article vii article vi article v article ivmbc.wv.gov/transcripts/f-g/fou90aw.pdfsection 7.09 rates...

FOUNTAIN PUBLIC SERVICE DISTRICT

WATER REVENUE BONDS,SERIES 1990 A AND SERIES 1990 B

andINTERIM CONSTRUCTION FINANCING

BOND AND NOTES RESOLUTION

Table of Contents

Subject

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ARTICLE ISTATUTORY AUTHORITY, FINDINGS AND DEFINITIONS

Section 1.01 Authority for this Resolution 1Section 1.02 Findings 1Section 1.03 Bond Legislation Constitutes Contract 4Section 1.04 Definitions 4

ARTICLE II

14

AUTHORIZATION OF ACQUISITION AND CONSTRUCTION

Section 2.01

OF THE PROJECT

Authorization of Acquisition and Constructionof the Project

ARTICLE III

15

.

AUTHORIZATION, TERMS, EXECUTION, REGISTRATION AND

SALE OF BONDS; AUTHORIZATION AND EXECUTION OF LOAN

AGREEMENT

Section 3.01 Authorization of BondsSection 3.02 Terms of Bonds 15Section 3.03 Execution of Bonds 16Section 3.04 Authentication and Registration 16Section 3.05 Negotiability, Transfer and Registration 16Section 3.06 Bonds Mutilated, Destroyed, Stolen or Lost 17Section 3.07 Bonds not to be Indebtedness of the Issuer 18Section 3.08 Bonds Secured by Pledge of Net Revenues; Lien

Positions 18Section 3.09 Form of Original Bonds 18

FORM OF SERIES 1990 A BOND 19FORM OF SERIES 1990 B BOND 26

Section 3.10 Sale of Original Bonds; Approval andRatification of Execution of Loan Agreementwith Authority 33

Section 3.11 "Amended Schedule A" Filing; Tender of Series1990 B Bonds 33

ARTICLE IVINTERIM CONSTRUCTION FINANCING

Authorization and General Terms 34Section 4.01Section 4.02 Terms of and Security for Notes; Trust

Indenture 34Section 4.03 Notes are Special Obligations 34Section 4.04 Letters of Credit 34

ARTICLE V

36

FUNDS AND ACCOUNTS; SYSTEM REVENUES AND

APPLICATION THEREOF

Establishment of Funds and Accounts withDepository Bank

Section 5.01

Section 5.02 Establishment of Funds and Accounts withCommission 36

Section 5.03 System Revenues; Flow of Funds 36

ARTICLE VI

42

BOND PROCEEDS; CONSTRUCTION DISBURSEMENTS

Section 6.01 Application of Bond Proceeds; Pledge ofUnexpended Bond Proceeds

Section 6.02 Disbursements From the Bond ConstructionTrust Fund 43

ARTICLE VIIADDITIONAL COVENANTS OF THE ISSUER

General Covenants of the Issuer 45Section 7.01Section 7.02 Bonds and Notes not to be Indebtedness of the

Issuer 45Section 7.03 Bonds Secured by Pledge of Net Revenues; Lien

Positions 45Section 7.04 Initial Schedule of Rates and Charges 46Section 7.05 Sale of the System 46Section 7.06 Issuance of Other Obligations Payable Out of

Revenues and General Covenant AgainstEncumbrances 47

Section 7.07 Parity Bonds 48Section 7.08 Books and Records 50

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Section 7.09 Rates 51Section 7.10 Operating Budget and Audit 52Section 7.11 No Competing Franchise 53Section 7.12 Enforcement of Collections 53Section 7.13 No Free Services 54Section 7.14 Insurance and Construction Bonds 54Section 7.15 Completion of Project 55Section 7.16 Tax Covenants 55Section 7.17 Statutory Mortgage Lien 57

Section 8.01

ARTICLE VIIIINVESTMENT OF FUNDS; NON ARBITRAGE

Investments 58Section 8.02 Arbitrage 59Section 8.03 Tax Certificate and Rebate 59

Section 9.01

ARTICLE IXDEFAULT AND REMEDIES

Events of Default 61Section 9.02 Remedies 62Section 9.03 Appointment of Receiver 62

Section 10.01

ARTICLE XDEFEASANCE

Defeasance of Series 1990 A Bonds 64Section 10.02 Defeasance of Series 1990 B Bonds 65Section 10.03 Defeasance of Notes 66

Section 11.01

ARTICLE XIMISCELLANEOUS

Amendment or Modification of Bond Legislation 67_Section 11.02 Bond Legislation Constitutes Contract 67Section 11.03 Severability of Invalid Provisions 67Section 11.04 Headings, Etc. 67Section 11.05 Conflicting Provisions Repealed 68Section 11.06 Covenant of Due Procedure, Etc. 68Section 11.07 Public Notice of Proposed Financing 68Section 11.08 Effective Date 68

SIGNATURES 69CERTIFICATION 70

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RESOLUTION

RESOLUTION AUTHORIZING THE ACQUISITION ANDCONSTRUCTION OF PUBLIC WATERWORKS FACILITIES OFFOUNTAIN PUBLIC SERVICE DISTRICT AND THEFINANCING OF THE COST, NOT OTHERWISE PROVIDED,THEREOF THROUGH THE ISSUANCE BY THE DISTRICT OFNOT MORE THAN $400,000 IN AGGREGATE PRINCIPALAMOUNT OF WATER REVENUE BONDS, SERIES 1990 A, NOTMORE THAN $100,000 IN AGGREGATE PRINCIPAL AMOUNTOF WATER REVENUE BONDS, SERIES 1990 B, AND NOTMORE THAN $500,000 INTERIM CONSTRUCTIONFINANCING, CONSISTING OF BOND ANTICIPATION NOTES,GRANT ANTICIPATION NOTES OR A LINE OF CREDITEVIDENCED BY NOTES, OR ANY COMBINATION OF THEFOREGOING; PROVIDING FOR THE RIGHTS AND REMEDIESOF AND SECURITY FOR THE REGISTERED OWNERS OF SUCHBONDS AND NOTES; AUTHORIZING EXECUTION ANDDELIVERY OF A TRUST INDENTURE SECURING THE NOTES;APPROVING, RATIFYING AND CONFIRMING A LOANAGREEMENT AND SUPPLEMENTAL LOAN AGREEMENTRELATING TO SUCH BONDS; AUTHORIZING THE SALE ANDPROVIDING FOR THE TERMS AND PROVISIONS OF SUCHBONDS AND NOTES AND ADOPTING OTHER PROVISIONSRELATING THERETO.

BE IT RESOLVED BY THE PUBLIC SERVICE BOARD OF FOUNTAINPUBLIC SERVICE DISTRICT:

ARTICLE I

STATUTORY AUTHORITY, FINDINGS AND DEFINITIONS

Section 1.01. Authority for this Resolution. ThisResolution (together with any order or resolution supplemental heretoor amendatory hereof, the "Bond Legislation") is adopted pursuant tothe provisions of Chapter 16, Article 13A of the West Virginia Codeof 1931, as amended (the "Act"), and other applicable provisions oflaw.

Section 1.02. Findings.

It is hereby found, determinedand declared that:

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A. Fountain Public Service District (the "Issuer") is apublic service district and political subdivision of the State ofWest Virginia in Mineral County of said State.

B. The Issuer does not presently own or operate a publicwaterworks system, and it is deemed necessary and desirable for thehealth and welfare of the inhabitants of the Issuer that there beacquired and constructed certain waterworks facilities of the Issuer,consisting of a water distribution system comprised of approximately4.2 miles of water mains, 22 fire hydrants and a 150,000 gallonstorage tank, together with all appurtenant facilities (collectively,the "Project"), which constitute properties for the storage anddistribution of water (the Project and any additions or improvementsthereto or extensions thereof is herein called the "System") at anestimated cost of $880,275, in accordance with the plans andspecifications prepared by the Consulting Engineers, which plans andspecifications have heretofore been filed with the Issuer.

C. The estimated revenues to be derived in each year aftercompletion of the Project from the operation of the System will besufficient to pay all the costs of the operation and maintenance ofsaid System, the principal of and interest on the Bonds and allSinking Fund, Reserve Account and other payments provided for herein,all as such terms are hereinafter defined.

D. It is deemed necessary for the Issuer to issue itsWater Revenue Bonds in the total aggregate principal amount of notmore than $500,000 in two series, being the Series 1990 A Bonds in theaggregate principal amount of not more than $400,000, and theSeries 1990 B Bonds in the aggregate principal amount of not more than$100,000 (collectively, the "Original Bonds"), and (at the option ofthe Issuer) to issue its waterworks system bond anticipation notesprior to issuance of the Original Bonds, and contemporaneouslytherewith, or as soon as practicable thereafter, to issue itswaterworks system grant anticipation notes and/or a note or notesevidencing a line of credit, or any combination of the foregoing(collectively, the "Notes"), in the aggregate principal amount of notmore than $500,000 to temporarily finance costs of acquisition andconstruction of the Project. Said costs shall be deemed to includethe cost of all property rights, easements and franchises deemednecessary or convenient therefor; interest upon the Notes during theterm thereof and upon the Bonds prior to and during construction oracquisition and for a period not exceeding 6 months after completionof construction of the Project; amounts which may be deposited in theReserve Accounts; engineering and legal expenses; expenses forestimates of costs and revenues, expenses for plans, specificationsand surveys; other expenses necessary or incident to determining thefeasibility or practicability of the enterprise, administrative

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expenses, commitment fees, fees of the Authority (as hereinafterdefined), underwriter's discount, initial fees for the services ofregistrars, paying agents, depositories or trustees or other costs inconnection with the sale of the Bonds and/or the Notes and such otherexpenses as may be necessary or incidental to the financing hereinauthorized, the acquisition or construction of the Project and theplacing of same in operation, and the performance of the things hereinrequired or permitted, in connection with any thereof, including, withrespect to the Notes, any fees for the providing of a letter ofcredit, as hereinafter defined, and any costs of obtaining insurancethereon; provided, that reimbursement to the Issuer for any amountsexpended by it for allowable costs prior to the issuance of the Bondsor the Notes or the repayment of indebtedness ' incurred by the Issuerfor such purposes shall be deemed Costs of the Project, as hereinafterdefined.

E. The period of usefulness of the System after completionof the Project is not less than 40 years.

F. It is in the best interests of the Issuer that itsOriginal Bonds be sold to the Authority pursuant to the terms andprovisions of a loan agreement and a supplemental loan agreement tobe entered into between the Issuer and the Authority, in formsatisfactory to the Issuer and the Authority, as shall be approved bysupplemental resolution.

G. There are no outstanding obligations of the Issuerwhich will rank prior to or on a parity with the Bonds as to liens andsource of and security for payment. The Series 1990 B Bonds shall bejunior and subordinate to the Series 1990 A Bonds with respect toliens, pledge and source of and security for payment and in all otherrespects. The Grant Anticipation Notes, if issued, will not bepayable from the Net Revenues, but shall be payable from GrantReceipts, Surplus Revenues, certain proceeds of such GrantAnticipation Notes and proceeds of a letter of credit, if any, all asshall be set forth in the Indenture and/or the Supplemental Resolutionauthorizing the Notes or such Grant Anticipation Notes. The BondAnticipation Notes, if issued, will be payable from the proceeds ofthe Bonds, certain proceeds of such Bond Anticipation Notes and theNet Revenues, if necessary, all as shall be set forth in the Indenture ,and/or the Supplemental Resolution authorizing the Notes or such BondAnticipation Notes.

H. The Issuer has complied with all requirements ofWest Virginia law relating to authorization of the acquisition,

. construction and operation of the Project and the System and issuanceof the Bonds and the Notes, or will have so complied prior to issuanceof any thereof, including, among other things and without limitation,

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the obtaining of a Certificate of Public Convenience and Necessity andapproval of this financing and necessary user rates and chargesdescribed herein from the Public Service Commission of West Virginiaby final order, the time for rehearing and appeal of which will eitherhave expired prior to the issuance of the Bonds or any of the Notesor such final order will not be subject to appeal or rehearing.

Section 1.03. Bond Legislation Constitutes Contract. Inconsideration of the acceptance of the Bonds and the Notes by thosewho shall be the registered owners of the same from time to time, thisBond Legislation shall be deemed to be and shall constitute a contractbetween the Issuer and such Bondholders and such Noteholders, and thecovenants and agreements herein set forth to be performed by theIssuer shall be for the equal benefit, protection and security of theregistered owners of any and all of such Bonds and Notes,respectively, all which shall be of equal rank and without preference,priority or distinction between any one Bond of a series and any otherBonds of the same series and between any one Note of a series and anyother Note of the same series, by reason of priority of issuance orotherwise, except as expressly provided therein and herein.

Section 1.04. Definitions. The following terms shall havethe following meanings herein unless the context expressly requiresotherwise:

"Act" means Chapter 16, Article 13A of the West VirginiaCode of 1931, as amended and in effect on the date of adoption hereof.

"Authority" means the West Virginia Water DevelopmentAuthority, which is expected to be the original purchaser of theOriginal Bonds, or any other agency of the State of West Virginia thatsucceeds to the functions of the Authority.

"Authorized Officer" means the Chairman of the GoverningBody of the Issuer or any temporary Chairman duly selected by theGoverning Body.

"Bond Construction Trust Fund" means the Bond ConstructionTrust Fund established by Section 5.01 hereof.

"Bondholder," "Holder of the Bonds," "Holder" or any similarterm whenever used herein with respect to an outstanding Bond orBonds, means the person in whose name such Bond is registered.

"Bond Legislation,"

"Resolution,"

"Bond and Notes

Resolution" or "Local Act" means this Bond and Notes Resolution and

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all orders and resolutions supplemental hereto or amendatory hereof.

"Bond Registrar" means the bank or other entity to bedesignated as such in the Supplemental Resolution and its successorsand assigns.

"Bond Year" means each one-year period (or shorter periodfrom the date of issue of the Bonds) that ends at the close ofbusiness on October 1.

"Bonds" means the Original Bonds and any bonds on a paritytherewith authorized to be issued hereunder.

"Chairman" means the Chairman of the Governing Body of theIssuer.

"Code" means the Internal Revenue Code of 1986, as amended,and the Regulations.

"Commission" means the West Virginia Municipal BondCommission or any other agency of the State of West Virginia thatsucceeds to the functions of the Commission.

"Consulting Engineers" means R. W. Smith & Associates, P.C.,Staunton, Virginia, or any engineer or firm of engineers that shallat any time hereafter be retained by the Issuer as ConsultingEngineers for the System.

"Costs" or "Costs of the Project" means those costsdescribed in Section 1.02D hereof to be a part of the cost ofacquisition and construction of the Project.

"Depository Bank" means the bank designated as such in theSupplemental Resolution, and its successors and assigns.

"FDIC" means the Federal Deposit Insurance Corporation andany successor to the functions of the FDIC.

"Fiscal Year" means each 12-month period beginning on July 1and ending on the succeeding June 30.

"Governing Body" or "Board" means the public service boardof the Issuer, as it may now or hereafter be constituted.

"Government Obligations" means direct obligations of, orobligations the timely payment of the principal of and interest onwhich is guaranteed by, the United States of America.

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"Grant" means the Small Cities Block Grant.

"Grant Agreement" means a written commitment for the paymentof the Small Cities Block Grant or any of the Other Grants, specifyingthe amount of such Grant, the terms and conditions upon which suchGrant is made and the date or dates or event or events upon which suchGrant is to be paid to the Issuer; provided that, "Small CitiesBlock Grant Agreement" means only the Grant Agreement relating to theSmall Cities Block Grant and "Other Grant Agreements" means only thoseGrant Agreements relating to the Other Grants.

"Grant Receipts" means all moneys received by the Issuer onaccount of any Grant after the date of issuance of any grantanticipation notes; provided that, "Small Cities Block GrantReceipts" means only Grant Receipts on account of the Small CitiesBlock Grant, and "Other Grant Receipts" means only Grant Receipts onaccount of any or all of the Other Grants.

"Grants" means, collectively, the Small Cities Block Grantand the Other Grants, as hereinafter defined.

"Gross Revenues" means the aggregate gross operating andnon-operating revenues of the System, as hereinafter defined,determined in accordance with generally accepted accountingprinciples, after deduction of prompt payment discounts, if any, andreasonable provision for uncollectible accounts; provided, that "GrossRevenues" does not include any gains from the sale or otherdisposition of, or from any increase in the value of, capital assets(including Qualified Investments, as hereinafter defined, purchasedpursuant to Article 8.01 hereof) or any Tap Fees, as hereinafterdefined.

"Herein," "hereto" and similar words shall refer to thisentire Bond Legislation.

-"-Indenture"-or-"-Trust Indenture" means the-Trust Indenturewhich may, at the Issuer's option, be entered into between the Issuerand the Trustee relating to any or all of the Notes and allsupplements or amendments thereto.

"Independent Certified Public Accountants" shall mean anycertified public accountant or firm of certified public accountantsthat shall at any time hereafter be retained by the Issuer to preparean independent annual or special audit of the accounts of the Systemor for any other purpose except keeping the accounts of the System inthe normal operation of its business and affairs.

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"Investment Property" means any security (as said term isdefined in Section 165(g)(2)(A) or (B) of the Code), obligation,annuity contract, investment-type property or any residential rentalproperty for family units which is not located within the jurisdictionof the Issuer and which is not acquired to implement a court orderedor approved housing desegregation plan, excluding, however,obligations the interest on which is excluded from gross income, underSection 103 of the Code, for federal income tax purposes other thanspecified private activity bonds as defined in Section 57(a)(5)(C) ofthe Code.

"Issuer" means Fountain Public Service District, in MineralCounty, West Virginia, and, unless the context clearly indicatesotherwise, includes the Governing Body of the Issuer.

"Loan Agreement" shall mean, collectively, the LoanAgreement and the Supplemental Loan Agreement, to be entered intobetween the Authority and the Issuer providing for the purchase ofthe Original Bonds from the Issuer by the Authority, the forms ofwhich shall be approved, and the execution and delivery by the Issuerauthorized and directed or ratified by the Supplemental Resolution.

"Net Proceeds" means the face amount of the Original Bonds,plus accrued interest and premium, if any, less original issuediscount, if any, and less proceeds deposited in the Reserve Accounts.For purposes of the Private Business Use limitations set forth herein,the term Net Proceeds shall include any amounts resulting from theinvestment of proceeds of the Original Bonds, without regard towhether or not such investment is made in tax-exempt obligations.

"Net Revenues" means the balance of the Gross Revenues,remaining after deduction of Operating Expenses, as hereinafterdefined.

"Nonpurpose Investment" means any Investment Property whichisacquired -wi-th--the --gross -proceeds or any other- proceeds of the -Original Bonds and is not acquired in order to carry out thegovernmental purpose of the Original Bonds.

"Noteholder," "Holder of . the Notes" or any similar termmeans the person, whenever used herein with respect to an outstandingNote or Notes, in whose name such Note is registered.

"Notes" means, collectively, the not more than$500,000 in aggregate principal amount of waterworks system bond

anticipation notes, grant anticipation notes and/or notes evidencinga line of credit, or any combination of the foregoing, and originallyauthorized hereby, which may be issued by the Issuer, the terms of

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which shall be set forth in one or more Supplemental Resolutions, andunless the context clearly indicates otherwise, the terms "Notes"includes any refunding Notes of the Issuer.

"Notes Construction Trust Fund" means the Notes ConstructionTrust Fund which may be established by the Indenture.

"Notes Debt Service Fund" means the Notes Debt Service Fundwhich may be established by the Indenture.

"Notes Registrar" means the bank to be designated as suchin the Indenture and/or the Supplemental Resolution pertaining to suchNotes and its successors and assigns.

"Operating Expenses" means the reasonable, proper andnecessary costs of repair, maintenance and operation of the Systemand includes, without limiting the generality of the foregoing,administrative, engineering, legal, auditing and insurance expenses,other than those capitalized as part of the Costs, fees and expensesof the Authority, fiscal agents, the Depository Bank, Registrar,Paying Agent and the Trustee (all as herein defined), other than thosecapitalized as part of the Costs, payments to pension or retirementfunds, taxes and such other reasonable operating costs and expensesas should normally and regularly be included under generally acceptedaccounting principles; provided, that "Operating Expenses" does notinclude payments on account of the principal of or redemption premium,if any, or interest on the Bonds or the Notes, charges fordepreciation, losses from the sale or other disposition of, or fromany decrease in the value of, capital assets, amortization of debtdiscount or such miscellaneous deductions as are applicable to prioraccounting periods.

"Original Bonds" or "Bonds originally authorized hereby" orsimilar phrases mean, collectively, the not more than $400,000 inaggregate principal amount of Series 1990 A Bonds and the not morethan $100,000 in aggregate-principal amount of Series- 1990 B Bonds,issued for the purpose of paying a portion of the Costs of the Projectand for such other purposes permitted and authorized by this BondLegislation.

"Original Notes Purchaser" means, in the event Notes areissued, the original purchaser of such Notes, as shall be named inthe Supplemental Resolution, and, in the event a note or notesevidencing a line of credit are issued, such bank or banks as shallbe named in a resolution. supplemental hereto.

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"Other Grants" means any other grant other than the SmallCities Block Grant hereafter received by the Issuer to aid infinancing any Costs.

" Outstanding," when used with reference to Bonds or Notesand as of any particular date, describes all Bonds theretofore andthereupon being authenticated and delivered, or all Notes theretoforeand thereupon being authenticated and delivered, as applicable, except(i) any Bond or Note cancelled by the Bond Registrar or NotesRegistrar, at or prior to said date; (ii) any Bond or Note for thepayment of which moneys, equal to its principal amount and redemptionpremium, if applicable, with interest to the date of maturity orredemption shall be in trust hereunder or under the Indenture, asapplicable, and set aside for such payment (whether upon or prior tomaturity); (iii) any Bond or Note deemed to have been paid as providedin Article X hereof or as provided in the Indenture, as applicable;and (iv) for purposes of consents or other action by a specifiedpercentage of Bondholders or Noteholders, any Bonds or Notesregistered to the Issuer.

"Parity Bonds" means additional. Bonds issued under theprovisions and within the limitations prescribed by Section 7.07hereof.

"Paying Agent" means the bank or banks or other entitydesignated as such for the Bonds and/or the Notes in the Indenture orin the Supplemental Resolution or such entity or authority as may bedesignated by the Issuer.

"Private Business Use" means use directly or indirectly ina . trade or business carried on by a natural person, including allpersons "related" to such person within the meaning ofSection 144(a)(3) of the Code, or in any activity carried on by aperson other than a natural person, including all persons "related"to such person within the meaning of Section 144(a)(3) of the Code,excluding; however, use by a state or local governmental unit and useas a member of the general public. All of the foregoing shall bedetermined in accordance with the Code, including, without limitation,giving due regard to "incidental use," if any, of the proceeds of theissue and/or proceeds used for "qualified improvements," if any.

"Program" means the Authority's loan program, under whichthe Authority purchases the water development revenue bonds of localgovernmental entities satisfying certain legal and other requirementswith the proceeds of water development revenue bonds of the Authority.

"Project" means the acquisition and construction of certainwaterworks facilities of the Issuer, consisting generally of a water

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distribution system comprised of approximately 4.2 miles of watermains, 22 fire hydrants and a 150,000 gallon storage tank, togetherwith all appurtenant facilities.

following:"Qualified Investments" means and includes any of the

(a) Government Obligations;

(b) Government Obligations which have beenstripped of their unmatured interest coupons,interest coupons stripped from GovernmentObligations, and receipts or certificatesevidencing payments from Government Obligationsor interest coupons stripped from GovernmentObligations;

(c) Bonds, debentures, notes or otherevidences of indebtedness issued by any of thefollowing agencies: Banks for Cooperatives;Federal Intermediate Credit Banks; Federal HomeLoan Bank System; Export-Import Bank of theUnited States; Federal Land Banks; GovernmentNational Mortgage Association; Tennessee ValleyAuthority; or Washington Metropolitan AreaTransit Authority;

(d) Any bond, debenture, note,participation certificate or other similarobligations issued by the Federal NationalMortgage Association to the extent suchobligation is guaranteed by the GovernmentNational Mortgage Association or issued by anyother federal agency and backed by the full faithand credit of the United States of America;

(e) Time accounts (-including accountsevidenced by time certificates of deposit, timedeposits or other similar banking arrangements)which, to the extent not insured by the FDIC orFederal Savings and Loan Insurance Corporation,shall be secured by a pledge of GovernmentObligations, provided, that said GovernmentObligations pledged either must mature as nearlyas practicable coincident with the maturity ofsaid time accounts or must be replaced orincreased so that the market value thereof is

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always at least equal to the principal amount ofsaid time accounts;

(f) Money market funds or similar fundswhose only assets are investments of the typedescribed in paragraphs (a) through (e) above;

(g) Repurchase agreements, fully secured byinvestments of the types described in paragraphs(a) through (e) above, with banks or nationalbanking associations which are members of FDIC orwith government bond dealers recognized asprimary dealers by the Federal Reserve Bank ofNew York, provided, that said investmentssecuring said repurchase agreements either mustmature as nearly as practicable coincident withthe maturity of said repurchase agreements ormust be replaced or increased so that the marketvalue thereof is always at least equal to theprincipal amount of said repurchase agreements,and provided further that the holder of suchrepurchase agreement shall have a prior perfectedsecurity interest in the collateral therefor;must have (or its agent must have) possession ofsuch collateral; and such collateral must be freeof all claims by third parties;

(h) The West Virginia " consolidated fund"managed by the West Virginia State Board ofInvestments pursuant to Chapter 12, Article 6 ofthe West Virginia Code of 1931, as amended; and

(i) Obligations of states or politicalsubdivisions or agencies thereof, the interest onwhich is excluded from gross income for federal

- income taxpurposes, and- which -are rated atleast "A" by Moody's Investors Service, Inc. orStandard & Poor's Corporation.

"Registered Owner," "Noteholder," "Bondholder," "Holder" orany similar term means whenever used herein with respect to anoutstanding Bond, Note, Bonds or Notes, the person in whose name suchBond or Note is registered.

"Registrar" means, as appropriate, either the Bond Registraror the Notes Registrar, or both.

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"Regulations" means temporary and permanent regulationspromulgated under the Code or any predecessor to the Code.

"Revenue Fund" means the Revenue Fund established bySection 5.01 hereof.

"Secretary" means the Secretary of the Governing Body of theIssuer.

"Series 1990 A Bonds" or "Series A Bonds" means the not morethan $400,000 in aggregate principal amount of Water Revenue Bonds,Series 1990 A, of the Issuer.

"Series 1990 A Bonds Reserve Account" means theSeries 1990 A Bonds Reserve Account established in the Series 1990 ABonds Sinking Fund pursuant to Section 5.02 hereof.

"Series 1990 A Bonds Reserve Requirement" means, as of anydate of calculation, the maximum amount of principal and interestwhich will become due on the Series 1990 A'Bonds in the then currentor any succeeding year.

"Series 1990 A Bonds Sinking Fund" means the Series 1990 ABonds Sinking Fund established by Section 5.02 hereof.

