar may,
however, close the books for registration of the transfer of a Series 2002 Bond or portion
thereof selected for redemption.
(c) Exchange of Series 2002 Bonds. Whenever any Series 2002 Bonds are
surrendered by the registered owner for exchange, the Registrar shall authenticate and
deliver one or more new Series 2002 Bonds of a like aggregate principal amount and
maturity as requested by the registered owner or the owner's attorney in writing.
(d) Cancellation. All Series 2002 Bonds surrendered upon any transfer or
exchange shall be promptly canceled by the Registrar and thereafter disposed of as
directed by the City.
(e) Improper or Unauthorized Transfer. When any Series 2002 Bond is
presented to the Registrar for transfer, the Registrar may refuse to transfer the same until
it is satisfied that the endorsement on such Series 2002 Bond or separate instrument of
transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good
faith, to make transfers which it, in its judgment, deems improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person
in whose name any Series 2002 Bond is at any time registered in the Bond Register as the
absolute owner of such Series 2002 Bond, whether such Series 2002 Bond shall be
overdue or not, for the purpose of receiving payment of, or on account of, the principal
of, premium, if any, and interest on such Series 2002 Bond and for all other purposes, and
all such payments so made to any such registered owner or upon the owner's order shall
be valid and effectual to satisfy and discharge the liability of the City upon such Series
2002 Bond to the extent of the sum or sums to paid.
(g) Taxes, Fees and Charges. For every transfer or exchange of a Series 2002
Bond (except for an exchange upon a partial redemption of any Series 2002 Bond), the
Registrar may impose a charge upon the owner thereof sufficient to reimburse the
Registrar for any tax, fee or other governmental charge required to be paid with respect to
such transfer or exchange.
(h) Mutilated, Lost, Stolen or Destroyed Series 2002 Bonds. In case any
Series 2002 Bond shall become mutilated or be lost, stolen or destroyed, the Registrar
shall deliver a new Series 2002 Bond of like amount, number, maturity date and tenor in
exchange and substitution for and upon cancellation of any such mutilated Series 2002
Bond or in lieu of and in substitution for any such Series 2002 Bond lost, stolen or
destroyed, upon the payment of the reasonable expenses and charges of the Registrar in
connection therewith; and, in the case of a Series 2002 Bond lost, stolen or destroyed,
upon receipt by the Registrar of evidence satisfactory to it that such Series 2002 Bond
was lost, stolen or destroyed, and of the ownership thereof, and upon receipt by the
Registrar of an appropriate bond of indemnity in form, substance and amount satisfactory
to it, in which both the City and the Registrar shall be named as obligees. All Series 2002
Bonds so surrendered to the Registrar shall be canceled by it and evidence of such
cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Series
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2002 Bond has already matured or such Series 2002 Bond has been called for redemption
in accordance with its terms, it shall not be necessary to issue a new Series 2002 Bond
before payment.
2.05 Initial Registrar'
e ig strar. The City hereby appoints U.S. Bank National Association, of
Billings, Montana, as the initial Registrar. The Mayor, City Manager and Finance Director are
hereby authorized to execute and deliver, on behalf of the City, a contract with U.S. Bank
National Association, of Billings, Montana, as Registrar. Upon merger or consolidation of the
Registrar with another corporation, if the resulting corporation is a bank or trust company
authorized by law to conduct such business, such corporation shall be authorized to act as
successor Registrar. The City agrees to pay the reasonable and customary charges of the
Registrar for the services performed. The City reserves the right to remove any Registrar upon
30 days' notice and upon the appointment of a successor Registrar, in which event the
predecessor Registrar shall deliver all cash and Series 2002 Bonds in its possession to the
successor Registrar and shall deliver the Bond Register to the successor Registrar. On or before
each principal or interest due date, without further order of this Council, the Finance Director
shall transmit to the Registrar, solely from moneys in the Revenue Bond Account of the
Sewerage System Fund available therefor, moneys sufficient for the payment of all principal,
premium, if any, and interest then due on the Series 2002 Bonds.
2.06 Redemption. Bonds with stated maturities in the years 2002 through 2006 shall
not be subject to optional redemption prior to their stated maturities. Bonds maturing July 1,
2007 and thereafter shall be subject to redemption at the option of the City on July 1, 2006, and
on any day thereafter at a price equal to the principal amount being redeemed plus accrued
interest to the date of redemption. Such Bonds shall be selected for redemption from such stated
maturities and principal amounts as the City may designate and, within a maturity, in $5,000
principal amounts selected by lot or other manner deemed fair by the Registrar. Bonds in
denominations larger than $5,000 may be redeemed in part in any integral multiple of $5,000.
The holder of any Bond redeemed in part shall receive one or more new Bonds in authorized
denominations equal in principal amount to the unredeemed portion of the Bond so surrendered.
Notice of redemption of any Series 2002 Bond shall be mailed by the Finance Director, at
least 30 days before the redemption date, by first-class mail to the Registrar and the owner
thereof at his address appearing in the Bond Register; provided that any failure to give or any
defect in such notice shall not affect the validity of proceedings for the redemption of any Series
2002 Bond not affected thereby. The notice of redemption shall specify the redemption date,
redemption price, the numbers, interest rates and CUSIP numbers of the Series 2002 Bonds to be
redeemed and the place at which the Series 2002 Bonds are to be surrendered for payment,
which is the principal office of the Registrar. Official notice of redemption having been given as
aforesaid, the Series 2002 Bonds or portions thereof so to be redeemed shall, on the redemption
date, become due and payable at the redemption price therein specified and from and after such
date (unless the City shall default in the payment of the redemption price) such Series 2002
Bonds or portions thereof shall cease to bear interest.
