n~Ibnairch Engineering, Inc.

February 5, 2016

FEB 8 2016Mr. Jeff Derouen, Executive Director Public ServicePublic Service Commission Commission211 Sower Blvd.

Frankfort, KY 40602

Re: Case No. 2015-00197

Cumberland County Water District

Dear Mr. Derouen:

Per instructions included in the PSC Order issued to the Cumberland County WaterDistrict on August 18, 2015, please find attached an executed copy of the AssistanceAgreement with the Kentucky Infrastructure Authority (KIA).

Should you need additional information, please advise.

Sincerely,

/lcc Mudd, P.E. 'Project Engineer

/jlm

cc: Matthew Dyer, Office ManagerCumberland County Water District

RECEIVED

556 Carlton Dr. • Lawrenceburg. Ky. 40342 • 502-839-1310 • Fax 502-839-1373

received8 2016

^bllc Service'"Omm/ss/on

ASSISTANCE AGREEMENT

BETWEEN THE KENTUCKY INFRASTRUCTURE AUTHORITY

AND

CUMBERLAND COUNTY WATER DISTRICT

TRANSCRIPT OF PROCEEDINGS

PECK, SHAFFER & WILLIAMS, A DIVISION OFDINSMORE & SHOHL LLP

COVINGTON, KENTUCKY

INDEX TO TRANSCRIPT OF PROCEEDINGS

In re: Assistance Agreement between Kentucky Infrastructure Authority (the "Authority") andCumberland County Water District (the "Governmental Agency"), dated as of August 1,2015

1. Opinion ofCounsel to the Governmental Agency.

2. General Closing Certificate of the Govermnental Agency.

3. Assistance Agreement.

4. Resolution of the Governmental Agency authorizing the Assistance Agreement.

5. Extract of Minutes of the Meeting of the Board of Commissioners adopting Resolution

6. Extract of Minutes of the Authority authorizing the Assistance Agreement.

7. Commitment Letter, including Credit Analysis.

DISTRIBUTION LTST

Alvin Pharis

Chairman

Cumberland County Water District133 Lower River Street

Burkesville, Kentucky42717

Ms. Brandi Norton

KentuckyInfrastructure Authority1024 Capital Center Drive, Suite 340Frankfort, Kentucky 40601

Mr. Buddy GriffinWater Infrastructure BranchEnergy and Environment Cabinet200 Fair Oaks, 4"* FloorFrankfort, Kentucky40601

Mr. Charles Lush, Jr.U.S. Bank National Association

Corporate Trust ServicesLocator CN-KY-0850

One Financial SquareLouisville, Kentucky 40202

Dirk M. Bedarff, Esq.Pecl^ Shaffer &Williams,

a division of Dinsmore & Shohl LLP50 E Rivercenter Blvd.

Suite 1150

Covington, Kentucky 41011

98I2706vl

Commonwealth of Kentucky'

Office of thf. Cumberland County' Attorney

Lindsf.y G. Bell400 Pi our SovARL

P.O. Dii.x 720

BiRK'Esviu r., Kentickv 42717(270)864-2602

FAX (270) 864-1575

Kentuclq' Infrastructure Authority1024 Capital Center Drive Suite 340Frankfort, Kentucky 40601

August 10^ 2015

RE: Assistance Agreement by and between Kentucky Infrastructure Authorityand Cumberland County Water District, dated as of August 1,2015

Ladies and Gentlemen:

The undersigned is an attorney at laYv duly admitted to the practice of law in theCommonYvealth of Kentucky and is legal coimscl to the Cumberland County Water District,hereinafter referred to as the "Governmental Agency". I am familiar with the organization andexistence of the Governmental Agency and the laws of the CommonYvealth applicable thereto.Additionally, I am familiar with the drinking water supply project (the "Project") with respect towhich the Assistance Agreement by and between the Kentucky Infrastructure Authority("Authoritj'") and the Governmental Agency is being authorized, executed and delivered.

I have revicYved the form of Assistance Agreement by and between the Authoritj' and theGovernmental Agency, the resolution or ordinance of the governing authority' authorizing theexecution and delivery of said Assistance Agreement.

Based upon my review I am of the opinion that:

1) The Governmental Agency is a duly organized and existing political subdivisionor body politic of the Commonwealth of Kentucky vaKdly existing under the Constitution andstatutes of the Commonwealth of Kentucky.

2) The Assistance Agreement has been duly executed and delivered by theGovernmental Agency and is a valid and binding obligation of the Governmental Agencyenforceable in accordance with its terms, except to the extent that the enforceability thereof maybe limited by equitable principles and by bankruptcy, reorganization, moratorium, insolvencyorsimilar laws heretofore or hereafter enacted relating to or affeeting the enforcement of creditors'rights or remedies generally.

3) The Governmental Agency has all necessary power and authority (i) to enter into,perform and eonsummate all transactions contemplated by the Assistance Agreement, and (ii) toexecute and deliver the documents and instruments to be executed and delivered by it inconnection with the construction of the Project.

Page 2Augxist 10*'', 2015

4) The Service Charges, as defined in the Assistance Agreement, are in full forceand effect and have been duly and lawfully adopted by the Governmental Agency.

5) The executionand delivery of the AssistanceAgreement and die performance bythe Governmental Agency of its obligations thereunder does not and will not conflict with,violate or constitute a default under any court or administrative order, decree or ruling, or anylaw, statute, ordinance or regulation, or any agreement, indenture, mortgage, lease, note or otherobligation or instrument, binding upon the Governmental Agency, or any of its properties orassets. The Governmental Agency has obtained each and every authorization, consent, permit,approval or license of, or filing or registration with, any court or governmental department^comffllsslon, boai^ bureau, agency or instrumentality, or any spedflcaiiy granted exemptionfrom any of the foregoing, that is necessary to the valid execution, delivery or performance bythe Governmental Agency of the Assistance Agreement and the imposition of the ServiceCharges.

6) To the best of my knowledgeafter due inquiry there is no action, suit, proceedingsor Investigation at law or in equity before any court, public board or body pending or threatenedagainst, affectingor questioning ® the valid existeuce of the Governmental Agency, pi) the ri^tor title of the members and officers of the Governmental Agency to their respective positions,(Ili) the authorization, execution, deHveiy or enforceability of the Assistance Agreement or theapplication of any monies or securitytherefor, (iv) the construction of the Project, (v)the validityor enforceability of the ServiceCharges or (vi) that would have a material adverse impact on theability of the Governmental Agencyto perform its obligationsunder the AssistanceAgreement

7) None of the proceedings or authorityheretofore had or taken by the GovernmentalAgency for the authorization, execution or deliveryof the Assistance Agreement has or havebeen repealed, rescinded, or revoked.

8) To the best of my knowledge,the Governmental Agencyhas fuDy complied withall federal and state labor and procurement laws in connection with the construction of tiieProject.

9) All proceedings and actions of the GovernmentalAgency with respect to whichthe Assistance Agreement is to be delivered were had or taken at meetingsproperly convenedand heldin substantial compliance with the applicable provisions ofSections 61.805 to 61.850 ofthe Kentucky Revised Statutes.

yours.

G.Bdl

LGB/rm

Re: Assistance Agreement between the Kentucky Infrastructure Authority ("KIA")and Cumberland County Water District (the "Governmental Agency"), dated as ofAugust 1,2015

GENERAL CLOSING CERTIFICATE OF GOVERNMENTAL AGENCY

In connection with the above-captioned Assistance Agreement (the "AssistanceAgreement"), the Governmental Agency, through its imdersigned duly authorized officer herebycertifies, represents, warrants and covenantsas follows:

1. No event of default exists, or with the passage of time will exist, under theAssistance Agreement and the representations and warranties set forth in the AssistanceAgreement are true and correct as ofthe date hoeof.

2. The Governmental Agency has examined and is familiar with proceedings of the-governing body—of the Go\fenmiental Agency approving the Assistance Agieement andauthorizing its negotiation, execution and delivery and such proceedings were duly enacted oradopted at a meeting of the governing body of the Governmental Agency at which a quorum waspresent and acting throughout; such proceedings are in full force and effect and have not beensuperseded, altered, amended or repealed as of the date hereof; and such meeting was duly calledand held in accordance with law.

3. The Governmental Agency is a duly organized and validly existing politicalsubdivision of the Commonwealth of Kentucky with full power to own its properties, conductitsaffairs, enter into the Assistance Agreement and consummate the transactions contemplatedthereby.

4. The negotiation, execution and delivery of the Assistance Agreement by theGovernmental Agaicy and the consummation of the transactions contemplated thereby by theGovernmental Agoicy have been duly authorized by all requisite action of the governing body ofthe Governmental Agency.

5. The Assistance Agreement has been duly executed and delivered by theGovernmental Agency and is a valid and binding obligation of the GovCTnmental Agencyenforceable in accordance with its terms, except to the extent that the enforceability thereofmaybe limited by equitable principles and by bankruptcy, reorganization, moratorium, insolvency orsimilar laws heretofore or hereafter enacted relating to or affecting the enforcement of creditors'rights or remedies generally.

6. There is no controversyor litigationofany nature pending, or to the knowledgeofthe Governmental Agency after diligait inquiry, threatened, in any court or before any board,tribunal or administrative body, to challenge in any manner the authority of the GovernmentalAgency or its governing body to make payments under the Assistance Agreement or to constructthe Project, or to challenge in any manner the authority of the Governmental Agency or itsgoverning body to take any of the actions which have been taken in the authorization or deliveryof the Assistance Agreement or the construction of the Project, or in any way contesting oraffecting the validity of the Assistance Agreement, or in any way questioning any proceedingstaken with respect to the authorization or delivery by the Governmental Agency of the

Assistance Agreement, or the application of the proceeds thereof or the pledge or application ofany monies or security provided therefor, or in any way questioning the due existence or powersof the Governmental Agency, or otherwise wherein an unfavorable decision would have anadverse impact on the transactions authorized in connection with the Assistance Agreement.

7. The authorization and delivery of the Assistance Agreement and theconsummation of the transactions contemplated thereby will not constitute an event of default orviolation or breach, nor an event which, with the giving of notice or the passage of time or both,would constitute an event of default or violation or breach, under any contract, agreement,instrument, indenture, lease, judicial or administrative order, decree, rule or regulation or otherdocumentor law affectingthe Governmental Agency or its governingbody.

8. All actions taken by the Governmental Agency in connection with the AssistanceAgreement and the loan described therein and the Project, as defined in the AssistanceAgreement, have been in full compliance with the provisions of the Kentucky Open MeetingsLaw, KRS61.f

9. The Governmental Agency has all licenses, permits and other governmentalapprovals required to own, occupy, operate and maintain the Project and to enter into theAssistance Agreement, is not in violation of and has not received any notice of an allegedviolation of any zoning or land use laws applicable to the Governmental Agency Project, and hasfull right, power and authority to perform the acts and things as provided for in the AssistanceAgreement.

10. The individuals named below are the duly elected or appointed qualified andacting incumbents in the office of the Governmental Agency indicated after their respectivenames and the signatures subscribed above their names are their genuine signatures.

WITNESS our signatures, this {ofn day of _,2015.

Attest:

By:Name: /^arkTitle: Secretary

98I2686VI

GOVERNMENTAL AGENCY:

CUMBERLAND COUNTY WATER DISTRICT

By:Name: Alvin Pharis

Title; Chairman

KENTUCKY INFRASTRUCTURE AUTHORITY

ASSISTANCE AGREEMENT

FUND?

PROJECT NUMBER; F15-001

BORROWER: Cumberland County Water District

BORROWER'S ADDRESS: 133 Lower Rivo" Street

Burkesville, Kentucky 42717

DATE OF ASSISTANCE AGREEMENT: August 1, 2015

CFDA NO.: 66.458

SECTION 2.1.

SECTION 2.2.

SECTION 3.1.

SECTION 3.2.

SECTION 3.3.

SECTION 3.4.

ASSISTANCE AGREEMENT

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Representations and Warranties ofAuthority 6Rq)rescntations and Warranties of the Governmental Agency 6

ARTICLE m

AUTHORITY'S AGREEMENT TO MAKE LOAN; TERMS

Determination ofEligibility 9Principal Amount ofLoan Established; Loan Paymaits;

Disbursement ofFunds 9

Governmental Agency's Right to Prepay Loan 9Subordination ofLoan 9

ARTICLE IV

CONDITIONS PRECEDENT TO DISBURSEMENT;REQUISITION FOR FUNDS

SECTION 4.1. Covenants ofGovernmental Agency and Conditions ofLoan 11SECTION 4.2. Additional Conditions to Disbursement Required

Under the Federal Agreement 13SECTION 4.3. Disbursements of Loan; Requisition for Funds 14

ARTICLE V

CERTAIN COVENANTS OF THE GOVERNMENTAL AGENCY;PAYMENTS TO BE MADE BY GOVERNMENTAL AGENCY TO THE AUTHORITY

SECTION 5.1.

SECTION 5.2.

SECTION 5.3.

SECTION 5.4.

SECTION 5.5.

SECTION 5.6.

SECTION 5.7.

Imposition of Sorice Charges 16Governmental Agency's Obligation to Repay Loan 16Covenant to Adjust Service Charges 16Adequacy ofService Charges 16Covenant to Establish Maintenance and Replacement Reserve 17Covenant to Charge Sufficient Rates; Reports; Inspections 17Segregation of Funds 17

ARTICLE VI

OTHER COVENANTS OF THE GOVERNMENTAL AGENCY

Further Assurance 18

Completion ofProject 18Establishment ofCompletion Date 18Commitment to Operate 18Continue to Operate 18Tax Covenant 18

Accounts and Reports 18Financial Statanents 19

General Compliance With All Duties 19General 19

Further Covenants Under the Federal Agreement 19Continuing Disclosure Obligation 21

ARTICLE Vn

SECTION 6.1.

SECTION 62.

SECTION 6.3.

SECTION 6.4.

SECTION 6.5.

SECTION 6.6.

SECTION 6.7.

SECTION 6.8.

SECTION 6.9.

SECTION 6.10.

SECTION 6.11.

SECTION 6.12

MAINTENANCE, OPERATION, INSURANCE AND CONDEMNATION

SECTION 7.1.

SECTION 12.

SECTION 7.3

SECTION 7.4.

SECTION 7.5.

SECTION 7.6.

SECTION 7.7.

SECTION 7.8.

SECTION 7.9.

SECTION 7.10.

SECTION7.il.

SECTION 7.12.

SECTION 8.1.

SECTION 8.2.

SECTION 8.3.

SECTION 8.4.

SECTION 8.5.

SECTION 8.6.

SECTION 8.7.