"Series 1990 B Bonds" or "Series B Bonds" means the not morethan $100,000 in aggregate principal amount of Water Revenue Bonds,Series 1990 B, of the Issuer.

"Series 1990 B Bonds Reserve Account" means theSeries 1990 B Bonds Reserve Account established in the Series 1990 BBonds Sinking Fund pursuant to Section 5.02 hereof.

"Series 1990 B Bonds Reserve Requirement" means, as of thedate of calculation, the maximum amount of principal which will becomedue on-the-Series --1990 B- Bonds in the then current or any succeedingyear. .

"Series 1990 B Bonds Sinking Fund" means the Series 1990 BBonds Sinking Fund established by Section 5.02 hereof.

"Small Cities Block Grant" means the grant from theUnited States Department of Housing and Urban Development or itssuccessor through the State of West Virginia.

"State" means the State of West Virginia.

12.

"Supplemental Resolution" means any resolution or order ofthe Issuer supplementing or amending this Resolution and, whenpreceded by the article "the," refers specifically to the supplementalresolution or resolutions authorizing the sale of any or all of theNotes or the sale of the Original Bonds, as the case may be; provided,that any matter intended by this Resolution to be included in theSupplemental Resolution with respect to the Notes or the OriginalBonds, as the case may be, and not so included may be included inanother Supplemental Resolution.

"Surplus Revenues" means the Net Revenues not required bythe Bond Legislation to be set aside and held for the payment of orsecurity for the Bonds or any other obligations of the Issuer,including, without limitation, the Renewal and Replacement Fund andthe Reserve Accounts, the proceeds of which Bonds or other obligationsare to be used to pay Costs of the Project.

"System" means the complete properties of the Issuer for thestorage and distribution of water, in its entirety or any integralpart thereof, and shall include the Project and any additions,improvements and extensions thereto hereafter constructed or acquiredfor said system from any sources whatsoever.

"Tap Fees" means the fees, if any, paid by prospectivecustomers of the System in order to connect thereto.

"Trustee" means the banking institution designated astrustee for the Noteholders under the Indenture, if any, itssuccessors and assigns.

Words importing singular number shall include the pluralnumber in each case and vice versa; words importing persons shallinclude firms and corporations; and words importing the masculine,feminine or neutral gender shall include any other gender.

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ARTICLE II

AUTHORIZATION OF ACQUISITION AND CONSTRUCTIONOF THE PROJECT

Section 2.01. Authorization of Acquisition and Constructionof the Project. There is hereby authorized the acquisition andconstruction of the Project, at an estimated cost of $880,275, inaccordance with the plans and specifications which have been preparedby the Consulting Engineers, heretofore filed in the office of theGoverning Body. The proceeds of the Notes and the Bonds herebyauthorized shall be applied as provided in the Indenture, if any, andArticle VI hereof, respectively.

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ARTICLE III,

AUTHORIZATION, TERMS, EXECUTION, REGISTRATION ANDSALE OF BONDS; AUTHORIZATION AND EXECUTION OF LOAN AGREEMENT

Section 3.01. Authorization of Bonds. For the purposes ofcapitalizing interest on the Series 1990 A Bonds, funding a reserveaccount for each series of Original Bonds, paying Costs of the Projectnot otherwise provided for and paying certain costs of issuance of theOriginal Bonds and related costs, or any or all of such purposes, asdetermined by the Supplemental Resolution, there shall be issuednegotiable Original Bonds of the Issuer, in an aggregate principalamount of not more than $500,000. Said Bonds shall be issued intwo series, to be designated respectively, "Water Revenue Bonds,Series 1990 A," in the aggregate principal amount of not more than$400,000, and "Water Revenue Bonds, Series 1990 B," in the aggregateprincipal amount of not more than $100,000, and shall have such termsas set forth hereinafter and in the Supplemental Resolution. SuchBonds shall be issued contemporaneously with or prior to issuance ofthe Grant Anticipation Notes, if any. The proceeds of the Bondsremaining after funding of the Reserve Accounts (if funded from Bondproceeds) and capitalization of interest, if any, shall be depositedin or credited to the Bond Construction Trust Fund established bySection 5.01 hereof.

Section 3.02. Terms of Bonds. The Bonds shall bearinterest at such rate or rates, not exceeding the then legal maximum,payable semiannually on such dates; shall mature on such dates and insuch amounts; and shall be redeemable, in whole or in part, all as theIssuer shall prescribe in a Supplemental Resolution. The Bonds shallbe payable as to principal at the office of the Paying Agent, in anycoin or currency which, on the dates of payment of principal is legaltender for the payment of public or private debts under the laws ofthe United States of America. Interest on the Bonds shall be paid bycheck or draft---of--the Paying Agent mailed to the registered -ownerthereof at the address as it appears on the books of the BondRegistrar, or by such other method as shall be mutually agreeable solong as the Authority is the Registered Owner thereof.

Unless otherwise provided by the Supplemental Resolution,the Original Bonds shall be issued in the form of a single bond foreach series, fully registered to the Authority, with a debt serviceschedule attached, representing the aggregate principal amount of eachseries, and shall mature in principal installments, all as providedin the Supplemental Resolution. The Bonds of each series shall beexchangeable at the option and expense of the Holder for other fullyregistered Bonds of the same series in aggregate principal amount

15.

equal to the amount of said Bonds then Outstanding and beingexchanged, with principal installments or maturities, as applicable,corresponding to the dates of payment of principal installments ofsaid Bonds; provided, that the Authority shall not be obligated to payany expenses of such exchange.

Subsequent series of Bonds, if any, shall be issued in fullyregistered form and in denominations as determined by a SupplementalResolution. The Bonds shall be dated as of the date specified in aSupplemental Resolution and shall bear interest from such date.

Section 3.03. Execution of Bonds. The Bonds shall beexecuted in the name of the Issuer by the Chairman, and the seal ofthe Issuer shall be affixed thereto or imprinted thereon and attestedby the Secretary. In case any one or more of the officers who shallhave signed or sealed any of the Bonds shall cease to be such officerof the Issuer before the Bonds so signed and sealed have been actuallysold and delivered, such Bonds may nevertheless be sold and deliveredas herein provided and may be issued as if the person who signed orsealed such Bonds had not ceased to hold such office. Any Bonds maybe signed and sealed on behalf of the Issuer by such person as at theactual time of the execution of such Bonds shall hold the properoffice in the Issuer, although at the date of such Bonds such personmay not have held such office or may not have been so authorized.

Section 3.04. Authentication and Registration. No Bondshall be valid or obligatory for any purpose or entitled to anysecurity or benefit under this Bond Legislation unless and until theCertificate of Authentication and Registration on such Bond,substantially in the forms set forth in Section 3.09 shall have beenmanually executed by the Bond Registrar. Any such executedCertificate of Authentication and Registration upon any such Bondshall be conclusive evidence that such Bond has been authenticated,registered and delivered under this Bond Legislation. The Certificateof Authentication and Registration on any Bond shall be deemed to havebeen executed by the Bond Registrar if manually signed by anauthorized officer of the Bond Registrar, but it shall not benecessary that the same officer sign the Certificate of Authenticationand Registration on all of the Bonds issued hereunder.

Section 3,05. Negotiability, Transfer and Registration.Subject to the provisions for transfer of registration set forthbelow, the Bonds shall be and have all of the qualities and incidentsof negotiable instruments under the Uniform Commercial Code of theState of West Virginia, and each successive Holder, in accepting anyof said Bonds shall be conclusively deemed to have agreed that suchBonds shall be and have all of the qualities and incidents ofnegotiable instruments under the Uniform Commercial Code of the State

16.

of West Virginia, and each successive Holder shall further beconclusively deemed to have agreed that said Bonds shall beincontestable in the hands of a bona fide holder for value.

So long as any of the Bonds remain outstanding, the Issuer,through the Bond Registrar as its agent, shall keep and maintain booksfor the registration and transfer of the Bonds.

The registered Bonds shall be transferable only upon thebooks of the Bond Registrar, by the registered owner thereof in personor by his attorney duly authorized in writing, upon surrender theretotogether with a written instrument of transfer satisfactory to theBond Registrar duly executed by the registered owner or his dulyauthorized attorney.

In all cases in which the privilege of exchanging Bonds ortransferring the registered Bonds are exercised, Bonds shall bedelivered in accordance with the provisions of this Bond Legislation.All Bonds surrendered in any such exchanges or transfers shallforthwith be cancelled by the Bond Registrar. For every such exchangeor transfer of Bonds, the Bond Registrar may make a charge sufficientto reimburse it for any tax, fee or other governmental charge requiredto be paid with respect to such exchange or transfer and the cost ofpreparing each new Bond upon each exchange or transfer, and any otherexpenses of the Bond Registrar incurred in connection therewith, whichsum or sums shall be paid by the Issuer. The Bond Registrar shall notbe obliged to make any such exchange or transfer of Bonds during theperiod commencing on the 15th day of the month next preceding aninterest payment date on the Bonds or, in the case of any proposedredemption of Bonds, next preceding the date of the selection of Bondsto be redeemed, and ending on such interest payment date or redemptiondate.

Section 3,06. Bonds Mutilated, Destroyed, Stolen or Lost.In case any Bond shall become mutilated or be destroyed, stolen orlost, the Issuer may, in its discretion, issue, and the Bond Registrarshall, if-so advised by the Issuer, authenticate and deliver, a newBond of the same series and of like tenor as the Bonds so mutilated,destroyed, stolen or lost, in exchange and substitution for suchmutilated Bond, upon surrender and cancellation of such mutilatedBond, or in lieu of and substitution for the Bond destroyed, stolenor lost, and upon the Holder's furnishing satisfactory indemnity andcomplying with such other reasonable regulations and conditions as theIssuer may prescribe and paying such expenses as the Issuer and theBond Registrar may incur. All Bonds so surrendered shall be cancelledby the Bond Registrar and held for the account of the Issuer. If anysuch Bond shall have matured or be about to mature, instead of issuinga substitute Bond, the Issuer may pay the same, upon being indemnified

17.

as aforesaid, and if such Bond be lost, stolen or destroyed, withoutsurrender thereof.

Section 3.07. Bonds not to be Indebtedness of the Issuer.The Bonds shall not, in any event, be or constitute an indebtednessof the Issuer within the meaning of any constitutional or statutoryprovision or limitation, but shall be payable solely from the GrossRevenues derived from the operation of the System as herein providedand amounts, if any, in the respective Reserve Accounts. No holderor holders of any of the Bonds shall ever have the right to compelthe exercise of the taxing power of the Issuer to pay the Bonds orthe interest thereon.

Section 3,08. Bonds Secured by Pledze of Net Revenues; LienPositions. The payment of the debt service of all the Series 1990 ABonds shall be secured forthwith equally and ratably with each otherby a first lien on the Net Revenues derived from the System. Thepayment of the debt service of all the Series 1990 B Bonds shall alsobe secured forthwith equally and ratably with each other by a lien onthe Net Revenues derived from the System, but junior and subordinateto the lien on such Net Revenues in favor of the Holders of theSeries 1990 A Bonds. Such Net Revenues in an amount sufficient topay the principal of and interest on and other payments for the Bondsand to make the payments into the Sinking Funds, the Reserve Accountstherein and the Renewal and Replacement Fund hereinafter established . ,are hereby irrevocably pledged to the payment of the principal of andinterest on the Bonds as the same become due.

Section 3.09. Form of Original Bonds. The text of theBonds shall be in substantially the following forms, with suchomissions, insertions and variations as may be necessary and desirableand authorized or permitted hereby, or by any Supplemental Resolutionadopted prior to the issuance thereof:

18.

[Form of Series 1990 A Bond]

UNITED STATES OF AMERICASTATE OF WEST VIRGINIA

FOUNTAIN PUBLIC SERVICE DISTRICTWATER REVENUE BOND,

SERIES 1990 A

No. AR-

KNOW ALL MEN BY THESE PRESENTS: That FOUNTAIN PUBLICSERVICE DISTRICT, a public corporation and political subdivision ofthe State of West Virginia in Mineral County of said State (the"Issuer"), for value received, hereby promises to pay, solely from thespecial funds provided therefor, as hereinafter set forth, to theWest Virginia Water Development Authority (the "Authority") orregistered assigns the sum DOLLARS ($ ), in installments on October 1 of each year, asset forth on the "Schedule of Annual Debt Service" attached as ExhibitA hereto and incorporated herein by reference with interest on eachinstallment at the rate per annum set forth on said Exhibit A.

The interest on each installment shall run from the originaldate of delivery of this Bond to the Authority and payment therefor,and until payment of such installment,

and such interest shall bepayable on April 1 and October 1 in each year,

beginning 1,19 Principal installments of this Bond are payable in any coin orcurrency which, on the respective dates of payment of suchinstallments, is legal tender for the payment of public and privatedebts under the laws of the United States of America, at the officeof the West Virginia Municipal Bond Commission, Charleston,West Virginia (the "Paying Agent"). The interest on this Bond ispayable bycheck -or-draft of-the-Paying -Agent mailed-to-the--registeredowner hereof at the address as it appears on the books of One ValleyBank, National Association, Charleston, West Virginia, as registrar(the "Registrar") on the 15th day of the month next preceding aninterest payment date, or by such other method as shall be mutuallyagreeable so long as the Authority is the registered owner hereof.

This Bond may be redeemed prior to its stated date ofmaturity in whole or in part, but only with the express writtenconsent of the Authority, and upon the terms and conditions prescribedby, and otherwise in compliance with, the Loan Agreement between theIssuer and the Authority, dated , 19

19.

This Bond is issued (i) to pay a portion of the costs ofacquisition and construction of certain new waterworks facilities ofthe Issuer (the "Project") ; (ii) [to pay interest on the Bonds of thisSeries (the "Bonds") during the construction of the Project and fornot more than 6 months thereafter;] (iii) [to fund a reserve accountfor the Bonds;] and (iv) to pay certain costs of issuance hereof andrelated costs. The Project and any additions, extensions orimprovements thereto is herein called the "System." This Bond isissued under the authority of and in full compliance with theConstitution and statutes of the State of West Virginia, includingparticularly Chapter 16, Article 13A of the West Virginia Code of1931, as amended (the "Act"), and a Resolution duly adopted by theIssuer on , 19 , and a Supplemental Resolution dulyadopted by the Issuer on , 19

(collectively called the"Bond Legislation"), and is subject to all the terms and conditionsthereof. The Bond Legislation provides for the issuance of additionalbonds under certain conditions, and such bonds would be entitled tobe paid and secured equally and ratably from and by the funds andrevenues and other security provided for the Bonds under the BondLegislation.

This Bond is issued concurrently with the Water RevenueBonds, Series 1990 B, of the Issuer (the "Series 1990 B Bonds"),issued in the aggregate principal amount of $ , whichSeries 1990 B Bonds are junior and subordinate with respect to liensand source of and security for payment to the Bonds.

This Bond is payable only from and secured by a pledge ofthe Net Revenues (as defined in the Bond Legislation) to be derivedfrom the operation of the System, moneys in the Reserve Accountcreated under the Bond Legislation for the Bonds (the "Series 1990 ABonds Reserve Account") and unexpended proceeds of the Bonds and theSeries 1990 B Bonds. Such Net Revenues shall be sufficient to paythe principal of and interest on all bonds which may be issuedpursuant to the Act and which shall be set aside as a special fundhereby pledged for such purpose. This Bond does not constitute acorporate indebtedness of the Issuer within the meaning of anyconstitutional or statutory provisions or limitations, nor shall theIssuer be obligated to pay the same or the interest hereon except fromsaid special fund provided from the Net Revenues, the moneys in theSeries 1990 A Bonds Reserve Account and unexpended proceeds of theBonds and the Series 1990 B Bonds. Pursuant to the Bond Legislation,the Issuer has covenanted and agreed to establish and maintain justand equitable rates and charges for the use of the System and theservices rendered thereby, which shall be sufficient, together withother revenues of the System, to provide for the reasonable expensesof operation, repair and maintenance of the System, and to leave abalance each year equal to at least 115% of the maximum amount payable

20.

in any year for principal of and interest on the Bonds, theSeries 1990 B Bonds and all other obligations secured by a lien on orpayable from such revenues prior to or on a parity with the Bonds orthe Series 1990 B Bonds, provided however, that so long as thereexists in the Series 1990 A Bonds Reserve Account an amount at leastequal to the maximum amount of principal and interest which willbecome due on the Bonds in the then current or any succeeding year,and in the respective reserve accounts established for theSeries 1990 B Bonds and any other obligations outstanding prior to oron a parity with the Bonds or the Series 1990 B Bonds, an amount atleast equal to the requirement therefor, such percentage may bereduced to 110%. The Issuer has entered into certain furthercovenants with the registered owner of the Bonds for the terms ofwhich reference is made to the Bond Legislation. Remedies providedthe registered owner of the Bonds are exclusively as provided in theBond Legislation, to which reference is here made for a detaileddescription thereof.

Subject to the registration requirements set forth herein,this Bond is transferable, as provided in the Bond Legislation, onlyupon the books of the Registrar by the registered owner, or by itsattorney duly authorized in writing, upon the surrender of this Bondtogether with a written instrument of transfer satisfactory to theBond Registrar duly executed by the registered owner or its attorneyduly authorized in writing.

Subject to the registration requirements set forth herein,this Bond, under the provision of the Act is, and has all thequalities and incidents of, a negotiable instrument under the UniformCommercial Code of the State of West Virginia.

All money received from the sale of this Bond, afterreimbursement and repayment of all amounts advanced for preliminaryexpenses as provided by law, shall be applied solely to the paymentof the Costs of the Project described in the Bond Legislation, andthere shall be and hereby is created and granted a lien upon suchmoneys, until so applied, in favor of the registered owner of thisBond.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,conditions and things required to exist, happen and be performedprecedent to and in the issuance of this Bond have existed, havehappened, and have been performed in due time, form and manner asrequired by law, and that the amount of this Bond, together with allother obligations of the Issuer, does not exceed any limit prescribedby the Constitution or statutes of the State of West Virginia and thata sufficient amount of the revenues of the System has been pledged to

21.

and will be set aside into said special fund by the Issuer for theprompt payment of the principal of and interest on this Bond.

All provisions of the Bond Legislation, resolutions andstatutes under which this Bond is issued shall be deemed to be a partof the contract evidenced by this Bond to the same extent as ifwritten fully herein.

IN WITNESS WHEREOF, FOUNTAIN PUBLIC SERVICE DISTRICT hascaused this Bond. to be signed by its Chairman and its corporate sealto be hereunto affixed and attested by its Secretary, and has causedthis Bond to be dated , 19

[SEAL]

Chairman

ATTEST:

Secretary

22.

(Form of)

CERTIFICATE OF AUTHENTICATION AND REGISTRATION

This Bond is one of the Series 1990 A Bonds described inthe within-mentioned Bond Legislation and has been duly registered inthe name of the registered owner set forth above, as of the date setforth below.

Date:

ONE VALLEY BANK, NATIONAL ASSOCIATION,as Registrar

ByIts Authorized Officer

23.

EXHIBITA

SCHEDULE OF ANNUAL DEBT SERVICE

24.

(Form of)

ASSIGNMENT

FOR VALUE RECEIVED the undersigned sells, assigns, andtransfers unto

the within Bond and does hereby irrevocably constitute and appoint, Attorney to transfer

the said Bond on the books kept for registration of the within Bondof the said Issuer with full power of substitution in the premises.

Dated:

In the presence of:

25.

[Form of Series 1990 B Bond]



SERIES 1990 B

No. BR-

KNOW ALL MEN BY THESE PRESENTS: That FOUNTAIN PUBLICSERVICE DISTRICT, a public corporation and political subdivision ofthe State of West Virginia in Mineral County of said State (the"Issuer"), for value received, hereby promises to pay, solely from thespecial funds provided therefor, as hereinafter set forth, to theWest Virginia Water Development Authority (the "Authority") orregistered assigns the sum ofDOLLARS ($ ), in annual installments on October 1 of each yearas set forth on the "Schedule of Annual Debt Service" attached asExhibit A hereto and incorporated herein by reference, withoutinterest.

Principal installments of this Bond are payable in any coinor currency which, on the respective dates of payment of suchinstallments, is legal tender for the payment of public and privatedebts under the laws of the United States of America, at the officeof the West Virginia Municipal Bond Commission, Charleston,West Virginia (the "Paying Agent").

This Bond may be redeemed prior to its stated date ofmaturity in whole or in part, but only with the express writtenconsent of the Authority, and upon the terms and conditions prescribedby, and otherwise incompliance -with, .the Supplemental- Loan-Agreementbetween the Issuer and the Authority, dated , 19__.

This Bond is issued (i) to pay a portion of the costs ofacquisition and construction of certain new waterworks facilities ofthe Issuer (the "Project"); (ii) [to fund a reserve account for theBonds of this Series (the "Bonds");] and (iii) to pay certain costsof issuance hereof and related costs. The Project and any additions,extensions or improvements thereto is herein called the "System."This Bond is issued under the authority of and in full compliance withthe Constitution and statutes of the State of West Virginia, includingparticularly Chapter 16, Article 13A of the West Virginia Code of1931, as amended (the "Act"), and a Resolution duly adopted by the

26.

Issuer on , 19 , and a Supplemental Resolution dulyadopted by the Issuer on , 19 (collectively called the"Bond Legislation"), and is subject to all the terms and conditionsthereof. The Bond Legislation provides for the issuance of additionalbonds under certain conditions, and such bonds would be entitled tobe paid and secured equally and ratably from and by the funds andrevenues and other security provided for the Bonds under the BondLegislation.

THIS BOND IS JUNIOR AND SUBORDINATE WITH RESPECT TO LIENS,PLEDGE AND SOURCE OF AND SECURITY FOR PAYMENT TO THE WATER REVENUEBONDS, SERIES 1990 A, OF THE ISSUER ISSUED CONCURRENTLY HEREWITH, INTHE AGGREGATE PRINCIPAL AMOUNT OF $ AND DESCRIBED IN THE BONDLEGISLATION (THE "SERIES 1990 A BONDS").

This Bond is payable only from and secured by a pledge ofthe Net Revenues (as defined in the Bond Legislation) to be derivedfrom the operation of the System after there has first been paid fromsaid Net Revenues all payments then due and owing on account of theSeries 1990 A Bonds, all moneys in the reserve account created underthe Bond Legislation for the Bonds (the "Series 1990 B Bonds ReserveAccount") and unexpended proceeds of the Bonds. Such Net Revenuesshall be sufficient to pay the principal of and interest on all bondswhich may be issued pursuant to the Act and which shall be set asideas a special fund hereby pledged for such purpose. This Bond does notconstitute a corporate indebtedness of the Issuer within the meaningof any constitutional or statutory provisions or limitations, norshall the Issuer be obligated to pay the same, except from saidspecial fund provided from the Net Revenues, the moneys in theSeries 1990 B Bonds Reserve Account and unexpended Bond proceeds.Pursuant to the Bond Legislation, the Issuer has covenanted and agreedto establish and maintain just and equitable rates and charges for theuse of the System and the services rendered thereby, which shall besufficient, together with other revenues of the System, to provide forthe reasonable expenses of operation, repair and maintenance of theSystem, and to leave a balance each year equal to at least 115% of themaximum amount payable in any year for principal of and interest, ifany, on the Bonds, the Series 1990 A Bonds and all other obligationssecured by a lien on or payable from such revenues prior to or on aparity therewith, provided however, that so long as there exists inthe Series 1990 B Bonds Reserve Account and the reserve accountestablished for the Series 1990 A Bonds, respectively, amounts atleast equal to the maximum amount of principal and interest, if any,which will become due on the Bonds and the Series 1990 A Bonds in thethen current or any succeeding year, and any reserve account for anysuch prior or parity obligations, is funded at least at therequirement therefor, such percentage may be reduced to 110%. The

27.

Issuer has entered into certain further covenants with the registeredowner of the Bonds for the terms of which reference is made to theBond Legislation. Remedies provided the registered owner of the Bondsare exclusively as provided in the Bond Legislation, to whichreference is here made for a detailed description thereof.

Subject to the registration requirements set forth herein,this Bond is transferable, as provided in the Bond Legislation, onlyupon the books of One Valley Bank, National Association, Charleston,West Virginia, as registrar (the "Registrar"), by the registeredowner, or by its attorney duly authorized in writing, upon thesurrender of this Bond together with a written instrument of transfersatisfactory to the Bond Registrar duly executed by the registeredowner or its attorney duly authorized in writing.

Subject to the registration requirements as set forthherein, this Bond, under the provision of the Act is, and has all thequalities and incidents of, a negotiable instrument under the UniformCommercial Code of the State of West Virginia.

All money received from the sale of this Bond, afterreimbursement and repayment of all amounts advanced for preliminaryexpenses as provided by law, shall be applied solely to the paymentof the Costs of the Project described in the Bond Legislation, andthere shall be and hereby is created and granted a lien upon suchmoneys, until so applied, in favor of the registered owner of theBonds, which lien is subordinate to the lien in favor of theregistered owner of the Series 1990 A Bonds.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,conditions and things required to exist, happen and be performedprecedent to and in the issuance of this Bond have existed, havehappened, and have been performed in due time, form and manner asrequired by law, and that the amount of this Bond, together with allother obligations of the Issuer, does not exceed any limit prescribedby the Constitution or statutes of the State of West Virginia and thata sufficient amount of the revenues of the System has been pledged toand will be set aside into said special fund by the Issuer for theprompt payment of the principal of this Bond.

All provisions of the Bond, Legislation, resolutions andstatutes under which this Bond is issued shall be deemed to be a partof the contract evidenced by this Bond to the same extent as ifwritten fully herein.

28.

IN WITNESS WHEREOF, FOUNTAIN PUBLIC SERVICE DISTRICT hascaused this Bond to be signed by its Chairman and its corporate sealto be hereunto affixed and attested by its Secretary, and has causedthis Bond to be dated , 19

[SEAL]

Chairman

ATTEST:

Secretary

29.

(Form of)


This Bond is one of the Series 1990 B Bonds described inthe within-mentioned Bond Legislation and has been duly registered inthe name of the registered owner set forth above, as of the date setforth below.

Date:



30.

EXHIBIT A


31.

(Form of)

ASSIGNMENT




Dated:

In the presence of:

32.

Section 3.10. Sale of Original Bonds; Approval andRatification of Execution of Loan Agreement with Authority. TheOriginal Bonds shall be sold to the Authority, pursuant to the termsand conditions of the Loan Agreement. If not so authorized byprevious resolution, the Chairman is specifically authorized anddirected to execute the Loan Agreement in the form attached hereto as"Exhibit A" and made a part hereof, and the Secretary is directed toaffix the seal of the Issuer attest the same, and deliver the LoanAgreement to the Authority, and any such prior execution and deliveryis hereby authorized, approved, ratified and confirmed.