In addition to the notice prescribed by the preceding paragraph, the Finance Director shall
also give, or cause to be given, notice of the redemption of any Series 2002 Bond or Bonds or
portions thereof at least 35 days before the redemption date by certified mail or telecopy to the
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Purchaser and all registered securities depositories then in the business of holding substantial
amounts of obligations of the character of the Series 2002 Bonds (such depositories now being
The Depository Trust Company, of New York, New York) and one or more national information
services that disseminate information regarding municipal bond redemptions; provided that any
defect in or any failure to give any notice of redemption prescribed by this paragraph shall not
affect the validity of the proceedings for the redemption of any Series 2002 Bond or portion
thereof.
Series 2002 Bonds in a denomination larger than $5,000 may be redeemed in part in any
integral multiple of $5,000. The owner of any Series 2002 Bond redeemed in part shall receive,
upon surrender of such Series 2002 Bond to the Registrar, one or more new Series 2002 Bonds in
authorized denominations equal in principal amount to the unredeemed portion of the Series
2002 Bond so surrendered. All selections of Series 2002 Bonds for redemption by lot or other
manner deemed fair by the Registrar shall be made in $5,000 principal amounts.
2.07 Form of the Series 2002 Bonds. The Series 2002 Bonds shall be prepared in
substantially the form set forth in Exhibit A hereto (which is hereby incorporated by reference
and made a part hereof) with such appropriate variations, omissions and insertions as are
permitted or required by Ordinance No. 859 or this Resolution.
2.08 Execution and Delivery. The Series 2002 Bonds shall be executed in the name of
the City by the signatures of the Mayor, City Manager and Finance Director, and shall be sealed
with the official seal of the City, provided that said signatures and the seal may be printed,
engraved or lithographed facsimiles thereof. In case any officer whose signature or a facsimile
of whose signature shall appear on the Series 2002 Bonds shall cease to be such officer before
the delivery of any Series 2002 Bonds, such signature or facsimile shall nevertheless be valid and
sufficient for all purposes, the same as if such officer had remained in office until delivery.
Notwithstanding such execution, no Series 2002 Bond shall be valid or obligatory for any
purpose or be entitled to any security or benefit under Ordinance No. 859 or this Resolution
unless and until a certificate of authentication on such Series 2002 Bond has been duly executed
by the manual signature of an authorized representative of the Registrar. Certificates of
authentication on different Series 2002 Bonds need not be signed by the same representative.
The executed certificate of authentication on a Series 2002 Bond shall be conclusive evidence
that it has been authenticated and delivered under Ordinance No. 859 and this Resolution. When
the Series 2002 Bonds have been fully executed and authenticated, they shall be delivered by the
Registrar to the Purchaser upon payment of the purchase price in accordance with the contract of
sale heretofore made and executed, and the Purchaser shall not be obligated to see to the
application of the purchase price.
2.09 Securities Depository.
(a) For purposes of this Section 2.09, the following terms shall have the
following meanings:
"Beneficial Owner" shall mean, whenever used with respect to a Bond, the
person in whose name such Bond is recorded as the beneficial owner of such
C,
Bond by a Participant on the records of such Participant, or such person's
subrogee.
"Cede & Co." shall mean Cede & Co., the nominee of DTC, and any
successor nominee of DTC with respect to the Bonds.
"DTC" shall mean The Depository Trust Company of New York,
New York.
"Participant" shall mean any broker -dealer, bank or other financial
institution for which DTC holds Bonds as securities depository.
"Representation Letter" shall mean the Blanket Issuer Letter of
Representations executed by the City to DTC pursuant to which the City agrees to
comply with DTC's Operational Arrangements.
(b) The Series 2002 Bonds shall be initially issued as separately authenticated
fully registered bonds, and one Series 2002 Bond shall be issued in the principal amount
of each Stated Maturity of the Series 2002 Bonds. Upon initial issuance, the ownership
of such Series 2002 Bonds shall be registered in the Bond Register in the name of Cede
& Co., as nominee of DTC. The Bond Registrar, Paying Agent and the City may treat
DTC (or its nominee) as the sole and exclusive owner of the Series 2002 Bonds
registered in its name for the purposes of payment of the principal of or interest on the
Series 2002 Bonds, selecting the Series 2002 Bonds or portions thereof to be redeemed, if
any, giving any notice permitted or required to be given to registered owners of Series
2002 Bonds under this resolution, registering the transfer of Series 2002 Bonds, and for
all other purposes whatsoever; and neither the Bond Registrar, Paying Agent nor the City
shall be affected by any notice to the contrary. Neither the Bond Registrar, Paying Agent
nor the City shall have any responsibility or obligation to any Participant, any person
claiming a beneficial ownership interest in the Series 2002 Bonds under or through DTC
or any Participant, or any other person which is not shown on the Bond Register as being
a registered owner of any Series 2002 Bonds, with respect to the accuracy of any records
maintained by DTC or any Participant, with respect to the payment by DTC or any
Participant of any amount with respect to the principal of or interest on the Series 2002
Bonds, with respect to any notice which is permitted or required to be given to owners of
Series 2002 Bonds under this resolution, with respect to the selection by DTC or any
Participant of any person to receive payment in the event of a partial redemption of the
Series 2002 Bonds, or with respect to any consent given or other action taken by DTC as
registered owner of the Series 2002 Bonds. So long as any Series 2002 Bond is
registered in the name of Cede & Co., as nominee of DTC, the Paying Agent shall pay all
principal of and interest on such Series 2002 Bond, and shall give all notices with respect
to such Series 2002 Bond, only to Cede & Co. in accordance with DTC's Operational
Arrangements, and all such payments shall be valid and effective to fully satisfy and
discharge the City's obligations with respect to the principal of and interest on the Series
2002 Bonds to the extent of the sum or sums so paid. No Person other than DTC shall
receive an authenticated Series 2002 Bond for each separate stated maturity evidencing
the obligation of the City to make payments of principal and interest. Upon delivery'by
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DTC to the Bond Registrar of written notice to the effect that DTC has determined to
substitute a new nominee in place of Cede & Co., the Series 2002 Bonds will be
transferable to such new nominee in accordance with paragraph (d) hereof.