Maintenance ofSystem 22Additions and Imp-ovements 22System Not to be Disposed of 22Compliance with State and Federal Standards 22Access to Records 22

Covenant to Insure - Casualty 22Authority as Named Insured 23C-ovenant to Insure - Liability 23Covenant Regarding Woricers' Compensation 23Application ofC-asualty Insurance Proceeds 23Eminent Domain 23

Flood Insurance 24

ARTICLE Vin

EVENTS OF DEFAULT AND REMEDIES

Events of Default Defined 25

Remedies on Default 25

Appointment ofReceiver 26No Remedy Exclusive 26Consent to Powers ofAuthority Under Act 26Waivers 26

Agreement to Pay Attorneys' Fees and Expenses 26

11

ARTICLE IX

MISCELLANEOUS PROVISIONS

SECTION 9.1. Approval not to be Unreasonably Withheld 27SECTION 9.2. Approval 27SECTION 9.3. EtfecUve Date 27

SECTION 9.4. Binding Effect 27SECTION 9.5. Scverability 27SECTION 9.6. Assignability 27SECTION 9.7. Execution in Counterparts 27SECTION 9.8. Applicable Law 27SECTION 9.9. Captions 27

SIGNATURES 28

EXHIBIT A - PROJECT SPECIFICS A-1

EXHIBIT B - REQUISITION FORM B-1EXHIBIT C - SCHEDULE OF SERVICE CHARGES C-1

EXHIBIT D - RESOLUTION D-1

EXHIBIT E - LEGAL OPINION E-1

EXHIBIT F - SCHEDULE OF PAYMENTS F-1

EXHIBIT G - ADDITIONAL COVENANTS AND AGREEMENTS G-1

111

ASSISTANCE AGREEMENT

This Assistance Agreement made and entered into as of the date set forth on the coverpage hereof (the "Assistance Agreement") by and between the KENTUCKYINFRASTRUCTURE AUTHORITY, a body corporate and politic, constituting a publiccorporation and governmental agency and instrumentality of the Commonwealth of Kentucky(the "Authority") and the Governmental Agency identified on the cover of this AssistanceAgreement (the "Governmental Agency");

WITNESSETH

WHEREAS, the General Assembly of the Commonwealth of Kentucky, being the dulyand legally constituted legislature of Kentucky at its 1988 Regular Session, enacted House Bill217 amending Chapter 224A of the Kentucky Revised Statutes (the "Act"), creating the"KentuckyInfiustructure Authority" to serve the public purposesidentified in the Act; and

WHEREAS, the Authority has established its Program as hereinafter defined, for thepurpose of providing financial assistance to Governmental Agencies, as defined in the Act, inconnection with the acquisition and construction of Projects, as defined in the Act, in order topreserve, protect, upgrade, conserve, develop, utilize and manage the resources of theCommonwealth of Kmtucky (the "Commonwealth") for the protection and preservation of thehealth, safety, convenience, and welfare of the Commonw^th and its citizens, and in thatrespect to assist and cooperate with Governmental Agenciesin achieving such purposes; and

WHEREAS, the Program is fimded in part, pursuant to the Capitalization GrantOperating Agreement between the Authority and the U.S. Environmental Protection Agencydated as of November 1, 1998, as amended, supplemented or restated fi^m time to time (the"Federal Agreement") under which the Authority is responsible for providing certain "matchfunding" described in the Federal Agreement; and

WHEREAS, the Authority has issued, and will issue fiiom time to time, its revalue bondspursuant to a General Trust Indenture dated as of February 1,2000 (the "Indenture") between theAuthority and U.S. Bank, National Association, as lawful successor in interest to National CityBank of Kentucky(the "Trustee"),in order to provide the "matchfunding" for the Program; and

WHEREAS, the Governmental Agencyhas determined that it is necessary and desirableto finance the acquisition and construction of the Project, as hereinafter defined, and theAuthority has detomined that the Project is a Project within the meaning of the Act and theIndenture, therebyqualifying for financial assistance fi-om the Authority; and

WHEREAS, the Governmental Agency desires to enter into this Assistance Agreemaitwith the Authority for the purpose of securing fiom the Authority the repayable Loanhereinafteridentified; and

WHEREAS, the Authority is willing to cooperate with the Governmental Agency inmaking available the Loan pursuant to the Act and the Indenture to be applied to the Projectupon the conditions hereinafter enumerated and the covenants by the Governmental Agencyherein contained to repay the Loanand the interest thereon fiom the sourcesherein provided, alljishereinafta more specifically provided; and

WHEREAS, the Authority and the Governmental Agency have determined to raiter intothis Assistance Agreement pursuant to the terms of the Act and the Indenture and to set forththeir respective duties, ri^ts, covenants, and obligations with respect to the acquisition,construction and financing of the Project and the repayment of the Loan and the interest thereon;

NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUALCOVENANTS HEREIN SET FORTH, THE LOAN HEREBY EFFECTED AND OTHERGOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBYACKNOWLEDGED BY EACH PARTY, THE PARTIES HERETO MUTUALLYCOVENANT AND AGREE, EACH WITH THE OTHER AS FOLLOWS:

ARTICLE I

DEFINITIONS

All of the terms utilized in this Assistance Agreement will have the same definitions andmeaning as ascribed to them in the Act and the Indenture, which Act and Indenture are herebyincorporated in this Assistance Agreementby reference, the same as if set forth hereby verbatim;provided, however, that those definitions utilized in the Act and the Indenture having generalapplication are hereby modified in certain instances to apply specifically to the GovernmentalAgency and its Project.

"Act" shall mean Chapter 224A of the Kentucky Revised Statutes, as amended.

^Administrative Fee" means the charge of the Authority for the servicing of the Loan,whidi is the annual perc«itage charged against the unpaid principal balance of the Loan asidentified in the Project Specifics.

"Architects" means the firm of consulting architects employed by the GovernmentalAgency in connection with the Project identified in the Project Specifics.

"AssistanceAgreement" shall mean this agreement made and entered into by and betweena Governmental Agency and the Authority, as authorized by the Act, providing for a Loan to theGovernmental Agency by the Authority, and for the repayment thereof to the Authority by theGovernmental Agency.

"Authority" shall mean the Kentucky Infi-astructure Authority created by the Act, a bodycorporate and politic, constituting a public corporation and a governmental agency andinstrumentality of the Commonwealth ofKentucky, or such other designation as may be effectedby future amendments to the Act.

"Bond" or "Bonds" or "Revenue Bonds" shall mean any Kentucky InfirastructureAuthority Bond or Bonds, or the issue of such Bonds, as the case may be, authenticated anddelivered under the Indenture.

"Business Day" shallmean any day other than a Saturday, Sunday or other legalholidayon which the general offices ofthe Commonwealth are closed.

"Cabinet" means the Energy and Environment Cabinet of the Commonwealth.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and shall include theRegulations of the UnitedStatesDepartment of the Treasurypromulgated thaeunder.

"Commonwealth" shall mean the Commonwealth of Kentucky.

"Construction" shall mean construction as defmed in the Act

"Debt Obligations" shall mean those outstanding obligations of the GovernmentalAgency identified in the Project Specifics outstanding as of the date of this AssistanceAgreement or issued in the future in accordance with the terras hereof, payable fix)m the incomeand revenues of the System.

"Drinking Water Supply Projecf shall mean the planning, design and construction ofdrinking water treatment and distribution systems, including expenditures to address Federal Acthealth goals, or to address situations where compliance standards have been exceeded or toprevent future violations of rules, and may further include drinking water treatment plants,including basins for rapid mix, flocculation, coagulation, filtration, pre-treatment disinfection,and disinfection prior to entry to the distribution system; distribution systems; storage tanks;intake lines and short-term water storage; clearwells; drilled wells and wellhead areas; and anyother structure or facility considered necessary by the Cabinet to the efBcient and sanitaryoperation ofa public water system and complies wifli the requirements of the Federal Act.

"Engineers" means the firm of consulting engineers employed by the GovernmentalAgency in connection with the Project identified in the Project Specifics.

"Federal Act" shall mean the Federal Safe Drinking Water Act, as amended, 42 U.S.C.Section 1401, etseq.

"GovernmentalAgency" shall mean any incoiporated city or municipal coiporation, orother agency or unit of government within the Commonwealth, now havingor hereafto" grantedthe authority and power to finance, acquire, construct, and operate infiastructure projects,including specifically but not by way of limitation, incorporated cities, counties, including anycounties containing a metropolitan sewer district, sanitation districts, water districts, sewerconstruction districts, metropolitan sewer districts, sanitation taxing districts, and any otheragencies, commissions, districts, or authorities (either acting alone, or in combination with oneanother pursuant to any regional or area compact, or multi-municipal agreement), now orhereafter established pursuant to the laws of the Commonwealth having and possessing suchdescribed powers; and for the purposes of this Assistance Agreement shall mean theGovernmental Agency identified in the Project Specifics.

"Indenture" shall mean the General Trust Indenture dated as of February 1,2000 betweenthe Authority and the Trustee.

"Interagency Agreement" means the Memorandum of Understanding dated as of July 1,1999 between the Authority and the Cabinet, as the same may be amended orsupplemented ^mtime to time.

"Loan" shall mean the loan effected under this Assistance Agreement from the Authorityto the Governmental Agency in the principal amount set forth in the Project Specifics, for thepurpose ofdefraying the costs incidental to the Construction of the Project.

"Loan Rate" means the rate of interest identified in the Schedule ofPayments.

"Person" shall mean any individual, firm, partnership, association, corporation orGovernmental Agency.

"Program" shall mean the program authorized by KRS 224A.1115 and the Indenture asthe "federally assisted drinking water revolving fund" for financing Projects through Loans bythe Authority to Governmental Agencies and shall not be deemed to mean or include any otherprograms of the Authority.

"Projecf shall mean, when used gmerally, a Drinking Water Supply Project, and whenused in specific reference to the Governmental Agaicy, the Project described in the ProjectSpecifics.

"Project Specifics" means those specific details of the Project identified in Exhibit Ahereto, all ofwhich are incorporated by reference in this Assistance Agreement.

"Requisitionfor Funds" means the form attached ha"etoas Exhibit B to be utilizedby theGovernmental Agency in obtaining disbursements of the Lx)an fiom the Authority as theConstruction ofthe Project progresses.

"Resolution" means the resolution of the Governmental Agency attached haeto asExhibit D authorizing the execution of this Assistance Agreement

"Schedule ofPayments" means the principal and interest requirements of the Loan as setforth in Exhibit F hereto, to be established and agreed to upon or prior to the completion of theProject.

"Schedule ofService Charges" shall mean those general charges to be imposed by theGovernmental Agency for services provided by the System, as set forth in Exhibit C hereto, andsuch otha revenues identified in Exhibit C hereto fiom which the Loan is to be r^aid, whichSchedule of Savice Charges diall be in full force and effect to the satisfaction of the Aufiiorityprior to the disbursement ofany portion of the Loan hereunder,

"Service Charges" shall mean any monthly, quartaly, semi-annual, or annual charges,surcharges or improvement benefit assessments to be imposed by a Governmental Agaicy, or bythe Authority, in respect of the System, which Service ^ai^ges arise by reason ofthe existenceof, and requiranent of, any Assistance Agreement and for the purposes of this AssistanceAgreement said Service Charges shall be no less than thoseset forfii in the Schedule of ServiceCharges.

"System" shall mean the wata system owned and operated by the Governmental Agencyof which the Project shall become a part and from the earnings of which (rqjresented by theService Chages) the Govemmatal Agency shall repay the Authority the Loan hereunda.

ARTICLE U

REPRESENTATIONS AND WARRANTIES

Section 2.1. Representations and Warranties of Authority. The Authority represents andwarrants for the benefit ofthe Governmental Agency as follows:

(A) The Authority is a body corporate and politic constituting a governmental agencyand instrumentality of the Commonwealth, has all necessary power and Authority to enter into,and perform its obligations under, this Assistance Agreement, and has duly authorized theexecution and delivary of this Assistance Agreonent.

(B) Neither the execution and delivery hereof nor the fulfillment of or compliancewith the terms and conditions hereof, nor the consummation of the transactions contemplatedhereby, conflicts with or results in a breach of the terms, conditions and provisions of anyrestriction or anyagreement or instrument to which the Authority is now a partyor by which theAuthority is bound, or constitutes a default under any of the foregoing.

(C) To the knowledge of the Authority, there is no litigation or proceeding pending orthreatened against the Authority or any other person affecting the right of the Authority toexecute or deliver this Assistance Agreement or to comply with its obligations under thisAssistance Agreement. Neither the execution and delivery of this Assistance Agreement by theAuthority, nor compliance by the Authority with its obligations xmder this AssistanceAgreement, require the approv£d of any regulatory body, or any other entity, which approval hasnot been obtained.

(D) The authorization, execution and delivery of this Assistance Agreement and allactions of the Authority with respect thereto, are in compliance with the Act and the Federal Actand any regulations issued thereunder.

Section 2.2. Representations and Warranties of the Governmental Aeencv. TheGovernmental Agency hereby represents and warrants for the benefit of the Authority as follows:

(A) The Governmental Agencyis a duly organized and validlyexistingGovernmentalAgency, as described in the Act, with full power to own its properties, conduct its affairs, enterinto this AssistanceAgreement and consummatethe transactions contemplated hereby.

(B) The negotiation, execution and delivery of this Assistance Agreemrait and theconsummation of the transactions contanplated herd)y have been duly authorized by allrequisite action of the governing body of the Governmental Agency.

(C) This Assistance Agreement has been duly executed and delivered by theGovernmental Agency and is a valid and binding obligation of the Governmental Agencyenforceable in accordance with its terms, except to the extent that the enforceabilityhereof maybe limited by equitableprinciples and by bankruptcy, reorganization, moratorium, insolvency orsimilar laws heretofore or hereafter enacted relating to or affecting the enforcementof creditors'rights or remedies generally.

(D) To the knowledge of the Governmental Agency, there is no controversy orlitigation of any nature pending or threatened, in any court or before any board, tribimal or

administrative body, to chailmge in any manner the authority of the Governmental Agency or itsgoverning body to make payments under fliis Assistance Agreement or to proceed with theProject, or to challenge in any manner the authority of the Govemmratal Agency or itsgoverning body to take any of the actions which have been taken in the authorization or deliveryof this Assistance Agreement or the Construction of the Project, or in any way contesting oraffecting the validity of this Assistance Agreement, or in any way questioning any proceedingstaken with respect to the authorization or delivery by the Governmental Agency of thisAssistance Agreement, or the application of the proceeds thereof or the pledge or application ofany monies or security provided therefor, or in any way questioning the due existence or powersof the Govenunental Agency, or otherwise whaein an imfevorable decision would have anadverse impact on the transactions authorized in connection with this Assistance Agreement.

(E) The authorization and delivery of this Assistance Agreemait and theconsummation of the transactions contemplated hereby will not constitute an event of default orviolation or breach, nor an event which, with the giving of notice or the passage of time or both,would constitute an event of default or violation or breach, tmder any contract, agreement,instrument, indenture, lease, judicial or administrative order, decree, rule or regulation or othwdocument or law affecting the Governmental Agency or its govaning body.