Section 3.11. "Amended Schedule, A" Filing; Tender of Series1990 B Bonds. Upon completion of acquisition and construction of theProject, the Issuer will file with the Authority a schedule insubstantially the form of the "Amended Schedule A" to the LoanAgreement, setting forth the actual costs of the Project and sourcesof funds therefor. In the event such schedule reflects an excess offunding for the Project, or if the Authority is otherwise advised ofan excess, the Authority may tender the Series 1990 B Bonds to theIssuer for payment in an amount equal to such excess. Notwithstandingthe foregoing, if the Issuer has Notes outstanding upon completion ofacquisition and construction of the Project, it will advise theAuthority of such fact and submit a second schedule to the Authorityupon payment of such Notes, and the Authority will not tender itsSeries 1990 B Bonds for payment until the outstanding Notes have beenpaid.

33.

ARTICLE IV

INTERIM CONSTRUCTION FINANCING

Section 4.01. Authorization and General Terms. In orderto pay certain Costs of the Project pending receipt of the GrantReceipts or issuance of the Bonds, the Issuer may issue and sell itsNotes in an aggregate principal amount not to exceed $500,000. The.Notes may be in the form of bond anticipation notes, grantanticipation notes and/or as evidence of a line of credit from acommercial bank or other lender, or any combination of the foregoing,at the discretion of the Issuer, and as shall be set forth in one ormore resolutions supplemental hereto. The Notes shall bear interestfrom the date or dates, at such rate or rates, payable on such datesand shall mature on such date or dates and be subject to suchprepayment or redemption, all as provided in the Indenture and/orsupplemental resolution, as applicable.

Section 4.02. Terms of and Security for Notes; Trust,Indenture. The Notes, if issued, shall be issued in fully registeredform, in the denominations, with such terms and secured in the mannerset forth in the Indenture, if applicable (which Indenture in the formto be executed and delivered by the Issuer shall be approved by asupplemental resolution), or one or more supplemental resolutions, ifno Indenture is used.

Section 4.03. Notes are Special Obligations. The Notesshall be special obligations of the Issuer payable as to principal andinterest solely from proceeds of the Bonds or the Net Revenues (ifissued in the form of Bond Anticipation Notes) or the Grant Receipts,the Surplus Revenues and letter of credit proceeds (if issued in theform of Grant Anticipation Notes) and from other sources described inthe Indenture and/or such supplemental resolution or resolutions.The Notes do not and shall not constitute an indebtedness of theIssuer within the meaning of any constitutional or statutoryprovisions. The general funds of the Issuer are not liable, andneither the full faith and credit nor the taxing power, if any, of. theIssuer is pledged for the payment of the Notes. The Holders of theNotes shall never have the right to compel the forfeiture of anyproperty of the Issuer. The Notes shall not be a debt of the Issuer,nor a legal or equitable pledge, charge, lien or encumbrance upon anyproperty of the Issuer or upon any of its income, receipts or revenuesexcept as set forth in the Indenture and/or the SupplementalResolution.

Section 4.04. Letters of Credit. As additional securityfor any Notes, the Issuer may obtain a letter or letters of credit

34.

from a bank or banks, pursuant to which such bank or banks would agreeto pay to the Trustee, upon presentation by the Trustee of certaincertificates, the sum or sums set forth therein but not to exceed$500,000 in the aggregate. In the event of a draw under any suchletter of credit, the Issuer shall issue its refunding notes to thebank issuing such letter of credit. Any such letter or letters ofcredit shall be authorized and shall have such terms as shall be setforth in a resolution supplemental hereto.

35.

ARTICLE V

FUNDS AND ACCOUNTS; SYSTEM REVENUES AND APPLICATION THEREOF

Section 5.01. Establishment of Funds and Accounts withDepository Bank. The following special funds or accounts are createdwith and shall be held by the Depository Bank separate and apart fromall other funds or accounts of the Depository Bank and from eachother:

(1) Revenue Fund;

(2) Renewal and Replacement Fund;

(3) Bond Construction Trust Fund; and

(4) Rebate Fund.

Section 5.02. Establishment of Funds and Accounts withCommission. The following special funds or accounts are herebycreated with the Commission:

(1) Series 1990 A Bonds Sinking Fund;

(a) Within the Series 1990 A Bonds SinkingFund, the Series 1990 A Bonds Reserve Account.

(2) Series 1990 B Bonds Sinking Fund;

(a) Within the Series 1990 B Bonds SinkingFund, the Series 1990 B Bonds Reserve Account.

Section 5.03, . System Revenues; Flow of Funds. A. Theentire Gross Revenues derived from the operation of the System shallbe-depos-ited-upon receipt in the -Revenue -Fund. - The Revenue Fundshallconstitute a trust fund for the purposes provided in this BondLegislation and shall be kept separate and distinct from all otherfunds of the Issuer and the Depository Bank and used only for thepurposes and in the manner herein provided.

(1) The Issuer shall first, each month, pay from theRevenue Fund the Operating Expenses of the System.

(2) Thereafter, from moneys remaining in the RevenueFund, the Issuer shall next, on the first day of each month,commencing 7 months prior to the first date of payment ofinterest on the Series 1990 A Bonds for which interest has

36.

not been capitalized, apportion and set apart out of theRevenue Fund and remit to the Commission, for deposit in theSeries 1990 A_Bondssinking Fund, a sum equal to 1/6th ofthe amount of interest which will become due on saidSeries 1990 A Bonds on the next ensuing semiannual interestpayment date; provided, that, in the event the period toelapse between the date of such initial deposit in theSeries 1990 A Bonds Sinking Fund and the next semiannualinterest payment date is less than 7 months, then suchmonthly payments shall be increased proportionately toprovide, one month prior to the next semiannual interestpayment date, the required amount of interest coming due onsuch date.

(3) The Issuer shall also, on the first day of eachmonth, commencing 13 months prior to the first date ofpayment of principal on the Series 1990 A Bonds, apportionand set apart out of the Revenue Fund and remit to theCommission for deposit in the Series 1990 A Bonds SinkingFund, a sum equal to 1/12th of the amount of principal whichwill mature and become due on said Series 1990 A Bonds onthe next ensuing principal payment date; provided that, inthe event the period to elapse between the date of suchinitial deposit in the Series 1990 A Bonds Sinking Fund andthe next annual principal payment date is less than13 months then such monthly payments shall be increasedproportionately to provide, one month prior to the nextannual principal payment date, the required amount ofprincipal coming due on such date.

(4) The Issuer shall next, on the first day of eachmonth, commencing 13 months prior to the first date ofpayment of principal of the Series 1990 A Bonds, if notfully funded upon issuance of the Series 1990 A Bonds,apportion and set apart out of the Revenue Fund and remitto the Commission for deposit inthe

_Series 1990 A Bonds

Reserve Account, an amount equal to 1/120 of theSeries 1990 A Bonds Reserve Requirement; provided, that nofurther payments shall be made into the Series 1990 A BondsReserve Account when there shall have been depositedtherein, and as long as there shall remain on deposittherein, an amount equal to the Series 1990 A Bonds ReserveRequirement.

(5) From the moneys remaining in the Revenue Fund,the Issuer shall next, on the first day of each month,commencing with the month succeeding the first full calendarmonth after commencement of operation of the System,

37.

0

transfer to the Renewal and Replacement Fund, a sum equalto 2 1/2% of the Gross Revenues each month, exclusive of anypayments for account of any-Reserve-Account-, All funds inthe Renewal and Replacement Fund shall be kept apart fromall other funds of the Issuer or of the Depository Bank andshall be invested and reinvested in accordance withArticle VIII hereof. Withdrawals and disbursements may bemade from the Renewal and Replacement Fund for replacements,emergency repairs, improvements or extensions to the System;provided, that any deficiencies in the reserves establishedwith respect to the Series 1990 A Bonds Reserve Account[except to the extent such deficiency exists because therequired payments into such account have not, as of the dateof determination of a deficiency, funded such account to themaximum extent required by Section 5.03(A)(4)] shall bepromptly eliminated with moneys from the Renewal andReplacement Fund.

(6) The Issuer shall next, on the first day of eachmonth, commencing 13 months prior to the first date ofpayment of principal on the Series 1990 B Bonds, apportionand set apart out of the Revenue Fund and remit to theCommission for deposit in the Series 1990 B Bonds SinkingFund, a sum equal to 1/12th of the amount of principal whichwill mature and become due on said Series 1990 B Bonds onthe next ensuing principal payment date; provided that, inthe event the period to elapse between the date of suchinitial deposit in the Series 1990 B Bonds Sinking Fund andthe next annual principal payment date is less than13 months then such monthly payments shall be increasedproportionately to provide, one month prior to the nextannual principal payment date, the required amount ofprincipal coming due on such date.

(7) The Issuer shall next on the first day of each-month, commencing 13 months prior to the first date ofpayment of principal of the Series 1990 B Bonds, if notfully funded upon issuance of the Series 1990 B Bonds,apportion and set apart out of the Revenue Fund and remitto the Commission for deposit in the Series 1990 B BondsReserve Account, an amount equal to 1/120 of theSeries 1990 B Bonds Reserve Requirement; provided, that nofurther payments shall be made into the Series 1990 B BondsReserve Account when there shall have been depositedtherein, and as long as there shall remain on deposittherein, an amount equal to the Series 1990 B Bonds ReserveRequirement.

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Moneys in the Series 1990 A Bonds Sinking Fund and theSeries 1990 B Bonds Sinking Fund shall be used only for thepurposes of paying principal of and interest, if any, on therespective series of Bonds as the same shall become due.Moneys in the Series 1990 A Bonds Reserve Account and theSeries 1990 B Bonds Reserve Account shall be used only forthe purpose of paying principal of and interest, if any, onthe respective series of Bonds, as the same shall come due,when other moneys in the attendant Sinking Fund areinsufficient therefor, and for no other purpose, except fortransfers to the Rebate Fund permitted hereunder.

Except to the extent transferred to the Rebate Fund atthe request of the Issuer, all investment earnings on moneysin the several Sinking Funds and Reserve Accounts shall bereturned, not less than once each year, by the Commissionto the Issuer, and such amounts shall, during constructionof the Project, be deposited in the Bond Construction TrustFund, and following completion of construction of theProject, shall be deposited in the Revenue Fund and appliedin full, first to the next ensuing interest payments, ifany, due on the respective series of Bonds, and then to thenext ensuing principal payments due thereon.

Except with respect to transfers to the Rebate Fundpermitted hereunder, any withdrawals from the Series 1990 ABonds Reserve Account which result in a reduction in thebalance of the Series 1990 A Bonds Reserve Account to belowthe Series 1990 A Bonds Reserve Requirement shall besubsequently restored from the first Net Revenues availableafter all required payments have been made in full to theSeries 1990 A Bonds Sinking Fund for payment of debt serviceon the Series 1990 A Bonds.

Except with respect to transfers to the Rebate Fundpermitted-hereunder, anywithdrawals from the Series 1990 BBonds Reserve Account which result in a reduction in thebalance of the Series 1990 B Bonds Reserve Account to belowthe Series 1990 B Bonds Reserve Requirement shall besubsequently restored from the first Net Revenues availableafter all required payments to the Series 1990 A BondsSinking Fund, the Series 1990 A Bonds Reserve Account, theRenewal and Replacement Fund and the Series 1990 B BondsSinking Fund have been made in full.

As and when additional Bonds ranking on a parity withthe Bonds are issued, provision shall be made for additionalpayments into the respective Sinking Fund sufficient to pay

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the interest on such additional parity Bonds and accomplishretirement thereof at maturity and to accumulate a balancein the appropriate Reserve Account in an amount equal to themaximum provided and required to be paid into theconcomitant Sinking Fund in any year for account of theBonds of such series, including such additional Bonds whichby their terms are payable from such Sinking Fund.

The Issuer shall not be required to make any furtherpayments into the Series 1990 A Bonds Sinking Fund, or theSeries 1990 B Bonds Sinking Fund or into the ReserveAccounts therein when the aggregate amount of funds in saidrespective Sinking Funds and Reserve Accounts are at leastequal to the aggregate principal amount of the respectiveBonds issued pursuant to this Bond Legislation thenOutstanding and all interest to accrue until the respectivematurities thereof.

The Commission is hereby designated as the fiscal agentfor the administration of the Sinking Funds createdhereunder, and all amounts required for said Sinking Fundsshall be remitted to the Commission from the Revenue Fundby the Issuer at the times provided herein.

The payments into the Sinking Funds shall be made onthe first day of each month, except that when the first dayof any month shall be a Sunday or legal holiday then suchpayments shall be made on the next succeeding business day,and all such payments shall be remitted to the Commissionwith appropriate instructions as to the custody, use andapplication thereof consistent with the provisions of thisBond Legislation.

Moneys in the Reserve Accounts shall be invested andreinvested by the Commission in accordance with Section 8.01her-eo-f-: --

Except with respect to transfers to the Rebate Fundpermitted hereunder, the Sinking Funds, including theReserve Accounts therein, shall be used solely and only for,and are hereby pledged for, the purpose of servicing therespective Bonds and any additional Bonds ranking on aparity therewith that may be issued and Outstanding underthe conditions and restrictions hereinafter set forth.

B. Whenever all of the required and provided transfersand payments from the Revenue Fund into the several special funds, ashereinbefore provided, are current and there remains in said Revenue

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Fund a balance in excess of the estimated amounts required to be sotransferred and paid into the Sinking Funds, including the ReserveAccounts therein and the Renewal and Replacement Fund during thefollowing month or such other period as required by law, such excessshall be considered Surplus Revenues. Surplus Revenues may be usedfor any lawful purpose of the System, including, but not limited to,payment to the Trustee for deposit in the Notes Debt Service Fund.

C. The Issuer shall remit from the Revenue Fund to theCommission, the Registrar, the Paying Agent or the Depository Bank,on such dates as the Commission, the Registrar, the Paying Agent orthe Depository Bank, as the case may be, shall require, suchadditional sums as shall be necessary to pay the Depository Bank'scharges and the Paying Agent fees then due.

D. The moneys in excess of the sum insured by the maximumamounts insured by FDIC in the Revenue Fund, the Renewal andReplacement Fund and the Rebate Fund shall at all times be secured,to the full extent thereof in excess of such insured sum, by QualifiedInvestments as shall be eligible as security for deposits of state andmunicipal funds under the laws of the State.

E. If on any monthly payment date the revenues areinsufficient to place the required amount in any of the funds andaccounts as hereinabove provided, the deficiency shall be made up inthe subsequent payments in addition to the payments which wouldotherwise be required to be made into the funds and accounts on thesubsequent payment dates; provided, however, that the priority ofcuring deficiencies in the funds and accounts herein shall be in thesame order as payments are to be made pursuant to this Section 5.03,and the Net Revenues shall be applied to such deficiencies beforebeing applied to any other payments hereunder.

F. All remittances made by the Issuer to the Commissionshall clearly identify the fund or account into which each amount is

-- ----- - - -- --- -- - --to-- e-deposited-.- - --

--- --

-

G. The Gross Revenues of the System shall only be usedfor purposes of the System.

H. All Tap Fees shall be deposited by the Issuer, asreceived, in the Bond Construction Trust Fund, and followingcompletion of the Project, shall be deposited in the Revenue Fund andmay be used for any lawful purpose of the System, provided that, inthe event Notes are issued, Tap Fees may, with the written consent ofthe Authority be deposited otherwise.

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ARTICLE VI,

BOND PROCEEDS; CONSTRUCTION DISBURSEMENTS

Section 6,01. Application of Bond Proceeds; Pledge , ofUnexpended Bond Proceeds. From the moneys received from the sale ofany or all of the Original Bonds, the following amounts shall be firstdeducted and deposited in the order set forth below:

A. From the proceeds of the Series 1990 A Bonds, thereshall first be deposited with the Commission in the Series 1990 ABonds Sinking Fund, the amount, if any, specified in the SupplementalResolution as capitalized interest; provided, that such amount may notexceed the amount necessary to pay interest on the Series 1990 A Bondsfor the period commencing on the date of issuance of the Bonds andending 6 months after the estimated date of completion of constructionof the Project.

B. Next, from the proceeds of the Series 1990 A Bonds,there shall be deposited with the Commission in the Series 1990 ABonds Reserve Account, and from the proceeds of the Series 1990 BBonds, there shall be deposited with the Commission in theSeries 1990 B Reserve Account, the respective sums, if any, set forthin the Supplemental Resolution for funding of the Reserve Accounts.

C. Next, from the proceeds of the Series 1990 A Bonds,there shall first be credited to the Bond Construction Trust Fund andthen paid, any and all borrowings by the Issuer made for the purposeof temporarily financing a portion of the Costs of the Project,including interest accrued thereon to the date of such payment, nototherwise paid from funds of the Issuer.

D. The remaining moneys derived from the sale of the Bondsshall be deposited with the Depository Bank in the Bond ConstructionTrust- Fund and applied solely to payment of Costs of the- Project irithe manner set forth in Section 6.02.

E. The Depository Bank shall act as a trustee andfiduciary for the Bondholder with respect to the Bond ConstructionTrust Fund and shall comply with all requirements with respect to thedisposition of the Bond Construction Trust Fund set forth in the BondLegislation. Except with respect to any transfers to the Rebate Fundpermitted hereunder, moneys in the Bond Construction Trust Fund shallbe used solely to pay Costs of the Project and until so transferredor expended, are hereby pledged as additional security for theSeries 1990 A Bonds, and thereafter for the Series 1990 B Bonds. Inthe event that Notes are issued, the disposition of funds in the-Bonds

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Construction Trust Fund may be modified from that set forth herein,with the written consent of the Authority.

Section 6.02. Disbursements From the Bond ConstructionTrust Fund. Payments for Costs of the Project shall be made monthly.

Except as provided in Section 6.01 hereof, disbursementsfrom the Bond Construction Trust Fund (except for the costs ofissuance of the Original Bonds which shall be made upon request ofthe Issuer), shall be made only after submission to the DepositoryBank of a certificate, signed by an Authorized Officer and theConsulting Engineers, stating:

(A) That none of the items for which the payment isproposed to be made has formed the basis for anydisbursement theretofore made;

(B) That each item for which the payment is proposedto be made is or was necessary in connection with theProject and constitutes a Cost of the Project;

(C) That each of such costs has been otherwiseproperly incurred; and

(D) That payment for each of the items proposed isthen due and owing.

In case any contract provides for the retention of a portionof the contract price, the Depository Bank shall disburse from theBond Construction Trust Fund only the net amount remaining afterdeduction of any such portion. All payments made from the BondConstruction Trust Fund shall be presumed by the Depository Bank tobe made for the purposes set forth in said certificate, and theDepository Bank shall not be required to monitor the application ofdisbursements from the Bond_ Construction Trust Fund. The ConsultingEngineers shall from time to time file with the Depository Bankwritten statements advising the Depository Bank of its then authorizedrepresentative.

Pending such application, moneys in the Bond ConstructionTrust Fund, including any accounts therein, shall be invested andreinvested in Qualified Investments at the written direction of theIssuer.

After completion of the Project, as certified by theConsulting Engineers, the Depository Bank shall transfer any moneysremaining in the Bond Construction Trust Fund to the Series 1990 ABonds Reserve Account, and when fully funded to the Series 1990 B

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Bonds Reserve Account, and when both Reserve Accounts are fullyfunded, shall return such remaining moneys to the Issuer for depositin the Revenue Fund. The Issuer shall thereafter, apply such moneysin full, first to the next ensuing interest payments, if any, due onthe respective Series of Bonds and thereafter to the next ensuingprincipal payments due thereon. Notwithstanding the foregoing, ifthe Authority tenders any of its Series 1990 B Bonds to the Issuerpursuant to the provisions of the Supplemental Loan Agreement, suchmoneys shall be applied to the purchase of such Series 1990 B Bonds.

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ARTICLE VII

ADDITIONAL COVENANTS OF THE ISSUER

Section 7.01. General Covenants of the Issuer. All thecovenants, agreements and provisions of this Bond Legislation shallbe and constitute valid and legally binding covenants of the Issuerand shall be enforceable in any court of competent jurisdiction byany Holder or Holders of the Bonds. In addition to the othercovenants, agreements and provisions of this Bond Legislation, theIssuer hereby covenants and agrees with the Holders of the Bonds ashereinafter provided in this Article VII. All such covenants,agreements and provisions shall be irrevocable, except as providedherein, as long as any of said Bonds or the interest thereon isOutstanding and unpaid.

Until the payment in full of the principal of and intereston the Notes when due, and to the extent they do not materiallyadversely affect Bondholders, the covenants, agreements and provisionscontained in this Bond Legislation shall, where applicable, also inureto the benefit of the Holders of the Notes and the Trustee thereforand constitute valid and legally binding covenants of the Issuer,enforceable in any court of competent jurisdiction by the Trustee orany Holder or Holders of said Notes as prescribed in the Indenture;provided, that Section 7.09 shall not be applied to the GrantAnticipation Notes or any line of credit evidenced by such GrantAnticipation Notes.

Section 7.02. Bonds and Notes not to be Indebtedness ofthe Issuer. Neither the Bonds nor the Notes shall be or constitutean indebtedness of the Issuer within the meaning of anyconstitutional, statutory or charter limitation of indebtedness, butshall be payable solely from the funds pledged for such payment bythis Bond Legislation. No Holder or Holders of any _ Bonds or Notes_,_shall ever have the right to compel the exercise of the taxing powerof the Issuer to pay said Bonds or Notes or the interest thereon.

Section 7.03. Bonds Secured Pledge of Net Revenues; LienPositions. The payment of the debt service of the Series 1990 A Bondsissued hereunder shall be secured forthwith equally and ratably by afirst lien on the Net Revenues derived from the operation of theSystem and payment of the debt service of the Series 1990 B Bondsissued hereunder shall be secured forthwith equally and ratably by alien on said Net Revenues, but such lien shall be junior andsubordinate to the lien on said Net Revenues in favor of the Holdersof the Series 1990 A Bonds. The Revenues derived from the System, inan amount sufficient to pay the principal of and interest on the Bonds

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and to make the payments into the Sinking Funds, including the ReserveAccounts therein, and all other payments provided for in the BondLegislation are hereby irrevocably p1edged, in the mannerprovidedherein, to the payment of the principal of and interest on the Bondsas the same become due, and for the other purposes provided in theBond Legislation.

Section 7,04. Initial Schedule of Rates and Charges. Theinitial schedule of rates and charges for the services and facilitiesof the System shall be as set forth and approved and described in theOrder

of the Public

Service

Commission

of West Virginia

enteredMarch 2,adopted.

1990 (Case No. 89-620-PWD-CN),

and such rates

are hereby

Section 7.05. Sale of the System. Except as otherwiserequired by law, the System may not be sold, mortgaged, leased orotherwise disposed of except as a whole, or substantially as a whole,and only if the net proceeds to be realized shall be sufficient to payfully all the Bonds and the Notes, if any, Outstanding, or toeffectively defease this Bond Legislation in accordance withSection 10.01 hereof and, if entered into and not previously defeased,the Indenture in accordance with Section 8.01 thereof. The proceedsfrom any such sale, mortgage, lease or other disposition of the Systemshall, with respect to the Bonds, immediately be remitted to theCommission for deposit in the Sinking Funds, and, with the writtenpermission of the Authority, or in the event the Authority is nolonger a Bondholder, the Issuer shall direct the Commission to applysuch proceeds to the payment of principal at maturity of and intereston the Bonds. Any balance remaining after the payment of all theBonds and interest thereon shall be remitted to the Issuer by theCommission unless necessary for the payment of other obligations ofthe Issuer payable out of the revenues of the System. With respectto the Notes, such proceeds in an amount sufficient to pay the Notesin full shall be applied to the payment of the Notes, either atmaturity or, if allowable under the Supplemental Resolution and/or theIndenture, prior thereto.

The foregoing provision notwithstanding, the Issuer shallhave and hereby reserves the right to sell, lease or otherwise disposeof any of the property comprising a part of the System hereinafterdetermined in the manner provided herein to be no longer necessary,useful or profitable in the operation thereof. Prior to any suchsale, lease or other disposition of such property, if the amount tobe received therefor, together with all other amounts received duringthe same Fiscal Year for such sales, leases or other dispositions ofsuch properties, is not in excess of $10,000, the Issuer shall, byresolution, determine that such property comprising a part of theSystem is no longer necessary, useful or profitable in the operation

46.

thereof and may then provide for the sale of such property. Theproceeds of any such sale shall be deposited in the Renewal andReplacement Fund. If the amount to be received from such sale, leaseor other disposition of said property, together with all other amountsreceived during the same Fiscal Year for such sales, leases or otherdispositions of such properties, shall be in excess of $10,000 but notin excess of $50,000, the Issuer shall first, determine uponconsultation with the Consulting Engineers that such propertycomprising a part of the System is no longer necessary, useful orprofitable in the operation thereof and may then, if it be so advised,by resolution duly adopted, authorize such sale, lease or otherdisposition of such property upon public bidding. The proceedsderived from any such sale, lease or other disposition of suchproperty, aggregating during such Fiscal Year in excess of $10,000 andnot in excess of $50,000, shall with the written consent of theAuthority, be remitted by the Issuer to the Commission for deposit inthe Sinking Fund and shall be applied only to the purchase of Bondsof the last maturities then Outstanding at prices not greater than thepar value thereof plus 3% of such par value or otherwise. Suchpayment of such proceeds into the Sinking Fund or the Renewal andReplacement Fund shall not reduce the amounts required to be paid intosaid funds by other provisions of this Bond Legislation. No sale,lease or other disposition of the properties of the System shall bemade by the Issuer if the proceeds to be derived therefrom, togetherwith all other amounts received during the same Fiscal Year for suchsales, leases, or other dispositions of such properties, shall be inexcess of $50,000 and insufficient to pay all Bonds then Outstandingwithout the prior approval and consent in writing of the Holders, ortheir duly authorized representatives, of over 50% in amount of theBonds then Outstanding and the Consulting Engineers. The Issuer shallprepare the form of such approval and consent for execution by thethen Holders of the Bonds for the disposition of the proceeds of thesale, lease or other disposition of such properties of the System.

Section 7.06. Issuance of Other Obligations Payable Out ofRevenues -and- General Covenant, Against - Encumbrances,. Except asprovided in this Section 7.06 and in Section 7.07B, the Issuer shallnot issue any obligations whatsoever with a lien on or otherwisepayable from any source of payment pledged originally to any or allof the Notes issued under the Indenture and/or supplemental resolutionprior to or on a parity with the lien on behalf of such Notes untilsuch Notes have been defeased in accordance with the provisions of theIndenture (if an Indenture is used) and the Bond Legislation; and, solong as any of the Bonds are Outstanding, the Issuer shall not issueany other obligations whatsoever payable from any or all of therevenues of the System which rank prior to, or equally, as to lien onand source of and security for payment from such revenues with theBonds; provided, however, that additional Bonds on a parity with the

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(Th

Series1990 B Bonds only may be issued as provided for in Section 7.07hereof. All obligations issued by the Issuer after the issuance ofthe Bonds and payable from any or all of the revenues of the System,except such additional parity Bonds, shall contain an expressstatement that such obligations are junior and subordinate, as to lienon and source of and security for payment from such revenues and inall other respects, to the Series 1990 A Bonds and the Series 1990 BBonds; provided, that no such subordinate obligations shall be issuedunless all payments required to be made into the Reserve Accounts andthe Renewal and Replacement Fund at the time of the issuance of suchsubordinate obligations have been made and are current.