(c) In the event the City determines that it is in the best interest of the
Beneficial Owners that they be able to obtain Series 2002 Bonds in the form of bond
certificates, the City may notify DTC and the Bond Registrar and Paying Agent,
whereupon DTC shall notify the Participants of the availability through DTC of Series
2002 Bonds in the form of certificates. In such event, the Series 2002 Bonds will be
transferable in accordance with paragraph (d) hereof. DTC may determine to discontinue
providing its services with respect to the Series 2002 Bonds at any time by giving notice
to the City, the Paying Agent and the Bond Registrar and discharging its responsibilities
with respect thereto under applicable law. in such event the Series 2002 Bonds will be
transferable in accordance with paragraph (d) hereof.
(d) In the event that any transfer or exchange of Series 2002 Bonds is
permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be
accomplished upon receipt by the Bond Registrar of the Series 2002 Bonds to be
transferred or exchanged and appropriate instruments of transfer to the permitted
transferee in accordance with the provisions of this resolution. In the event Series 2002
Bonds in the form of certificates are issued to owners other than Cede & Co., its
successor as nominee for DTC as owner of all the Series 2002 Bonds, or another
securities depository as owner of all the Series 2002 Bonds, the provisions of this
resolution shall also apply to all matters relating thereto, including, without limitation, the
printing of such Series 2002 Bonds in the form of bond certificates and the method of
payment of principal of and interest on such Series 2002 Bonds in the form of bond
certificates.
Section 3. ApproELnation of Bond Proceeds and Refunding of Series 1991 Bonds and
Series 1997 Bonds.
3.01 Appropriation of Bond Proceeds. The proceeds of the Series 2002 Bonds are
appropriated to the Sewerage System Fund created by Ordinance No. 859 and are to be deposited
or applied as follows:
(a) Any accrued interest on the Series 2002 Bonds shall be credited to the
Revenue Bond Account;
(b) $2,308,404.65 of the proceeds of the Series 2002 Bonds shall be deposited
with the Escrow Agent pursuant to the Escrow Agreement as provided for in Section
3.02; and
(c) The balance of the proceeds of the Series 2002 Bonds shall be credited to
the Construction Account to pay costs of issuance of the Series 2002 Bonds and of the
refunding of the Series 1991 Bonds and Series 1997 Bonds.
3.02 Escrow. Simultaneously with the delivery of the Series 2002 Bonds, the Finance
Director shall deposit in escrow with U.S. Bank National Association, in Billings, Montana, the
entire proceeds of the Series 2002 Bonds, less any accrued interest received in the sale thereof
and the amount thereof to be used to pay costs of issuance of the Series 2002 Bonds and of the
refunding of the Series 1991 Bonds and Series 1997 Bonds, and shall also transmit to said
escrow agent, $200,989.85 of moneys on hand in the Revenue Bond Account attributable to the
Series 1991 Bonds and Series 1997 Bonds and $27,917.50 on hand in the Revenue Bond
Account attributable to the Series 1991 and Series 1997 Debt Service Reserve. The Finance
Director shall cause the amount so deposited to be invested in securities of the type described in
Montana Code Annotated, Section 7-6-202, maturing on the dates and bearing interest at the
rates required to provide funds sufficient to pay the interest on each Series 1991 Bond and Series
1997 Bond when due to maturity or earlier redemption on July 1, 2002. The escrow account and
all investments thereof shall be held in safekeeping by said escrow agent, and said account and
all income therefrom are irrevocably appropriated for the purposes stated in this Section 3.02. At
or before the time of making said deposit and investment the Mayor, City Manager and Finance
Director shall execute on the part of the City an escrow agreement with said escrow agent, in the
form of such agreement which has been presented to this Council at the meeting at which this
resolution was adopted, and is hereby approved. In accordance with the provisions of Section 7
of the Bond Ordinance, upon the establishment of the escrow account pursuant to this Section
3.02, the Series 1991 Bonds and Series 1997 Bonds shall no longer be considered outstanding.
In accordance with the provisions of the Escrow Agreement, the Series 1991 Bonds with stated
maturities in the years 2002 through 2011 are hereby called for redemption on July 1, 2002 and
the Series 1997 Bonds with stated maturities in the years 2002 through 2006 are hereby called
for redemption on July 1, 2002.
3.03 Notice of Redem tion of Series 1991 Bonds and Series 1997 Bonds. The City
Clerk and Finance Director are hereby directed to immediately notify the Registrar and Paying
Agent of the Series 1991 Bonds and Series 1997 Bonds of the redemption thereof and to cause
the Registrar and Paying Agent to give notice of redemption by first class mail in substantially
the forms attached as Exhibit B and Exhibit C hereto (which are hereby incorporated by
reference and made a part hereof), to the registered owners of the outstanding Series 1991 Bonds
and Series 1997 Bonds, not less than thirty (30) day before the date of redemption.
In addition to the notice prescribed by the preceding paragraph, the Finance Director shall
also give, or cause to be given, notice of the redemption of any Series 1991 Bond or Bonds and
Series 1997 Bond or Bonds or portions thereof at least 35 days before the redemption date by
certified mail or telecopy to the purchaser thereof and all registered securities depositories then
in the business of holding substantial amounts of obligations of the character of the Series 1991
Bonds and Series 1997 Bonds (such depositories now being The Depository Trust Company, of
New York, New York) and one or more national information services that disseminate
information regarding municipal bond redemptions; provided that any defect in or any failure to
give any notice of redemption prescribed by this paragraph shall not affect the validity of the
proceedings for the redemption of any Series 1991 Bond or Series 1997 Bond or portion thereof.