(F) Attached hereto as Exhibit D is a true, accurate and complete copy of theresolution or ordinance of the governing body of the Governmental Agmcy approving andauthorizing the execution and delivery of this Assistance Agreement Such resolution orordinance was duly enacted or adopted at a meeting of the governing body of the GovernmentalAgency at which a quorum was present and acting throughout; such resolution or ordinance is infull force and effect and has not been superseded, altered, amended or repealed as of the datehereof; and such meeting was duly called and held in accordance with law.

(G) All actions taken by the Governmental Agency in connection with this AssistanceAgreement and the Loan described hCTcin and the Project have been in full compliance with theprovisions of the Kentucky Op«i Meeting Law, KRS 61.805 to 61.850.

(H) The Govemmoital Agency has all licenses, pennits and other govonmentalapprovals (including but not limited to all required approvals of the Kentucky Public ServiceCommission) required to own, occupy, operate and maintain the Project, to cWge and collectthe Service Charges and to enter into this Assistance Agreement, is not in violation of and hasnot received any notice of an alleged violation of any zoning or land use laws applicable to theProject, and has full ri^t, power and authority to perform the acts and things as provided for inthis Assistance Agreement.

(I) Legal counsel to the Govenunental Agency has duly executed and delivered theopinion of legal counsel substantially in the form set forth in Exhibit E hereto.

(J) The Governmental Agency is in full compliance with all federal and state laborand procurement laws in connection with the planning, design, acquisition and construction ofthe ftojecL

(K) Project is consistent with the water supply plan developed pursuant to 401 KAR4:220 for the county in which the Governmental Agency is located.

ARTICLE III

AUTHORITY'S AGREEMENT TO MAKE LOAN; TERMS

Section 3.1. Determination of ElieibiEtv. Phirsuant to the terms of the Act and the

Indenture, the Authority has determined that the Governmental Agency's Project is a DrinkingWater Supply Project under the Act and the Governmental Agency is entitled to financialassistance ^m the Authority in connection with financing the Construction ofthe Project

Section 3.2. Principal Amount of Loan Established: Loan Payments: Disbursement ofFunds. The principal amount of the Loan shall be the Loan Amoimt as identified in the ProjectSpecifics, subject to such adjustments as may be set forth in the Schedule of Paymaits. Principalpayments shall be made semiannually in the amounts and on the dates to be established by theSdiedule of Payments, which Sdiedule of Payments shall provide for approximately level debtservice payments over the Repayment Term set forth in the Project Specifics, commencing withthe Amorti2ationCommencement Date set forth in the Project Specifics.

The Loan shall bear interest, payable semiannually, at the Loan Rate identified in theProject Specifics, and after the Amortization Commencement Date, in the amounts (based onsuch Loan Rate) and on the dates set forth in the Schedule ofPayments; provided that, should anEvait of Default occur, such payments of interest shall be made on the first day of each monthduring the continuation of such Event ofDefault

The Authority shall advance the proceeds of the Loan as Construction of the Projectprogresses upon the submission by the Govamnental Agency of a Requisition for Funds insubstantially the same form as Exhibit B hereto. Each disbursement under a Requisition forFunds representing a portion of the principal amount of the Loan shall bear interest at the LoanRate fiom the date of the disburs«nent; and shall be subject to the finther requirements set forthin Article IV hereof.

Payments ofprincipal and interest on the Loan shall be made at the principal office of theAuthority or the Trustee, as designated by the Authority.

Section 3.3. Governmental Agency's Right to Prepay Loan. The Governmental Agencyshall have the right to prepay and retire the entire amount ofthe Loan at any time without penaltyupon written notice to the Authority no less than five (5) Business Days in advance of saidprepayment

Notwithstanding the foregoing, upon the determination by the Authority that it intends toissue revenuebonds securedby a pledgeof the paymentson the Loan, the Authority shall advisethe GovernmentalAgency (i) of its intention to proceed with the authorizationof such bonds (ii)of the limitation on prepayments after such bonds are issued and (iii) that the GovernmentalAgency has thirty (30) days fix)m its receipt of said notice to exercise its option to prqwy theLoan. Upon the expiration of said thirty day period the Governmental Agaicys li^t to prepaythe Loan shall be limited to the tenns described in such notice.

Section 3.4. Subordination of Loan. The Authority hereby agrees that the securityinterest and source of payment for the Loan shall be inferior and subordinate to the securityinterest and source of payment for the Debt Obligations of the Govemmaital Agency payablefrom the revenues of the System outstanding at the time this Assistance Agreement is executed

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as identified in the Project Specifics; provided, however, the Authority shall receive notice ofany additional financings in accordance with Section 5.5(D) hereof.

ARTICLE IV

CONDITIONS PRECEDENT TO DISBURSEMENT;REQUISITION FOR FUNDS

Section 4.1. Covatants of Govemmental Agoicv and Conditions of Loan. By theexecution of this Assistance Agreanent, the Govenunental Agency agrees that prior to anyrequests for the disbursement ofall or a portion of the Loan made hereimder, the GovernmentalAgency shall supply the Authority and the Cabinet appropriate documentation, satisfactory to theAuthority indicating the following:

(A) That the Authority and the Cabinet and any appropriate regulatory agency of theCommonwealth as may be designated by the Authority or the Cabinet, and their respective dulyauthorized agents, shall have the right at all reasonable times, subject to prior notice to theGovemmental Agency, to examine and inspect the Project.

(B) All real estate and interest in real estate and all personal property constituting theProject and the sites of the Project heretofore or hereafter acquired shall at all times be andremain the property of the Govenunental Agency and constitute a part of the System.

(C) In the event the Govemmental Agency is required to provide financing for theProject finm sources other than the Atrthority (as described in the Project Specifics) theAuthority shall have the right to receive such reasonable proofe as it may require of the ability ofthe Govemmental Agency to finance the costs of the Construction of the Project over and abovefile Loan, prior to the disbursement by the Authority ofany portion ofthe Loan.

(D) The Governmental Agency shall do all things necessary to acquire all proposedand necessary sites, easements and rights of way necessary or required in respect of the Projectand demonstrate its ability to construct the Project in accordance with the plans, design andspecifications prepared for the Govemmraital Agency by the Engineers.

(E) Actual construction and installation incident to the Project shall be performed bythe lump-sum (fixed price) contract method, and adequate legal methods of obtaining public,competitive bidding will be employed prior to the awarding of the constmction contract for theProject in accordance with Kentucky law.

(F) Unless constmction of the Project has already been initiated as of the date of thisAssistance Agreement, pursuant to due compliance with state law and applicable regulations, theProject will not be advertised or placed on the market for constmction bidding by theGovemmental Agency until the final plans, designs and specifications therefor have beenapproved by such state and federal agencies and authorities as may be legally required, and untilwritten notification of such approvals has been received by the Govanmental Agency andfurnished to the Cabins.

(G) Duly authorized representatives of the Cabinet and such other agencies of theCommonwealth and the United States Government as may be charged with responsibih'ty willhave reasonable access to the constmction work whenever it is in preparation or progress, andthe Governmental Agency will assure that the contractor or contractors will provide facilities forsuch access and inspection.

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(H) The construction contract or contracts shall require the contractorto comply withall provisions of federal and state law legally applicable to such work, and any amendments ormodifications thereto, together with all other applicable provisions of law, to cause qDpropriateprovisions to be inserted in subcontracts to insure compliance therewith by all subcontractorssubject thereto, and to be responsible for the submission of any statements required ofsubcontractors thereunder.

(I) A work progress schedule utilizing a method of standard acceptance in theengineering community shall be prepared prior to the institution of construction in connectionwith each construction contract, or, if construction has already been initiated as of the date of thisAssistance Agreement, at the earliest practicable date, to indicate the proposed schedule as tocompletion of the Project, and same shall be maintained monthly thereafter to indicate the actualconstruction progress ofthe Project.

(J) Prior to the award of the construction contractand prior to the commencement ofconstruction, the Governmental Agency will arrange and conduct a conference as to the Projectsaid conferaice to include representatives of the Authority, the Governmental Agency, theCabinet and any other participating federal or state agency, the Engineers, and all constructioncontractors, such conference to be held in accordance with guidelines established by theAuthority and the Cabinet. A written brief of said conference summarizing the constmctionschedule, fimd requirements schedule, payment authorizations, responsible parties for approvalof all facets of the construction work and payment therefor, and other pertinent matters shall beprepared and distributed to each agency involved, and all construction contractors and Engineers.Provided, however, that in the event construction shall have been initiated as of the date of thisAssistance Agreement, this provision may be waived.

(K) All construction contracts will be so prepared that federal participation costs, ifany, and stateparticipation costsmaybe readily segregated from localparticipation costs, if any,and from each other, and in such manner that all materials and equipment furnished to theGovernmental Agency may be readily itemized.

(L) Any change or changes in a construction contract will be promptly submitted tothe Cabinet and any state or federal agencies.

(M) The Construction, including the letting of contracts in connection therewith, willconform in all respects to applicable requirements of federal, state and local laws, ordinances,rules and regulations.

(N) The Governmental Agency will proceed expeditiously with and complete theProject in accordance with the approved surveys, plans specifications and designs oramendments thereto, prepared by the Engineers for the Governmental Agency and approved bystate and federal agencies.

(O) If requested, the Governmental Agency will erect at the Project sites, signssatisfactory to the Authority and the United States Environmental Protection Agencynoting theparticipation of the Authority and the U.S. Government, respectively, in the financing of theProject.

(P) Except as otherwise provided in this Assistance Agreemait, the GovernmentalAgency shall have the sole and exclusive charge of all details ofthe Construction.

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(Q) The Governmental Agency shall keep complete and accurate records of the costsof acquiring the Project sites and the costs of Construction. The Governmental Agency shallpermit the Authority and the Cabinet, acting by and through tiieir duly authorizedrepresentatives, and the duly authorized representativesofstate and/or fedCTal agencies to inspectall books, documents, papers and records relating to the Project at any and all reasonable timesfor the purpose of audit and examination, and the Governmental Agency shall submit to theAuthority and the Cabinet such documents and information as sudi public bodies mayreasonably require in connection with the administration ofany federal or state assistance.

(R) The Governmental Agency shall require that each construction contractor orcontractors furnish a performance and a payment bond in an amount at least equal to onehundred percent (100%) of the contract price or the portion of the Project covered by theparticular contract as security for the faithfiil performance ofsuch contract.

(S) The Governmental Agency shall require that each of its contractors and allsubcontractors maintain during the life of the construction contract, worker's compensationinsurance, public liability insurance, property damage insurance and vehicle liability insurance inamounts and on terms satisfactoryto the Authority. Until the Project facilities are completed andaccepted by the Governmental Agency, the contractorshallmaintainbuildersrisk insurance (fireand extended coverage) on a one hundred percent (100%) basis (completed value form) on theinsurable portion of the Project, such insurance to be made payable to the order of the Authority,the Governmental Agency, the prime contractor, and all subcontractors, as their interests mayappear.

(T) The Governmental Agency shall provide and maintain competent and adequateresident engineering services covering the supervision and inspection of the development andconstruction of the Project, and bearing the responsibility ofassuring that Construction conformsto the approved plans, specifications and designs prqjared by the Engineers. Sudi residentengineer shall certify to the Cabinet, any involved state or federal agoicies, and theGovernmental Agency at the completion of construction that construction is in accordance withthe approved plans, specifications and designs, or, approved amendments thereto.

(U) The Governmental Agency shall demonstrate to the satisfaction of the Authoritythe legal capability of the Governmental Agency to enact, adopt, levy, charge, collect, enforceand remit to the Authority and the Cabinet the Service Charges of the Governmental Agencydescribed in the Schedule of Service Charges attached to and made a part of this AssistanceAgreement as Exhibit C and submit proofsatisfactory to the Authority that the Service Chargesare in full force and effect

(V) The Governmental Agency shall require all laborers and mechanics employed bycontractors and subcontractorson the Project shall be paid wages at rates not less than prevailingon projects of a character similar in the locality as determined by the Secretary of Labor inaccordancewith subchapterIV of Chapter 31 of title 40, United States Code.

(W) The Governmental Agency shall complywith all federal requiranents applicableto the Loan (including those imposed by P.L. 113-76, Consolidated Appropriations Act, 2014(the"2014 Appropriations Act")and related Programpolicy guidelines) whichthe GovernmentalAgency understands includes, among other requirements, that all of the iron and steel productsused in the Project are to be produced in the United States ("American Iron and Steel

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Requirement") unless (i) the Governmental Agency has requested and obtained a waiver fromthe United States Environmental Protection Agency pertaining to the Project or (ii) theAuthorityhas otherwise advised the Participant in writing that the American Iron and Steel Requirement isnot applicable to the Project.

(X) The Governmental Agency shall comply with all record keeping and reportingrequirements under the Federal Act, including any reports required by a Federal agency or theAuthority such as performance indicators of program deliverables, information on costs andproject progress. The Governmental Agency understands that (i) each contract and subcontractrelated to the Project is subject to audit by appropriate federal and state entities and (ii) failure tocomply with the Federal Act and this Agreement may be a default hereunder that results in arqiayment ofthe Loanin advance of the maturityof the Bondsand/orother remedial actions.

Section 4.2. Additional Conditions to Disbursement Required Under the Federal

Ag-eement The Governmental Agency, in order to comply with the terras and conditions oftheFederal Agreement, further covenants and further agrees to additional conditions todisbursement, as follows:

(A) Notwithstanding any other agreonents contained herein regarding themaintenance of books and records, that it shall maintain Project accounts in accordance withgenerally accepted govemmaital accounting standards, as required by the Federal Agreement.The Governmental Agency shall retain such records for no less than three (3) years following thefinal paymentby the Governmental Agencyunder this Assistance Agreement or if anyportionofthe Project is disposed of, until at least three (3) years after such disposition; provided that if anylitigation, claim, appeal or audit is commenced prior to the end ofsuch period such records shall •be maintained until the completion of such action or until three (3) years after suchcommencement, whichever is later.

(B) That it has not and will not apply any other federal funding to the Project in amanner that would cause it to receive "double benefits" as described in Section 603 of the Water

Quality Act of 1987.

(C) That all property required for the completion of the Project shall be obtained, byeasement, purchase or other means acceptable to the Authority, prior to commencement ofconstruction and that the relocation of any Person resulting therefinm be in accordance wifli 49CFR24 for Uniform Relocation Assistance and Real Property Acquisition Act of 1970.

(D) That all Project contractors shall be required to retain Project records for theperiods established for the retention ofdie Governmental Agency's records in Section 4.2(A).

(E) That no more than fifty percent (50%) of the proceeds of the Loan shall bedisbursed until approval by the Cabinet ofthe final plan for operation for the Project.

(F) That no more than ninety percent (90%) of the proceeds of the Loan shall bedisbursed until approval by the Cabinet of the draft operations and maintenance manual.

(G) That final disbursement will not be allowed until approval by the Cabinet of afinal operations and maintenance manual.