Except as provided above, the Issuer shall not create, orcause or permit to be created, any debt, lien, pledge, assignment,encumbrance or any other charge having priority over or being on aparity with the lien of the Bonds, and the interest thereon, upon anyor all of the income and revenues of the System pledged for paymentof the Bonds and the interest thereon in this Bond Legislation, orupon the System or any part thereof.

Section 7.07. Parity Bonds. A. No Parity Bonds, payableout of any or all of the revenues of the System, shall be issued afterthe issuance of any Bonds pursuant to this Bond Legislation, exceptunder the conditions and in the manner herein provided.

All Parity Bonds issued hereunder shall be on a parity inall respects with the Series 1990 B Bonds. No Parity Bonds shall beissued which shall be payable out of any or all of the revenues of theSystem on a parity with the Series 1990 A Bonds, unless theSeries 1990 B Bonds are no longer outstanding.

No such Parity Bonds shall be issued except for the purposeof financing the costs of the construction or acquisition ofextensions and improvements to the System or refunding one or moreseries of Bonds issued pursuant hereto, or both such purposes.

No Parity Bonds shall be issued at any time, however, unlessthere has been procured and filed with the Secretary a writtenstatement by the Independent Certified Public Accountants, based uponthe necessary investigation and certification by the ConsultingEngineers, reciting the conclusion that the Net Revenues actuallyderived, subject to the adjustments hereinafter provided for, from theSystem during any 12 consecutive months, within the 18 monthsimmediately preceding the date of the actual issuance of such ParityBonds, plus the estimated average increased annual Net Revenues to bereceived in each of the 3 succeeding years after the completion of theimprovements to be financed by such Parity Bonds, shall not be lessthan 115% of the largest aggregate amount that will mature and become

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due in any succeeding Fiscal Year for principal of and interest on thefollowing:

(1) The Bonds then Outstanding;

(2) Any Parity Bonds theretofore issued pursuantto the provisions contained in this Resolution thenOutstanding; and

(3) The Parity Bonds then proposed to be issued.

The "estimated average increased annual Net Revenues to bereceived in each of the 3 succeeding years," as that term is used inthe computation provided in the above paragraph, shall refer only tothe increased Net Revenues estimated to be derived from (a) theimprovements to be financed by such Parity Bonds and (b) any increasein rates adopted by the Issuer, the period for appeal of which hasexpired prior to the date of delivery of such Parity Bonds, and shallnot exceed the amount to be stated in a certificate of the ConsultingEngineers, which shall be filed in the office of the Secretary priorto the issuance of such Parity Bonds.

The Net Revenues actually derived from the System duringthe 12-consecutive-month period hereinabove referred to may beadjusted by adding to such Net Revenues such additional Net Revenueswhich would have been received, in the opinion of the ConsultingEngineers and the said Independent Certified Public Accountants, asstated in a certificate jointly made and signed by the ConsultingEngineers and said Independent Certified Public Accountants, onaccount of increased rates, rentals, fees and charges for the Systemadopted by the Issuer, the period for appeal of which has expiredprior to issuance of such Parity Bonds.

Not later than simultaneously with the delivery of suchParity Bonds, the Issuer shall have entered into written contractsfor the -immediate construction or acquisition of such extensions orimprovements, if any, to the System that are to be financed by suchParity Bonds.

All covenants and other provisions of this Bond Legislation(except as to details of such Parity Bonds inconsistent herewith)shall be for the equal benefit, protection and security of the Holdersof the Bonds and the Holders of any Parity Bonds subsequently issuedfrom time to time within the limitations of and in compliance withthis section. Bonds issued on a parity, regardless of the time ortimes of their issuance, shall rank equally with respect to their lienon the revenues of the System and their source of and security forpayment from said revenues, without preference of any Bond of one

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series over any other Bond of the same series. The Issuer shallcomply fully with all the increased payments into the various fundsand accounts created in this Bond Legislation required for and onaccount of such Parity Bonds, in addition to the payments required forBonds theretofore issued pursuant to this Bond Legislation.

All Parity Bonds shall mature on the day of the years ofmaturities, and the semiannual interest thereon shall be payable onthe days of each year, specified in a Supplemental Resolution.

Parity Bonds shall not be deemed to include bonds, notes,certificates or other obligations subsequently issued, the lien ofwhich on revenues of the System is subject to the prior and superiorliens of the Series 1990 A Bonds and the Series 1990 B Bonds on suchrevenues. The Issuer shall not issue any obligations whatsoeverpayable from revenues of the System, or any part thereof, which rankprior to or, except in the manner and under the conditions providedin this section, equally, as to lien on and source of and security forpayment from such revenues, with the Series 1990 A Bonds or theSeries 1990 B Bonds.

No Parity Bonds shall be issued any time, however, unlessall the payments into the respective funds and accounts provided forin this Bond Legislation with respect to the Bonds then Outstanding,and any other payments provided for in this Bond Legislation, shallhave been made in full as required to the date of delivery of suchParity Bonds, and the Issuer shall then be in full compliance with allthe covenants, agreements and terms of this Bond Legislation.

B. Notwithstanding the foregoing, or any provision ofSection 7.06 to the contrary, additional Bonds may be issued solelyfor the purpose of completing the Project as described in theapplication to the Authority submitted as of the date of the LoanAgreement without regard to the restrictions set forth in this Section7.07, if there is first obtained by the Issuer the written consent ofthe Authority to-the issuance of-bonds-on a parity-with the Bonds.

Section 7.08. Books and Records. The Issuer will keepbooks and records of the System, which shall be separate and apartfrom all other books, records and accounts of the Issuer, in whichcomplete and correct entries shall be made of all transactionsrelating to the System, and any Holder of a Bond or Bonds or of a Noteor Notes issued pursuant to this Bond Legislation and/or the Indentureor the Trustee shall have the right at all reasonable times to inspectthe System and all parts thereof and all records, accounts and dataof the Issuer relating thereto.

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The accounting system for the System shall follow currentgenerally accepted accounting principles and safeguards to the extentallowed and as prescribed by the Public Service Commission ofWest Virginia.

Separate control accounting records shall bemaintained by the Issuer.

Subsidiary records as may be requiredshall be kept in the manner and on the.forms, books and otherbookkeeping records as prescribed by the Governing Body. TheGoverning Body shall prescribe and institute the manner by whichsubsidiary records of the accounting system which may be installedremote from the direct supervision of the Governing Body shall bereported to such agent of the Issuer as the Governing Body shalldirect.

The Issuer shall file with the Consulting Engineers, theTrustee and the Authority, or any other original purchaser of theBonds, and shall mail in each year to any Holder or Holders of Bondsor Notes, as the case may be, requesting the same, an annual reportcontaining the following:

(A) A statement of Gross Revenues, Operating Expenses,Net Revenues and Surplus Revenues derived from and relatingto the System.

(B) A balance sheet statement showing all deposits inall the funds and accounts provided for in this BondLegislation and the Indenture with respect to said Bonds orNotes, as the case may be, and the status of all said fundsand accounts.

(C) The amount of any Bonds, Notes or otherobligations outstanding.

The Issuer shall also, at least once a year, cause thebooks, records and accounts of the System to be audited by IndependentCertified Public Accountants and shall mail upon request, and makeavailable generally;-the report of-said-Independernt--Certifid-PublicAccountants, or a summary thereof, to any Holder or Holders of Bondsor Notes, as the case may be, and shall submit said report to theTrustee and the Authority, or any other original purchaser of theBonds. Such audit report submitted to the Authority shall include astatement that the Issuer is in compliance with the terms andprovisions of the Loan Agreement and this Bond Legislation.

Section 7.09 , . Rates. Equitable rates or charges for theuse of and service rendered by the System have been established allin the manner and form required by law, and copies of such rates andcharges so established will be continuously on file with theSecretary, which copies will be open to inspection by all interested

51.

parties. The schedule of rates and charges shall at all times beadequate to produce Gross Revenues from said System sufficient to payOperating Expenses and to make the prescribed payments into the fundscreated hereunder. Such schedule of rates and charges shall bechanged and readjusted whenever necessary so that the aggregate of therates and charges will be sufficient for such purposes. In order toassure full and continuous performance of this covenant, with a marginfor contingencies and temporary unanticipated reduction in income andrevenues, the Issuer hereby covenants and agrees that the schedule ofrates or charges from time to time in effect shall be sufficient,together with other revenues of the System (i) to provide for allreasonable expenses of operation, repair and maintenance of the Systemand (ii) to leave a balance each year equal to at least 115% of themaximum amount required in any year for payment of principal of andinterest on the Bonds and all other obligations secured by a lien onor payable from such revenues prior to or on a parity with the Bonds;provided that, in the event that amounts equal to or in excess of theReserve Requirements are on deposit respectively in the ReserveAccounts and reserve accounts for obligations prior to or on a paritywith the Bonds are funded at least at the requirement therefor, suchbalance each year need only equal at least 110% of the maximum amountrequired in any year for payment of principal of and interest on theBonds and all other obligations secured by a lien on or payable fromsuch revenues prior to or on a parity with the Bonds. In any event,the Issuer shall not reduce the rates or charges for services setforth in the rate schedule described in Section 7.04.

Section 7.10. Operating Budget and Audit. The Issuer shallannually, at least 45 days preceding the beginning of each FiscalYear, prepare and adopt by resolution a detailed, balanced budget ofthe estimated expenditures for operation and maintenance of the Systemduring the succeeding Fiscal Year. No expenditures for the operationand maintenance of the System shall be made in any Fiscal Year inexcess of the amounts provided therefor in such budget without awritten finding and recommendation by the Consulting Engineers, which-f-inding -and--r-e c o mmendat i on- s-ha-l-l- s-to-te-- in---de-to-i l--the--purp o-s-a--o-f- and -necessity for such increased expenditures for the operation andmaintenance of the System, and no such increased expenditures shallbe made until the Issuer shall have approved such finding andrecommendation by a resolution duly adopted. No increasedexpenditures in excess of 10% of the amount of such budget shall bemade except upon the further certificate of the Consulting Engineersthat such increased expenditures are necessary for the continuedoperation of the System. The Issuer shall mail copies of such annualbudget and all resolutions authorizing increased expenditures foroperation and maintenance to the Trustee and the Authority and to anyHolder of any Bonds or Notes, as the case may be, who shall file hisor her address with the Issuer and request in writing that copies of

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all such budgets and resolutions be furnished him or her and shallmake available such budgets and all resolutions authorizing increasedexpenditures for operation and maintenance of the System at allreasonable times to the Trustee and to any Holder of any Bonds orNotes, as the case may be, or anyone acting for and in behalf of suchHolder of any Bonds or Notes, as the case may be.

In addition, the Issuer shall annually cause the records ofthe System to be audited by an independent certified publicaccountant, the report of which audit shall be submitted to theAuthority and which audit report shall include a statement that theIssuer is in compliance with the terms and provisions of this BondLegislation and the Loan Agreement.

Section 7.11. No Competing Franchise. To the extentlegally allowable, the Issuer will not grant or cause, consent to orallow the granting of, any franchise or permit to any person, firm,corporation, body, agency or instrumentality whatsoever for theproviding of any services which would compete with services providedby the System.

Section 7.12. Enforcement of Collections. The Issuer willdiligently enforce and collect all fees, rentals or other charges forthe services and facilities of the System, and take all steps, actionsand proceedings for the enforcement and collection of such fees,rentals or other charges which shall become delinquent to the fullextent permitted or authorized by the Act, the rules and regulationsof the Public Service Commission of West Virginia and other laws ofthe State of West Virginia.

Whenever any fees, rates, rentals or other charges for theservices and facilities of the System shall remain unpaid for a periodof 30 days after the same shall become due and payable, the propertyand the owner thereof, as well as the user of the services andfacilities, shall be delinquent until such time as all such rates andcharges are fully paid. To the extent authorized by the laws of theState and the rules and regulations of the Public Service Commissionof West Virginia, rates, rentals and other charges, if not paid, whendue, shall become a lien on the premises served by the System. TheIssuer further covenants and agrees that, it will, to the full extentpermitted by law and the rules and regulations promulgated by thePublic Service Commission of West Virginia, discontinue and shut offthe services of the System to all users of the services of the Systemdelinquent in payment of charges for the services of the System andwill not restore such services until. all delinquent charges for theservices of the System, plus reasonable interest and penalty chargesfor the restoration of service, have been fully paid and shall take

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all further actions to enforce collections to the maximum extentpermitted by law.

Section 7013. No Free Services. The Issuer will not renderor cause to be rendered any free services of any nature by the System,nor will any preferential rates be established for users of the sameclass; and in the event the Issuer, or any department, agency,instrumentality, officer or employee of the Issuer shall avail itselfor themselves of the facilities or services provided by the System,or any part thereof, the same rates, fees or charges applicable toother customers receiving like services under similar circumstancesshall be charged the Issuer and any such department, agency,instrumentality, officer or employee. The revenues so received shallbe deemed to be revenues derived from the operation of the System, andshall be deposited and accounted for in the same manner as otherrevenues derived from such operation of the System.

Section 7.14. Insurance and Construction Bonds. A. TheIssuer hereby covenants and agrees that so long as any of the Bondsor any of the Notes remain Outstanding, the Issuer will, as anOperating Expense, procure, carry and maintain insurance with areputable insurance carrier or carriers as is customarily covered withrespect to works and properties similar to the System. Such insuranceshall initially cover the following risks and be in the followingamounts:

(1) FIRE, LIGHTNING, VANDALISM, MALICIOUSMISCHIEF AND EXTENDED COVERAGE INSURANCE, on all above-ground insurable portions of the System in an amount equalto the actual cost thereof. In time of war the Issuer willalso carry and maintain insurance to the extent availableagainst the risks and hazards of war. The proceeds of allsuch insurance policies shall be placed in the Renewal andReplacement Fund and used only for the repairs andrestoration of the damaged or destroyed properties or for

---------the other purposes provided herein for said Renewal andReplacement Fund. The Issuer will itself, or will requireeach contractor and subcontractor to, obtain and maintainbuilder's risk insurance (fire and extended coverage) toprotect the interests of the Issuer, the Authority, theprime contractor and all subcontractors as their respectiveinterests may appear, in accordance with the Loan Agreement,during construction of the Project on a 100% basis(completed value form) on the insurable portion of theProject, such insurance to be made payable to the order ofthe Authority, the Issuer, the contractors andsubcontractors, as their interests may appear.

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(2) PUBLIC LIABILITY INSURANCE, with limits ofnot less than $1,000,000 per occurrence to protect theIssuer from claims for bodily injury and/or death and notless than $500,000 per occurrence from claims for damage toproperty of others which may arise from the operation of theSystem, and insurance with the same limits to protect theIssuer from claims arising out of operation or ownership ofmotor vehicles of or for the System.

(3) WORKER'S COMPENSATION COVERAGE FOR ALLEMPLOYEES OF OR FOR THE SYSTEM ELIGIBLE THEREFOR; ANDPERFORMANCE AND PAYMENT BONDS, such bonds to be in theamounts of 100% of the construction contract and to berequired of each contractor contracting directly with theIssuer, and such payment bonds will be filed with the Clerkof The County Commission of the County in which such workis to be performed prior to commencement of construction ofthe Project in compliance with West Virginia Code,Chapter 38, Article 2, Section 39.

(4) FLOOD INSURANCE, to the extent available atreasonable cost to the Issuer.

(5) BUSINESS INTERRUPTION INSURANCE, to theextent available at reasonable cost to the Issuer.

B. The Issuer shall also require all contractors engagedin the construction of the Project to carry such worker's compensationcoverage for all employees working on the Project and public liabilityinsurance, vehicular liability insurance and property damage insurancein amounts adequate for such purposes and as is customarily carriedwith respect to works and properties similar to the Project. In theevent the Loan Agreement so requires, such insurance shall be madepayable to the order of the Authority, the Issuer, the primecontractor and all subcontractors, as their interests may appear.

Section 7.15. Completion of Project. The Issuer willcomplete the Project and operate and maintain the System in goodcondition.

Section 7.16 , . Tax Covenants , .

The Issuer hereby furthercovenants and agrees as follows:

A. PRIVATE BUSINESS USE LIMITATION. The Issuer shallassure that (i) not in excess of 10% of the Net Proceeds of theOriginal Bonds are used for Private Business Use if, in addition, thepayment of more than 10% of the principal or 10% of the interest dueon the Original Bonds during the term thereof is, under the terms of

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the Original Bonds or any underlying arrangement, directly orindirectly, secured by any interest in property used or to be used fora Private Business Use or in p aypeps respect of property used orto be used for a Private Business Use or is to be derived frompayments, whether or not to the Issuer, in respect of property orborrowed money used or to be used for a Private Business Use; and(ii) and that, in the event that both (A) in excess of 5% of the NetProceeds of the Original Bonds are used for a Private Business Use,and (B) an amount in excess of 5% of the principal or 5% of theinterest due on the Original Bonds during the term thereof is, underthe terms of the Original Bonds or any underlying arrangement,directly or indirectly, secured by any interest in property used orto be used for said Private Business Use or in payments in respect ofproperty used or to be used for said Private Business Use or is to bederived from payments, whether or not to the Issuer, in respect ofproperty or borrowed money used or to be used for said PrivateBusiness Use, then said excess over said 5% of Net Proceeds of theOriginal Bonds used for a Private Business Use shall be used for aPrivate Business Use related to the governmental use of the Project,or if the Original Bonds are for the purpose of financing more thanone project, a portion of the Project, and shall not exceed theproceeds used for the governmental use of the portion of the Projectto which such Private Business Use is related. All of the foregoingshall be determined in accordance with the Code.

B. PRIVATE LOAN LIMITATION. The Issuer shall assure thatnot in excess of 5% of the Net Proceeds of the Original Bonds or$5,000,000 are used, directly or indirectly, to make or finance a loan(other than loans constituting Nonpurpose Investments) to personsother than state or local government units.

C. FEDERAL GUARANTEE PROHIBITION. The Issuer shall nottake any action or permit or suffer any action to be taken if theresult of the same would be to cause the Bonds to be "federallyguaranteed" within the meaning of Section 149(b) of the Code.

D. INFORMATION RETURN. The Issuer will timely file allstatements, instruments and returns necessary to assure the tax-exemptstatus of the Original Bonds and the interest thereon including,without limitation, the information return required underSection 149(e) of the Code.

E. FURTHER ACTIONS. The Issuer will take any and allactions that may be required of it (including, without limitation,those deemed necessary by the Authority) so that the interest on theOriginal Bonds will be and remain excluded from gross income forfederal income tax purposes, and will not take any actions or fail totake any actions (including, without limitation, those deemed

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necessary by the Authority), the result of which would adverselyaffect such exclusion.

Section 7,17,. Statutory Mortgage, Lien. For the furtherprotection of the Holders of the Bonds, a statutory mortgage lien uponthe System is granted and created by the Act, which statutory mortgagelien is hereby recognized and declared to be valid and binding, shalltake effect immediately upon delivery of the Bonds and shall be forthe equal benefit of all Holders of each respective Series of Bonds,provided however, that the statutory mortgage lien in favor of theHolders of the Series 1990 A Bonds shall be senior to the statutorymortgage lien in favor of the Holders of the Series 1990 B Bonds.

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ARTICLE VIII

INVESTMENT OF FUNDS;_ _NON_ ARBITRAGE_

Section 8,01. Investments. Any moneys held as a part ofthe funds and accounts created by this Bond Legislation or theIndenture, other than the Revenue Fund, shall be invested andreinvested by the Commission, the Trustee, if any, the DepositoryBank, or such other bank or national banking association holding suchfund or account, as the case may be, at the written direction of theIssuer in any Qualified Investments to the fullest extent possibleunder applicable laws, this Bond Legislation, and the Indenture, ifany, the need for such moneys for the purposes set forth herein andin the Indenture, if any, and the specific restrictions and provisionsset forth in this Section 8.01 and in the Indenture.

Except as provided in the Indenture, if any, any investmentshall be held in and at all times deemed a part of the fund or accountin which such moneys were originally held, and the interest accruingthereon and any profit or loss realized from such investment shall becredited or charged to the appropriate fund or account except asotherwise provided herein with respect to the Rebate Fund. Theinvestments held for any fund or account shall be valued at the lowerof cost or then current market value, or at the redemption pricethereof if then redeemable at the option of the holder, including thevalue of accrued interest and giving effect to the amortization ofdiscount, or at par if such investment is held in the "ConsolidatedFund." The Commission, the Trustee, if any, the Depository Bank, orsuch other bank or national banking association, as the case may be,shall sell and reduce to cash a sufficient amount of such investmentswhenever the cash balance in any fund or account is insufficient tomake the payments required from such fund or account, regardless ofthe loss on such liquidation. The Trustee, if any, the DepositoryBank, or such other bank or national banking association, as the casemay be, may make any and all investments permitted by this sectionthrough its own bond department and shall not be responsible for anylosses from such investments, other than for its own negligence orwillful misconduct.

The Trustee, if any, and the Depository Bank shall keepcomplete and accurate records of all funds, accounts and investments,and shall distribute to the Issuer, at least once each year, or moreoften as reasonably requested by the Issuer, a summary of such funds,accounts and investment earnings. The Issuer shall retain all suchrecords and any additional records with respect to such funds,accounts and investment earnings so long as any of the Bonds areOutstanding and as long thereafter as necessary to assure the

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exclusion of interest on the Original Bonds from gross income forfederal income tax purposes.

Section 8,02. Arbitrage. The Issuer covenants that (i) itshall not take, or permit or suffer to be taken, any action withrespect to the gross or other proceeds of the Bonds which would causethe Original Bonds to be "arbitrage bonds" within the meaning ofSection 148 of the Code, and (ii) it will take all actions that maybe required of it (including, without implied limitation, the timelyfiling of a Federal information return with respect to the OriginalBonds) so that the interest on the Original Bonds will be and remainexcluded from gross income for Federal income tax purposes, and willnot take any actions which would adversely affect such exclusion.

Section 8,03. Tax Certificate and Rebate. The Issuer shalldeliver a certificate of arbitrage, a tax certificate or other similarcertificate to be prepared by nationally recognized bond counsel ortax counsel relating to payment of arbitrage rebate and other taxmatters as a condition to issuance of the Original Bonds. Inaddition, the Issuer covenants to comply with all Regulations fromtime to time in effect and applicable to the Original Bonds as may benecessary in order to fully comply with Section 148(f) of the Code,and covenants to take such actions, and refrain from taking suchactions, as may be necessary to fully comply with such Section 148(f)of the Code and such Regulations, regardless of whether such actionsmay be. contrary to any of the provisions of this Bond Legislation.

The Issuer shall calculate, annually, the rebatablearbitrage, determined in accordance with Section 148(f) of the Code.Upon completion of each such annual calculation, unless otherwiseagreed by the Authority, the Issuer shall deposit, or cause to bedeposited, in the Rebate Fund such sums as are necessary to cause theaggregate amount on deposit in the Rebate Fund to equal the sumdetermined to be subject to rebate to the United States, which,notwithstanding anything herein to the contrary, shall be paid from

- investment earningson the underlying fund or account establishedhereunder and on which such rebatable arbitrage was earned or fromother lawfully available sources. Notwithstanding anything herein tothe contrary, the Rebate Fund shall be held free and clear of any lienor pledge hereunder or under the Indenture, if any, and used only forpayment of rebatable arbitrage to the United States. The Issuer shallpay, or cause to be paid, to the United States, from the Rebate Fund,the rebatable arbitrage in accordance with Section 148(f) of the Codeand such Regulations. In the event that there are any amountsremaining in the Rebate Fund following all such payments required bythe preceding sentence, the Depository Bank shall pay said amounts tothe Issuer to be used for any lawful purpose of the System. TheIssuer shall remit payments to the United States in the time and at

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the address prescribed by the Regulations as the same may be in timeto time in effect with such reports and statements as may beprescribed by such Regulations. In the event that, for any reason,amounts in the Rebate Fund are insufficient to make the payments tothe United States which are required, the Issuer shall assure thatsuch payments are made by the Issuer to the United States, on a timelybasis, from any funds lawfully available therefor. In addition, theIssuer shall cooperate with the Authority in preparing rebatecalculations and in all other respects in connection with rebates andhereby consents to the performance of all matters in connection withsuch rebates by the Authority at the expense of the Issuer. To theextent not so performed by the Authority, the Issuer and theDepository Bank (at the expense of the Issuer) may provide for theemployment of independent attorneys, accountants or consultantscompensated on such reasonable basis as the Issuer or the DepositoryBank may deem appropriate in order to assure compliance with thisSection 8.03. The Issuer shall keep and retain, or cause to be keptand retained, records of the determinations made pursuant to thisSection 8.03 in accordance with the requirements of Section 148(f) ofthe Code and such Regulations. In the event the Issuer fails to makesuch rebates as required, the Issuer shall pay any and all penaltiesand other amounts, from lawfully available sources, and obtain awaiver from the Internal Revenue Service, if necessary, in order tomaintain the exclusion of interest on the Bonds from gross income forfederal income tax purposes.

The Issuer shall submit to the Authority within 15 daysfollowing the end of each Bond Year a certified copy of its rebatecalculation and certificate with respect thereto or, if the Issuerqualifies for the small governmental issue exception to rebate, or anyother exception thereto, then the Issuer shall submit to the Authoritya certificate stating that it is exempt from such rebate provisionsand that no event has occurred to its knowledge during the Bond Yearwhich would make the Original Bonds subject to rebate. The Issuershall also furnish to the Authority, at any time, such additionalinformation-r-ela-tins -to- rebate--asmay-be-reasonably requested-by-the -Authority.

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ARTICLE IX

DEFAULT

REMEDIES_

Section 9,01. Events of Default. A. Each of the followingevents shall constitute an "Event of Default" with respect to theNotes:

(1) If default occurs in the due and punctualpayment of the principal of or interest on any Notes; or

(2) If default occurs in the Issuer's observanceof any of the covenants, agreements or conditions on itspart relating to the Notes set forth in this BondLegislation, any supplemental resolution, the Indenture orin the Notes, and such default shall have continued for aperiod of 30 days after the Issuer shall have been givenwritten notice of such default by the Trustee, any otherbank or banking association holding any fund or accounthereunder or a Holder of a Note; or

(3) If the Issuer files a petition seekingreorganization or arrangement under the federal bankruptcylaws or any other applicable law of the United States ofAmerica.

B.

Each of the following events shall constitute an "Eventof Default" with respect to the Bonds:

(1) If default occurs in the due and punctualpayment of the principal of or interest on any Bonds; or

(2) If default occurs in the Issuer's observanceof any of the covenants, agreements or conditions on itspart- -relat-ing - to the - Bonds set forth in this BondLegislation, any supplemental resolution or in the Bonds,and such default shall have continued for a period of30 days after the Issuer shall have been given writtennotice of such default by the Commission, the DepositoryBank, Registrar or any other Paying Agent or a Holder of aBond; or

(3) If the Issuer files a petition seekingreorganization or arrangement under the federal bankruptcylaws or any other applicable law of the United States ofAmerica.