Section 4. Security for the Series 2002 Bonds. The Series 2002 Bonds are issued
under Section 4.03 of Ordinance No. 859 and shall, with the Outstanding Bonds and any other
additional bonds issued under the provisions of said Section 4.03 or Section 4.02 of Ordinance
No. 859, be equally and ratably secured by the provisions of Ordinance No. 859 and this
Resolution and payable out of the Net Revenues appropriated to the Revenue Bond Account of
W
the Sewerage System Fund, without preference or priority, all as provided in Ordinance No. 859,
and secured by the reserve established in the Revenue Bond Account. Upon the issuance of the
Series 2002 Bonds, the Finance Director shall deposit, from other available funds in the
Sewerage System Fund, the amount required to cause the balance in said reserve to equal the
maximum amount of principal of and interest payable on the Outstanding Bonds and the Series
2002 Bonds in any future fiscal year. The City shall keep, perform and observe each and every
one of its covenants and undertakings set forth in Ordinance No. 859 and shall cause the
Improvements to be undertaken and completed expeditiously.
Section 5. Arbitrage and Certification of Proceedings.
5.01 Use of System. The facilities of the System refinanced or financed in whole or in
part with proceeds of the Series 2002 Bonds are and will be owned and operated by the City and
used by the City to provide sewerage services to members of the general public. No user of the
System is granted any concession, license or special arrangement with respect to the System.
The City shall not enter into any lease, use or other agreement with any nongovernmental person
relating to the use of the System or security for the payment of the Series 2002 Bonds which
might cause the Series 2002 Bonds to be considered "private activity bonds" or "private loan
bonds" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended
(the "Code").
5.02 Covenant. The City covenants and agrees with the owners from time to time of
the Series 2002 Bonds that it will not take or permit to be taken by any of its officers, employees
or agents any action which would cause the interest on the Series 2002 Bonds to become
includable in gross income for federal income tax purposes under the Code and applicable
Treasury Regulations (the "Regulations"), and covenants to take any and all actions within its
powers to ensure that the interest on the Series 2002 Bonds will not become includable in gross
income for federal income tax purposes under the Code and the Regulations.
5.03 Certification. The Mayor, City Manager and Finance Director, being the officers
of the City charged with the responsibility for issuing the Series 2002 Bonds pursuant to this
resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in
accordance with the provisions of Section 148 of the Code, and Sections 1.103-13, 1.103-14 and
1.103-15 of the Regulations, stating that on the basis of facts, estimates and circumstances in
existence on the date of issue and delivery of the Series 2002 Bonds, it is reasonably expected
that the proceeds of the Series 2002 Bonds will be used in a manner that would not cause the
Series 2002 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and
the Regulations.
5.04 Arbitrage Rebate Exem tion.
(a) The City hereby represents that the Series 2002 Bonds qualify for the exception
for small governmental units to the arbitrage rebate provisions contained in Section 148(f) of the
Code. Specifically, the City represents:
10
(1) Substantially all (not less than 95%) of the proceeds of the Series 2002
Bonds (except for amounts to be applied to the payment of costs of issuance) will be used
for local governmental activities of the City.
(2) The aggregate face amount of all "tax-exempt bonds" (including warrants,
contracts, leases and other indebtedness, but excluding private activity bonds) issued by
or on behalf of the City and all subordinate entities thereof during 2002 is reasonably
expected not to exceed $5,000,000. To date in 2002, the City has issued no such tax-
exempt bonds, and in the calendar years 1997 through 2001, the City issued no tax-
exempt bonds, other than its $761,000 Water System Revenue Bond (DNRC Drinking
Water Revolving Loan Program), Series 2001, $1,581,500 Special Improvement District
No. 343 Bonds, $2,500,000 West Side District Taxable Tax Increment Urban Renewal
Revenue Bond, Series 2000 and $925,000 Sewerage System Revenue Refunding Bonds,
Series 1997.
(b) If notwithstanding the provisions of paragraph (a) of this Section 10.4, the
arbitrage rebate provisions of Section 148(f) of the Code apply to the Series 2001 Bond,
the Borrower hereby covenants and agrees to make the determinations, retain records and
rebate to the United States the amounts at the times and in the manner required by said
Section 148(f).
5.05 Information Reporting. The City shall file with the Secretary of the Treasury, not
later than August 15, 2002, a statement concerning the Series 2002 Bonds containing the
information required by Section 149(e) of the Code.
Section 6. Designation as Qualified Tax -Exempt Obligations. Pursuant to Section
265(b)(3)(B)(ii) of the Code, the City hereby designates the Series 2002 Bonds as "qualified
tax-exempt obligations" for purposes of Section 265(b)(3) of the Code. The City hereby
represents that it does not anticipate that obligations bearing interest not includable in gross
income for purposes of federal income taxation under Section 103 of the Code (including
refunding obligations as provided in Section 265(b)(3) of the Code and including "qualified
501(c)(3) bonds" but excluding other "private activity bonds," as defined in Sections 141(a) and
145(a) of the Code) will be issued by or on behalf of the City and all "subordinate entities" of the
City in 2002 in an amount greater than $10,000,000.
Section 7. Authentication of Transcri t. The officers of the City are hereby
authorized and directed to furnish to the Purchaser and to bond counsel certified copies of all
proceedings relating to the issuance of the Series 2002 Bonds and such other certificates and
affidavits as may be required to show the right, power and authority of the City to issue the
Series 2002 Bonds, and all statements contained in and shown by such instruments, including
any heretofore furnished, shall constitute representations of the City as to the truth of the
statements purported to be shown thereby.