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(H) That, as required by 40 CFR 35.2218, all engineeriDg services regardingconstruction and regarding the first year of operation of the Project shall be provided for,including the following:

(1) The operation of the Project and the revision of the operations andmaintenance manual as necessaryto accommodate actualoperatingexpsience;

(2) The training ofoperating personnel, including preparationofcurricula andtrainingmaterial for operating personnel; and

(3) Advice as to whether the Project is meeting the Project performancestandards (including three quarterly reports and one project performance rqiort).

(I) That it shall advise the Cabinet and the Authority in writing of the date forinitiation ofoperation of the Project.

(J) That one year after operation is initiated, it shall certify to the Cabinet and theAuthority that the Project is capable ofmeeting the Project performance standards.

(K) That it shall provide that qualified inspectors are present at the construction site.A summary of sudi inspector's qualifications and experience sliall be submitted to the Cabinetand the Authority.

(L) That it shall notify the Authority and the Cabinet of tiie completion date of theProject.

(M) That it agrees to the terms and conditions of its application for assistance and theAuthority's commitment to provide assistance, the terms of which are incorporated herein byreference.

(N) That all measures required to minimize water pollution to affected watas shall beemployed in the Project including compliance with Section 404 of PL 92-500, as amended, itbeing understood that approval of the Project does not constitute sanction or approval of anychanges or deviations fiom established water quality standards, criteria implementation dates, ordates established by enforcement proceedings.

Section 4.3. Disbursements of Loan: Requisition for Funds. The Governmental Agencyshall submit to the Authority (or the Trustee acting on behalfof the Authority, if so designated)and the Cabind; a Requisition for Funds prior to the fifth day of each month (or such otherdesignated period as is acceptable to the Authority), in substantially the same form as thatattached to this Assistance Agreement as Exhibit B and made a part hereofi accompanied by, tothe extent requested by the Authority, the following documentation:

(A) A full and complete accounting of the costs of fiie planning and design of theProject to be obligated by contract or otherwise during the month in question, or alreadyobligated and not included in any previous accoimting;

(B) A full and complete accounting of any costs of the planning and design of theProject paid by the Governmental Agency from its own funds with the approval of the Authorityand not included in any previous accounting for whicii it scdcs reimbursement;

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(C) A full and complete accounting of any costs of the planning and design of theProject paid or requisitioned under any other financing, loan, bond, grant or similar agreement orpaid fixwn its own funds for which it does not seek reimbursement and which have not beenidaitified in any previous requisition form.

(D) The Contractor's estimate of woric performed during the preceding monthpursuant to construction contracts for the Project and payment thereunder due, together with theEngineer's and Governmental Agency's approval thereof for disbursement by the Authority.

Upon the Authority's receipt of the Requisition for Funds, and sudi additionaldocumentation as it may require, and subject to certification by the Cabinet, the Authority maydirect the Trustee to remit the amoimt requested to the Governmental Agency as a draw upon theLoan.

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ARTICLE V

CERTAIN COVENANTS OF THE GOVERNMENTAL AGENCY;PAYMENTS TO BE MADE BY GOVERNMENTAL AGENCY TO THE AUTHORITY

Section 5.1. Imposition of Service Charges. The Governmental Agency herdjyirrevocably covenants and agrees to comply with all of the terms, conditions and requirements ofthis Assistance Agreement, pursuant to which the Loan is to be made by the Authority to theGovernmental Agency as specified herein and in the Act and the Indenture. The GovernmentalAgency herdjy further irrevocably covenants and agrees that it already has, or will, to the extentnecessary, immediately impose Service Charges upon all persons, firms and entities to whom orwhich services are provided by the System, such Service Charges to be no less than as set forthin Exhibit C annexed hereto. If so required, such Service Charges shall be in addition to all otherrates, rentals and service charges of a similar nature of the Govemmoital Agency now orhereafter authorized by law, and now or hereafter being levied and collected by theGovernmentalAgency and shall be levied and collected solely for the purpose ofrepaying to theAuthority all sums received from the Authority as representing the Loan in respect of the Project.

Section 5.2. Governmental Aggicv's Obligation to Repav Loan. The obligation of theGovernmental Agency to repay to the Authority the amount of the Loan from the ServiceCharges shall not be revocable, and in the event that services supplied by the Project shall cease,or be sxispended for any reason, the Governmental Agencyshall continueto be obligated to repaythe Loan from the Services Charges. In the event the Govemmwital Agency defaults in thepayment of any Service Charges to the Authority, the amount of such default shall bear interestat the per aimrnnrate equal to the Defeult Rate set forth in the Project Specifics, fTC)m the date ofthe default until the date of the payment thereof.

Section 5.3. Covenant to Adiust Service Charges. In the event, for any reason, theSchedule of Service Charges shall prove to be insufficient to provide to the Authority theminimum sums set forth in the Schedule of Payments, to make the required deposits to theMaintenance and Replacement Reserve and to provide for the opo-ation of the System, theGovernmental Agency hereby covaiants and agrees that it will, upon noticeby the Authority, tothe full extent authorized by law, both federal and state, immediately adjust and increase suchSchedule of Service Charges, or immediately commenceproceedings for a rate adjustment andincrease with all applicable regulatory authorities, so as to provide funds sufficient to pay to theAuthority the minimum sums set fortii in the Schedule of Payments, to provide for the operationof the System as required imder this Assistance Agreement andto make the required deposits tothe Maintenance and Replacement Reserve.

Section 5.4. Adequacv of Service Charges. The Service Charges herein covenanted tobe imposed by the Governmental Agmcyshall be fixed at such rateor rates (and it is repr^entedthat the Schedule set forth in Exhibit C hereto so qualifies), as shall be at least adequate to makethe payments at the times and in the amounts set forth in the Schedule of Payments, to make therequired deposits to the Maintenance and Replacement Reserve and to providefor the operationofthe System,subject to necessarygovernmental and regulatmyapjanvals.

The Service Charges imposed by the Governmental Agency shall be paid by the users ofthe System and accordingly the Project not less frequently than the Service Charge Paymentperiod set forth in the Project Specifics, and shall be remitted to the Authority by the

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Governmental Agency with a report showing collections and any delinquencies. A report of allcollections and delinquencies shall be made at least semi-annually on or before each PaymentDate identified in the Schedule ofPayments.

Section 5.5. Covenant to Establish Maintenance and Replacement Reserve. TheGovernmental Agency shall establish a special account identified as a "Maintenance andReplacement Reserve". The Governmental Agency shall deposit into the Maintenance andReplacement Reserve an amount equal to the amount set forth in the Project Specifics at thetimes set forth in the Project Specifics. Amounts in the Maintenance and Replacemait Reservemay be used for extraordinary maintenance expenses related to the Project or for the unbudgetedcosts ofreplacingworn or obsoleteportionsofthe Project

Section 5.6. Covenant to Charge Sufficient Rates; Reports: Inspections. The

Governmental Agency hereby irrevocably covenants and agrees with the Authority.

(A) That, as aforesaid, it will at all times impose, prescribed, charge and collect theService Charges set forth in Exhibit C as shall result in net revenues to the GovemmoitalAgency at least adequate to provide for the payments to the Authorityrequired by this AssistanceAgreement, to provide for the operation of the System and to make the required dqwsits to theMaintenance and Replacement Reserve.

(B) That it will fiimish to the Authority and the Cabinet not less than annually reportsof the operations and income and revenues of the System, and will permit authorized agents ofthe Authority to inspect all records, accounts and data ofthe System at all reasonable times.

(C) That it will collect, accoimt for and promptly ranit to the Authority those specificrevenues, funds, income and proceeds derived fiom Service Charges incident to this AssistanceAgreement.

(D) That it will notify the Authority in writing of its intention to issue bonds or notespayable fiom tiie revenues of the System not less than thirty (30) days prior to the sale of saidobligations. It further covenants that it will not issue any notes, bonds or otha: obligationspayable fix)m the revenues of the System, if the pledge of the revenues of tiie System to therqjayment of such obligations is to rank on a parity with, or superior to, the pledge of therevenues of the System for the repayment of the Lx)an granted under this Assistance Agreanent,unless the Governmental Agency has secured the consent of the Authority not less than fifteen(15) days prior to the issuance of such obligations.

Section 5.7. Segreeation of Funds. The Governmental Agency shall at all times accountfor the income and revenues of the System and distinguish same from all other revenues, moneysand funds of the Governmental Agency, if any.

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ARTICLE VI

OTHER COVENANTS OF THE GOVERNMENTAL AGENCY

Section 6.1. Further Assurance. At any time and all times the Governmental Agencyshall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and deliver,all and every such further resolutions, acts, deeds, conveyances, assignments, transfers andassurances as may be necessary or desirable for the better assuring, conveying, granting,assigning and confirming all and singular the ri^ts, assets and revenues herein pledged orassigned, or intended so to be, or which the Governmental Agaicy may hereafter become boundto pledge or assign.

Section 6.2. Completion of Project The Governmental Agency hereby covenants andagrees to proceed expeditiously with and promptly complete the Project in accordance with theplans, designs and specifications prepared by the Engineers for the Governmental Agency.

Section 6.3. Establishment of Completion Date. The completion date for the Project shallbe evidaiced to the Authority by a certificate signed by the Engineer and an authorizedrepresentative of the Governmental Agaicy stating that, except for amounts r^ained by theAuthority for costs of the Project not then due and payable, (i) the Construction has beencompleted and all labor, services, materials, supplies, machinery and equipment used in suchConstruction have been paid for, (ii) all other fecilities necessary in coimection with the Projecthave been acquired, constructed, equipped and installed and all costs and expenses incurred inconnection therewith have been paid, (iii) the Project and all other facilities in connectiontherewith have been acquired, constructed, equipped and installed to his satisfaction.

Section 6.4. Commitment to Operate. The Governmental Agency herdjy covenants andagrees to commence operation of the Project immediately on completion of construction and notto discontinue operations or disposeofsuch Projectwithoutthe approval of the Authority.

Section 6.5. Continue to Operate. The Governmental Agency hereby covenants andagrees to continuously operate and maintain the Project in accordance with applicable provisionsof federal and state law and to maintain adequate records relating to said operation; said recordsto be made available to the Authority upon its request at all reasonable times.

Section 6.6. Tax Covenant. In the event the Authority issues Bonds which are intendedto be excludable fipm gross income for federal income tax purposes to provide the funds for theLoan, the Governmental Agency shall at all times do and perform all acts and things permittedby law and necessary or desirable in order to assure such exclusion and shall take such actions asmay be directed by the Authority in order to accomplish the foregoing. The GovernmentalAgency shall not permit (i) the proceeds of the Loan to be used directly or indirectly in any tradeor business, (ii) its payments hereunder to be secured directly or indirectly by property to be usedin a trade or business, (iii) any management agreement for the operation of the System or (iv)any federal guarantee of its obligations hereunder without the prior written consent of theAuthority. The Govranmental Agency will not acquire or pledge any obligations which wouldcause the Bonds to be "arbitrage bonds" within the meaning of the Code.

Section 6.7. Accounts and Reports. The Governmental Agency shall at all times keqj, orcause to be kept, proper books of record and account in accordance with the "Uniform System ofAccounts" establish^ by the Commonwealth, in which complete and accurate entries shall be

18

made of all its transactions relating to the System and which shall at all reasonable times besubject to the inspection of the Authority.

Section 6.8. Financial Statements. Within one hundred eighty (180) days after the end ofeach fiscal year of the Govenunental Agency, the Governmental Agency shall provide to theAuthority, itemized financial statements of income and expense and a balance sheet inreasonable detail, certified as accurate by a firm of independent certified public accountants orthe Auditor of Public Accounts of the Commonwealth. All financial information must besatisfactory to the Authority as to form and content and be prepared in accordance with generallyaccepted accounting principles on a basis consistent withprior practice unless specifically notedthereon. With such financial statements, the Governmental Agency shall fimiish to the Authoritya certificate stating that, to the best knowledge of the authorized representative signing suchcertificate, no default undw this Assistance Agreement exists on the date of such certificate, or ifany such default shall then exist, describing such default with specificity. All recipients andsubredpients expending $500,000 or more in a year in Federal awards must have a single orprogram-specificaudit conductedfor that year in accordancewith 0MB CircularA-133.

Section 6.9. General Compliance With All Duties. The Governmental Agency shallfaithfully and punctuallyperformall duties with reference to the Project and the System requiredby the Constitution and laws of the Commonwealth, and by the terms and provisions of thisAssistance Agreement and any other Debt Obligations.

Section 6.10. General. The Governmental Agency shall do and perform or cause to bedone and paformed all acts and things required to be done or performedby or on behalf of theGovernmental Agency under the provisions of the Act, the Federal Act and this AssistanceAgreement in accordance with the terms of such provisions including the Additional Covenantsand Agreonents, if any, set forth in Exhibit G hereto.

Section 6.11. Further Covenants under the Federal Agreement The Governmental

Agency shall comply with all further requirements or conditions whidi may arise fix»m time totime in order to assure compliance with the Federal Act, and with the agreanents of theAuthorityset forth in the FederalAgreement, includingbut not limited to the following:

(A) The Governmental Agency shall provide all information requested of it by theAuthority or the Cabinet so that (i) the Grants Information Control System, referred to in theFederal Agreement, can be maintained, (ii) the accounting and auditing procedures required bythe Federal Act can be maintained and (iii) the Authoritycan furnish the information required ofits under the Federal Agreement.

(B) Qualified operating personnel, properly certifiedby the Cabinet, shall be retainedby the Governmental Agency to operate the Project during the entire term of this AssistanceAgreement An approved plan of operating and an operations and maintenance manual for theProject shall be provided by the Governmental Agency to the Cubinet and the Authority. TheProject shallbe operated andmaintained in an efficient and effective manna*.

(C) All residents in the service area of the Project must be offered the sameopportunity to become users of theProject regardless of race, creed, color, or level of income.

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(D) The Governmental Agency shall comply with provisions contained in thefollowing federal regulations,orders, acts and circulars and the following statutes and regulationsofthe Commonwealth.

(1) Federal Cross-Cutters

Environmental Airthorities

(a) Archeological and Historic Preservation Act of 1974, Pub. L. 86-523, asamended

(b) Clean Air Act, Pub. L. 84-159, as amended(c) 40 CFR 35.3580 (and Appendix A to Subpart L) - NEPA - Like State

Environmental Review Process

(d) Environmental Justice, Executive Order 12898(e) Floodplain Management, Executive Order 11988 as amended by

Executive Order 12148

(f) Protection ofWetlands, Executive Order 11990Farmland Protection Policy Act, Pub. L. 97-98

(h) Fish and Wildlife Coordination Act, Pub. L. 85-624, as amended(i) National Historic Preservation Act of 1966, PL 89-665, as amended0) Safe Drinking Water Act, Pub. L. 93-523, as amended(k) • Wild and Scenic Rivers Act, Pub. L. 90-542, as amaided

Economic and Miscellaneous Authorities

(a) Demonstration Cities and Metropolitan DevelopmentAct of 1966, Pub. L.89-754, as amended. Executive Order 12372

(b) Procurement Prohibitions imder Section 306 of the Clean Air Act andSection 508 of the Clean Water Act, including Executive Order 11738,Administration of the Clean Air Act and the Federal Water Pollution

Control Act with Respect to Federal Contracts, Grants, or Loans.(c) Uniform Relocation and Real Property Acquisition Policies Act, Pub. L.