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Section 9.02. , Remedies. Upon the happening and continuanceof any Event of Default, any Registered Owner of a Note or Bond, asthe case may be, may exercise any available remedy and bring anyappropriate action, suit or proceeding to enforce his or her rightsand, in particular, (i) bring suit for any unpaid principal orinterest then due, (ii) by mandamus or other appropriate proceedingenforce all rights of such Registered Owners including the right torequire the Issuer to perform its duties under the Act and the BondLegislation relating thereto, including but not limited to the makingand collection of sufficient rates or charges for services renderedby the System, (iii) bring suit upon the Notes or Bonds, as the casemay be, (iv) by action at law or bill in equity require the Issuer toaccount as if it were the trustee of an express trust for theRegistered Owners of the Notes or Bonds, as the case may be, and(v) by action or bill in equity enjoin any acts in violation of theBond Legislation with respect to the Notes or Bonds, or the rights ofsuch Registered Owners, provided however, that no remedy herein statedmay be exercised by a Noteholder in a manner which adversely affectsany remedy available to the Bondholders, and provided further, thatall rights and remedies of the Holders of the Series 1990 B Bondsshall be subject to those of the Holders , of the Series 1990 A Bonds.

Section 9.03, Appointment of Receiver. Any RegisteredOwner of a Bond or Bond Anticipation Note or a Bond Anticipation Noteevidencing a line of credit may, by proper legal action, compel theperformance of the duties of the Issuer under the Bond Legislation andthe Act, including, after commencement of operation of the System, themaking and collection of sufficient rates and charges for servicesrendered by the System and segregation of the revenues therefrom andthe application thereof. If there be any Event of Default withrespect to such Bonds or Bond Anticipation Notes or Bond AnticipationNote evidencing such line of credit any Registered Owner of a Bondshall, in addition to all other remedies or rights, have the right byappropriate legal proceedings to obtain the appointment of a receiverto administer the System or to complete the acquisition andconstruction of the-Project on behalf--of- the Issuer with power tocharge rates, rentals, fees and other charges sufficient to providefor the payment of Operating Expenses of the System, the payment ofthe Bonds and interest and the deposits into the funds and accountshereby established, and to apply such rates, rentals, fees, chargesor other revenues in conformity with the provisions of this BondLegislation and the Act.

The receiver so appointed shall forthwith, directly or byhis or her or its agents and attorneys, enter into and upon and takepossession of all facilities of said System and shall hold, operateand maintain, manage and control such facilities, and each and everypart thereof, and in the name of the Issuer exercise all the rights

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and powers of the Issuer with respect to said facilities as the Issueritself might do..

Whenever all that is due upon the Bonds and interest thereonand under any covenants of this Bond Legislation for Reserve, Sinkingor other funds and upon any other obligations and interest thereonhaving a charge, lien or encumbrance upon the revenues of the Systemshall have been paid and made good, and all defaults under theprovisions of this Bond Legislation shall have been cured and madegood, possession of the System shall be surrendered to the Issuer uponthe entry of an order of the court to that effect. Upon anysubsequent default, any Registered Owner of any Bonds shall have thesame right to secure the further appointment of a receiver upon anysuch subsequent default.

Such receiver, in the performance of the powers hereinaboveconferred upon him or her or it, shall be under the direction andsupervision of the court making such appointment, shall at all timesbe subject to the orders and decrees of such court and may be removedthereby, and a successor receiver may be appointed in the discretionof such court. Nothing herein contained shall limit or restrict thejurisdiction of such court to enter such other and further orders anddecrees as such court may deem necessary or appropriate for theexercise by the receiver of any function not specifically set forthherein.

Any receiver appointed as provided herein shall hold andoperate the System in the name of the Issuer and for the jointprotection and benefit of the Issuer and Registered Owners of theBonds. Such receiver shall have no power to sell, assign, mortgageor otherwise dispose of any assets of any kind or character belongingor pertaining to the System, but the authority of such receiver shallbe limited to the possession, operation and maintenance of the Systemfor the sole purpose of the protection of both the Issuer andRegistered Owners of such Bonds and the curing and making good of anyEvent of Default with respect thereto under the provisions of thisBond Legislation, and the title to and ownership of said System shallremain in the Issuer, and no court shall have any jurisdiction toenter any order or decree permitting or requiring such receiver tosell, assign, mortgage or otherwise dispose of any assets of theSystem.

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ARTICLE X

_DEFEASANCE_

Section 10.01. Defeasance of Series 1990 A Bonds. If theIssuer shall pay or cause to be paid, or there shall otherwise bepaid, to the respective Holders of all Series 1990 A Bonds, theprincipal of and interest due or to become due thereon, at the timesand in the manner stipulated therein and in this Bond Legislation,then with respect to the Series 1990 A Bonds only, the pledge of NetRevenues and other moneys and securities pledged under this BondLegislation and all covenants, agreements and other obligations ofthe Issuer to the Registered Owners of the Series 1990 A Bonds shallthereupon cease, terminate and become void and be discharged andsatisfied, except as may otherwise be necessary to assure theexclusion of interest on the Original Bonds from gross income forfederal income tax purposes.

Series 1990 A Bonds for the payment of which either moneysin an amount which shall be sufficient, or securities the principalof and the interest on which, when due, will provide moneys which,together with the moneys, if any, deposited with the Paying Agents atthe same or earlier time, shall be sufficient, to pay as and when dueeither at maturity or at the next redemption date, the principalinstallments of and interest on such Series 1990 A Bonds shall bedeemed to have been paid within the meaning and with the effectexpressed in the first paragraph of this section. All Series 1990 ABonds shall, prior to the maturity thereof, be deemed to have beenpaid within the meaning and with the effect expressed in the firstparagraph of this section if there shall have been deposited with theCommission or its agent, either moneys in an amount which shall besufficient, or securities the principal of and the interest on which,when due, will provide moneys which, together with other moneys, ifany, deposited with the Commission at the same time, shall besu icientto pay when due the principal installments of and interestdue and to become due on said Series 1990 A Bonds on and prior to thenext redemption date or the maturity dates thereof. Neithersecurities nor moneys deposited with the Commission pursuant to thissection nor principal or interest payments on any such securitiesshall be withdrawn or used for any purpose other than, and shall beheld in trust for, the payment of the principal installments of andinterest on said Series 1990 A Bonds; provided, that any cash receivedfrom such principal or interest payments on such securities depositedwith the Commission or its agent, if not then needed for such purpose,shall, to the extent practicable, be reinvested in securities maturingat times and in amounts sufficient to pay when due the principalinstallments of and interest to become due on said Bonds on and prior

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to the next redemption date or the maturity dates thereof, andinterest earned from such reinvestments shall be paid over to theIssuer as receivedby the Commission or its agent, freeandclear of-any trust, lien or pledge. For the purpose of this section,securities shall mean and include only Government Obligations.

Section 10.02. Defeasance of Series 1990 B Bonds. If theIssuer shall pay or cause to be paid, or there shall otherwise bepaid, to the respective Holders of all Series 1990 B Bonds, theprincipal due or to become due thereon, at the times and in the mannerstipulated therein and in this Bond Legislation, then with respect tothe Series 1990 B Bonds only, the pledge of Net Revenues and othermoneys and securities pledged under this Bond Legislation and allcovenants, agreements and other obligations of the Issuer to theRegistered Owners of the Series 1990 B Bonds shall thereupon cease,terminate and become void and be discharged and satisfied, except asmay otherwise be necessary to assure the exclusion of interest on theOriginal Bonds from gross income for federal income tax purposes.

Series 1990 B Bonds for the payment of which either moneysin an amount which shall be sufficient, or securities the principalof and the interest on which, when due, will provide moneys which,together with the moneys, if any, deposited with the Paying Agents atthe same or earlier time, shall be sufficient, to pay as and when dueeither at maturity or at the next redemption date the principalinstallments of such Series 1990 B Bonds shall be deemed to have beenpaid within the meaning and with the effect expressed in the firstparagraph of this section. All Series 1990 B Bonds shall, prior tothe maturity thereof, be deemed to have been paid within the meaningand with the effect expressed in the first paragraph of this sectionif there shall have been deposited with the Commission or its agent,either moneys in an amount which shall be sufficient, or securitiesthe principal of and the interest on which, when due, will providemoneys which, together with other moneys, if any, deposited with theCommission at the same time, shall be sufficient to pay when due the_principal installments of said Series 1990 B Bonds on and prior to thenext redemption date or the maturity dates thereof. Neithersecurities nor moneys deposited with the Commission pursuant to thissection nor principal or interest payments on any such securitiesshall be withdrawn or used for any purpose other than, and shall beheld in trust for, the payment of the principal installments of saidSeries 1990 B Bonds; provided, that any cash received from suchprincipal or interest payments on such securities deposited with theCommission or its agent, if not then needed for such purpose, shall,to the extent practicable, be reinvested in securities maturing attimes and in amounts sufficient to pay when due the principalinstallments of said Bonds on and prior to the next redemption dateor the maturity dates thereof, and interest earned from such

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reinvestments shall be paid over to the Issuer as received by theCommission or its agent, free and clear of any trust, lien or pledge.For the purpose of this section, securities shall mean and includeonly Government Obligations.

Section 10,03. Defeasance of Notes. If the Issuer shallpay or cause to be paid, or there shall otherwise be paid, to therespective Holders of any series of Notes, the principal of andinterest due or to become due thereon, at the times and in the mannerset forth in the Indenture and/or the Supplemental Resolutionpertaining to such Notes, then with respect to such Notes only, thisBond Legislation, the Indenture, if any, and the pledges of GrantReceipts and other moneys and securities pledged thereby, and allcovenants, agreements and other obligations of the Issuer to theHolders of the Notes shall thereupon cease, terminate and become voidand be discharged and satisfied, except as may otherwise be necessaryto assure the exclusion of interest on the Notes from gross income forfederal income tax purposes.

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ARTICLE XI

MISCELLANEOUS

Section 11.01. Amendment or Modification of BondLegislation. No material modification or amendment of this BondLegislation, or of any resolution amendatory or supplemental hereto,that would materially and adversely affect the respective rights ofRegistered Owners of the Notes or Bonds shall be made without theconsent in writing of the Registered Owners of 66-2/3% or more inprincipal amount of the Notes, the Series 1990 A Bonds or theSeries 1990 B Bonds so affected and then Outstanding; provided, thatno change shall be made in the maturity of any Bond or Bonds or anyNote or Notes or the rate of interest thereon, or in the principalamount thereof, or affecting the unconditional promise of the Issuerto pay such principal and interest out of the funds hereinrespectively pledged therefor without the consent of the respectiveRegistered Owner thereof. No amendment or modification shall be madethat would reduce the percentage of the principal amount of Bonds orNotes respectively, required for consent to the above-permittedamendments or modifications. Notwithstanding the foregoing, this BondLegislation may be amended without the consent of any Bondholder orNoteholder as may be necessary to assure compliance withSection 148(f) of the Code relating to rebate requirements orotherwise as may be necessary to assure the exclusion of interest onthe Original Bonds and the Notes, if any, from gross income of theholders thereof.

Section 11.02. Bond Legislation Constitutes Contract. Theprovisions of the Bond Legislation shall constitute a contract betweenthe Issuer and the Registered Owners of the Bonds and Notes, and nochange, variation or alteration of any kind of the provisions of theBond Legislation shall be made in any manner, except as in this BondLegislation provided.

Section 11.03. , Severability of Invalid Provisions. If anysection, paragraph, clause or provision of this Resolution should beheld invalid by any court of competent jurisdiction, the invalidityof such section, paragraph, clause or provision shall not affect anyof the remaining provisions of this Resolution, the SupplementalResolution, the Indenture, if any, the Bonds or the Notes, if any.

Section 11.04. Headings, Etc. The headings and catchlines'of the articles, sections and subsections hereof are for convenienceof reference only, and shall not affect in any way the meaning orinterpretation of any provision hereof.

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Section 11.05. Conflicting Provisions Repealed. All ordersor resolutions and or parts thereof in conflict with the provisionsof this Resolution are, to the extent of such conflict herebyrepealed.

Section 11,06. Covenant of Due Procedure, Etc. The Issuercovenants that all acts, conditions, things and procedures requiredto exist, to happen, to be performed or to be taken precedent to andin the adoption of this Resolution do exist, have happened, have beenperformed and have been taken in regular and due time, form and manneras required by and in full compliance with the laws and Constitutionof the State of West Virginia applicable thereto; and that theChairman, Secretary and members of the Governing Body were at alltimes when any actions in connection with this Resolution occurred andare duly in office and duly qualified for such office.

Section 11.07,. Public Notice of Proposed Financing. Priorto making formal application to the Public Service Commission ofWest Virginia for a Certificate of Public Convenience and Necessityand adoption of this Resolution, the Secretary of the Governing Bodyshall have caused to be published in a newspaper of generalcirculation in each municipality in Fountain Public Service Districtand within the boundaries of the District, a Class II legaladvertisement stating:

(a) The respective maximum amounts of theBonds and the Notes to be issued;

(b) The respective maximum interest ratesand terms of the Bonds and the Notes originallyauthorized hereby;

(c) The public service properties to beacquired or constructed and the cost of the same;

- (d)- -Themaxim-um anticipated- rates which willbe charged by the Issuer; and

(e) The date that the formal application fora Certificate of Public Convenience and Necessityis to be filed with the Public Service Commissionof West Virginia.

Section 11.08. Effective Date. This Resolution shall takeeffect immediately upon adoption.

68.

CERTIFICATION

Certified a true copy of a Resolution duly adopted by thePublic Service Board of FOUNTAIN PUBLIC SERVICE DISTRICT on the18th day of April, 1990.

Dated: April 20, 1990

70.


Water Revenue Bonds,Series 1990 A and Series 1990 B

SUPPLEMENTAL RESOLUTION

SUPPLEMENTAL RESOLUTION PROVIDING AS TO PRINCIPALAMOUNTS, DATES, MATURITIES, INTEREST RATES,PRINCIPAL PAYMENT SCHEDULES, SALE PRICES AND OTHERTERMS OF THE WATER REVENUE BONDS, SERIES 1990 AAND SERIES 1990 B OF FOUNTAIN PUBLIC SERVICEDISTRICT; APPROVING, RATIFYING AND CONFIRMING ALOAN AGREEMENT AND SUPPLEMENTAL LOAN AGREEMENTRELATING TO SUCH BONDS AND THE SALE AND DELIVERYOF SUCH BONDS TO WEST,VIRGINIA WATER DEVELOPMENTAUTHORITY; DESIGNATING A REGISTRAR, PAYING AGENTAND DEPOSITORY BANK; AND MAKING OTHER PROVISIONSAS TO THE BONDS.

WHEREAS, the Public Service Board (the "Governing Body") ofFountain Public Service District (the "Issuer"), has duly andofficially adopted a bond and notes resolution, effective April 18,1990 (the "Bond and Notes Resolution" or the "Resolution") entitled:

RESOLUTION AUTHORIZING THE ACQUISITION ANDCONSTRUCTION OF PUBLIC WATERWORKS FACILITIES OFFOUNTAIN PUBLIC SERVICE DISTRICT AND THE FINANCINGOF THE COST, NOT OTHERWISE PROVIDED, THEREOFTHROUGH THE ISSUANCE BY THE DISTRICT OF NOT MORETHAN $400,000 IN AGGREGATE PRINCIPAL AMOUNT OFWATER REVENUE BONDS, SERIES 1990 A, NOT MORE THAN$100,000 IN AGGREGATE PRINCIPAL AMOUNT OF WATERREVENUE BONDS, SERIES 1990 B, AND NOT MORE THAN$500,000 INTERIM CONSTRUCTION FINANCING,CONSISTING OF BOND ANTICIPATION NOTES, GRANTANTICIPATION NOTES OR A LINE OF CREDIT EVIDENCEDBY NOTES, OR ANY COMBINATION OF THE FOREGOING;PROVIDING FOR THE RIGHTS AND REMEDIES OF ANDSECURITY FOR THE REGISTERED OWNERS OF SUCH BONDSAND NOTES; AUTHORIZING EXECUTION AND DELIVERY OFA TRUST INDENTURE SECURING THE NOTES; APPROVING,RATIFYING AND CONFIRMING A LOAN AGREEMENT ANDSUPPLEMENTAL LOAN AGREEMENT RELATING TO SUCHBONDS; AUTHORIZING THE SALE AND PROVIDING FOR THE

TERMS AND PROVISIONS OF SUCH BONDS AND NOTES ANDADOPTING OTHER PROVISIONS RELATING THERETO.

WHEREAS, the Bond and Notes Resolution provides for theissuance of Water Revenue Bonds of the Issuer (the "Bonds"), in anaggregate principal amount not to exceed $500,000, to be issued in twoseries, the Series 1990 A Bonds to be in an aggregate principal amountof not more than $400,000 (the "Series 1990 A Bonds") and theSeries 1990 B Bonds to be in an aggregate principal amount of not morethan $100,000 (the "Series 1990 B Bonds"), and has preliminarilyauthorized the execution and delivery of a loan agreement relating tothe Series 1990 A Bonds dated April 20, 1990, and a supplemental loanagreement relating to the Series 1990 B Bonds, also dated April 20,1990 (sometimes collectively referred to herein as the "LoanAgreement"), both by and between the Issuer and West Virginia WaterDevelopment Authority (the "Authority"), all in accordance withChapter 16, Article 13A of the West Virginia Code of 1931, as amended(the "Act"); and in the Bond and Notes Resolution it is provided thatthe form of the Loan Agreement and the exact principal amounts,maturity dates, interest rates, interest and principal payment dates,sale prices and other terms of the Bonds should be established by asupplemental resolution pertaining to the Bonds; and that othermatters relating to the Bonds be herein provided for;

WHEREAS, the Loan Agreement has been presented to the Issuerat this meeting;

WHEREAS, the Bonds are proposed to be purchased by theAuthority pursuant to the Loan Agreement; and

WHEREAS, the Governing Body deems it essential and desirablethat this supplemental resolution (the "Supplemental Resolution") beadopted and that the Loan Agreement be approved, ratified andconfirmed and entered into by the Issuer, that the exact principalamounts, the prices, the maturity dates, the redemption provisions,the interest rates and the interest and principal payment dates of theBonds be fixed hereby in the manner stated herein, and that othermatters relating to the Bonds be herein provided for;

NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OFFOUNTAIN PUBLIC SERVICE DISTRICT:

2.

Section 1. Pursuant to the Bond and Notes Resolution andthe Act, this Supplemental Resolution is adopted and there are herebyauthorized and ordered to be issued:

(A) The Water Revenue Bonds, Series 1990 A, of theIssuer, originally represented by a single Bond, numberedAR-1, in the principal amount of $356,633. TheSeries 1990 A Bonds shall be dated the date of deliverythereof, shall finally mature October 1, 2029, shall bearinterest at the rate of 7.85% per annum, payablesemiannually on April 1 and October 1 of each year, firstinterest payable October 1, 1990, shall be subject toredemption upon the written consent of the Authority, andupon payment of the interest and redemption premium, if any,and otherwise in compliance with the Loan Agreement, as longas the Authority shall be the registered owner of theSeries 1990 A Bonds, and shall be payable in installmentsof principal on October 1 of each of the years and in theamounts as set forth in "Schedule X," attached thereto andto the Loan Agreement and incorporated therein by reference.

(B) The Water Revenue Bonds, Series 1990 B, of theIssuer, originally represented by a single Bond, numberedBR-1, in the principal amount of $16,642. The Series 1990 BBonds shall be dated the date of delivery thereof, shallfinally mature October 1, 2029, shall be interest free,shall be subject to redemption upon the written consent ofthe Authority, and otherwise in compliance with the LoanAgreement, as long as the Authority shall be the registeredowner of the Series 1990 B Bonds, and shall be payable ininstallments of principal on October 1 of each of the yearsand in the amounts as set forth in "Schedule X," attachedthereto and to the Supplemental Loan Agreement andincorporated therein by reference.

Section 2. All other provisions relating to the Bondsand the text of the Bonds shall be in substantially the forms providedin the Bond and Notes Resolution.

Section 3. The Issuer does hereby authorize, approve,ratify, confirm and accept the Loan Agreement, copies of which areincorporated herein by reference, and the execution and delivery bythe Chairman of the Loan Agreement, and the performance of theobligations contained therein, on behalf of the Issuer are herebyauthorized, directed, approved, ratified and confirmed. The price ofthe Bonds shall be 100% of par value, there being no interest accruedthereon.

3.

Section 4. The Issuer does hereby appoint and designateOne Valley Bank, National Association, Charleston, West Virginia, asRegistrar for theBonds--and- does--approve and acceptthe Registrar'sAgreement to be dated the date of delivery of the Bonds, by andbetween the Issuer and One Valley Bank, National Association, insubstantially the form attached hereto, and the execution and deliveryby the Chairman of the Registrar's Agreement, and the performance ofthe obligations contained therein, on behalf of the Issuer are herebyauthorized, approved and directed.

Section 5.

The Issuer does hereby appoint and directthe

West Virginia

Municipal

Bond

Commission,

Charleston,West Virginia, to serve as Paying Agent for the Bonds.

Section 6. The Issuer does hereby appoint The NationalBank of Keyser, Keyser, West Virginia, as Depository Bank under theBond and Notes Resolution.

Section 7,. Series 1990 A Bonds proceeds in the amountof $21,955 shall be deposited in the Series 1990 A Bonds Sinking Fundas capitalized interest

Section 8,. Series 1990 A Bonds proceeds in the amountof $-0- shall be deposited in the Series 1990 A Bonds Reserve Accountand Series 1990 B Bonds proceeds in the amount of $-0- shall bedeposited in the Series 1990 B Bonds Reserve Account.

Section 9,. The remaining proceeds of the Bonds shall bedeposited in the Bond Construction Trust Fund for payment of Costs ofthe Project, including repayment of any temporary bank loans orAuthority advances made or incurred with respect to the Project andpayment of costs of issuance of the Bonds.

Section 10. The Issuer hereby determines to pay, on thedate of delivery of the Bonds and receipt of proceeds thereof, allborrowings of the Issuer heretofore incurred for the purpose oftemporarily financing a portion of the Costs of the Project,including, but not limited to, all borrowings from West Virginia WaterDevelopment Authority.

Section 11, . The Chairman and Secretary are herebyauthorized and directed to execute and deliver such other documents,agreements, instruments and certificates required or desirable inconnection with the Bonds hereby and by the Bond and Notes Resolutionapproved and provided for, to the end that the Bonds may be deliveredto the Authority pursuant to the Loan Agreement on or about April 20,1990.

4.

Section 12. The acquisition and construction of theProject and the financing thereof in part with proceeds of the Bondsare in the public interest, serve a public purpose of the_Issuer_andwill promote the health, welfare and safety of the residents of theIssuer.

Section 13. The Issuer hereby determines that it is inthe best interest of the Issuer to invest all moneys in the funds andaccounts established by the Bond and Notes Resolution held by theDepository Bank in time deposits secured by a pledge of GovernmentObligations with the Depository Bank, and therefore the Issuer herebydirects the Depository Bank to take such actions as may be necessaryto cause such moneys to be invested in such time accounts, untilfurther directed by the Issuer. Moneys in the Sinking Funds for theBonds shall be invested by the Municipal Bond Commission in theWest Virginia restricted consolidated fund.

Section 14. The Issuer shall not permit at any time ortimes any of the proceeds of the Bonds or any other funds of theIssuer to be used directly or indirectly in a manner which wouldresult in the exclusion of the Bonds from the treatment afforded bySection 103(a) of the Internal Revenue Code of 1986, as amended, andthe temporary and permanent regulations promulgated thereunder orunder any predecessor thereto (the "Code"), by reason of theclassification of the Bonds as "private activity bonds" within themeaning of the Code. The Issuer will take all actions necessary tocomply with the Code and Treasury Regulations promulgated or to bepromulgated thereunder.

Section 15. The Issuer elects to haveSection 148(f)(4)(B)(iv)(V) of the Code apply to the Bonds and agreesto pay the penalty prescribed under such Section 148(f)(4)(B)(iv)(V)of the Code.

Section 16.

This Supplemental Resolution shall beeffective immediately following adoption hereof.

Adopted this 18th day of April, 1990.


/ 2'„

5.

CERTIFICATION

Certified a true copy of a Supplemental Resolution dulyadopted by the Public Service Board of FOUNTAIN PUBLIC SERVICEDISTRICT on the 18th day of April, 1990.

Dated: April 20, 1990.

6.

C,J

WDA-5(February 1990)

.LOAN AGREEMENT

THIS LOAN AGREEMENT, Made and entered into in severalcounterparts, by and between the WEST VIRGINIA WATER DEVELOPMENTAUTHORITY, a governmental instrumentality and body corporate ofthe State of West Virginia (the "Authority"), and the govern-mental agency designated below (the "Governmental Agency").

Fountain Public Service District (Name of Governmental Agency)

W I T N E S S E T H:

WHEREAS, pursuant to the provisions of Chapter 20, Article5C, of the Code of West Virginia, 1931, as amended (the "Act"),the Authority is empowered to make loans to governmentalagencies for the acquisition or construction of water develop-ment projects by such governmental agencies and to issue waterdevelopment revenue bonds of the State of West Virginia (the"State") to finance, in whole or in part, by loans to govern-mental agencies, one or more water development projects, allsubject to such provisions and limitations as are contained inthe Act;

WHEREAS, the Governmental Agency constitutes a govern-mental agency as defined by the Act;

WHEREAS, the Governmental Agency is authorized andempowered by the statutes of the State to construct, operateand improve a water development project, as defined by the Act,and to finance the cost of. constructing or acquiring the sameby borrowing money to be evidenced by revenue bonds issued bythe Governmental Agency;

WHEREAS, the Governmental Agency intends to construct, isconstructing or has constructed such a water developmentproject at the location and as more particularly described andset forth in the Application, as hereinafter defined (the"Project");

WHEREAS, the Governmental Agency has completed and filedwith the Authority an Application for a Construction Loan withattachments and exhibits and an Amended Application for aConstruction Loan also with attachments and exhibits (together,as further revised and supplemented, the "Application"), whichApplication is incorporated herein by this reference; and

3A

WHEREAS, having reviewed the Application and made allfindings required by Section 5 of the Act and having availablesufficient funds therefor, the Auth'- 4 ty is willing to lend theGovernmental Agency the amount set L .:th on Schedule X attachedhereto and incorporated herein by reference, through the pur-chase of revenue bonds of the Governmental Agency with proceedsof certain water development revenue bonds of the State issuedby the Authority pursuant to and in accordance with the provi-sions of the Act and a certain general revenue bond resolutionadopted by the Board of the Authority (the "GeneralResolution"), as supplemented, subject to the GovernmentalAgency's satisfaction of certain legal and other requirementsof the Authority's water development loan program (the"Program") as hereinafter set forth.

NOW, THEREFORE, in consideration of the premises andthe mutual agreements hereinafter contained, the GovernmentalAgency and the Authority hereby agree as follows:

ARTICLE I

Definitions

1.1 Except where the context clearly indicates other-wise, the terms "Authority," "water development revenue bond,""cost," governmental agency," "water development project,""wastewater facility" and "water facility" have the definitionsand meanings ascribed to them in the Act.