Section 8. Continuing Disclosure.
(a) Purpose and Beneficiaries. To provide for the public availability of certain
information relating to the Bonds and the security therefor and to permit the original purchaser
11
and other participating underwriters in the primary offering of the Bonds to comply with
amendments to Rule 15c2-12 promulgated by the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to
continuing disclosure (as in effect and interpreted from time to time, the "Rule"), which will
enhance the marketability of the Bonds, the City hereby makes the following covenants and
agreements for the benefit of the Owners (as hereinafter defined) from time to time of the
Outstanding Bonds. The City is the only "obligated person" in respect of the Bonds within the
meaning of the Rule for purposes of identifying the entities in respect of which continuing
disclosure must be made. The City has complied in all material respects with any undertaking
previously entered into by it under the Rule.
If the City fails to comply with any provisions of this Section 8, 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 Section 8, 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 to the extent permitted by law. Notwithstanding anything
to the contrary contained herein, in no event shall a default under this Section 8 constitute a
default under the Bonds or under any other provision of this resolution.
As used in this Section 8, "Owner" or "Bondowner" means, in respect of a Bond, the
registered owner or owners thereof appearing in the bond register maintained by the Registrar or
any `Beneficial Owner" (as hereinafter defined) thereof, if such Beneficial Owner provides to
the Registrar evidence of such beneficial ownership in form and substance reasonably
satisfactory to the Registrar. As used herein, `Beneficial Owner" means, in respect of a Bond,
any person or entity which (i) has the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of the
Bond for federal income tax purposes.
(b) Information To Be Disclosed. The City will provide, in the manner set forth in
subsection (c) hereof, either directly or indirectly through an agent designated by the City, the
following information at the following times:
(1) on or before 270 days after the end of each fiscal year of the City, commencing with
the fiscal year ending June 30, 2002, the following financial information and operating data in
respect of the City (the "Disclosure Information") -
(A) the audited financial statements of the City for such fiscal year,
accompanied by the audit report and opinion of the accountant or government
auditor relating thereto, as permitted or required by the laws of the State of
Montana, 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, showing in comparative form such figures for the preceding
fiscal year of the City, prepared in accordance with generally accepted
accounting principles promulgated by the Financial Accounting Standards
Board as modified in accordance with the governmental accounting standards
12
promulgated by the Governmental Accounting Standards Board or as
otherwise provided under Montana 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 City, noting the discrepancies therefrom
and the effect thereof, and certified as to accuracy and completeness in all
material respects by the fiscal officer of the City; 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, dated March 14, 2002, 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
City Fiscal Officer to the best of his or her knowledge which certification may
be based on the reliability of information obtained from third party sources:
(1) audited financial statements of the Sewerage System Fund for the then
most recent completed fiscal year or if unavailable as of the date of
request, updated operating results for the Sewerage System Fund for the
then most recent completed fiscal year;
(2) a description of any additional borrowing or future financing for the
Sewerage System;
(3) updated figures for the number of Sewerage System Connections for the
then current fiscal year in format similar to the table "Historical Sewerage
System Connections" in the Official Statement;
(4) updated information of any changes in the user rates in a format similar to
the table "Current Sewerage System Rate Structure" in the Official
Statement;
(5) a list of the Sewerage System users for the then current fiscal year in
format similar to the table "Major Sewerage System Users" in the Official
Statement;
Notwithstanding the foregoing paragraph, if the audited financial statements are not
available by the date specified, the City shall provide on or before such date unaudited financial
statements in the format required for the audited financial statements as part of the Disclosure
Information and, within 10 days after the receipt thereof, the City shall provide the audited
financial statements.
Any or all of the Disclosure Information may be incorporated by reference, if it is
updated as required hereby, from other documents, including official statements, which have
been submitted to each of the repositories hereinafter referred to under subsection (c) or the SEC.
If the document incorporated by reference is a final official statement, it must be available from
13
the Municipal Securities Rulemaking Board. The City shall clearly identify in the Disclosure
Information each document so incorporated by reference.
If any part of the Disclosure Information can no longer be generated because the
operations of the City have materially changed or been discontinued, such Disclosure
Information need no longer be provided if the City includes in the Disclosure Information a
statement to such effect; provided, however, if such operations have been replaced by other City
operations in respect of which data is not included in the Disclosure Information and the City
determines that certain specified data regarding such replacement operations would be a Material
Fact (as defined in paragraph (3) hereof), then, from and after such determination, the Disclosure
Information shall include such additional specified data regarding the replacement operations.
If the Disclosure Information is changed or this Section 8 is amended as permitted by this
paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information
to be delivered hereunder, to the extent necessary, an explanation of the reasons for the
amendment and the effect of any change in the type of financial information or operating data
provided.
(2) In a timely manner, notice of the occurrence of any of the following events which is a
Material Fact (as hereinafter defined):
(A) Principal and interest payment delinquencies;
(B) Non-payment related defaults;
(C) Unscheduled draws on debt service reserves reflecting financial difficulties;
(D) Unscheduled draws on credit enhancements reflecting financial difficulties;
(E) Substitution of credit or liquidity providers, or their failure to perform;
(F) Adverse tax opinions or events affecting the tax-exempt status of the security;
(G) Modifications to rights of security holders;
(H) Bond calls;
(1) Defeasances;
(J) Release, substitution, or sale of property securing repayment of the securities;
and
(K) Rating changes.
As used herein, a "Material Fact" is a fact as to which a substantial likelihood exists that
a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a
Bond or, if not disclosed, would significantly alter the total information otherwise available to an
investor from the Official Statement, information disclosed hereunder or information generally
available to the public. Notwithstanding the foregoing sentence, a "Material Fact" is also an
event that would be deemed "material" for purposes of the purchase, holding or sale of a Bond
within the meaning of applicable federal securities laws, as interpreted at the time of discovery of
the occurrence of the event.