91-646, as amended(d) Dd)arraent and Suspension, Executive Order 12549

Social Policy Authorities

(a) Age Discrimination Act of 1975, Pub. L 94-135(b) Title VI of the Civil Rights Act of 1964, Pub. L. 88-352(c) Section 13 of the Federal Water Pollution Control Act Amendments of

1972, Pub. L. 92-500 (the Clean Water Act)(d) Section 504 ofthe R^abilitation Act of1973, Pub. L. 93-112 (including

Executive Orders 11914 and 11250)(e) Equal Employment Opportunity, ExecutiveOrder 11246(f) Women's and Minority Business Enterprise, Executive Orders 11625,

12138, and 12432(g) Section 129 of the Small Business Administration Reauthorization and

Amendment Act of 1988, Pub. L. 100-590

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(2) State:

(a) KRS151(b) KRS 224(c) KRS 224A.1115 Federally Assisted Drinking Water Revolving Fund(d) KRS Chapter 337, Labor Laws(e) 401 KAR Chapter 8

Section 6.12. Continuing Disclosure Obligation. The Governmental Agency covenantsand agrees that notwithstanding any other provision of this Assistance Agreement to thecontrary, upon written notice from the Authority that the Schedule of Payments provides tenpercent (10%) or more of the debt service requirements on an issue of the Authority's Bonds andthat compliance by the Governmental Agency with the requirements of Securities and ExchangeCommission Rule 15c2-12, as amended (the "SEC Rule") is required in connection with theAuthority's Bonds, the Governmental Agency shall provide to the Authority such information asmay be required by the Rule, within the time periods set out in such notice by the Authority, toenable the Authority to establish to the satisfaction of prospective purchasers of the Authority'sBonds that the requirements of the SEC Rule will be satisfied in connection with the issuance ofthe Authority's Bonds. The Governmental Agency fiulher understands and agrees that theAuthority shall act as the Governmental Agency's disclosure agent for purposes of compliancewith the SEC Rule and that upon a failure by the Governmental Agency to provide theinformation required to be provided under the SEC Rule within the time fimne specified in suchnotice, the Authority and/or the boieficial owners and holders of the Authority's Bonds shall bespecifically granted the right of enforcing the provisions of this Section 6.12 by an action inmandamus, for specific performance, or similar remedy to compel performance.

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ARTICLE VII

MAINTENANCE, OPERATION, INSURANCE AND CONDEMNATION

Section 7.1. Maintain System. The Governmental Agency agrees that during the entireterm of this Assistance Agreement, it will keep the Project, including all appurtenances thereto,and the equipment and machinery tha-ein, in good and soimd repair and good operatingcondition at its own cost so that the completed Project will continue to provide the services forwhich the System is designed.

Section 1.2. Additions and Improvements. The Governmental Agency shall have theprivilege of making additions, modifications and improvements to the sites of the Project, and tothe Project itself finm time to time provided that said additions, modifications and improvementsdo not impair the operation or objectives of the Project The Cost of such additions,modifications and improvements shall be paid by the Governmental Agency, and the same shallbe the property of the Governmental Agency and shall be included under the terms of thisAssistance Agreement as part of the site of the Project, or the Project, as the case may be.Nothing herein contained ^all be construed as precluding the Authority and the GovenimentalAgency fiom entering into one or more supplementary Assistance Agreements providing for anadditional Loan or Loans in respect of additional Projects undertaken by the GovernmentalAgency.

Section 7.3. System Not to Be Disposed Of. The Governmental Agency covenants andagrees that, until satisfaction in full of its obligations hereunder, it will not, without the priorwritten consent of the Authority, which consent shall not be unreasonably withheld, sell,mortgage, or in any manner dispose of, or surrender control or otherwise dispose of any of thefacilities of the System or any part thereof (except that the Governmental Agency may retireobsolete and worn out facilities, and seU same, if appropriate).

Section 7.4. Compliance with State and Federal Standards. The Governmental Agencyagrees that it will at all times provide operation and maintenance of the Project to comply withthe water quality standards, if any, established by any state or federal agency. Hie GovernmentalAgency agrees that qualified operating personnel properly certified by the Commonwealth willbe retained to operate the Project during the entire torn of this Assistance Agreement

Section 7.5. Access to Records. The Governmental Agency agrees that it will permit theAuthority and any state or federal agency and their respective agents to have access to therecords of the Governmental Agency pertaining to the operation and maintenance of the Projectat any reasonable time following completion of construction of the Project, and commencementofoperations thereof

Section 7.6. Covenant to Insure - Casualty. The Governmental Agency agrees to insurethe Project facilities in such amount as like properties are similarly insured by politicalsubdivisions similarly situated, against loss or dWage of the kinds usually insured against bypolitical subdivisions similarly situated, by means of policies issued by reputable insurancecompanies duly qualified to do such btisiness in the Commonwealth.

22

Section 7.7. Authority as Named Insured. Any insurance policy issued pursuant toSection 7.5 hereof, shall be so written or endorsed as to make losses, if any, payable to theGovernmental Agmcy, and to the Authority, as their interests may appear.

Section 7.8. Covenant to Insure - Liabilitv. The Governmental Agency agrees that it willcarry public liability insurance vrith reference to the Project with one or more reputable insurancecompanies duly qualified to do business in the Commonwealth, insuring against such risks(including but not limited to personal inquiry, death and property damage) and in such amountsas are set forth in the Project Specifics, and naming the Authority as an additional insured.

Section 7.9. Covenant Regarding Worker's Comtrensation. Throughout the entire termof this Assistance Agreement, the Governmental Agaicy shall maintain worker's compensationcoverage, or cause the same to be maintained.

Section 7.10. Aprrlication of CasualtyInsurance Proceeds. If, prior to the completion ofthe term of this Assistance Agreement, the Project shall be damaged or partially or totally

-destroyed by fire, wirrdstoim ui uUiei casually, there shall be no abamment or reduction m theamount payable by the Governmental Agency pursuant to the terms of this AssistanceAgreement and the Governmental Agency will (1) promptly rqrair, rebuild or restore the Projectdamaged or destroyed; and (2) apply for such purpose so much as may be necessary of any netproceeds of insuranceresulting from claims for such losses, as well as any additional moneys ofthe Governmental Agency necessary therefor. AH net proceeds of insruance resulting fromclaims for such losses shall be paid to the Governmental Agency, and shall be promptly appliedas herein provided.

Section 7.11. Eminent Domain. In the event that title to, or the temporary use of, theProject, or any part thereof, shall be taken under the exercise of the power ofeminait domain byany governmental body or by any Person acting under governmental authority, thae shall be noabatement or reduction in the minimum amounts payable by the Govenunental Agency to theAuthority pursuant to the terms of this Assistance Agreement, and any and all net proceedsreceived finm any award made in such eminentdomain proceedings shall be paid to and held bythe Govanmentfid Agencyin a separatecondemnation award account and shall be applied by theGovernmental Agency in either or both of the following ways, as shall be detamined by theGovernmental Agaicy in its sole discretion:

(A) The restoration of the improvemarts located on the P '̂ect sites tosubstantially the same condition as prior to the exercise ofsaid powa ofeminent domain;or

(B) The acquisition of additional property, if necessary, and tiie acquisition ofadditional facilities by construction or otherwise, equivaloit to the Jfroject facilities,which propertyand facilities shall be deemed to be a part of the Project sites and a part ofthe Project facilities and to be substituted for Project facilities so taken by eminentdomain, without the payment of any amount other than herein provided, to the sameextent as if such property and facilities were specifically describedherein.

Anybalanceof the net proceeds of the award in such eminent domain proceedings afterthe carrying out of themandatory proceedings stipulated in (A) and(B) of this Section 7.11,shallbe paid to the Governmental Agencyupon delivery to the Authority of a certificatesignedby an

23

authorized officer of the Governmental Agency to the effect that the Governmental Agency hascomplied with either subparagraph (A) or (B), or both, of this Section, and written approval ofsuch certificate by an authorized officer of the Authority. In no event will the GovernmentalAgency voluntarily settle or consent to the settlement of any prospective or pendingcondemnation proceedings with respect to the Project or any part thereof without the writtenconsent of the Authority.

Section 7.12. Flood Insurance. All structures located in flood prone areas shall becovered by flood insurance carried by the Governmental Agency for an amount equal to the totalProject cost excluding the cost of land and any uninsurable improvements, or for the maximumlimit available under the National Flood Insurance Act of 1968, as amended, whichever is less,for the entire uselul life of the Project.

24

ARTICLE Vin

EVENTS OF DEFAULT AND REMEDIES

Section 8.1. Events of Default Defined. The following will be "Events of Default" underthis Assistance Agreement and the term "Event of Default" or "Default" will mean, wheneva- itis used in this Assistance Agreement, any one or more of the following events;

(A) Failure by the Governmental Agency to pay any payments specified hereinat the times specified herein.

(B) Failure by the Governmental Agency to observe or perfonn any covenant,condition or agreement on its part to be observed or performed, other than as referred toin subsection (A) of this Section, for a period of thirty (30) days after written noticespecifying such failure and requesting that it be remedied will have been given to theGovernmental Agency by the Authority unless the Authority agrees in writing to anextension of such time prior to its expiration; provided, however, if the failure stated inthe notice cannot be corrected within the applicable period, the Authority will notunreasonably withhold its consent to an extension of such time if corrective action isinstituted by the Governmental Agency within the applicable period and diligentlypursued until such failure is corrected.

(C) The dissolution or liquidation of the Governmental Agency, or thevoluntary initiation by the Govermnental Agency of any proceeding under any federal orstate law relating to bankruptcy, insolvency, arrangement, reorganization, readjustment ofdebt or any other form ofdebtor relief, or the initiation against the Governmental Agencyofany such proceeding which will remain undismissed for sixty (60) days, or the entry bythe Governmental Agency into an agreement of composition with creditors or the failuregenerally by the Governmental Agency to pay its debts as they become due.

(D) A default by the Governmental Agency under the provisions of anyagreements relating to its Debt Obligations.

Section 8.2. Remedies on Default. Whenever any Event of Default referred to in Section8.1 has occurred and is continuing (other than an event of default arising under Section 6.13 ofthis Assistance Agreement), the Authority may, without any further demand or notice, take oneor any combination of the following remedial steps:

(A) Declare all payments due hereunder, as set forth in the Schedule ofPayments, to be immediately due and payable.

(B) Exercise all the rights and remedies of the Authority set forth in the Act.

(C) Take whatever action at law or in equity may appear necessary ordesirable to enforce its rights under this Assistance Agreement.

(D) Submit a formal referral to the appropriate federal agency, as required bythe Federal Agreement.

25

The sole remedies for an Event of Defeult under this Assistance Agreement arising byvirtue of the failure of the Governmental Agency to complywith the provisions of Section 6.10hereof shall be those remedies specifically set forth in Section 6.10 hereof

Section 8.3. Appointment of Receiver. Upon the occurrence of an Event of Default, andupon the filing of a suit or other commencement ofjudicial proceedings to enforce the rights ofthe Authority under this Assistance Agreement, the Authority shall be entitled, as a matter ofright, to the appointment of a receiver or receivers of the System and all receipts therefiom,pending such proceedings, with such power as the court making such appointment shall confer;provided, however, that the Authority may, with or without action under ^s Section, pursue anyavailable remedy to enforce the payment obligations hereunder, or to remedy any Event ofDefault

Section 8.4. No Remedv Exclusive. No remedy herein conferred upon or reserved to theAuthority is intended to be exclusive, and every such remedy vidll be cumulativeand will be inaddition to every other remedy given hereunder and every remedy now or hereaftCT existing atIfitv or in equity. No delay or omission to exercise any nght or power accruing upon any defaultwill impair any such ri^t or power and any such right and power may be exercised fiom time totime and as often as may be deemed expedient

Section 8.5. Consent to Powers of Authoritv Under Act The Governmental Agencyhereby acknowledges to the Authority its understanding of the provisions of the Act, vesting inthe Authority certain powers, ri^ts and privileges in respect of the Project upon the occurrenceof an Event of Default, and the Governmental Agency hereby covenants and agrees that if theAuthority should in the future have recourse to said rights and powers, the GovernmentalAgency shall take no action of any nature whatsoevercalculated to inhibit, nullify, void, delay orrender nugatory such actions of the Authority in the due and prompt implementation of thisAssistance Agreement.

Section 8.6. Waivers. In the event that any agreement contained herein should bebreached by eitherparty and thereafterwaived by the other party, such waiver will be limited tothe particular breach so waived and will not be deemed to waive any other breach hereunder.

Section 8.7. Agreement to Pav Attorneys' Fees and Expenses. In the event that eitherparty heretowill defaultimderany of the provisions hereofand the non-defaulting party employsattorneys or incurs other expenses for the enforcement of performance or observance of anyobligation or agreement on the part of the defaulting party herein contained, the defaulting partyagrees that it will pay on demand therefor to the non-defaultingparty the fees of such attorneysand such other expenses so incurred by the non-defaulting party.

26

ARTICLE IX

MISCELLANEOUS PROVISIONS

Section 9.1. Approval not to be UnreasonablyWithheld. Any approval of the Authorityrequired by this Assistance Agreement shall not be unreasonably withheld and shall be deemedto have been given on the thirtieth (30th) day following the submission of any matter requiringapproval to the Authority, unless disapproved in writing prior to such thirtieth (30th) day. Anyprovision of this Assistance Agreement requiring the approval of the Authority or the satisfactionor the evidence of satisfaction of the Authority shall be interpreted as requiring action by anauthorized officer of the Authority granting, authorizing or expressing such approval orsatisfaction, as the case may be, unless such provision expressly provides otherwise.

Section 9.2. Approval. This Agreement is made subject to, and conditioned upon, theapproval of this Assistance Agreement by the Secretary of the Finance and AdministrationCabinet.

Section 9.3. Effective Date. This Assistance Agreement shall become effective as of thedate first set forth hereinabove and shall continue in full force and effect until the date theobligations of the Governmental Agency pursuant to the provisions of this AssistanceAgreementhave been fully satisfied.

Section 9.4. Binding Effect. This Assistance Agreement shall be binding upon, and shallinure to the benefit of the parties hereto, and to any person, officer, board, department, agency,municipal corporation, or body politic and corporate succeeding by operation of law to thepowers and duties of either of the parties hereto. This Assistance Agreement shall not berevocable by either of the parties, without the written consent of the other party.

Section 9.5. Severabilitv. In the event that any provision of this Assistance Agreementwill be held invalid or unenforceable by any court of competent jurisdiction, such holding willnot invalidate or render unenforceable any other provision hereof.

Section 9.6. Assienabilitv. The rights of the Authority under this Assistance Agreementshall be assignable by the Authority without the consent of the Governmental Agency, but noneof the rights, duties or obligations of the Governmental Agency under this AssistanceAgreement shall be assignable by the Governmental Agency without the prior written consent ofthe Authority.