1.2 "Consulting Engineers" means the consultingengineer designated in the Application and any successorthereto.

1.3 "Loan" means the loan to be made by the Authorityto the Governmental Agency through the purchase of Local Bonds,as hereinafter defined, pursuant to this Loan Agreement.

1.4 "Local Act" means the official action of theGovernmental Agency required by Section 4.1 hereof, authorizingthe Local Bonds.

1.5 "Local Bonds" means the revenue bonds to be issuedby the Governmental Agency pursuant to the provisions of theLocal Statute, as hereinafter defined, to evidence the Loan andto be purchased by the Authority with a portion of the proceedsof its water development revenue bonds, all in accordance withthe provisions of this Loan Agreement.

1.6 "Local Statute" means the specific provisions ofthe Code of West Virginia, 1931, as amended, pursuant to whichthe Local Bonds are issued.

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1.7 "Operating Expenses" means the reasonable, properand necessary costs of operation and maintenance of the System,as hereinafter defined, as should normally and regularly beincluded as such under generally accepted accounting principles.

1.8 "Project" means the water development projecthereinabove referred to, to be constructed or being constructedby the Governmental Agency in whole or in part with the netproceeds of the Local Bonds or being or having been constructedby the Governmental Agency in whole or in part with theproceeds of bond anticipation notes or other interim financing,which is to be paid in whole or in part with the net proceedsof the Local Bonds.

1.9 "System" means the water development project ownedby the Governmental Agency, of which the Project constitutesall or to which the Project constitutes an improvement, and anyimprovements thereto hereafter constructed or acquired from anysources whatsoever.

1.10 Additional terms and phrases are defined in thisLoan Agreement as they are used.

ARTICLE II

The Project and the System

2.1 The Project shall generally consist of the con-struction and acquisition of the facilities described in theApplication, to be, being or having been constructed inaccordance with plans, specifications and designs prepared forthe Governmental Agency by the Consulting Engineers, theAuthority having found, to the extent applicable, that theProject is consistent with the applicable comprehensive plan ofwater management approved by the Director of the West VirginiaDepartment of Natural Resources (or in the process ofpreparation by such Director), has been approved by the WestVirginia Department of Health and is consistent with thestandards set by the West Virginia Water Resources Board forthe waters of the State affected thereby.

2.2 Subject to the terms, conditions and provisionsof this Loan Agreement and of the Local Act, the GovernmentalAgency has acquired, or shall do all things necessary toacquire,- the proposed site of the Project and shall do, isdoing or has done all things necessary to construct the Projectin accordance with the plans, specifications and designsprepared for the Governmental Agency by the ConsultingEngineers.

2.3 All real estate and interests in real estate andall personal property constituting the Project and the Projectsite heretofore or hereafter acquired shall at all times be andremain the property of the Governmental Agency, subject to anymortgage lien or other security interest as is provided for inthe Local Statute.

2.4 The Governmental Agency agrees that the Authorityand its duly authorized agents shall have the right at allreasonable times to enter upon the Project site and Projectfacilities and to examine and inspect the same. The Govern-mental Agency further agrees that the Authority and its dulyauthorized agents shall, prior to, at and after completion ofconstruction and commencement of operation of the Project, havesuch rights of access to the System site and System facilitiesas may be reasonably necessary to accomplish all of the powersand rights of the Authority in respect of the System pursuantto the pertinent provisions of the Act.

2.5 The Governmental Agency shall keep complete andaccurate records of the cost of acquiring the Project site andthe costs of constructing, acquiring and installing the Project.The Governmental Agency shall permit the Authority, acting byand through its Director or his duly authorized representatives,to inspect all books, documents, papers and records relating tothe Project at any and all reasonable times for the purpose ofaudit and examination, and the Governmental Agency shall submitto the Authority such documents and information as it mayreasonably require in connection with the construction, acqui-sition and installation of the Project and the administrationof the Loan or of any State and federal grants or other sourcesof financing for the Project.

2.6 The Governmental Agency agrees that it will permitthe Authority and its agents to have access to the records ofthe Governmental Agency pertaining to the operation and mainte-nance of the System at any reasonable time following completionof construction of the Project and commencement of operationthereof.

2.7 The Governmental Agency shall require that eachconstruction contractor furnish a performance bond and a paymentbond, each in an amount at least equal to one hundred percent(100%) of the contract price of the portion of the Projectcovered by the particular contract, as security for the faithfulperformance of such contract.

2.8 The Governmental Agency shall require that eachof its contractors and all subcontractors maintain, during thelife of the construction contract, workers' compensation cover-age, public liability insurance, property damage insurance andvehicle liability insurance in amounts and on terms satisfactoryto the Authority. Until the Project facilities are completed

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and accepted by the Governmental Agency, the Govt nmental Agencyor (at the option of the Governmental Agency) the contractorshall maintain builder's risk insurance (fire and extendedcoverage) on a one hundred percent (100%) basis (completed valueform) on the insurable portion of the Project, such insuranceto be made payable to the order of the Authority, the Govern-mental Agency, the prime contractor and all subcontractors, astheir interests may appear. If .facilities of the System whichare detrimentally affected by flooding are or will be locatedin designated special flood or mudslide-prone areas and if floodinsurance is available at a reasonable cost, a flood insurancepolicy must be obtained by the Governmental Agency on or beforethe Date of Loan Closing, as hereinafter defined, and maintainedso long as any of the Local Bonds is outstanding. Prior tocommencing operation of the Project, the Governmental Agencymust also obtain, and maintain so long as any of the Local Bondsis outstanding, business interruption insurance if available ata reasonable cost.

2.9 The Governmental Agency shall provide and maintaincompetent and adequate resident engineering services satisfac-tory to the Authority covering the supervision and inspectionof the development and construction of the Project, and bearingthe responsibility of assuring that construction conforms tothe plans, specifications and designs prepared by the ConsultingEngineers, which have been approved by all necessary govern-mental bodies. Such resident engineer shall certify to theAuthority and the Governmental Agency at the completion ofconstruction that construction is in accordance with theapproved plans, specifications and designs, or amendmentsthereto, approved by all necessary governmental bodies.

2.10 The Governmental Agency agrees that it will atall times provide operation and maintenance of the System tocomply with any and all State and federal standards. TheGovernmental Agency agrees that qualified operating personnelproperly certified by the State will be retained to operate theSystem during the entire term of this Loan Agreement.

2.11 The Governmental Agency hereby covenants andagrees to comply with all applicable laws, rules and regulationsissued by the Authority or other State, federal or local bodiesin regard to the construction of the Project and operation,maintenance and use of the System.

ARTICLE III

Conditions to Loan;Issuance of Local Bonds

3.1 The agreement of the Authority to make the Loanis subject to the Governmental Agency's fulfillment, to thesatisfaction of the Authority, of each and all of those certainconditions precedent on or before the delivery date for theLocal Bonds, which shall be the date established pursuant toSection 3.4 hereof. Said conditions precedent are as follows:

(a) The Governmental Agency shall have performedand satisfied all of the terms and conditions to be performedand satisfied by it in this Loan Agreement;

(b) The Governmental Agency shall have authorizedthe issuance of and delivered to the Authority for purchase theLocal Bonds described in this Article III and in Article IVhereof;

(c) The Governmental Agency shall either havereceived bids or entered contracts for the construction of theProject which are in an amount and otherwise compatible withthe plan of financing described in the Application; provided,that, if the Loan will refund an interim financing ofconstruction, the Governmental Agency must either beconstructing or have constructed its Project for a cost and asotherwise compatible with the plan of financing described inthe Application; and, in either case, the Authority shall havereceived a certificate of the Consulting Engineers to sucheffect the form of which certificate is attached hereto asExhibit A;

(d) The Governmental Agency shall have obtainedall permits required by the laws of the State and the federalgovernment necessary for the construction of the Project, andthe Authority shall have received a certificate of theConsulting Engineers to such effect;

(e) The Governmental Agency shall have obtainedall requisite orders of and approvals from the Public ServiceCommission of West Virginia (the "PSC") necessary for theconstruction of the Project and operation of the System, andthe Authority shall have received an opinion of counsel to theGovernmental Agency, which may be local counsel to theGovernmental Agency, bond counsel or special PSC counsel butmust be satisfactory to the Authority, to such effect;

(f) The Governmental Agency shall have obtainedany and all approvals for the issuance of the Local Bondsrequired by State law, and the Authority shall have received an

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opinion of counsel to the Governmental Agency, which may belocal counsel to the Governmental Agency, bond counsel orspecial PSC counsel but must be satisfactory to the Authority,to such effect;

(g) The Governmental Agency shall have obtainedany and all approvals of rates and charges required by Statelaw and shall have taken any other action required to establishand impose such rates and charges (imposition of such rates andcharges is not, however, required to be effective untilcompletion of construction of the Project), and the Authorityshall have received an opinion of counsel to the GovernmentalAgency, which may be local counsel to the Governmental Agency,bond counsel or special PSC counsel. but must be satisfactory tothe Authority, to such effect;

(h) Such rates and charges for the System shallbe sufficient to comply with the provisions of Subsection4.1(b)(ii) hereof, and the Authority shall have received acertificate of the accountants for the Governmental Agency,'-orsuch other person or firm experienced in the finances ofgovernmental agencies and satisfactory to the Authority, tosuch effect; and

(i) The net proceeds of the Local Bonds, togetherwith all moneys on deposit or to be simultaneously deposited(or, with respect to proceeds of grant anticipation notes orother indebtedness for which a binding purchase contract hasbeen entered, to be deposited) and irrevocably pledged theretoand the proceeds of grants irrevocably committed therefor, shallbe sufficient to pay the costs of construction and acquisitionof the Project as set forth in the Application, and the Author-ity shall have received a certificate of the ConsultingEngineers, or such other person or firm experienced in thefinancing of water development projects and satisfactory to theAuthority, to such effect, such certificate to be in form andsubstance satisfactory to the Authority, and evidence satisfac-tory to the Authority of such irrevocably committed grants.

3.2 Subject to the terms and provisions of this LoanAgreement, the rules and regulations promulgated by the Author-ity or any other appropriate State agency and any applicablerules, regulations and procedures promulgated from time to timeby the federal government, it is hereby agreed that the Author-ity shall make the Loan to the Governmental Agency and theGovernmental Agency shall accept the Loan from the Authority,and in furtherance thereof it is agreed that the GovernmentalAgency shall sell to the Authority and the Authority shall makethe Loan by purchasing the Local Bonds in the principal amountand at the price set forth in Schedule X hereto. The LocalBonds shall have such further terms and provisions as describedin Article IV hereof.

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3.3

The Loan shall be secured and shall be repaid inthe manner hereinafter provided in this Loan Agreement.

3.4 The Local Bonds shall be delivered to the Author-ity, at the offices of the Authority, on a date designated bythe Governmental Agency by written notice to the Authority,which written notice shall be given not less than ten (10)business days prior to the date designated; provided, however,that if the Authority is unable to accept delivery on the datedesignated, the Local Bonds shall be delivered to the Authorityon a date as close as possible to the designated date andmutually agreeable to the Authority and the Governmental Agency.The date of delivery so designated or agreed upon is hereinafterreferred to as the "Date of Loan Closing." Notwithstanding theforegoing, the Date of Loan Closing shall in no event occurmore than ninety (90) days after the date of execution of thisLoan Agreement by the Authority.

3.5 The Governmental Agency understands and acknow-ledges that it is one of several governmental agencies whichhave applied to the Authority for loans to finance waterdevelopment projects and that the obligation of the Authorityto make any such loan is subject to the Governmental Agency'sfulfilling all of the terms and conditions of this Loan Agree-ment on or prior to the Date of Loan Closing and to the rightof the Authority to make such loans to other governmentalagencies as in the aggregate will permit the fullest and mosttimely utilization of such proceeds to enable the Authority topay debt service on the water development revenue bonds issuedby it. The Governmental Agency specifically recognizes thatthe Authority will not execute this Loan Agreement unless anduntil it has available funds sufficient to purchase all theLocal Bonds and that, prior to such execution, the Authoritymay commit to and purchase the revenue bonds of other govern-mental agencies for which it has sufficient funds available.The Governmental Agency further specifically recognizes thatduring the last 90 days of a period to originate Loans from itswater development revenue bond proceeds, the Authority mayexecute Loan Agreements, commit moneys and close Local Bondsales in such order and manner as it deems in the best interestof the Program.

ARTICLE IV

Local Bonds; Security for Loan;Repayment of Loan; Interest on Loan;

Fees and Charges

4.1 The Governmental Agency shall, as one of theconditions of the Authority to make the Loan, authorize theissuance of and issue the Local Bonds pursuant to an official

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n

action of the Governmental Agency in accordance with the I calStatute, which shall, as e: cted, contain provisions and cove-nants in substantially the form as follows:

(a) That the revenues generated from the opera-tion of the System will be used monthly, in the order of prior-ity listed, as set forth on Schedule Y attached hereto andincorporated herein by reference. The gross revenues of theSystem shall always be used for purposes of the System.

(b) Covenants substantially as follows:

(i) That the Local Bonds shall be securedby the gross or net revenues from the System, as more fully setforth in Schedules X and Y attached hereto;

(ii) That the schedule of rates or chargesfor the services of the System shall be sufficient to providefunds which, along with other revenues of the System, will payall Operating Expenses and leave a balance each year equal toat least one hundred fifteen percent (115%) of the maximumamount required in any year for debt service on the Local Bondsand all other obligations secured by a lien on or payable. fromthe revenues of the System prior to or on a parity with theLocal Bonds or, if the reserve account established for thepayment of debt service on the Local Bonds (the "ReserveAccount") is funded (whether by Local Bond proceeds, monthlydeposits or otherwise) at an amount at least equal to themaximum amount of principal and interest which will come due onthe Local Bonds in the then current or any succeeding year (the"Reserve Requirement") and any reserve account for any suchprior or parity obligations is funded at least at- therequirement therefor, equal to at least one hundred ten percent(110%) of the maximum amount required in any year for debtservice on the Local Bonds and any such prior or parity obliga-tions;

(iii) That the Governmental Agency willcomplete the Project and operate and maintain the System ingood condition;

(iv) That, except as otherwise required byState law, the System may not be sold, mortgaged, leased orotherwise disposed of except as a whole, or substantially as awhole, and only if the net proceeds to be realized shall besufficient to pay fully all the Local Bonds outstanding, withfurther restrictions on the disposition of portions of theSystem as are normally contained in such covenants;

(v) That the Governmental Agency shall notissue any other obligations payable from the revenues of theSystem which rank prior to, or equally, as to lien and securitywith the Local Bonds, except parity bonds which shall only be

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issued if net revenues of the System prior to issuance of suchparity bonds, plus reasonably projected revenues from rateincreases and the improvements to be financed by such paritybonds, shall not be less than one hundred fifteen percent (115%)of the maximum debt service in any succeeding year on all LocalBonds and parity bonds theretofore and then being issued and onany obligations secured by a lien on or payable from therevenues of the System prior to the Local Bonds; provided,however, that additional parity bonds may be issued to completethe Project, as described in the Application as of the datehereof, without regard to the foregoing;

(vi) That the Governmental Agency will carrysuch insurance as is customarily carried with respect to worksand properties similar to the System, including those specifiedby Section 2.8 hereof;

(vii)

That the Governmental Agency will notrender any free services of the System;

(viii) That any Local Bond owner may, byproper legal action, compel the performance of the duties ofthe Governmental Agency under the Local Act, including themaking and collection of sufficient rates or charges forservices rendered by the System, and shall also have, in theevent of a default in payment of principal of or interest onthe Local Bonds, the right to obtain the appointment of areceiver to administer the System or construction of theProject, or both, as provided by law;

(ix) That, to the extent authorized by thelaws of the State and the rules and regulations of the PSC, alldelinquent rates and charges, if not paid when due, shall becomea lien on the premises served by the System;

(x) That, to the extent legally allowable,the Governmental Agency will not grant any franchise to provideany services which would compete with the System;

(xi) That the Governmental Agency shallannually cause the records of the System to be audited by anindependent certified public accountant and shall submit thereport of said audit to the Authority, which report shallinclude a statement that the Governmental Agency is incompliance with the terms and provisions of the Local Act andthis Loan Agreement;

(xii) That the Governmental Agency shallannually adopt a detailed budget of the estimated expendituresfor operation and maintenance of the System during thesucceeding fiscal year;

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0

(xiii) That, to the extent authorized by thelaws of the State and the rules and regulations of the PSC,prospective users of the System shall be required to connectthereto;

(xiv) That the proceeds of the Local Bonds,except for accrued interest and capitalized interest, if any,must (a) be deposited in a construction fund, which, except asotherwise agreed to in writing by the Authority, shall be heldseparate and apart from all other funds of the GovernmentalAgency and on which the owners of the Local Bonds shall have alien until such proceeds are applied to the construction of theProject (including the repayment of any incidental interimfinancing for non-construction costs) and/or (b) be used to pay(or redeem) bond anticipation notes or other interim funding ofsuch Governmental Agency, the proceeds of which were used tofinance the construction of the Project; provided that, withthe prior written consent of the Authority, the proceeds of theLocal Bonds may be used . to fund all or a portion of the ReserveAccount, on which the owner of the Local Bonds shall have alien as provided herein;

(xv) That, as long as the Authority is theowner of any of the Local Bonds, the Governmental Agency shallnot authorize redemption of any Local Bonds by it without thewritten consent of the Authority and otherwise in compliancewith this Loan Agreement;

(xvi) That, unless it qualifies for anexception to the provisions of Section 148 of the Code, whichexception shall be set forth in an opinion of bond counsel, theGovernmental Agency will furnish to the Authority, annually, atsuch time as it is required to perform its rebate calculationsunder the Code, a certificate with respect to its rebatecalculations and, at any time, any additional informationrequested by the Authority; and

(xvii) That the Governmental Agency shall takeany and all action, or shall refrain from taking any action, asshall be deemed necessary by the Authority to maintain theexclusion from gross income for Federal income tax purposes ofinterest on the Authority's water development revenue bonds.

The Governmental Agency hereby represents and warrantsthat the Local Act has been or shall be duly adopted in compli-ance with all necessary corporate and other action and inaccordance with applicable provisions of law. All legal mattersincident to the authorization, issuance, sale and delivery ofthe Local Bonds shall be approved without qualification byrecognized bond counsel acceptable to the Authority in substan-tially the form of legal opinion attached hereto as Exhibit B.

4.2

The Loan shall be secured by the pledge andassignment by the Governmental Agency, as effected by the LocalAct, of the fees, charges and other revenues of theGovernmental Agency from the System as further set forth by andsubject only to such reservations and exceptions as aredescribed in Schedules X and Y hereto or are otherwiseexpressly permitted in writing by the Authority.

4.3 The principal of the Loan shall be repaid by theGovernmental Agency annually on the day and in the yearsprovided in Schedule X hereto. Interest payments on the Loanshall be made by the Governmental Agency on a semiannual basisas provided in said Schedule X.

4.4 The Loan shall bear interest from the date of thedelivery to the Authority of the Local Bonds until the date ofpayment thereof, at the rate or rates per annum set forth onSchedule X hereto. In no event shall the interest rate on orthe net interest cost of the Local Bonds exceed any statutorylimitation with regard thereto.

4.5 The Local Bonds shall be delivered to the Author-ity in fully registered form, transferable and exchangeable asprovided in the Local Act at the expense of the GovernmentalAgency. Anything to the contrary herein notwithstanding, theLocal Bonds may be issued in one or more series, as reflectedby Schedule X hereto.

4.6 The Governmental Agency agrees to pay from timeto time, as required by the Authority, the Governmental Agency'sallocable share of the reasonable administrative expenses ofthe Authority relating to the Program. Such administrativeexpenses shall be as determined by the Authority and shallinclude without limitation Program expenses, legal fees paid bythe Authority and fees paid to the trustee and paying agentsfor the water development revenue bonds. The Authority shallprovide both the Governmental Agency and the trustee for thewater development revenue bonds with a schedule of such feesand charges, and the Governmental Agency shall pay such feesand charges on the dates indicated directly to the trustee.The Governmental Agency hereby specifically authorizes theAuthority to exercise the powers granted it by Section 9.06 ofthe General Resolution.

4.7 The Governmental Agency agrees to expend the netproceeds of the Local Bonds for the Project within 3 years ofthe issuance of the Authority's bonds.

4.8 As long as the Authority is the owner of any ofthe Local Bonds outstanding, the Governmental Agency shall notredeem any of such Local Bonds outstanding without the writtenconsent of the Authority, and any such redemption of LocalBonds authorized by the Authority shall provide for the payment

-12-

of interest to the first allowable redemption date for theapplicable water development revenue bonds, the redemptionpremium payable on the applicable water development revenuebonds redeemable as a- -consequence of such redemption of LocalBonds and the costs and expenses of the Authority in effectingany such redemption, all as further prescribed by Section 9.11of the General Resolution. Nothing in this Loan Agreementshall be construed to prohibit the Authority from refundingapplicable water development revenue bonds, and such refundingneed not be based upon or result in any benefit to theGovernmental Agency.

ARTICLE V

Certain Covenants of the Governmental Agency;Imposition and Collection of User Charges;

Payments To Be Made byGovernmental Agency to the Authority

5.1 The Governmental Agency hereby irrevocably cove-nants and agrees to comply with all of the terms, conditionsand requirements of this Loan Agreement and the Local Act. TheGovernmental Agency hereby further irrevocably covenants andagrees that, as one of the conditions of the Authority to makethe Loan, it has fixed and collected, or will fix and collect,the rates, fees and other charges for the use of the System, asset forth in the Local Act and in compliance with the provisionsof Subsection 4.1(b)(ii) hereof.

5.2 In the event, for any reason, the schedule ofrates, fees and charges initially established for the System inconnection with the Local Bonds shall prove to be insufficientto produce the minimum sums set forth in the Local Act, theGovernmental Agency hereby covenants and agrees that it will,to the extent or in the manner authorized by law, immediatelyadjust and increase such schedule of rates, fees and charges soas to provide funds sufficient to produce the minimum sums setforth in the Local Act and as required by this Loan Agreement.

5.3

In the event the Governmental Agency defaults inthe payment of any fees due to the Authority pursuant to Sec-tion 4.6 -hereof, - the amount of such default shall bear- interestat the interest rate of the installment of the Loan next due,from the date of the default until the date of the paymentthereof.

5.4 The Governmental Agency hereby irrevocably cove-nants and agrees with the Authority that, in the event of anydefault hereunder by the Governmental Agency, the Authority mayexercise any or all of the rights and powers granted under Sec-tion 6a of the Act, including without limitation the right toimpose, enforce and collect directly charges upon users of theSystem.

-13-

ARTICLE VI

Other Agreements of theGovernmental Agency

6.1 The Governmental Agency hereby acknowledges tothe Authority its understanding of the provisions of the Act,vesting in the Authority certain powers, rights and privilegeswith respect to water development projects in the event ofdefault by governmental agencies in the terms and covenants ofloan agreements, and the Governmental Agency hereby covenantsand agrees that, if the Authority should hereafter have recourseto said rights and powers, the Governmental Agency shall takeno action of any nature whatsoever calculated to inhibit,nullify, void, delay or render nugatory such actions of theAuthority in the due and prompt implementation of this LoanAgreement.

6.2 At the option of the Authority, the GovernmentalAgency shall issue and sell to the Authority additional, subor-dinate bonds to evidence the Governmental Agency's obligationto repay to the Authority any grant received by the GovernmentalAgency from the Authority in excess of the amount to which theGovernmental Agency is entitled pursuant to applicable policiesor rules and regulations of the Authority. Also at the optionof the Authority, the Governmental Agency may issue and sell tothe Authority additional, subordinate bonds for such purposesas may be acceptable to the Authority.

6.3 The Governmental Agency hereby warrants andrepresents that all information provided to the Authority inthis Loan Agreement, in the Application or in any other appli -cation or documentation with respect to financing the Projectwas at the time, and now is, true, correct and complete, andsuch information does not omit any material fact necessary tomake the statements therein, in light of the circumstances underwhich they were made, not misleading. Prior to the Authority'smaking the Loan and receiving the Local Bonds, the Authorityshall have the right to cancel all or any of its obligationsunder this Loan Agreement if (a) any representation made to theAuthority by the Governmental Agency in connection with theLoan shall be incorrect or incomplete in any material respector (b) the Governmental Agency has violated any commitment madeby it in its Application or in any supporting documentation orhas violated any of the terms of this Loan Agreement.

6.4 The Governmental Agency hereby agrees to repay onor prior to the Date of Loan Closing any moneys due and owingby it to the Authority for the planning or design of theProject, and such repayment shall be a condition precedent tothe Authority's making the Loan.

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6.5 The Governmental Agency hereby covenants that itwill rebate any amounts required by Section 148 of the InternalRevenue Code of 1986, as amended, and will take all stepsnecessary to make any such rebates. In the event theGovernmental Agency fails to make any such rebates as required,then the Governmental Agency shall pay any and all penalties,obtain a waiver from the Internal Revenue Service and take anyother actions necessary or desirable to preserve the exclusionfrom gross income for Federal income tax purposes of intereston the Local Bonds.

6.6 Notwithstanding Section 6.5, the Authority may atany time, in its sole discretion, cause the rebate calculationsprepared by or on behalf of the Governmental Agency to bemonitored or cause the rebate calculations for the GovernmentalAgency to be prepared, in either case at the expense of theGovernmental Agency.

6.7 The Governmental Agency hereby agrees to give theAuthority prior written notice of the issuance by it of ---anyother obligations to be used for the Project, payable from-therevenues of the System or from any grants for the Project orotherwise related to the Project or the System.

6.8 The Governmental Agency hereby agrees to filewith the Authority upon completion of acquisition andconstruction of the Project a schedule in substantially theform of Amended Schedule A to the Application, setting forththe actual costs of the Project and sources of funds therefor.

ARTICLE VII

Miscellaneous

7.1 Additional definitions, additional terms andprovisions of the Loan and additional covenants and agreementsof the Governmental Agency are set forth in Schedule Z attachedhereto and incorporated herein by reference, with the sameeffect as if contained in the text of this Loan Agreement.

7.2 Schedule X shall be attached to this Loan Agree-ment by the Authority as soon as practicable after the Date ofLoan Closing is established and shall be approved by anofficial action of the Governmental Agency supplementing theLocal Act, a certified copy of which official action shall besubmitted to the Authority.

7.3 If any provision of this Loan Agreement shall forany reason be held to be invalid or unenforceable, the invalid-ity or unenforceability of such provision shall not affect anyof the remaining provisions of this Loan Agreement, and this

Loan Agreement shall be construed and enforced as if suchinvalid or unenforceable provision had not been containedherein.

7.4 This Loan Agreement may be executed in one ormore counterparts, any of which shall be regarded for all pur-poses as an original and all of which constitute but one andthe same instrument. Each party agrees that it will executeany and all documents or other instruments and take such otheractions as may be necessary to give effect to the terms of thisLoan Agreement.