(3) In a timely manner, notice of the occurrence of any of the following events or
conditions:
14
(A) the failure of the City to provide the Disclosure Information
required under paragraph (b)(1) at the time specified thereunder;
(B) the amendment or supplementing of this Section 8 pursuant to
subsection (d), together with a copy of such amendment or supplement and
any explanation provided by the City under subsection (d)(2);
(C) the termination of the obligations of the City under this Section 8
pursuant to subsection (d);
(D) any change in the accounting principles pursuant to which the financial
statements constituting a portion of the Disclosure Information are prepared; and
(E) any change in the fiscal year of the City.
(c) Manner of Disclosure. The City agrees to make available the information described
in subsection (b) to the following entities by telecopy, overnight delivery, mail or other means, as
appropriate:
(1) the information described in paragraph (1) of subsection (b), to each then nationally
recognized municipal securities information repository under the Rule and to any state
information depository then designated or operated by the State of Montana as contemplated by
the Rule (the "State Depository"), if any;
(2) the information described in paragraphs (2) and (3) of subsection (b), to the
Municipal Securities Rulemaking Board and to the State Depository, if any; and
(3) the information described in subsection (b), to any rating agency then maintaining a
rating of the Bonds and, at the expense of such Bondowner, to any Bondowner who requests in
writing such information, at the time of transmission under paragraphs (1) or (2) of this
subsection (c), as the case may be, or, if such information is transmitted with a subsequent time
of release, at the time such information is to be released.
(d) Term, Amendments, Interpretation.
(1) The covenants of the City in this Section 8 shall remain in effect so long as any
Bonds are Outstanding. Notwithstanding the preceding sentence, however, the obligations of the
City under this Section 8 shall terminate and be without further effect as of any date on which the
City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative
action or final judicial or administrative actions or proceedings, the failure of the City to comply
with the requirements of this Section 8 will not cause participating underwriters in the primary
offering of the Bonds to be in violation of the Rule or other applicable requirements of the
Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or
amendatory thereof.
(2) This Section 8 (and the form and requirements of the Disclosure Information) may be
amended or supplemented by the City from time to time, without notice to (except as provided in
paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this
15
Council filed in the office of the recording officer of the City accompanied by an opinion of
Bond Counsel, who may rely on certificates of the City and others and the opinion may be
subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is
made in connection with a change in circumstances that arises from a change in law or regulation
or a change in the identity, nature or status of the City or the type of operations conducted by the
City, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule;
(ii) this Section 8 as so amended or supplemented would have complied with the requirements of
paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any
change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect
and interpreted at the time of the amendment or supplement was in effect at the time of the
primary offering; and (iii) such amendment or supplement does not materially impair the
interests of the Bondowners under the Rule.
If the Disclosure Information is so amended, the City agrees to provide,
contemporaneously with the effectiveness of such amendment, an explanation of the reasons for
the amendment and the effect, if any, of the change in the type of financial information or
operating data being provided hereunder.
(3) This Section 8 is entered into to comply with the continuing disclosure provisions of
the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the
Rule.
Section 9. Official Statement. The Official Statement relating to the Series 2002
Bonds is hereby approved and the determination of the City Manager that the Official Statement
is deemed final for purposes of SEC Rule 15c2-12 is ratified and confirmed. The officers of the
City are hereby authorized and directed to execute such certificates as may be appropriate
concerning the accuracy, completeness and sufficiency of the Official Statement and to deliver to
the Purchaser within seven business days after the date of adoption of this resolution copies of
the Official Statement in a reasonable quantity as requested by the Purchaser.
Section 10. Effective Date. This resolution shall be in full force and effect from and
after its passage.
Passed and adopted by the City Council of the City of Kalispell, Montana, this 18th day
of March, 2002.
Attest:
City Clerk
SEAL
16
ayor ..
EXHIBIT A
[Face of the Series 2002 Bonds]
UNITED STATES OF AMERICA
STATE OF MONTANA
COUNTY OF FLATHEAD
CITY OF KALISPELL
SEWERAGE SYSTEM REVENUE REFUNDING BOND
SERIES 2002
IM
Maturity Date of
Rate Date Original Issue CUSIP
July 1, April 1, 2002
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
FOR VALUE RECEIVED, THE CITY OF KALISPELL (the "City"), a duly organized
municipal corporation located in Flathead County, Montana, acknowledges itself to be specially
indebted and hereby promises to pay to the registered owner identified above or registered
assigns, solely from the Revenue Bond Account of its Sewerage System Fund, the principal
amount specified above on the maturity date specified above, or, if this Bond is prepayable as
stated below, on an earlier date on which it shall have been duly called for redemption, upon
presentation and surrender hereof at the principal office of the Bond Registrar hereinafter named,
with interest thereon, from April 1, 2002, or from such later date to which interest has been paid
or duly provided for, until the principal amount hereof is paid or until this Bond, if prepayable,
has been duly called for redemption, at the annual interest rate specified above. Interest is
payable semiannually on January 1 and July 1 in each year, commencing July 1, 2002, to the
registered owner of this Bond as such appears of record in the bond register as of the close of
business on the fifteenth day (whether or not a business day) of the immediately preceding
month. Interest is payable by check or draft mailed by U.S. Bank National Association, of
Billings, Montana, as Bond Registrar, Transfer Agent and Paying Agent, or its successor
designated under the Ordinance described herein (the "Bond Registrar").
Notwithstanding any other provisions of this Bond, so long as this Bond is registered in
the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any
A-1
other nominee of The Depository Trust Company or other securities depository, the Registrar
shall pay all principal of and interest on this Bond, and shall give all notices with respect to this
Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of
The Depository Trust Company or other securities depository as agreed to by the City.