Section 9.7. Execution in Counterparts. This Assistance Agreement may besimultaneously executed in several counterparts, each of which will be an original and all ofwhich will constitute but one and the same instrument.

Section 9.8. Applicable Law. This Assistance Agreanent will be govemed by andconstrued in accordance with the laws of the Commonwealth.

Section 9.9. Captions. The captions or headings herein are for convenience only and inno way define, limit or describe the scope or intent of any provisions or sections of thisAssistance Agreement.

27

IN WITNESS WHEREOF, the parties hereto have caused this AssistanceAgreement to be executed by their respective duly authorized officers as of the day and yearabove written.

ATTEST:

Title: SECRETARY

ATTEST;

Title: Secretary

APPROVED:

•dlSECRETARY/FINANCE AND ^ADMINISTRATION CABINET OF THE KENTUCKY INFRASTRUCTURE

COMMONWEALTH OF KENTUCKY AUTHORITY

KENTUCKY INFRASTRUCTURE

AUTHORITY

Title:E/t/CUTVE DIRECTOR

GOVERNMENTAL AGENCY:

CUMBERLAND COUNTY WATER DISTRICT

Title: Chainnan

EXAMINED:

LEGAL COUNSEL TO THE

APTEOVED AS TO FORM AND LEGALITY

APPROVED

FINANCE AND ADMINISTRATION CABINET

28

EXHIBIT A

CUMBERLAND COUNTY WATER DISTRICT

PROJECT SPECIFICS

F15-001

GOVERNMENTAL AGENCY:

Name;

Contact

Person:

Cumberland County Water District133 Lower River Street

Burkesville.KY42717

Alvin Pharis

Chairman

SYSTEM: Water

PROJECT:

The proposed project will upgrade or rehabilitate various aging, undersized and inadequateinfrastructure components of the District. Project components Include waterline replacements,elevated storage tank and pump station rehabilitation, new telemetry communications system andinstallation of radio read meters.

PROJECT BUDGET:

Administrative ExpensesLegal ExpensesEngineering Fees - Design / ConstEngineering Fees - InspectionEngineering Fees - OtherConstruction

ContingencyTotal

FUNDING SOURCES:

Fund F Loan

USDA RD

Total

KIA DEBT SERVICE:

Construction Loan

Less: Principal Forgiveness (30%)Amortized Loan Amount

Interest Rate

Loan Term (Years)Estimated Annual Debt Service

Administrative Fee (0.25%)

Total

$ 5.0008,000

88,00056,00020,000

1,092,00099,000

$ 1,368,000

Amount %

$ 1,268,000100,000

93%

7%

$ 1,368,000 100%

$ 1,268,000380,400

$ 887,600

0.75%

20

$ 47,8752,219

$ 50,094

AMORTIZATION COMMENCEMENT DATE: June 1 and December 1

Interest payments will commence within six months from first draw of funds (estimated 06/01/15).

Full principal and interest payments will commence within oneyear ofinitiation ofoperation(estimated 12/01/16).

REPLACEMENT RESERVE ACCOUNT: $ 3.200 ANNUAL AMOUNT$ 32,000 TOTAL/AMOUNT

The annual replacement cost is $3,200. This amount should be added to the replacement accounteach December 1 untilthe balance reaches $32,000 and maintained for the life of the loan.

ADMINISTRATIVE FEE:

DEFAULT RATE:

DEBT OBLIGATIONS CURRENTLY OUTSTANDING:

0.25%

8.00%

Outstanding Maturity

Rural Water $ 86,000 2031

RD Series 1975 11,800 2014

RD Series 1978 19.550 2017

RD Series 1985 169,399 2024

RD Series 1986 165,517 2025

RD Series 1987 64,042 2026

RD Series 1988 51,231 2027

RD Series 1991 48,000 2029

RD Series 1994 110,000 2033

RD Series 1994 95,848 2033

RD Series 1996 199,000 2036

RD Series 2001 349,000 2041

RD Series 2005 424,500 2045

RD Series 2009 405,500 2049

RD Series 2011 1,000,000 2051

RD Series 2014 487,000 2053

Total $ 3,686,387

LIABiLITY INSURANCE COVERAGE:

Death or Personal Injury (per person)Death or Personal Injury (per occurrence)Property Damage on System

n, OOP, coo

It IJOCiQ .OOPft I, Ood

EXHIBIT BREQUEST FOR PAYMENT AND PROJECT STATUS REPORT

Boirower;

WX/SX Number;.Draw Number

KIA Loan #

Date:

The above identified Governmental Agency has entered into an Assistance Agreement with the KentuckyInfrastructure Authority (the "Authority") for the acquisition and construction of facilities described in the AssistanceAgreement as the "Project."

Pursuant to the Assistance Agreement, we hereby certify that we have incurred the following expenses inconnection with the Project and that the Authority's funding share of these expenses is in the amount so denoted in thisrequest.

Documentation supporting the expenses incurred and identified per this request are attached.

Funds Requested;

Prolect Budget and Expenses

Line

Item Cost

1 Administrative

2 Legal3 Land, Appraisals, Easements4 Relocation Expense5 Planning6 Engineering Fees - Design7 Engineering Fees - Construction8 Engineering Fees —Inspection9 Construction

10 Equipment11 Contingency12 Other

TOTAL

Expenses ThisRequest

Expenses toDate Project Budget Balance

Ifexpenses to date exceed project budget a revised budget must be submitted to and approved by the Authority beforefunds will be released.

1

2

3

4

5

6

7

8

9

10

11

12

Funding Agency

TOTAL

Expenses ThisRequest

B-1

Protect Funding

Expenses toDate Project Budget Balance

Wc coiiiy that theexpenses in this draw request were incurred pursuant to local procurement polices which conform toKRS45A.

Borrower Signature:

Project Administraton

Draw#

STATUS REPORT:

PROJECT IS: On schedule

Ahead ofschedule

Behind schedule

Ifahead or behind,please explain

PROJECT EXPENSES THIS DRAW REQUEST(Inchido Invoices for Expensee Listed Below)

Line Item Draw# Vender

B-2

Amount

CERTIFICATE OF CONSULTING ENGINEERS AS TO

PAYMENT REQUEST

The undersigned, a duly qualified and licensed Engineer hereby certifies that he or she

represents the Governmental Agency submitting this request in connection with the "Eligible Project"

and that all expenses represented in this request were duly incurred for the Construction of the

"Project," that the Authority's funding share of these expenses is accurately represented and that such

expenses have not been the subject ofany request for disbursement previously submitted.

Engineer/Architect

Firm Name

B-3

EXHIBIT C

SCHEDULE OF SERVICE CHARGES

See Attached

C-1

J ^

- ,• -•% . '/ •">;:/ . •Fok - CUMBERLAND COUNTY,XT

.0>: ,Si ;* . ". PSCKYNumber: - • " 4 .

' = r: Revised •• SheetNo. " 4 •'

* I: • " " . CancelliiBBPSCKYNumber •= '• "CUMBERLAND COUNTY WATER DISTRICT '

Revised ••".SheetNo." '*

?"* *.

i:.;' =•

• A.MCWThLyRATES ; .

""r ;5/8"'x^4"Meter."• ' , *

V. •• First 2,000 Oallons . $27.00 Minimum Bill -•

•- flext 3,000 Gallons 7.50 per 1300 Gallon^ .-Next : 5,000 Gallons ' 630 per 1,000GajtonsAll Over 10,000 Gallons 5J0 per.1,000 Gallons

• 1" Meter • . - J • • . •

» * • First • • 5,000 Gallons $4930: : Mtrj1mum:BiU

; Next ' 5;000 Gallons . 630 • •per 1,000 GallonsOver 10,000 Gallons . • 530 per1300 Gallpns

'

.

11/2"Meter • • •• First 12300 Gallons. . $95.25 Minimum Bill

_I *Over 12300 Gallons • 5.50 per 1300 -Gallons

t .

• t. 2° Meteri • •• First 25,000 Gallons • • $16430 Minimum Bill

iI..

Over 25,000 Gallons • -530 per 1300 Galloris

) i

Dale,Hollow Meter .1 . First • 300,000 Gallons $1,677.00 Minimum Bill

f. .i •

ii .i;

• Over 300,000 Gaiiohs 530 per IjOOO Gallons".

DATEOFISStJE

•DAItEFFECTTS^

05/16/2013•i^adk/D^/Ttar '

. t)5/r6/2013"fSSTSt^TJST

;ISSUED / , 0^

•iniB chairman

BY ATJIHOIUTy OF ORDER OF THE PUBUC SERVICE COMMISSION

TN CASE NO. ^01^-0015? DA1ED_ 5'| Ip- ZC/.3

JT • • - .fy.. . . .

KENTUCKYPUBLIC SERVICE COMMISSION

JEFF R. DEROUENEXECUTIVE DIRECTOR

TARIFF BRANCH

EFFECTIVE

5/16/2013PURSUANT TO807 KAR 5:011 SECTION 9(1)

EXHIBIT D

RESOLUTION

RESOLUTION OF THE CUMBERLAND COUNTY WATER DISTRICT

APPROVING AND AUTHORIZING AN ASSISTANCE AGREEMENT

DATED AS OF AUGUST 1,2015 BETWEEN THE CUMBERLAND COUNTYWATER DISTRICT AND THE KENTUCKY INFRASTRUCTURE

AUTHORITY.

WHEREAS, the Board of Commissioners ("Govcming Authority") of the CumberlandCounty Water District ("Governmental Agency") has previously detamined that it is in thepublic interest to acquire and construct certain facilities and improvements to the GovernmentalAgency's Water System (the "Project") and

WHEREAS, the Governmental Agency has made application to the KentuckyTnfiastructure Authority (the "Authority") for the purpose of providing monies to acquire andconstruct the Project; and

WHEREAS, in order to obtain such monies, the Governmental Agency is required toenter into an assistance agreement dated as ofAugust 1,2015 (the "Assistance Agreement") withthe Authority.

NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of theCtimberland County Water District, as fallows:

SECTION 1. That the Governing Authority herday approves and authorizes theAssistance Agreement between the Governmental Agency and the Authority substantially in theform on file with the Governmental Agency for the purpose of providing the necessary financingto the Governmental Agency for the acquisition and construction of the Project

SECTION 2. That the Chairman and Secretary of the Governmental Agency be andhereby are authorized, directed and empowered to execute necessary documents or agreements,and to otherwise act on behalfofthe Governmental Agency to effect such financing.

SECTION 3. That this resolution shall take effect at the earliest time provided by law.

ADOPTED on , 2015.

Chairman

Attest:

Title; Secretary

D-1

CERTIFICATE

I, the undersigned, hereby certify that I am the duly qualified and acting Secretary of the

Cumberland County Water District; that the foregoing is a full, true and correct copy of a

Resolution adopted by the Board of Commissioners of said District at a meeting duly held on

, 2015; that said official action appears as a matter of public record in the official

records or journal of the governing authority; that said meeting was held in accordance with all

applicable requirements of Kentucky law, including KRS 61.810, 61.815, 61.820 and 61.823;

that a quorum was present at said meeting; that said official action has not been modified,

amended, revoked or repealed and is now in full force and effect.

IN TESTIMONY WHEREOF, witness my signature this day of , 2015.

Secretary

D.2

EXHIBIT E

OPINION OF COUNSEL

[Letterhead ofCounsel to Governmental Agency]

[Date]

Kentucky Infrastructure Authority1024 Capital Center DriveSuite 340

Frankfort, Kentucky 40601

RE: Assistance Agreement by and between Kentueky Infrastructure Authority andCumberland County Water District, dated as of August 1,2015

Ladies and Gentlemen:

The undersigned is an attorney at law duly admitted to the practice of law in theCommonwealth of Kentucky and is legal counsel to the Cumberland County Water District,hereinafter referred to as the "Governmental Agency". I am familiar with the organization andexistence of the Governmental Agency and the laws of the Commonwealth applicable thereto.Additionally I am familiar with the drinking water supply project (the "Project") with respect towhich the Assistance Agreement by and between the Kentucky Infrastructure Authority("Authority") and the Governmental Agency is being authorized, executed and delivered.

1 have reviewed the fonn of Assistance Agreement by and between the Authority and theGovenunental Agency, the resolution or ordinance of the governing authority authorizing theexecution and delivery of said Assistance Agreement.

Based upon my review I am of the opinion that:

1) The Governmental Agency is a duly organized and existing political subdivisionor body politic of the Commonwealth of Kentucky validly existing under the Constitution andstatutes of the Commonwealth ofKentucky.

2) The Assistance Agreement has been duly executed and delivered by theGovernmental Agency and is a valid and binding obligation of the Governmental Agencyenforceable in accordancewith its terms, except to the extent that the enforceabilitythereof maybe limited by equitable principles and by bankruptcy, reorganization, moratorium, insolvency orsimilar laws heretofore or hereafter enacted relating to or affecting tlie enforcement of ercditors'rights or remedies generally.

E-1

3) The Governmental Agency has all necessary power and authority (i) to enter into,perform and consummate all transactions contemplated by the Assistance Agreement, and (ii) toexecute and deliver the documents and instruments to be executed and delivered by it incormection with the construction of the Project.

4) The Service Charges, as defined in the Assistance Agreement, are in full forceand effect and have been duly and lawfully adopted by the Govenunental Agency.

5) The execution and delivery of the Assistance Agreement and the performance bythe Govemmental Agency of its obligations thereunder does not and will not conflict with,violate or constitute a default under any court or administrative order, decree or ruling, or anylaw, statute, ordinance or regulation, or any agreement, indenture, mortgage, lease, note or otherobligation or instrument, binding upon the Govemmental Agency, or any of its properties orassets. The Govemmental Agency has obtained each and every authorization, consent, permit,approval or license of, or filing or registration with, any court or govemmental department,commission, board, bureau, agency or instrumentality, or any specifically granted exemptionfi-om any of the foregoing, that is necessary to the valid execution, delivery or performance bythe Govemmental Agency of the Assistance Agreement and the imposition of the ServiceCharges.

6) To the best ofmy knowledge after due inquiry there is no action, suit, proceedingsor investigation at law or in equity before any court, public board or body pending or threatenedagainst, affecting or questioning (i) the valid existence of the Govemmental Agency, (ii) the rightor title of the members and officers of the Govemmental Agency to their respective positions,(iii) the authorization, execution, delivery or enforceability of the Assistance Agreement or theapplication of any moniesor security therefor, (iv) the construction of the Project,(v) the validityor enforceability of the Service Charges or (vi) that would have a material adverse impact on theability of the Govemmental Agency to perform its obligations under the Assistance Agreement.

7) None of the proceedings or authority heretofore had or taken by the GovemmentalAgency for the authorization, execution or delivery of the Assistance Agreement has or havebeen repealed, rescinded, or revoked.

8) To the best of my knowledge, the Govemmental Agency has fully complied withall federal and state labor and procurement laws in connection with the construction of theProject.