7.5 No waiver by either party of any term or conditionof this Loan Agreement shall be deemed or construed as a waiverof any other terms or conditions, nor shall a waiver of anybreach be deemed to constitute a waiver of any subsequentbreach, whether of the same or of a different section, subsec-tion, paragraph, clause, phrase or other provision of this LoanAgreement.

7.6 This Loan Agreement merges and supersedes allprior negotiations, representations and agreements between theparties hereto relating to the Loan and constitutes the entireagreement between the parties hereto in respect thereof.

7.7 By execution and delivery of this Loan Agreement,notwithstanding the date hereof, the Governmental Agency speci-fically recognizes that it is hereby agreeing to sell its LocalBonds to the Authority and that such obligation may be specifi-cally enforced or subject to a similar equitable remedy by theAuthority.

7.8

This Loan Agreement shall terminate upon theearlier of:

(i) the end of ninety (90) days after thedate of execution hereof by the Authority if the GovernmentalAgency has failed to deliver the Local Bonds to the Authority;

(ii)

termination by the Authority pursuantto Section 6.3 hereof; or

(iii) payment in full of the principal of andinterest on the Loan and of any fees and charges owed by theGovernmental Agency to the Authority.

IN WITNESS WHEREOF, the parties hereto have causedthis Loan Agreement to be executed by their respective duly

authorized officers as of the date executed below by theAuthority.

Fountain Public Service District[Proper

Name

of

GovernmentalAgency]

(SEAL)

Date:

April 20, 1990

(SEAL)

Attest:

41kkaSecretary-Treasurer'

WEST VIRGINIA WATERDEVELOPMENT AUTHORITY

"c ^.^.^.ByDirector

Date:

April 20, 1990

WDA-5X(March 1988)

SCHEDULE XDESCRIPTION OF LOCAL BONDS

Principal Amount of Local Bonds $356,633.00

Purchase Price of Local Bonds $356,633.00

Interest on the Local Bonds is payable on April 1 andOctober 1 in each year, beginning with the first semiannualinterest payment date after delivery of the Local Bonds to theAuthority, until the Local Bonds are paid in full, at the rateof 7.85 per annum. Principal of the Local Bonds is payableon October 1 in each year as set forth on Exhibit 1 attachedhereto and incorporated herein by reference.

As of the date of the Loan Agreement, the Local Bondsare on a parity as to source of and security for payment withthe following obligations:

As of the date of the Loan Agreement, the Local Bondsare subordinate as to source of and security for payment to thefollowing obligations:

0----------------------------------------------------------------------------------------------------------------------------------------------------------------------

IFountain Public Service DistrictDebt Service ScheduleAnalysis of Borrowing from Series 1989 B Pool39 Principal PaymentsClosing Date: 20-Apr-90

Coupon Principal InterestDebt Service7.85% BondsDate

01-Oct-90 12,520.29 12,520.2901-Oct-91 7.85% 1,551.00 27,995.69 29,546.6901-Oct-92 7.85% 1,672.00 27,873.94 29,545.9401-Oct-93 7.85% 1,804.00 27,742.68 29,546.6801-Oct-94 7.85% 1,945.00 27,601.07 29,546.0701-Oct-95 7.85% 2,098.00 27,448.39 29,546.3901-Oct-96 7.85% 2,263.00 27,283.70 29,546.7001-Oct-97 7.85% 2,440.00 27,106.05 29,546.0501-Oct-98 7.85% 2,632.00 26,914.51 29,546.5101-Oct-99 7.85% 2,838.00 26,707.90 29,545.90

01-Oct-2000 7.85% 3,061.00 26,485.11 29,546.1101-Oct-2001 7.85% 3,302.00 26,244.83 29,546.8301-Oct-2002 7.85% 3,561.00 25,985.62 29,546.6201-Oct-2003 7.85% 3,840.00 25,706.08 29,546.0801-Oct-2004 7.85% 4,142.00 25,404.64 29,546.6401-Oct-2005 7.85% 4,467.00 25,079.49 29,546.4901-Oct-2006 7.85% 4,817.00 24,728.83 29,545.8301-Oct-2007 7.85% 5,196.00 24,350.70 29,546.7001-Oct-2008 7.85% 5,604.00 23,942.81 29,546.8101-Oct-2009 7.85% 6,043.00 23,502.90 29,545.9001-Oct-2010 7.85% 6,518.00 23,028.52 29,546.5201-Oct-2011 7.85% 7,030.00 22,516.86 29,546.8601-Oct-2012 7.85% 7,581.00 21,965.01 29,546.0101-Oct-2013 7.85% 8,176.00 21,369.90 29,545.9001-Oct-2014 7.85% 8,818.00 20,728.08 29,546.0801-Oct-2015 7.85% 9,510.00 20,035.87 29,545.8701-Oct-2016 7.85% 10,257.00 19,289.33 29,546.3301-Oct-2017 7.85% 11,062.00 18,484.16 29,546.1601-Oct-2018 7.85% 11,931.00 17,615.79 29,546.790.1-Oct-2019 7.85% 12,867.00 16,679.21 29,546.2101-Oct-2020 7.85% 13,877.00 15,669.15 29,546.1501-Oct-2021 7.85% 14,967.00 14,579.81 29,546.8101-Oct-2022 7.85% 16,141.00 13,404.90 29,545.9001-Oct-2023 7.85% 17,409.00 12,137.83 29,546.8301-Oct-2024 7.85% 18,775.00 10,771.22 29,546.2201-Oct-2025 7.85% 20,249.00 9,297.38 29,546.3801-Oct-2026 7.85% 21,838.00 7,707.84 29,545.8401-Oct-2027 7.85% 23,553.00 5,993.55 29,546.5501-Oct-2028 7.85% 25,402.00 4,144.64 29,546.6401-Oct-2029 7.85% 27,396.00 2,150.59 29,546.59

356,633.00 808,194.87 1,164,827.87

f

WDA-5Y-PSD Water(March 1988)

SCHEDULE Y, REVENUES

In accordance with Subsection 4.1(a) of the LoanAgreement, the revenues generated from the operation of theSystem will be used monthly, in the order of priority listed,as follows:

(i) to pay Operating Expenses of the System;

(ii) to the extent not otherwise limited by anoutstanding local resolution, indenture or other act ordocument, as reflected on Schedule X to the Loan Agreement,and beginning seven (7) months prior to the first date ofpayment of interest on the Local Bonds from revenues andthirteen (13) months prior to the first date of payment ofprincipal of the Local Bonds, respectively, to provide debtservice on the Local Bonds by depositing in a sinking fundone-sixth (1/6) of the interest payment next coming due onthe Local Bonds and one-twelfth (1/12) of the principalpayment next coming due on the Local Bonds and, if theReserve Account was not funded from proceeds of the LocalBonds or otherwise concurrently with the issuance thereof(which, with an approving opinion of bond counsel to theGovernmental Agency, may be with a letter of credit) in anamount equal to the Reserve Requirement, by depositing inthe Reserve Account an amount not less than one-twelfth(1/12) of one-tenth (1/10) (or such other amount as shallbe acceptable to the Authority and as shall fund theReserve Account over not more than 10 years) of the ReserveRequirement or, if the Reserve Account has been so funded(whether by Local Bond proceeds, monthly deposits orotherwise), any amount necessary to maintain the ReserveAccount at the Reserve Requirement;

(iii) - to create- a renewal and replacement, --- o-rsimilar, fund in an amount equal to. two and one-halfpercent (2-1/2%) of the gross revenues from the System,exclusive of any payments into the Reserve Account, for thepurpose of improving or making emergency repairs orreplacements to the System or eliminating any deficienciesin the Reserve Account;

(iv) to provide debt service on and requisitereserves for any subordinate indebtedness of theGovernmental Agency held or owned by the Authority; and

(v) for other legal purposes of the System,including payment of debt service on other obligationsjunior, subordinate and inferior to the Local Bonds.

fl

WDA-5Z-PSD Water(March 1988)

SCHEDULE Z

Additional and Supplemental Definitions

1. "Local Statute" means Chapter 16, Article 13A, ,the Code of West Virginia, 1931, as amended.

2. "System" means the public service properties forthe diversion, development, pumping, impounding, treatr.ent,storage, distribution or furnishing of water to or for thepublic for industrial, public, private or other uses, ow•)ed bythe Governmental Agency, and any improvements or ext nsionsthereto hereafter constructed or acquired from any sourceswhatsoever and includes the Project.

Additional Conditions and Covenants

1. As a condition precedent to the Authority'smaking the Loan, the Governmental Agency shall have obtained,among other permits required, a permit from the West VirginiaDepartment of Health.

2. The

Local

Act

shall

contain

a

covenantsubstantially as follows:

That the Governmental 'Agency will, to the fullextent permitted by applicable law and the rules andregulations of the PSC, discontinue and shut off theservices and facilities of the System to all users ofservices of the System delinquent in payment ofcharges for the services of the System and will notrestore the services of thE. System until alldelinquent charges for the services of the System havebeen fully paid.

3. Subject to any prior or parity obligationsdescribed in Schedules X and Y attached to the Loan Agreement,the net revenues derived from the operation of the System arepledged to the payment of the princpal of and interest on theLocal Bonds.

4. The paying agent for the Local Bonds shall be theWest Virginia Municipal Bond Commission or any successor to thefunctions thereof.

5. As a condition precedent to the Authority'smaking the Loan, the Governmental Agency shall deliver to theAuthority a certificate representing the following:

(a) The Governmental Agency expects to enterinto a contract within six months of thedate thereof for the construction of theProject, and the amount to be expendedpursuant to such contract exceeds the lesserof 2-1/2 percent of the estimated totalProject cost financed with proceeds from thesale of the Local Bonds or $100,000;

(b) Work with respect to the construction of theProject will proceed with due diligence tocompletion. Construction is expected to becompleted within three years from the dateof issuance of the Authority's waterdevelopment revenue bonds;

(c) All of the proceeds from the sale of theLocal Bonds which will be used for paymentof costs of the Project will be expended forsuch purpose within three years from thedate of issuance of the Authority's waterdevelopment revenue bonds; and

(d) The Governmental Agency does not expect tosell or otherwise dispose of the Project, inwhole or in part, prior to the last maturitydate of the Local Bonds.

WDA-Supp. 5(March 1988)

SUPPLEMENTAL LOAN AGREEMENT

THIS SUPPLEMENTAL LOAN AGREEMENT, Made an enteredinto in several-- counterparts - by and between the WEST VIRGINIAWATER DEVELOPMENT AUTHORITY, a governmental instr::mentality andbody corporate of the State of West Virginia (the " Authority"),and the governmental agency designated below (the "GovernmentalAgency").

Fountain Public Service District(Name of Governmental Agency)

W I T N E S S E T H:

WHEREAS, pursuant to the provisions of Chapter 20,Article 5C, of the Code of West Virginia, 1931, as amended (the"Act"), the Authority is empowered to make loans togovernmental agencies for the acquisition or construction ofwater development projects by such governmental agencies and toissue water development revenue bonds of the State of WestVirginia (the "State") to finance, in whole or in part, byloans to governmental agencies, one or more water developmentprojects, all subject to such provisions and limitations as arecontained in the Act;

WHEREAS,

the

Governmental Agency constitutes

agovernmental agency as defined by the Act;

WHEREAS, the Governmental Agency is authorized andempowered by the statutes of the State to construct, operateand improve a water development project, as defined by the Act,and to finance the cost of constructing or acquiring the. sameby borrowing money to be evidenced by revenue bonds, includingsupplemental, subordinate revenue bonds, issued by theGovernmental Agency;

EREAS t e Governmental Ageny- intends to construct,is constructing or has constructed such a water developmentproject at the location and as more particularly described andset forth in the Application, as hereinafter defined (the"Project");

WHEREAS, the Governmental Agency has completed andfiled with the Authority an Application for a Construction Loanwith attachments and exhibits and an Amended Application for aConstruction Loan also with attachments and exhibits (together,as further revised and supplemented, the "Application"), whichApplication is incorporated herein by this reference;

33

WHEREAS, on or prior to the date hereof, theGovernmental Agency and the Authority entered a loan agreementwith respect to the purchase by the Authority of certain LocalBonds of the Governmental Agency, all as more specificallydescribed in Exhibit A attached hereto and incorporated hereinby reference (the "Loan Agreement"); and

WHEREAS, having reviewed the Application and made allfindings required by Section 5 of the Act, and having availablesufficient funds therefor, the Authority is willing to lend theGovernmental Agency the amount set forth on Schedule X attachedhereto and incorporated herein by reference, through thepurchase of supplemental, subordinate revenue bonds of theGovernmental Agency with certain available funds of theAuthority (other than the proceeds of certain water developmentrevenue bonds of the State issued by the Authority pursuant toand in accordance with the provisions of the Act and a certaingeneral revenue bond resolution adopted by the Board of theAuthority, as supplemented), subject to the GovernmentalAgency's satisfaction of certain legal and other requirementsof the Authority's supplemental water development loan program(the "Supplemental Program") as hereinafter set forth.

NOW, THEREFORE, in consideration of the premises andthe mutual agreements hereinafter contained, the GovernmentalAgency and the Authority hereby agree as follows:

ARTICLE I

Definitions; Loan Agreement

1.1 Capitalized terms used and not otherwise definedherein shall have the meanings respectively given them by theLoan Agreement.

1.2 Except where the context clearly indicates other-wise, the terms "Authority," "water development revenue bond,""cost," "governmental agency," "water develop.aent project,""wastewater facility" and "water facility" have the definitionsand meanings ascribed to them in the Act.

1.3 "Local Act" means the official action of theGovernmental Agency required by Section 4.1 hereof, authorizingthe Supplemental Bonds.

1.4 "Supplemental Bonds" means the revenue bonds tobe issued by the Governmental Agency pursuant to the provisionsof the Local Statute, to evidence the Supplemental Loan, ashereinafter defined, and to be purchased by the Authority withcertain available funds (other than the proceeds of its waterdevelopment revenue bonds), the lien of which on the revenues

-2-

of the System is junior, subordinate and inferior to that ofthe Local Bonds, all in accordance with the provisions of thisSupplemental Loan Agreement.

1.5 "Supplemental Loan" means the loan to be made bythe Authority to the Governmental Agency through the purchaseof Supplemental Bonds pursuant to this Supplemental LoanAgreement.

1.6

Additional terms and phrases are defined in thisSupplemental Loan Agreement as they are used.

1.7 This Supplemental Loan Agreement is supplementalto the Loan Agreement, the terms of which are incorporatedherein by reference.

ARTICLE II

The Project and the System

2.1 The Project shall generally consist of theconstruction and acquisitions of the facilities described in theApplication, to be, being or having been constructed inaccordance with plans, specifications and designs prepared forthe Governmental Agency by the Consulting Engineers, theAuthority having found, to the extent applicable, that theProject is consistent with the applicable comprehensive plan ofwater management approved by the Director of the West VirginiaDepartment of Natural Resources (or in the process ofpreparation by such Director), has been approved by the WestVirginia Department of Health and is consistent with thestandards set by the West Virginia Water Resources Board forthe waters of the State affected thereby.

2.2 Subject to the terms, conditions and provisionsof this Supplemental Loan Agreement and of the Local Act, theGovernmental Agency has acquired, or shall do all thingsnecessary to acquire, the proposed site of the Project andshall- -do, -isdoing or has done all things - necessary toconstruct the Project in accordance with the plans,specifications and designs prepared for the Governmental Agencyby the Consulting Engineers.

2.3 All real estate and interests in real estate andall personal property constituting the Project and the Projectsite heretofore or hereafter acquired shall at all times be andremain the property of the Governmental Agency, subject to anymortgage lien or other security interest as is provided for inthe Local Statute.

2.4 The Governmental Agency agrees that the Authorityand its duly authorized agents shall have the right at allreasonable times to enter upon the Project site and Projectfacilities and to examine and inspect the same. TheGovernmental Agency further agrees that the Authority and itsduly authorized agents shall, prior to, at and after completionof construction and commencement of operation of the Project,have such rights of access to the System site and Systemfacilities as may be reasonably necessary to accomplish all ofthe powers and rights of the Authority in respect of the Systempursuant to the pertinent provisions of the Act.

2.5 The Governmental Agency shall keep complete andaccurate records of the cost of acquiring the Project site andthe costs of constructing, acquiring and installing theProject. The Governmental Agency shall permit the Authority,acting by and through its Director or his duly authorizedrepresentatives, to inspect all books, documents, papers andrecords relating to the Project at any and all reasonable timesfor the purpose of audit and examination, and the GovernmentalAgency shall submit to the Authority such documents andinformation as it may reasonably require in connection with theconstruction, acquisition and installation of the Project andthe administration of the Supplemental Loan or of any State andfederal grants or other sources of financing for the Project.

2.6 The Governmental Agency agrees that it willpermit the Authority and its agents to have access to therecords of the Governmental Agency pertaining to the operationand maintenance of the System at any reasonable time followingcompletion of construction of the Project and commencement ofoperation thereof.

2.7 The Governmental Agency shall require that eachconstruction contractor furnish a performance bond and apayment bond, each in an amount at least equal to one hundredpercent (100%) of the contract price of the portion of theProject covered by the particular contract, as security for thefaithful performance of such contract.

2.8 The Governmental Agency shall require that eachof its contractors and all subcontractors maintain, during thelife of the construction contract, workers' compensationcoverage, public liability insurance, property damage insuranceand vehicle liability insurance in amounts and on termssatisfactory to the Authority. Until the Project facilitiesare completed and accepted by the Governmental Agency, theGovernmental Agency or (at the option of the GovernmentalAgency) the contractor shall maintain builder's risk insurance(fire and extended coverage) on a one hundred percent (100%)basis (completed value form) on the insurable portion of theProject, such insurance to be made payable to the order of theAuthority, the Governmental Agency, the prime contractor and

-4-

all subcontractors, as their interests may appear. Iffacilities of the System which are detrimentally affected byflooding are or will be located in designated special flood ormudslide-prone areas and if flood insurance is available at areasonable cost, a flood insurance policy must be obtained bythe Governmental Agency on or before the Date of Loan Closingand maintained so long as any of the Supplemental Bonds isoutstanding. Prior to commencing operation of the Project, theGovernmental Agency must also obtain, and maintain so long asany of the Supplemental

Bonds is outstanding,

businessinterruption insurance if available at a reasonable cost.

2.9 The Governmental Agency shall provide andmaintain competent and adequate resident engineering servicessatisfactory to the Authority covering the supervision andinspection of the development and construction of the Project,and bearing the responsibility of assuring that constructionconforms to the plans, specifications and designs prepared bythe Consulting Engineers, which have been approved by. allnecessary governmental bodies. Such resident engineer shallcertify to the Authority and the Governmental Agency at thecompletion of construction that construction is in accordancewith the approved plans, specifications and designs, oramendments thereto, approved by all necessary governmentalbodies.

2.10 The Governmental Agency agrees that it will atall times provide operation and maintenance of the System tocomply with any and all State and federal standards. TheGovernmental Agency agrees that qualified operating personnelproperly certified by the State will be retained to operate theSystem during the entire term of this Supplemental LoanAgreement.

2.11 The Governmental Agency hereby covenants andagrees to comply with all applicable laws, rules andregulations issued by the Authority or other State, federal orlocal bodies in regard to the construction of the Project andoperation, maintenance and use of the System.

ARTICLE III

Conditions to Supplemental Loan;Issuance of Supplemental Bonds

3.1 The agreement of the Authority to make theSupplemental Loan is subject to the Governmental Agency'sfulfillment, to the satisfaction of the Authority, of each andall of those certain conditions precedent on or before thedelivery date for the Supplemental Bonds, which shall be the

date established pursuant to Section 3.4 of the Loan Agreementfor delivery of the Local Bonds. Said conditions precedent areas follows:

(a) The Governmental Agency shall have performedand satisfied all of the terms and conditions to be performedand satisfied by it in this Supplemental Loan Agreement;

(b) The Governmental Agency shall haveauthorized the issuance of and delivered to the Authority forpurchase the Supplemental Bonds described in this Article IIIand in Article IV hereof and shall have delivered to theAuthority for purchase the Local Bonds in accordance with theLoan Agreement;

(c) The Governmental Agency shall either havereceived bids or entered contracts for the construction of theProject which are in an amount and otherwise compatible withthe plan of financing described in the Application; provided,that, if the Supplemental Loan will refund an interim financingof construction, the Governmental Agency must either beconstructing or have constructed its Project for a cost and asotherwise compatible with the plan of financing described inthe Application; and in either case, the Authority shall havereceived a certificate of the Consulting Engineers to sucheffect;

(d) The Governmental Agency shall have obtainedall permits required by the laws of the State and the federalgovernment necessary for the construction of the Project, andthe Authority shall have received a certificate of theConsulting Engineers to such effect;

(e) The Governmental Agency shall have obtainedall requisite orders of and approvals from the Public ServiceCommission of West Virginia (the "PSC") necessary for theconstruction of the Project and operation of the System, andthe Authority shall have received an opinion of counsel to theGovernmental Agency, which may be local counsel to theGovernmental Agency, bond counsel or special PSC counsel butmust be satisfactory to the Authority, to such effect;

(f) The Governmental Agency shall have obtainedany and all approvals for the issuance of the SupplementalBonds required by State law, and the Authority shall havereceived an opinion of counsel to the Governmental Agency,which may be local counsel to the Governmental Agency, bondcounsel or special PSC counsel but must be satisfactory to theAuthority, to such effect;

(g) The Governmental Agency shall have obtainedany and all approvals of rates and charges required by Statelaw and shall have taken any other action required to establishand impose such rates and charges (imposition of such

-6-

rates and charges is not, however, required to be effectiveuntil completion of construction of the Project), and theAuthority shall have received an opinion of counsel to theGovernmental Agency, which may be local counsel to theGovernmental Agency, bond counsel or special PSC counsel butmust be satisfactory to the Authority, to such effect;

(h) Such rates and charges for the System shallbe suffi-cient to -comply - with- the- provisions of Subject-ion4.1(b)(ii) hereof, and the Authority 'shall have received acertificate of the accountants for the Governmental Agency, orsuch other person or firm experienced in the finances ofgovernmental agencies and satisfactory to the Authority, tosuch effect; and

(i) The net proceeds of the Supplemental Bonds,together with the net proceeds of the Local Bonds and all othermoneys on deposit or to be simultaneously deposited (or, withrespect to proceeds of grant anticipation notes or otherindebtedness for which a binding purchase contract has beenentered, to be deposited) and irrevocably pledged thereto andthe proceeds of grants irrevocably committed therefor, shall besufficient to pay the costs of construction and acquisition ofthe Project as set forth in the Application, and the Authorityshall have received a certificate of the Consulting Engineers,or such other person or firm experienced in the financing ofwater development projects and satisfactory to the Authority,to such effect, such certificate to be in form and substancesatisfactory to the Authority, and evidence satisfactory to theAuthority of such irrevocably committed grants.

3.2

Subject to the terms and provisions of thisSupplemental Loan Agreement, the rules and regulationspromulgated by the Authority or any other appropriate Stateagency and any applicable rules, regulations and procedurespromulgated from time to time by the federal government, it ishereby agreed that the Authority shall make the SupplementalLoan to the Governmental Agency and the Governmental Agencyshall accept the Supplemental Loan. from the Authority, and infurtherance thereof it is agreed that the Governmental Agency

-shall- -sell -to-the Authority and the Authority -sh-a-1T- make- theSupplemental Loan by purchasing the Supplemental Bonds in theprincipal amount and at the price set forth in Schedule Xhereto. The Supplemental Bonds shall have such further termsand provisions as described in Article IV hereof.

3.3 The Supplemental Loan shall be secured and shallbe repaid in the manner hereinafter provided in thisSupplemental Loan Agreement.

3.4

The Supplemental Loan will be made only inconjunction with the Loan.

The Supplemental Bond shall bedelivered to the Authority, at the offices of the Authority,

-7-

simultaneously with the delivery of the Local Bond to theAuthority.

3.5 The Governmental Agency understands andacknowledges that it is one of several governmental agencieswhich have applied to the Authority for loans to finance waterdevelopment projects and that the obligation of the Authorityto make any such loan is subject to the Governmental Agency'sfulfilling all of the terms and conditions of this SupplementalLoan Agreement and the Loan Agreement on or prior to the Dateof Loan Closing and to the right of the Authority to make suchloans to other governmental agencies under the conditions andin the manner described in the Loan Agreement. TheGovernmental Agency further understands and acknowledges thatthe Authority's obligation to make the Supplemental Loan issubject to the availability on the Date of Loan Closing offunds legally available therefor.

3.6 Anything in this Loan Agreement notwithstanding,if the Authority is unable to pay the proceeds of theSupplemental Bonds to the Governmental Agency on the Date ofLoan Closing due to the time required for processing thepurchase order or requisition for such moneys with the State,the Authority may pay such proceeds as soon as received afterthe Date of Loan Closing; provided, that the Supplemental Bondsshall not evidence any debt to be repaid to the Authority untilthe proceeds thereof are received by the Governmental Agency.

ARTICLE IV

Supplemental Bonds; Security for Supplemental Loan;Repayment of Supplemental Loan; No Interest on

Supplemental Loan; Fees and Charges

4.1 The Governmental Agency shall, as one of theconditions of the Authority to make the Supplemental Loan,authorize the issuance of and issue the Supplemental Bondspursuant to an official action of the Governmental Agency inaccordance with the Local Statute, which shall, as enacted,contain provisions and covenants in substantially the form asfollows:

(a) That the revenues generated from theoperation of the System will be used monthly, in the order ofpriority listed, as set forth on Schedule Y attached hereto andincorporated herein by reference. The gross revenues of theSystem shall always be used for purposes of the System.