This Bond is one of a series in the aggregate principal amount of $2,355,000 (the "Series
2002 Bonds"), all of like date of original issue and tenor except as to serial number, interest rate,
date, maturity date, denomination and redemption privilege, and all issued for the purposes of
financing improvements to the City's municipal sewerage system (the "System") and of
refunding certain valid outstanding sewerage system revenue bonds of the City, under authority
of and in conformity with the Constitution and laws of the State of Montana and the ordinances
and resolutions of the City, including Montana Code Annotated, as amended, Title 7, Chapter 7,
Parts 44 and 45, as amended, and Ordinance No. 859, as amended, and Resolution No. 4685 duly
enacted by the City Council on March 18, 2002 (collectively, the "Ordinance"). The Series 2002
Bonds are issuable only as fully registered bonds of a single maturity, in denominations of
$5,000 or any integral multiple thereof. The Series 2002 Bonds are issued on a parity and are
equally and ratably secured by the Net Revenues of the System with outstanding sewerage
system revenue bonds of the City, Series 1991A, dated as of November 1, 1991 (the
"Outstanding Bonds").
Reference is made to the Ordinance for a more complete statement of the terms and
conditions upon which the Series 2002 Bonds have 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 Outstanding Bonds and the Series 2002 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 2002 Bonds.
The Series 2002 Bonds maturing in the years 2002 through 2006 are not subject to
redemption before maturity, but Series 2002 Bonds having stated maturity dates in the years
2007 and later years are each subject to redemption at the option of the City, in whole or in part,
in inverse order of maturities and in $5,000 principal amounts selected by lot or any other
manner deemed fair by the Registrar, on July 1, 2006, and any business day thereafter, at a
redemption price equal to the principal amount being redeemed, plus interest accrued to the date
of redemption.
Notice of the call for redemption of any Series 2002 Bond will be mailed, at least thirty
days before said redemption date, by first-class mail to the registered owner thereof at the
address appearing in the registration books maintained by the Registrar; provided that any failure
to give or any defect in such notice shall not affect the validity of proceedings for the redemption
of any Bond not affected thereby. Official notice of redemption having been given as aforesaid,
the Series 2002 Bonds or portions thereof so to be redeemed shall, on the redemption date,
become due and payable at the redemption price therein specified, and from and after such date
(unless the City shall default in the payment of the redemption price) such Series 2002 Bonds or
portions thereof shall cease to bear interest. Upon partial redemption of any Series 2002 Bond, a
new Series 2002 Bond or Bonds will be delivered to the owner without charge, representing the
remaining principal amount outstanding.
A-2
This Bond is a negotiable investment security as provided in the Montana Uniform
Commercial Code. As provided in the Ordinance and subject to certain limitations set forth
therein, this Bond is transferable upon the books of the City at the principal office of the Bond
Registrar, by the registered owner hereof in person or by his attorney duly authorized in writing,
upon surrender hereof together with a written instrument of transfer satisfactory to the Bond
Registrar, duly executed by the registered owner or his attorney; and may also be surrendered in
exchange for Series 2002 Bonds of other authorized denominations. Upon such transfer or
exchange, the City will cause a new Series 2002 Bond or Bonds to be issued in the name of the
transferee or registered owner, of the same aggregate principal amount, bearing interest at the
same rate and maturing on the same date, subject to reimbursement for any tax, fee or
governmental charge required to be paid with respect to such transfer or exchange.
The City and the Bond Registrar may deem and treat the person in whose name this Bond
is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose
of receiving payment and for all other purposes, and neither the City nor the Bond Registrar shall
be affected by any notice to the contrary.
IT IS CERTIFIED, RECITED, COVENANTED AND AGREED that the City has fixed
and established and will collect reasonable rates and charges for the services and facilities
afforded by the System and has created a special Sewerage System Fund into which the gross
revenues of the System, including all additions thereto and replacements and improvements
thereof, 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 of the System
then on hand, an amount equal to not less than the sum of one -sixth of the interest due within the
next six months and one -twelfth of the principal due within the next twelve months with respect
to all Bonds secured by the Ordinance and payable from that Account, and in which shall be
established and maintained a reserve balance equal to the maximum amount of principal and
interest to become due on the Series 2002 Bonds and all other Bonds in any subsequent fiscal
year; that the Revenue Bond Account will be used only to pay the principal of, premium, if any,
and interest on the Series 2002 Bonds, the Outstanding Bonds and any other additional Bonds
issued pursuant to and secured by the Ordinance on a parity therewith, and such rates and
charges 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 125% 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 2002 Bonds and
Outstanding 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, whether or not such
obligation shall also constitute a general obligation and indebtedness of the City, unless the lien
thereof shall be expressly made subordinate to the lien of the Series 2002 Bonds, the Outstanding
Bonds and additional parity Bonds on such Net Revenues; that all provisions for the security of
the holder of this 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 City to be done, to exist, to happen
and to be performed in order to make this Series 2002 Bond a valid and binding special
obligation of the City according to its terms have been done, do exist, have happened and have
A-3
been performed as so required; and that this Bond and the 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 2002 Bonds does not cause either the general or the
special indebtedness of the City to exceed any constitutional or statutory limitation; and that the
opinion attached hereto is a true copy of the legal opinion given by Bond Counsel with reference
to the Series 2002 Bonds, dated the date of original issuance and delivery of the Series 2002
Bonds.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Ordinance until the Certificate of Authentication hereon shall have
been executed by the Bond Registrar by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the City of Kalispell, Flathead County, Montana, by its City
Council, has caused this Bond and the certificate hereof to be executed by the facsimile
signatures of the Mayor, City Manager and Finance Director and has caused a facsimile of the
official seal of the City to be imprinted hereon.