9) All proceedings and actions of the Govemmental Agency with respect to whichthe Assistance Agreement is to be delivered were had or taken at meetings properly convenedand held in substantial compliance with the applicable provisions of Sections 61.805 to 61.850 ofthe Kentucky Revised Statutes.

Very truly yours,

E-2

EXHIBIT F

TO ASSISTANCE AGREEMENT BETWEEN

CUMBERLAND COUNTY WATER DISTRICT

("GOVERNMENTAL AGENCY") ANDTHE KENTUCKY INFRASTRUCTURE AUTHORITY

Total Loan to be Repaid byGovernmental Agency toKentucky Infrastructure Authority

Principal and Interest Payableon Each June 1 and December 1

It is xmderstood and agreed by the parties to this Assistance Agreement that this Exhibit Fis an integral part of the Assistance Agreement between the Governmental Agency and theKentucky Infrastructure Authority.

IN WITNESS WHEREOF, the parties have caused this Exhibit F to AssistanceAgreement to be executed by their respective duly authorized officers as of the date of saidAssistance Agreement.

KENTUCKY INFRASTRUCTURE AUTHORITY

By:_

Title;

CUMBERLAND COUNTY WATER DISTRICT,Governmental Agency

By:_

Title:_

ATTEST:

Title:

F-1

EXHIBIT G

ADDITIONAL COVENANTS AND AGREEMENTS

NONE

9812263vl

G-1

RESOLUTION

RESOLUTION OF THE CUMBERLAND COUNTY WATER DISTRICT

APPROVING AND AUTHORIZING AN ASSISTANCE AGREEMENT

DATED AS OF AUGUST 1, 2015 BETWEEN THE CUMBERLAND COUNTYWATER DISTRICT AND THE KENTUCKY INFRASTRUCTURE

AUTHORITY.

WHEREAS, the Board of Commissioners ("Governing Authority") of the CumberlandCounty Water District ("Governmental Agency") has previously determined that it is in thepublic interest to acquire and construct certain facilities and improvements to the GovernmentalAgency's Water System (the "Project") and

WHEREAS, the Governmental Agency has made application to the KentuckyInfrastructure Authority (the "Authority") for the purpose of providing monies to acquire andconstruct the Project; and

WHEREAS, in order to obtain such monies, the Governmental Agency is required toenter into an assistance agreement dated as of August 1, 2015 (the "Assistance Agreement") withthe Authority.

NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of theCumberland County Water District, as follows:

SECTION 1. That the Governing Authority hereby approves and authorizes theAssistance Agreement between the Governmental Agency and the Authority substantially in theform on file with the Govermnenlal Agency for the purpose of providing the necessary financingto the Governmental Agency for the acquisitionand constructionof the Project.

SECTION 2. That the Chairman and Secretary of the Governmental Agency be andhereby are authorized, directed and empowered to execute necessary documents or agreements,and to otherwise act on behalf of the Governmental Agency to effect such financing.

SECTION 3. That this resolution shall take effect at the earliest time provided by law.

ADOPTED on tOTH , 2015.

Chairman

Attest:

/aM^Secretary

CERTIFICATE

I, the undersigned, hereby certify that I am the duly qualified and acting Secretary of the

Cumberland County Water District; that the foregoing is a full, true and correct copy of a

Resolution adopted by the Board of Commissioners of said District at a meeting duly held on

loTW , 2015; that said official action appears as a matter of public record in the official

records or journal of the governing authority; that said meeting was held in accordance with all

applicable requirements of Kentucky law, including KRS 61.810, 61.815, 61.820 rmd 61.823;

that a quorum was present at said meeting; that said official action has not been modified,

amended, revoked or repealed and is now in full force and effect.

IN TESTIMONY WHEREOF, witness my signature this lOrM day of . 2015.

Secretary

98I2664VI

Cumberiand County Water DistrictBoard of Commissioners

August 10, 2015 6:00 p.m.

Commissioners:

AMn Pharis, Ctialrman; Garland Hleneman, Vice-ChalrmanTroy Norrls, Treasurer; Jay Gary

Employees: Johnny Carter, Matthew Dyer

Visitors: David Bowles, Lee Mudd

A quorum being present the Chairman called the meeting to order.

Lee Mudd presented the Information to the Board pertaining to the upcoming system projectLee informed the Board that a resolution needed to be reviewed and passed in order to moveforward with the project 'Resolution of the Cumberland County Water District Approvingand Authorizing an Assistance Agreement Dated as of August 1,2015 Between theCumberland CountyWater District and the Kentudty Infrastructure Autiiority.' Thisresolution is for the CCWD to accept the funding for system wide projects from the KIA. Amotion was made by Troy Norrls, second by Garland Hieneman; all in favor.

The minutes of the July27,2015 meeting were approved on a motion by Troy Norris, secondby Gariand Hieneman; all In favor.

The JulyWater Loss Report was reviewed and discussed by the Board.The report showed atotal of 18.47% ofwater not sold.

Johnny gave the Board his Manager's Report

The Board performed the financial review.

There was no Old Business to discuss.

In New Business,Matthew presented the EmployeeHealth Insurance Renewal to the Boardfor review. We are lookingat an increase of 2.9% which equals $143.00 monthly. The Boardaccepted the increase and the renewal on a motion by Troy Norris, second by MarkVlbbert;all in favor.

With no further business the meeting was adjourned on a motion made by Garland Hieneman,second by JayGary; all in favor.

mvin Phafis, Chairman

Kentucky Infrastructure AuthorityMinutes of the Full Board - Fegular Meeting - October 2,2014

KENTUCKY INFRASTRUCTURE AUTHORITYMInutss of the Full Board

Meeting Date/Location; Octotier 2,2014 -1:00 p.m.Kentucky Infrastructure Authority1024 Capital Center Drive, Suite 340, Frankfort

Membera present:

Mr. Russ Salsman, Department for Local Govemment(proxyfor Commissioner Tony Wilder

Mr. Sam Ruth, Finance and Administration Cabinet(proxy for Secretary LorlH. Flanery, FAC)

Ms. Lona Brewer, Energy and Environment Cabinet(permanent proxy for Secretary Leonard K. Peters, EEC)

Mr. Jeff Derouen, Executive Director, Public Service CommissionMr. C. Ronald Lovan, representing the American Water Works AssociationMr. David W. Cartmell, Mayor, City of Maysvlile, representing the Kentucky League of CitiesMr. Damon Taliey, representing the Kentucky Rural Water Association

Members absent:

Secretary Larry Hayes, Economic Development CabinetMs. Unda C. Bridwell, representing for-proftt private water companiesMr. Jody Jenkins, UnionCounty Judge/Executive, representing the Kentucky

Association of CountiesMr. MartyT. Ivy, representing the Kentucky Municipal Utilities Association

Guests:

Mr. Shafiq Amawi, Division of WaterMr. Kevin Ckinignon.City of OwensboroMr.Joe Schepers. Cityof OwensboroMr. Edcfie Brown, Kenvironsfi4r. Bryan Kirby, Community &EconomicDevelopmentAssociates, inc.Mr. Tim Schwetidemann, Cumtjerland Valley Area Development DistrictMr. Dennis McClure, City of Mount VemonIt4r. Steve Starkweather, Office of Rnanclai ManagementMr. John Brady, Office of Rnanclai ManagementMr. Chris Stewart, HMB Professional Engineers, Inc.Mr. Chad Clark, Western Lewis-Rectorvlile Water & GasMr. Ora Main, Nesbitt Engineering, Inc.Annette Dupont-Ewing, KentuckyMunicipal Utilities AssociationMs. Donna McNeil, Kentucky RuralWater Association1^ Laura Jefferson, BuffaloTrace Area Development DistrictMr. Josh W. Nacey, Legislative Research Commission

Pag* 1^7

Kentucky Infrastructure AuthorityWnutos of the Fun Board - Regular Meeting - October 2,2014

PROCEEDINGS

Vice Chair Damon Talley called the meeting of the Kentucky Infrastructure Authority(KIA) Board to order In the absence of Board Chair Tony Wilder. Mr. Talley asked boardmembers and guests to Introduce themselves. He confirmed that a quorum was presentand that the press had been notified regarding the meeting.

Mr. RustyAnderson, KIA, made maps available forviewing via the Water Resource InformationSystem (WRIS) which showed an oven/lew of the water and sewer projects that were to beconsidered at this board meeting.

BUSINESS (Board Action Reaulredl

A. 1. APPROVAL OF MINUTESFor: KIARegular Board Meeting of September 4, 2014

Mr. Sam Ruth moved to approve the minutes of the September 4, 2014,regular board meeting. Ma. Lona Brewer seconded, end the motion carriedunanimously.

B. NEW PROJECTS/ACnON ITEMS

1. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS OF THEKENTUCKY INFRASTRUCTURE AUTHORITY FOR APPROVAL OF AFUND A LOAN (A15-036) IN THEAMOUNT OF $3,975,000 TO THECITY OF OWENSBORO, DAVIESS COUNTY, KENTUCKY

Ms. Shafiq Amawl, DOW, and Ms. Brand! Armstrong, KIA, presented the projectto the Board. The City of Owensboro requested a $3,975,000 Fund A loan forthe Sherm Ditch Phase IV project The project Is the fourth phase of the Cit/sSherm Dlt(^ Rehabilitation project and will separate storm and sanitary sewerlines along Sherm Road to Weslyn Plaza. Roadway structures will also beremoved and replaced with box culverts and curb boxes. Mr. Damon Talleyrequested an explanation of the Cit/s "Your Community Vision Fund" and howthey can finance projects without sewer rates. A city representative explainedthat their "Your Community Vision Special Revenue Furid" Is funded by a .33percent tax on net profits and Income. He tokJ the board that by ordinance asubstantial portion Is designated to be used for storm water.

Mr. Ron Lovan moved to approve the Fund A Loan A1B-036 In the amountof $3,976,000 to the City of Owensboro with the standard conditions. Mr.David CartmeU seconded, and the motion vras unanimously approved.

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Kentucky Inlrastrucdure AuthorityMinutes of the Full Board - Regular tweeting - October 2,2014

2. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS OF THEKENTUCKY INFRASTRUCTURE AUTHORITY AUTHORIZINGISSUANCE OF A CONDITIONAL COMMITMENT FOR AGOVERNMENTAL AGENCIES FUND C LOAN (C15-001) IN THEAMOUNT OF $1,200,000 TO THE NORTHERN MADISON COUNTYSANITATION DISTRICT, MADISON COUNTY, KENTUCKY

Mr. Jeff Abahire, KIA, presented the projectto the Board. Tfie Nortliern MadisonCounty Sanitation Dl^ct requested a Fund 0 loan In the amount of $1,200,000for the Muddy Greek Waste water Treatment Plant project. The project willInvolve the construction of a 200,000 gallon per day (QPD) wastewater treatmentplant, force main and two lift stations In the Mud^ Creek area east of theRichmond city limits. The project will serve an eristing 386 customers and alsoprovide the capacity to expand Into existing unsen/ed areas (subdivisions withfailing septic systems, a school, and several small businesses). Mr. Ron Lov£inwanted to clarify If this construction of this plant is necessary to deal withcapacity Issues. He was told that the new treatment plant is needed to addressboth capacity Issues and the cost of bulk treatment. The 200,000 GPD capacitywill allow for three existing package plants to be decommissioned In futurephases. Mr. Damon Talleyconfirmed with Mr. Shaflq Amawl that the Division ofWater (DOW) finds this system to be appropriately sized and Is prepared toapprove the required permits. Mr. Tailey stressed that the record shoukJ reflectthat DOW approval is available and that future phases will eliminate threepackage plants.

Mr. Ron Lovan moved to approve the Fund C Loan C1S-001 In the amountof $1^00,000 to the Northern Madison County Sanitation Dlstiii^ with thestandard conditions. Mr. Sam Ruth seconded, and the motion wasunanimously approved.

3. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS OF THEKENTUCKY INFRASTRUCTURE AUTHORITY AUTHORIZING ANAMENDMENT OF THE CONDfUONAL COMMITMENT FOR AFEDERALLY ASSISTED DRINKING WATER REVOLVING FUND FLOAN (F12-01) INCREASING THE AMOUNT TO $3,023,310 TO THECITY OF MOUNT VERNON, ROCKCASTLE COUNTY, KENTUCKY

Mr. Shaflq Amawi, DOW, and Mr. Jeff Abshire, KIA, presented the project to theBoard. The dty of Mount Vernon requested an Increase of $423,310 to apreviously approved Fund F loan in the amount of $2,600,000 for the Phase #2Potable Water Storage Tanks and Lines project. Changes made during thedesign phase of the project increased the project cost by about $360,000, whileinflation increased cost by $63,000. The Interest rate wID remain at 1.00%, thesame as on the original project ban. Project Engineer Eddie Brown, Kenvirons,inc., explained that the Increase is needed to cover additions to the original planas wen as more site preparation for the tank than originally anticipated.

Mr. Sam Ruth moved to approve the Increase to Fund F Loan F12-01 In theamount of $423,310 for a total of $$3,023,310 with the standard conditions.Mr. Ron Lovan seconded, and the motion was unanimously approved.

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Kentucky Intrastnjcture AuttiorttyMlnutaG of the Full Board - Regular Meeting - October 2,2014

4. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS OF THEKENTUCKY INFRASTRUCTURE AUTHORITY AUTHORIZINGISSUANCE OF A CONDITIONAL COMMITMENT FOR A FEDERALLYASSISTED DRINKING WATER REVOLVING FUND LOAN (F15-001) OF$1^68,000 TO THE CUMBERLAND COUNTY WATER DISTRICT.CUMBERLAND COUNTY, KENTUCKY

Mr. Shaflq Amawl, DOW, and Ms. JamI Johnson, KIA, presented the project tothe Board. The Cumberland County Water District requested a $1,268,000 FundF loan for the Water Sj^em improvement Project The project will replace agingand undersized lines; rehabilitate two pump stations; rehabilitate a 100,000gallon elevated storage tank; Install new telemetry communications systems onfive storage tanks, four pump stations and at the water treatment plant; andInstall approximately 400 radio read meters. The project qualified for additionaisubsidization in the amount of $280,400. As the water district Is regulated by theKentucky Public Service Commission, Mr. Jeff Derouen indicated that he wouldabstain from this vote.

Mr. Ron Lovan moved to approve the Fund F Loan FIB-MI In the amount o1$1,268,000 to the Cumberland County Water District with the standardconditions. Mr. David Cartmell seconded, and the motion received all "aye"votes with the exception of Mr. Jeff Derouen, who abstained.

5. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS OF THEKENTUCKY INFRASTRUCTURE AUTHORITY AUTHORIZINGISSUANCE OF A CONDITIONAL COMMITMENT FOR A FEDERALLYASSISTED DRINKING WATER REVOLVING FUND LOAN (F15-005) OF$1,266,500 TO THE WESTERN LEWIS-RECTORVILLE WATER ANDGAS DISTRICT, MASON COUNTY, KENTUCKY

Mr. Shafiq Amawi, DOW, and Ms. Jami Johnson, KIA, presented the project tothe Board. The Western Lewls-RectorvUle Water and Gas District requested aFund F loan In the amount of $1,266,500 for the Water System ImprovementsProject. This project wili Install approximately 30,000 feet of various sized waterlines to provide new service and Improve erdsting senrice, and it will Install fourloops to eliminate dead end lines. The project win also Instan an interconnectwith the Greater Fleming County Regienai Water Commission, and recoal theinterior and exterior of an existing water storage tank. The project qualified foradditionai subsidization in the amount of $379,950. Mr. Damon Tailey confirmedwith Westem Lewis-Rectorville representatives that a water rate increaseapplication has already been made. Mr. Jeff Derouen and Mr. David Cartmellindicated that they would abstain from this vote.

Ms. Lona Brewer moved to approve the Fund F Loan F1B-00SIn the amountof $1,266,500 to the Westem Lewls-RectorvUle Water and Qas District withthe standard conditions. Mr. Ron Lovan seconded, and the motion receivedall "aye" votes with the exception of Mr. Jeff Derouen and Mr. DavidCartmell, who abstained.

Pag«4o]7

Kentucky Infrastructure AuthorflyMkiutes of the Fun Board - Reguter Meeting - October 2.2014

6. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS OF THEKENTUCKY INFRASTRUCTURE AUTHORFTY AUTHORIZINGISSUANCE OF A CONDITIONAL COMMITMENT FOR A FEDERALLYASSISTED DRINKING WATER REVOLVING FUND LOAN (F15-014) OF52,800,000 TO THE HENRY COUNTY WATER DISTRICTl #2, HENRYCOUNTY, KENTUCKY

Mr. Shafkj Amawi, DOW, and Ms. Jaml Johnson, KIA, presented the project tothe Board. Henry Courity Water District #2 requested a Fund F loan in theamount of $2,800,000 for the U.S. Highway 42 Storage Tank Project Theproject involved constmction of a one million gallon composite storage tank thatwill replace a 47-year-oid 200,000 gallon elevated leg tank that Is in need ofrepair and painting. This project wfll Increase storage capacity, allow for morewater to l}e available to the first three booster pump stations, and Increasegravity flow, reducing pump run times atthe pumping stkions. Mr. Damon TaDeyclarified that while Kentucky infrastructure Authority is not including a raleincrease in its conditions for approval of the loan, the Henry County WaterDistrict feels that ft would be prudent to plan for one, Mr. Jimmy Simpson withHenry County Water District #2 told the board that the water district will bepetitioning the Public Senrlce Commission for a rate Increase in early 2016. Mr.Jeff Derouen indicated that he would abstain from this vote.

Mr. David Cartmell moved to approve the Fund F Loan F1&^)14 In theamount of $2,800,000 to Henry County Water District 92 with the standardconditions. Mr. Ron Lovan seconded, artd the motion received all "aye"votes wHh the exception of Mr. Jeff Derouen, who at>stalned.

7. RESOLUTION AND ORDER OF THE BOARD OF DIRECTORS AUTHORIZINGAND APPROVING THE ISSUANCE OF OBUGATIONS OF THE KENTUCKYINFRASTRUCTURE AUTHORiTY TO REIMBURSE CAPITAL EXPENDITURESMADE BY GOVERNMENTAL AGENCIES PURSUANT TO LOANS MADE BYTHE KENTUCKY INFRASTRUCTURE AUTHORITY TO SUCHGOVERNMENTAL AGENCIES

This Is a routine resolutionallowing KiA to relmtiurse expenses that are paid outof the Authorlty'G funds with tiond proceeds. The projects listed below arecovered under this resolution:

APPUCANT FUND AMOUNT

City of Owenstjoro A15-036 $3,975,000

Northern Madison County Sanitation District C15-001 $1,200,000

City of Mount Vemon (increase of $423,310) Ft 2-01 $3,023,310

(Cumberland (County Water District F15-001 $1,268,000

Western Lewis-Rectorvjile Water and Gas District F15-005 $1J266,500

Henry County Water District #2 F15-014 $2,800,000

Mr. Russ Salsman moved to approve the resolution. Mr. David Cartmellseconded, and the motion carrM unanimously.

PaB*5of7

Kentucky Inlrastructure AuthorityMinutes of the FuH Board - Regular Meeting - October 2,2014

\l EXECUTIVE DIRECTOR'S REPORT

Mr. Covington provided more In-daplh information on changes to the Clean Water Act thathe received In training. He told the board that Davis Bacon and American Iron and Steeland Additional Suti&idization provisions have been made a permanent part of the program.Davis Bacon and American Iron and Steel will now applyto more types of projects, such asstorm water and decentralized systems.

Additional Subsidization is now optional, but if a stale chooses to use it, affordatiilltyrequirements must be based on Income, unemployment data, population trends, and otherrelevant data as determined by the state. Additional subsidization can also be used toimplement water and energy efficiency goals, mitigate stormwater runoff, and encouragesustainable project planning and design. States must establish AffordattOiiy Criteria beforeSeptember 30,2015.

There have also been changes to eligible projects. Land purchases will now be eligible.The Clean Water Act also aDows loans to private and non-profit entitles, but that is stillprohibited by state law.

Mr. Covington discussed the requirement for borrowers to have a Rscal Sustainabiiity Plan,which will include an inventory of critical assets, evaluation of condition, borrowercertification that water and energy conservations efforts are a part of the pbn, and a planfor financing maintenance and repair of facilities. The facility plan and information containedin the WRiS will be useful In complying with this requirement Cost and effectiveness andwater/energy efficiency of projects must also be evaluated.

Requirements for procurement or architectural and engineering services include a publicannouncement, evaluation and rankings based on qualifications, and consideration of atleast three firms. Negotiations can then take place withthe most qualifiedfund.

Revisions to the Clean Water Act will change receiptof Administrative Funds. There will bea choice of taking 4% of the Cap Grant or one fifth of the net value of the Fund.

As discussed at the last meeting, another change board members must consider Is theability to make loans with for a term of 30 years or the useful life of the project. In order toallow such loans. Itwould be necessary to revise KRS 224A.111, which requires that loansbe repaid within 20 years.

Mr. Covington toid board members that representatives of the companythat performed theagency's audit will be attending either the t^vemtier or December board meeting.

III. STATUS REPORT FOR FUNDS A, A2, B, 81. C, F, F2

IV. ANNOUNCEAAENTS/NOTIFICATIONS

• Next scheduled KIA board meeting:Tentatively set for Thursday, November 6,20141024 Capital Center Drive, Suite 340Frankfort, Kentucky

Psg* e of 7

Kentucky InfrastruclureAuttiofftyMinutes of the FuH Board - Regular IVIeetlng - October 2, 2014

There being no further business Mr. Hues Salsman moved to adjourn. Mr. JeffDerouen seconded and the motion carried unanimously. The October 2 2014,regular meedng of the Board of the Kentucky Infrastructure Authority wasadjourned.

Submitted by:

Jeffrey A. Abshire, Secretary DateKentucky infrastructureAuthority

PiBi7ot7

KENTUCKY INFRASTRUCTURE AUTHORITYStBVen L Bcshcar 1024 Capital Center Drive, Suite 340 Johll E. COVidgtOn IIIGovernor Frankfort, Kentucky 40501 Executive Director

Phone (502) 573-0250Fax (502) 573-0157

http://kla.ky.Bov

October 2. 2014

Mr, AMn Pharis, ChairmanCumberland County W133 Lower Rh/er Streel

Burkesvllle, KY 42717

O CTD

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•o ^Cumberland County Water District 5 2 a133 Lower Rh/er Street ^ M

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KENTUCKY INFRASTRUCTURE AUTHORITYFEDERALLY ASSISTED DRINKING WATER REVOLVING LOAN FUND

CONDITIONAL COMMITMENT LETTER (F15-001)

Dear Chairman Pharis;

The Kentucky Infrastructure Authority ("the Authority") commends your efforts toImprove public service facilities In your community. On October 2, 2014, the Authorityapproved your loan for the Water System Improvement Project subject to the conditionsstated below. The total cost of the project shall not exceed $1,360,000 of which theAuthority loan shall provide $1,268,000 of the funding. Other anticipated funding for theproject is reflected in the attached documents. The final loan amount will be equal tothe Authority's portion of estimated project cost applied to the actual project cost. Theattachments incorporated herein by reference fully describe the project.

An Assistance Agreement will be executed h)etween the Authority and the CumberlandCounty Water District upon satisfactory performance of the conditions set forth in thisletter. A period of twelve months from the date of this letter (October 2, 2015), will beallowed for you to meet the conditions set forth in this letter and enter into an AssistanceAgreement. A one-time extension of up to six months may be granted for applicantsthat experience extenuating circumstances. Funds will be available for disbursementonly after execution of the Assistance Agreement.

The Assistance Agreement and this commitment shall be subject, but not limited to, thefollowing tenns:

1. The Authority project loan shall not exceed $1,268,000.

^ UNBWDLCD SPIRfT^-KentuckyUnbndIedSpirit.com ^ ^ Opportunity Employer M/F/D

Chairman Afvin Pharls

October 2,2014Page 2

2. The loan shall contain principal forgiveness In the amount of 30%. Actualamortized loan and forgiveness amounts will be based on actual projectcosts drawn from the Authority.

3. The loan shall bear Interest at the rate of 0.75 percent per annumcommencing with the first draw of funds.

4. The loan shall be repaid over a period not to exceed 20 years from thedate the loan Is closed.

5. Interest shall be payable on the unforglven amount of actual fundsreceived. The first payment shall be due on June 1 or December 1immediately succeeding the date of the Initial draw of funds, provided thatIf such June 1 or December 1 shall be less than three months since thedate of the Initial draw of funds, then the first Interest payment date shallbe the June 1 or December 1 which is at least six months from the date ofthe Initial draw of funds. Interest payments will be due each six monthsthereafter until the loan Is repaid.

6. Full principal payments will commence on the appropriate June 1 orDecember 1 within twelve months from Initiation of operation. Fullpayments will tie due each six months thereafter until the loan Is repaid.

7. A loan servicing fee of 0.25% of the annual outstanding loan balance shallbe payable to the Authority as a part of each Interest payment.

8. Loan funds will be disbursed after execution of the Assistance Agreementas project costs are Incurred.

9. The Authority loan funds must be expended within six months of theofficial date of Initiation of operation.

10. Fund *F° loan funds may be considered to be federal funds. OMB CircularA-133, "Audits of States, Local Governments and Non-ProfItOrganizations, requires that all recipients and subreclplents expending$500,000 or more In a year In federal awards must have a silngle orprogram-specific audit conducted for that year In accordance with theCircular. If the federal amount expended plus all other federal fundsexpended exceeds the threshold, you are required to arrange for an A-133audit to be performed by an Independent, licensed CPA, or In specialcases, the Auditor of Public Accounts of the Commonwealth of Kentucky.Please note that the guidance for single audit requirements will change for

Chairman Aivin Pharls

October 2, 2014Pages

calendar or fiscal years beginning after December 26, 2014. Pleaseconsult with your Independent auditor as soon as possible to understandhow the changes will affect you.

11. The Authority requires an annual financial audit to be performed for the lifeof the loan.

The following Is a list of the standard conditions to be satisfied prior to execution of theAssistance Agreement or Incorporated In the Assistance Agreement. Any requireddocumentation must be submitted to the party designated.

1. The Authority to Award (bid) package must be submitted to the Division ofWater for approval within 14 days of bid opening.

2. The Assistance Agreement must be executed within six (6) months frombid opening.

3. Documentation of final funding commitments from all parties other thanthe Authority as reflected In the credit analysis shall be provided prior topreparation of the Assistance Agreement and disbursement of the loanmonies. Rejections of any anticipated project funding siiall beimmediately reported and may cause this loan to be subject to furtherconsideration.

4. The loan must undergo review by the Capital Projects and Bond OversightCommittee of the Kentucky Legislature prior to the state's execution of theAssistance Agreement. The committee meets monthly on the thirdTuesday. At this time we know of no further submission required for theirreview; however, they may request Informationas needed.

5. Any required adjustment in utility service rates shall be adopted byordinance, municipal order or resolution by the appropriate govemingbody of the Borrower. Public hearings as required by law shall be heldprior to the adoption of the service rate ordinance, order, or resolution.Any required approvals by the Kentucky Public Service Commission shallt>e obtained.

6. The Borrower must complete and retum to the Authority the attached"Authorization for Electronic Deposit of Vendor Paymenf Form.

7. An environmental review shall be conducted by the Division of Water forall construction projects receiving DWSRF funds, within the term of thisbinding commitment and prior to project bid.

Chairman Alvin Pharls

October 2, 2014Page 4

8. Technical plans and specifications and a complete DWSRF specificationschecklist shall be approved by the Division of Water prior to project bid.

9. Aii easements or purchases of land shall be completed prior tocommencement of construction. Clear Site Certification of all land oreasement acquisitions shall be provided to the Division of Water. DOWrepresentatives shall be notified for attendance of the pre-constructionconference.

10. Project changes or additions shall require a complete environmental andchange order review before they can be Included In the DWSRF loanproject.

11. Applicant must provide certification from their legal counsel stating thatthey have prepared construction specifications In accordance with allapplicable state or federal wage rate laws, and that the procurementprocedures, Including those for construction, land, equipment andprofessional services that are a part of the project, are In compliance withapplicable federal, state and loc^ procurement laws.

12. The Borrower shall comply with all Davis Bacon related monitoring andreporting and require all contractors to pay wages pursuant to applicableprevailing wage rates (federal or state) for all work relating to the subjectProject.

13. The project shall comply with the reporting requirements of theTransparency Act, and shall complete the attached Transparency ActReporting Infomnatlon Form and provide to the Authority no later than 30days after the KIA Board approval data of your loan.

14. If the project has a "Green Resen/e" component, the Borrower mustsubmit a Business Case. Ifrequired.

15. The project shall comply with American Iron and Steel requirements ofThe Consolidated Appropriations Act of 2014 (H.R. 3547), which becameeffective January 17, 2014, unless engineering plans and specificationswere approved by the Division of Water prior to the effective date.

Any special conditions stated In the Project Review attachment must be resolved.

Chairman AMn Pharis

October 2, 2014Page 5

Please Inform the Authority of any changes In your financing plan as soon as possible.We wish you every success for this project which will benefit both your community andthe Commonwealth as a whole.

Sincerely,

ribn, 111Executive Director

Attachments

cc: Mathew Dyer, Cumberland County Water DistrictJohnny Carter, Cumtierland County Water DistrictLee Mudd, Monarch Engineering, IncDivision of WaterDirk Bedarff, Peck, Shaffer & Williams LLPState Local Debt Office, DLGBorrower Rle - Cumberland County Water District - F15-001

Please sign and return a copy of this letter Indicating your acceptance of thiscommitment and Its terms. Also attach the completed "Auttiorizatlon For BectronicDeposit of Vendor Paymenf Form.

Accepted Date