(Facsimile Seal)
(Facsimile Signature)
Mayor
(Facsimile Signature)
City Manager
(Facsimile Signature)
Finance Director
A-4
Date:
CERTIFICATE OF AUTHENTICATION
This is one of the Sewerage System Revenue Refunding Bonds, Series 2002 delivered
pursuant to the Ordinance mentioned within.
U.S. BANK NATIONAL ASSOCIATION,
as Bond Registrar, Transfer Agent
and Paying Agent
By
Authorized Representative
A-5
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants
in common
TEN ENT -- as tenants
by the entireties
UTMA............ Custodian .................
(Gust) (Minor)
under Uniform Gifts to
3T TEN -- as joint tenants Minor Act ............................................
with right of (State)
survivorship and
not as tenants in
common
Additional abbreviations may also be used.
ASSIGNMENT
FOR VALUED RECEIVED the undersigned hereby sells, assigns and transfers unto
the within Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints attorney to transfer the within
Bond on the books kept for registration thereof, with full power of substitution in the premises.
Date:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE:
SIGNATURE GUARANTEE
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Bond Registrar,
which requirements include membership
or participation in STAMP or such other
"signature guaranty program" as may be
determined by the Bond Registrar in
addition to or in substitution for STAMP,
all in accordance with the Securities
Exchange Act of 1934, as amended.
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond in every
particular, without alteration, enlargement
or any change whatsoever.
oni
EXHIBIT B
NOTICE OF REDEMPTION
Sewerage System Revenue Bonds, Series 1991
Dated, as originally issued, as of April 15, 1991
City of Kalispell, Flathead County, Montana
NOTICE IS HEREBY GIVEN that the City of Kalispell, Flathead County, Montana, has
called for redemption all bonds of the issue of its Sewerage System Revenue Bonds, Series 1991,
dated, as originally issued, as of April 15, 1991, which mature on July 1 in the years and bear
interest and CUSIP numbers as set forth below:
Year
Interest Rate
CUSIP No.
2002
6.70%
483423 CR8
2003
6.80
483423 CS6
2004
690
483423 CT4
2005
7.00
483423 CU1
2006
7.05
483423 CV9
2007
7.10
483423 CW7
2008
7.15
483423 CX5
2009
7.20
483423 CY3
2010
7.25
483423 CZO
2011
7.25
483423 DA4
Such bonds have been called for redemption on July 1, 2002, at the redemption price of
101 % of the principal amount thereof plus interest accrued to July 1, 2002.
Holders of such bonds maturing in said years should surrender their bonds for payment
on July 1, 2002 to U.S. Bank National Association, of Billings, Montana (as successor to First
Trust Company of Montana National Association), at its operations center in St. Paul,
Minnesota, for payment on January 1, 2003. Holders of such bonds maturing in said years
should surrender their bonds for payment at U.S. Bank National Association, 180 East Fifth
Street, 4th Floor - Bond Drop Window, St. Paul, Minnesota, or if by mail to U.S. Bank National
Association, P. O. Box 64111, St. Paul, Minnesota 55164-0111. For more information, please
call Bondholder Relations (612) 973-6700.
In compliance with the Interest and Dividend Compliance Act of 1983, as amended by
the Energy Policy Act of 1992, a portion of the principal amount of the bonds to be redeemed
will be withheld unless the Paying Agent is furnished with a completed IRS W-9 Form. A W-9
Form may be obtained from the Paying Agent or other bank or financial institution.
On July 1, 2002, the redemption price of such bonds will become due and payable and
interest on such bonds shall cease to accrue, and the holders thereof shall have no further rights
with respect thereto except to receive the redemption price so deposited.
Dated: , 2002.
BY ORDER OF THE CITY COUNCIL
EXHIBIT C
NOTICE OF REDEMPTION
Sewerage System Refunding Revenue Bonds, Series 1997
Dated, as originally issued, as of May 15, 1997
City of Kalispell, Flathead County, Montana
NOTICE IS HEREBY GIVEN that the City of Kalispell, Flathead County, Montana, has
called for redemption all bonds of the issue of its Sewerage System Refunding Revenue Bonds,
Series 1997, dated, as originally issued, as of May 15, 1997, which mature on July 1 in the years
and bear interest and CUSIP numbers as set forth below:
Year
Interest Rate
CUSIP No.
2002
4.90%
483423 DG1
2003
5.00
483423 DH9
2004
5.10
483423 DJ5
2005
5.20
483423 DK2
2006
5.25
483423 DLO
Such bonds have been called for redemption on July 1, 2002, at the redemption price of
101% of the principal amount thereof plus interest accrued to July 1, 2002.
Holders of such bonds maturing in said years should surrender their bonds for payment
on July 1, 2002 to Wells Fargo Bank Montana, as successor to Norwest Capital Management &
Trust Co., as paying agent, for payment on or before July 1, 2003. Holders of such bonds
maturing in said years should surrender their bonds for payment at the principal office of the
paying agent at Wells Fargo Bank, Corporation Trust Operations, 6th and Marquette Avenue,
Minneapolis, Minnesota 55479-0113.
In compliance with the Interest and Dividend Compliance Act of 1983, as amended by
the Energy Policy Act of 1992, a portion of the principal amount of the bonds to be redeemed
will be withheld unless the Paying Agent is furnished with a completed IRS W-9 Form. A W-9
Form may be obtained from the Paying Agent or other bank or financial institution.
On July 1, 2002, the redemption price of such bonds will become due and payable and
interest on such bonds shall cease to accrue, and the holders thereof shall have no further rights
with respect thereto except to receive the redemption price so deposited.
Dated: , 2002.
BY ORDER OF THE CITY COUNCIL
C-1