(b) Covenants substantially as follows:

(i) That the Supplemental Bonds shall be securedby the gross or net revenues from the System, as more fullyset forth in Schedules X and Y attached hereto, subject tothe prior and senior security therefrom granted to theLocal Bonds;

(ii) That the schedule of rates or charges forthe services of the System shall be sufficient to providefunds which, along with other revenues of the System, willpay all Operating Expenses and leave a balance each yearequal to at least one hundred fifteen percent (115%) of themaximum amount required in any year for debt service on theLocal Bonds and the Supplemental Bonds and all otherobligations secured by a lien on or payable from therevenues of the System prior to or on a parity with theLocal Bonds or the Supplemental Bonds or, if the reserveaccounts established for the payment of debt service on theLocal Bonds (the "Reserve Account") and for the payn.cnt ofdebt service on the Supplemental Bonds (the "SupplementalReserve Account") are funded (whether by bond proceeds,monthly deposits or otherwise), respectively, at an amountat least equal to the maximum amount of principal andinterest which will come due on the Local Bonds in the thencurrent or any succeeding year (the "Reserve Requirement")or on the Supplemental Bonds in the 'then current or anysucceeding year (the "Supplemental Reserve Requirement"),as the case may be, and any reserve account for any suchprior or parity obligations is funded at least at therequirement therefor, equal to at least one hundred tenpercent (110%) of the maximum amount required in any yearfor debt service on the Local Bonds and the SupplementalBonds and any such prior or parity obligations;

(iii) That the Governmental Agency will completethe Project and operate and maintain the System in goodcondition;

(iv) That, except as otherwise required by Statelaw, the System may not be sold, mortgaged, leased orotherwise disposed of except as a whole, or substantiallyas a whole, and only if the net proceeds to be realizedshall be sufficient to pay fully all the Local Bonds andSupplemental Bonds outstanding, with further restrictionson the disposition of portions of the System as arenormally contained in such covenants;

(v) That the Governmental Agency shall not issueany other obligations payable from the revenues of theSystem which rank prior to, or equally, as to lien andsecurity with the Supplemental Bonds, except the LocalBonds and bonds on a parity with the Supplemental Bonds,which parity bonds shall only be issued if net revenues of

the System prior to issuance of such parity bonds, plusreasonably projected revenues from rate increases and theimprovements to be financed by such parity bonds, shall notbe less than one hundred fifteen percent (115%) of themaximum debt service in any succeeding year on allSupplemental Bonds and parity bonds theretofore and thenbeing issued and on the Local Bonds and any otherobligations secured by a lien on or payable from therevenues of the System prior to the Supplemental Bonds;provided, however, that additional parity Local Bonds andadditional parity Supplemental Bonds may be issued tocomplete the Project, as described in the Application as ofthe date hereof, without regard to the foregoing;

(vi) That the Governmental Agency will carry suchinsurance as is customarily carried with respect to worksand properties similar to the System, including thosespecified by Section 2.8 hereof;

(vii)

That the Governmental Agency will not renderany free services of the System;

(viii) That any Supplemental Bond owner may, byproper legal action, compel the performance of the dutiesof the Governmental Agency under the Local Act, includingthe making and collection of sufficient rates or chargesfor services rendered by the System, and shall also have,in the event of a default in payment of principal of orinterest on the Supplemental Bonds, the right to obtain theappointment of a receiver to administer the System orconstruction of the Projec., or both, as provided by law,subject to the prior and senior rights of the owner orowners of the Local Bonds;

(ix) That, to the extent authorized by the lawsof the State and the rules and regulations of the PSC, alldelinquent rates and charges, if not paid when due, shallbecome a lien on the premises served by the System;

(x) That, to the extent legally allowable, theGovernmental Agency will not grant any franchise to provideany services which would compete with the System;

(xi) That the Governmental Agency shall annuallycause the records of the System to be audited by anindependent certified public accountant and shall submitthe report of said audit to the Authority, which reportshall include a statement that the Governmental Agency isin compliance with the term8 and provisions of the LocalAct and this Supplemental Loan Agreement;

(xii) That the Governmental Agency shall annuallyadopt a detailed budget of the estimated expenditures foroperation and maintenance of the System during thesucceeding fiscal year;

(xiii) That, to the extent authorized by the lawsof the State and the rules and regulations of the PSC,prospective users of the System shall be required toconnect thereto;-

(xiv) That the proceeds of the Supplemental Bonds,except any proceeds deposited in the Reserve Account or theSupplemental Reserve Account, must be deposited in aconstruction fund on which the owners of the SupplementalBonds shall have a lien until such proceeds are applied tothe construction of the Project (including the repayment ofany incidental interim financing for \ non-constructioncosts); provided, that said construction fund may be theone established for the Local Bonds, which shall have aprior and senior lien thereon, but shall otherwise be keptseparate and apart from all other funds of the GovernmentalAgency; and

(xv) That, as long as the Authority is the ownerof any of the Supplemental Bonds, the Governmental Agencyshall not authorize redemption of any Supplemental Bonds byit without the written consent of the Authority.

The Governmental Agency hereby represents and warrantsthat the Local Act has been or shall be . duly adopted incompliance with all necessary corporate and other action and inaccordance with applicable provisions of law. All legalmatters incident to the authorization, issuance, sale anddelivery of the Supplemental Bonds shall be approved withoutqualification by recognized bond counsel acceptable to theAuthority in substantially the form of legal opinion attachedhereto as Exhibit B.

4.2 The Supplemental Loan shall be secured by thepledge and assignment by the Governmental Agency, as effectedby - the -Local-Act, of the- fee-s,---ch-a-r-ges and - of-her -- revenuesofthe Governmental Agency from the System as further set forth byand subject only to the prior and senior security therefrom forthe Local Bonds and to such reservations and exceptions as aredescribed in Schedules X and Y hereto or are otherwiseexpressly permitted in writing by the Authority.

4.3 The principal of the Supplemental Loan shall berepaid by the Governmental Agency annually on the day and inthe years provided in Schedule X hereto.

4.4

The Supplemental Loan shall not bear interest.

4.5

The Supplemental Bonds shall be delivered to theAuthority in fully registered form, transferable andexchangeable as provided in the Local Act at the expense of theGovernmental Agency.

4.6 The Governmental Agency agrees to pay from timeto time, as required by the Authority, the GovernmentalAgency's allocable share of the reasonable administrativeexpenses of the Authority relating to the Supplemental Program,which administrative expenses shall be as determined by theAuthority and shall include, but not be limited to, legal feespaid by the Authority.

4.7 If the schedule furnished to the Authoritypursuant to Section 6.5 reflects an excess of funding for theProject, or if the Authority is otherwised advised of an excessof funding for the Project, the Authority may tender to theGovernmental Agency its Supplemental Bonds for payment in anamount equal to such excess. Notwithstanding the foregoing, ifthe Governmental Agency has grant anticipation notes or someother interim financing outstanding upon completion ofconstruction of the Project, it shall advise the Authority ofsuch fact and submit a second schedule to the Authority uponpayment of the interim financing, and the Authority shall nottender its Supplemental Bonds for payment until the outstandinginterim financing has been paid.

ARTICLE V

Certain Covenants of the Governmental Agency;Imposition and Collection of User Charges;

Payments To Be Made byGovernmental Agency to the Authority

5.1 The Governmental Agency hereby irrevocablycovenants and agrees to comply with all of the terms,conditions and requirements of this Supplemental Loan Agreementand the Local Act. The Governmental Agency hereby furtherirrevocably covenants and agrees that, as one of the conditionsof the Authority to make the Supplemental Loan, it has fixedand collected, or will fix and collect, the rates, fees andother charges for the use of the System, as set forth in theLocal Act and in compliance with the provisions of Subsection4.1(b)(ii) hereof.

5.2 In the event, for any reason, the schedule ofrates, fees and charges initially established for the System inconnection with the Local Bonds and the Supplemental Bondsshall prove to be insufficient to produce the minimum sums set

-12-

forth in the Local Act, the Governmental Agency herebycovenants and agrees that it will, to the extent or in themannerauthorized by-law, immediately adjust and increase suchschedule of rates, fees and charges so as to provide fundssufficient to produce the minimum sums set forth in the LocalAct and as required by this Supplemental Loan Agreement.

5.3 In the event the Governmental Agency defaults inthe payment of any f-ees - due to the Authority pursuant toSection 4.6 hereof, the amount of such default shall bearinterest at the rate of five percent (5%) per annum, from thedate of the default until the date of the payment thereof.

5.4 The Governmental Agency hereby irrevocablycovenants and agrees with the Authority that, in the event ofany default hereunder by the Governmental Agency, the Authoritymay exercise any or all of the rights and powers granted underSection 6a of the Act, including without limitation the rightto impose, enforce and collect directly charges upon users ofthe System.

ARTICLE VI

Other Agreements of theGovernmental Agency

6.1 The Governmental Agency hereby acknowledges tothe Authority its understanding of the provisions of the Act,vesting in the Authority certain powers, rights and privilegeswith respect to water development projects in the event ofdefault by governmental agencies in the terms and covenants ofloan agreements, and the Governmental Agency hereby covenantsand agrees that, if the Authority should hereafter haverecourse to said rights and powers, the Governmental Agencyshall take no action of any nature whatsoever calculated toinhibit, nullify, void, delay or render nugatory such actionsof the Authority in the due and prompt implementation of thisSupplemental Loan Agreement.

6.2 The Governmental Agency hereby warrants andrepresents that all information provided to the Authority inthis Supplemental Loan Agreement, in the Application or in anyother application or documentation with respect to financingthe Project was at the time provided, and now is, true, correctand complete, and such information does not omit any materialfact necessary to make the statements therein, in light of thecircumstances under which they were made, not misleading.Prior to the Authority's making the Supplemental Loan andreceiving the Supplemental Bonds, the Authority shall have theright to cancel all or any of its obligations under thisSupplemental Loan Agreement if (a) any representation made to

-13-

the Authority by the Governmental Agency in connection with theLoan or the Supplemental Loan shall be incorrect or incompletein any material respect or (b) the Governmental Agency hasviolated any commitment made by it in its Application or in anysupporting documentation or has violated any of the terms ofthe Loan Agreement or this Supplemental Loan Agreement.

6.3 The Governmental Agency hereby agrees to repay onor prior to the Date of Loan Closing any moneys due and owingby it to the Authority for the planning or design of theProject, and such repayment shall be a condition precedent tothe Authority's making the Supplemental Loan.

6.4 The Governmental Agency hereby agrees to givethe Authority prior written notice of the issuance by it of anyother obligations to be used for the Project, payable from therevenues of the System or from any grants for the Project orotherwise related to the Project or the System.

6.5 The Governmental Agency hereby agrees to filewith the Authority upon completion of acquisition andconstruction of the Project a schedule in substantially theform of Amended Schedule A to the Application, setting forththe actual costs of the Project and sources of funds therefor.

ARTICLE VII

Miscellaneous

7.1 Additional definitions, additional terms andprovisions of the Supplemental Loan and additional covenantsand agreements of the Governmental Agency are set forth inSchedule Z attached hereto and incorporated herein byreference, with the same effect as if contained in the text ofthis Supplemental Loan Agreement.

7.2 Schedule X shall be attached to this SupplementalLoan Agreement by the Authority as soon as practicable afterthe Date of Loan Closing is established and shall be approvedby an official action of the Governmental Agency supplementingthe Local Act, a certified copy of which official action shallbe submitted to the Authority.

7.3 If any provision of this Supplemental LoanAgreement shall for any reason be held to be invalid orunenforceable, the invalidity or unenforceability of suchprovision shall not affect any of the remaining provisions ofthis Supplemental Loan Agreement, and this Supplemental LoanAgreement shall be construed and enforced as if such invalid orunenforceable provision had not been contained herein.

-14-

7.4 This Supplemental Loan Agreement may be executedin one or more counterparts, any of which shall be regarded forall purposes as an original and all of which constitute but oneand the same instrument. Each party agrees that it willexecute any and all documents or other instruments and takesuch other actions as may be necessary to give effect to the.terms of this Supplemental Loan Agreement.

7.5 No-- waiver by eit-her -- party of

any to-rm orcondition of this Supplemental Loan Agreement shall be deemedor construed as a waiver of any other terms or conditions, norshall a waiver of any breach be deemed to constitute a waiverof any subsequent breach, whether of the same or of a differentsection,

subsection,

paragraph,

clause,

phrase

or

otherprovision of this Supplemental Loan Agreement.

7.6

This Supplemental Loan Agreement merges andsupersedes

all

prior

negotiations,

representations

andagreements between the parties hereto relating to theSupplemental Loan and constitutes the entire agreement betweenthe parties hereto in respect thereof.

7.7

By execution and delivery of this SupplementalLoan Agreement, notwithstanding the date hereof, theGovernmental Agency specifically recognizes that it is herebyagreeing to sell its Supplemental Bonds to the Authority andthat such obligation may be specifically enforced or subject toa similar equitable remedy by the Authority.

7.8

This Supplemental Loan Agreement shall terminateupon the earlier of:

(i)

termination by the Authority of the LoanAgreement pursuant to Subsections 7.8(i) or (ii) thereof;

(ii)

termination by the Authority pursuant toSection 6.2 hereof; or

(iii) payment in full of the principal of theSupplemental Loan and of any fees and charges owed by theGovernmental-Agency to the--Authority.

IN WITNESS WHEREOF, the parties hereto have causedthis Supplemental Loan Agreement to be executed by theirrespective duly authorized officers as of the date executedbelow by the Authority.

Fountain Public ServiceDistrict[Proper Name of Governmental Agency]

WEST VIRGINIA WATER DEVELOPMENTAUTHORITY

By

.

Director

Date:

April 20, 1990

(SEAL)

Attest:

ftAoetary-Treasurer

7

WDA-Supp. 5X(March 1988)

SCHEDULE XDESCRIPTION OF SUPPLEMENTAL BONDS

Principal Amount o-f Supplemental Bonds

$ 16,642.00

Purchase Price of Supplemental Bonds

$ 16,642.00

Principal of the Supplemental Bonds is payable onOctober 1 in each year as set forth on Exhibit 1 attachedhereto and incorporated herein by reference. The SupplementalBonds bear no interest.

As of the date of the Supplemental Loan Agreement, theSupplemental Bonds are on a parity as to source of and securityfor payment with the following obligations:

As of the date of the Supplemental Loan Agreement, theSupplemental Bonds are subordinate as to source of and securityfor payment to the following obligations, in addition to theLocal Bonds:

Fountain Public Service DistrictDebt Service ScheduleAnalysis of Borrowing from Series 1989 B Pool39 Principal Payments

Closing Date:

20-Apr-90

=

Date

Interest

Free Loan

01-Oct-9001-Oct-91 426.64

01-Oct-92 426.72

01-Oct-93 426.72

01-Oct-94 426.72

01-Oct-95 426.72

01-Oct-96 426.72

01-Oct-97 426.72

01-Oct-98 426.72

01-Oct-99 426.72

01-Oct-2000 426.72

01-Oct-2001 426.72

01-Oct-2002 426.72

01-Oct-2003 426.72

01-Oct-2004 426.72

01-Oct-2005 426.72

01-Oct-2006 426.72

01-Oct-2007 426.72

01-Oct-2008 426.72

01-Oct-2009 426.72

01-Oct-2010 426.72

01-Oct-2011 426.72

01-Oct-2012 426.72

01-Oct-2013 426.72

01-Oct-2014 426.72

01-Oct-2015 426.72

01-Oct-2016 426.72

01-Oct-2017 426.72

01-Oct-2018 426.72

01-Oct-2019 426.72

01-Oct-2020 426.72

01-Oct-2021 426.72

01-Oct-2022 426.72

01-Oct-2023 426.72

01-Oct-2024 426.72

01-Oct-2025 426.72

01-Oct-2026 426.72

01-Oct-2027 426.72

01-Oct-2028 426.72

01-Oct-2029 426.72

16,642.00

WDA-Supp. 5Y-PSD Water(March 1988)

SCHEDULE YREVENUES

In accordance with Subsection 4.1(a) of the Supple-mental Loan--Agreement _the- -revenues---gene-rated f-rom _th-e-operationof the System will be used monthly, in the order of prioritylisted, as follows:

(i) as prescribed by the Loan Agreement, topay Operating Expenses of the System;

(ii) as prescribed by the Loan Agreement, tothe extent not otherwise limited by an outstanding localresolution, indenture or other act or document, as reflectedon Schedule X to the Loan Agreement, and beginning seven(7) months prior to the first date of payment of intereston the Local Bonds from revenues and thirteen (13) monthsprior to the first date of payment of principal of the LocalBonds, respectively, to provide debt service on the LocalBonds by depositing in a sinking fund one-sixth (1/6) ofthe interest payment next coming due on the Local Bonds andone-twelfth (1/12) of the principal payment next coming dueon the Local Bonds and, if the Reserve Account was notfunded from proceeds of the Local Bonds or otherwiseconcurrently with the issuance thereof (which, with anapproving opinion of bond counsel to the GovernmentalAgency, may be with a letter of credit) in an amount equalto the Reserve Requirement, by depositing in the ReserveAccount an amount not less than one =twelfth (1/12) ofone-tenth (1/10) (or such other amount as shall beacceptable to the Authority and as shall fund the ReserveAccount over not more than 10 years) of the ReserveRequirement or, if the Reserve Account has been so funded(whether by Local Bond proceeds, monthly deposits orotherwise), any amount necessary to maintain the ReserveAccount at the Reserve Requirement;

(iii) as prescribed by the Loan Agreement, tocreate a renewal and replacement, or similar, fund in anamount equal to two and one-half percent (2-1/2%) of thegross revenues from the System, exclusive of any paymentsinto the Reserve Account, for the purpose of improving ormaking emergency repairs or replacements to the System oreliminating any deficiencies in the Reserve Account;

(iv) beginning thirteen (13) months prior tothe first date of payment of principal of the SupplementalBonds, to provide debt service on the Supplemental Bonds by

depositing in a sinking fund one-twelfth (1/12) of theprincipal payment next coming due on the Supplemental Bondsand, if the Supplemental Reserve Account was not fundedconcurrently with the issuance thereof in an amount equalto the Supplemental Reserve Requirement, by depositing inthe Supplemental Reserve Account an amount not less thanone-twelfth (1/12) of one-tenth (1/10) (or such otheramount as shall be acceptable to the Authority and as shallfund the Reserve Account over not more than 10 years) ofthe Supplemental Reserve Requirement or, if theSupplemental Reserve Account has been so funded (whether bySupplemental Bond proceeds, monthly deposits or otherwise),any amount necessary to maintain the Supplemental ReserveAccount at the Supplemental Reserve Requirement;

(v) to provide debt service on andrequisite reserves for any other subordinate indebtednessof the Governmental Agency held or owned by the Authority;and

(vi) for other legal purposes of the System,including payment of debt service on other obligationsjunior, subordinate and inferior to the Local Bonds.

WDA-Supp. 5Z-PSD Water(March 1988)

SCHEDULE Z

Addit_iona_l -andSupplemental Definitions

1. "Local Statute" means Chapter 16, Article 13A, ofthe Code of West Virginia, 1931, as amended.

2. "System" means the public service properties forthe diversion, development, pumping, impounding, treatment,storage, distribution or furnishing of water to or for thepublic for industrial, public, private or other uses, owned bythe Governmental Agency, and any improvements or extensionsthereto hereafter constructed or acquired from any sourceswhatsoever and includes the Project.

Additional Conditions and Covenants

1. As a condition precedent to the Authority'smaking the Supplemental Loan, the Governmental Agency shallhave obtained, among other permits required, a permit from theWest Virginia Department of Health.

2. The

Local

Act

shall

contain

a

covenantsubstantially as follows:

That the Governmental Agency will, to the fullextent permitted by applicable law and the rules andregulations of the PSC, discontinue and shut off theservices and facilities of the System to all users ofservices of the System delinquent in payment ofcharges for the services of the System and will notrestore the services of the System until all

-del-i-nquent charges-for-the_ services of_- the_ Syst-em_ havebeen fully paid.

3. Subject to any prior or parity obligationsdescribed in Schedules X and Y attached to the SupplementalLoan Agreement, and to the prior lien of the Local Bonds, thenet revenues derived from the operation of the System arepledged to the payment of the principal of the SupplementalBonds.

4. The paying agent for the Supplemental Bonds shallbe the West Virginia Municipal Bond Commission or any successorto the functions thereof.

(SPECIMEN BOND)



SERIES 1990 A

No. AR-1

$356,633

KNOW ALL MEN BY THESE PRESENTS: That FOUNTAIN PUBLICSERVICE DISTRICT, a public corporation and political subdivision ofthe State of West Virginia in Mineral County of said State (the"Issuer"), for value received, hereby promises to pay, solely from thespecial funds provided therefor, as hereinafter set forth, to theWest Virginia Water Development Authority (the "Authority") orregistered assigns the sum THREE HUNDRED FIFTY-SIX THOUSAND SIXHUNDRED THIRTY-THREE DOLLARS ($356,633), in installments on October 1of each year, as set forth on the "Schedule of Annual Debt Service"attached as Exhibit A hereto and incorporated herein by reference withinterest on each installment at the rate per annum set forth on saidExhibit A.

The interest on each installment shall run from the originaldate of delivery of this Bond to the Authority and payment therefor,and until payment of such installment, and such interest shall bepayable on April 1 and October 1 in each year, beginning October 1,1990. Principal installments of this Bond are payable in any coin orcurrency which, on the respective dates of payment of suchinstallments, is legal tender for the payment of public and privatedebts under the laws of the United States of America, at the officeof the West Virginia Municipal Bond Commission, Charleston,West Virginia (the "Paying Agent"). The interest on this Bond ispayable by check or draft of the Paying Agent mailed to the registeredowner hereof at the address as it appears on the books of One ValleyBank, National Association, Charleston, West Virginia, as registrar(the "Registrar") on the 15th day of the month next preceding aninterest payment date, or by such other method as shall be mutuallyagreeable so long as the Authority is the registered owner hereof.

This Bond may be redeemed prior to its stated date ofmaturity in whole or in part, but only with the express writtenconsent of the Authority, and upon the terms and conditions prescribedby, and otherwise in compliance with, the Loan Agreement between theIssuer and the Authority, dated April 20, 1990.

7

n

This Bond is issued (i) to pay a portion of the costs ofacquisition and construction of certain new waterworks facilities ofthe Issuer (the "Project"); (ii) to pay interest on the Bonds of thisSeries (the " Bonds" ) during the construction of the Project and fornot more than 6 months thereafter; and (iii) to pay certain costs ofissuance hereof and related costs. The Project and any additions,extensions or improvements thereto is herein called the "System."This Bond is issued under the authority of and in full compliance withthe Constitution and statutes of the State of West Virginia, includingparticularly Chapter 16, Article 13A of the West Virginia Code of1931, as amended (the "Act"), and a Resolution duly adopted by theIssuer on April 18, 1990, and a Supplemental Resolution duly adoptedby the Issuer on April 18, 1990 (collectively called the "BondLegislation"), and is subject to all the terms and conditions thereof.The Bond Legislation provides for the issuance of additional bondsunder certain conditions, and such bonds would be entitled to be paidand secured equally and ratably from and by the funds and revenues andother security provided for the Bonds under the Bond Legislation.

This Bond is issued concurrently with the Water RevenueBonds, Series 1990 B, of the Issuer (the "Series 1990 B Bonds"),issued in the aggregate principal amount of $16,642, whichSeries 1990 B Bonds are junior and subordinate with respect to liensand source of and security for payment to the Bonds.

This Bond is payable only from and secured by a pledge ofthe Net Revenues (as defined in the Bond Legislation) to be derivedfrom the operation of the System, moneys in the Reserve Accountcreated under the Bond Legislation for the Bonds (the "Series 1990 ABonds Reserve Account") and unexpended proceeds of the Bonds and theSeries 1990 B Bonds. Such Net Revenues shall be sufficient to paythe principal of and interest on all bonds which may be issuedpursuant to the Act and which shall be set aside as a special fundhereby pledged for such purpose. This Bond does not constitute acorporate indebtedness of the Issuer within the meaning of anyconstitutional or statutory provisions or limitations, nor shall theIssuer be obligated to pay the same or the interest hereon except fromsaid special fund provided from the Net Revenues, the moneys in theSeries 1990 A Bonds Reserve Account and unexpended proceeds of theBonds and the Series 1990 B Bonds. Pursuant to the Bond Legislation,the Issuer has covenanted and agreed to establish and maintain justand equitable rates and charges for the use of the System and theservices rendered thereby, which shall be sufficient, together withother revenues of the System, to provide for the reasonable expensesof operation, repair and maintenance of the System, and to leave abalance each year equal to at least 115% of the maximum amount payablein any year for principal of and interest on the Bonds, theSeries 1990 B Bonds and all other obligations secured by a lien on or

2.

C)

payable from such revenues prior to or on a parity with the Bonds orthe Series 1990 B Bonds, provided however, that so long as thereexists in the Series 1990 A Bonds Reserve Account an amount at leastequal to the maximum amount of principal and interest which willbecome due on the Bonds in the then current or any succeeding year,and in the respective reserve accounts established for theSeries 1990 B Bonds and any other obligations outstanding prior to oron a parity with the Bonds or the Series 1990 B Bonds, an amount atleast equal to the requirement therefor, such percentage may bereduced to 110%. The Issuer has entered into certain furthercovenants with the registered owner of the Bonds for the terms ofwhich reference is made to the Bond Legislation. Remedies providedthe registered owner of the Bonds are exclusively as provided in theBond Legislation, to which reference is here made for a detaileddescription thereof.

Subject to the registration requirements set forth herein,this Bond is transferable, as provided in the Bond Legislation, onlyupon the books of the Registrar by the registered owner, or by itsattorney duly authorized in writing, upon the surrender of this Bondtogether with a written instrument of transfer satisfactory to theBond Registrar duly executed by the registered owner or its attorneyduly authorized in writing.

Subject to the registration requirements set forth herein,this Bond, under the provision of the Act is, and has all thequalities and incidents of, a negotiable instrument under the UniformCommercial Code of the State of West Virginia.

All money received from the sale of this Bond, afterreimbursement and repayment of all amounts advanced for preliminaryexpenses as provided by law, shall be applied solely to the paymentof the Costs of the Project described in the Bond Legislation, andthere shall be and hereby is created and granted a lien upon suchmoneys, until so applied, in favor of the registered owner of thisBond.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,conditions and things required to exist, happen and be performedprecedent to and in the issuance of this Bond have existed, havehappened, and have been performed in due time, form and manner asrequired by law, and that the amount of this Bond, together with allother obligations of the Issuer, does not exceed any limit prescribedby the Constitution or statutes of the State of West Virginia and thata sufficient amount of the revenues of the System has been pledged toand will be set aside into said special fund by the Issuer for theprompt payment of the principal of and interest on this Bond.

3.


IN WITNESS WHEREOF, FOUNTAIN PUBLIC SERVICE DISTRICT hascaused this Bond to be signed by its Chairman and its corporate sealto be hereunto affixed and attested by its Secretary, and has causedthis Bond to be dated April 20, 1990.

[SEAL]

Chairman

ATTEST:

Secretary

4.

n


This Bond is one of the Series 1990 A Bonds described inthe within-mentioned Bond Legislation and has been duly registered inthe name of the registered owner set forth above, as of the date setforth below.

Date: April 20, 1990



5.

EXHIBIT A


====2===SS===II1============:.=3

=====3==S=aMM211=21IMasaltaU=8C.LI2a3X==Z=:xaass

Fountain Public Service DistrictI

Debt Service ScheduleAnalysis of Borrowing from Series 1989 B Pool39 Principal PaymentsClosing Date: 20-Apr-90

..................................................

Date Coupon Principal InterestDebt Service7.85% Bonds

01-Oct-90 12,520.29 12,520.2901-Oct-91 7.85% 1,551.00 27,995.69 29,546.6901-Oct-92 7.85% 1,672.00 27,873.94 29,545.9401-Oct-93 7.85% 1,804.00 27,742.68 29,546.6801-Oct-94 7.85% 1,945.00 27,601.07 29,546.0701-Oct-95 7.85% 2,098.00 27,448.39 29,546.3901-Oct-96 7,85% 2,263.00 27,283.70 29,546.7001-Oct-97 7.85% 2,440.00 27,106.05 29,546.0501-Oct-98 7.85% 2,632.00 26,914.51 29,546.5101-Oct-99 7.85% 2,838.00 26,707.90 29,545.90

01-Oct-2000 7.85% 3,061.00 26,485.11 29,546.1101-Oct-2001 7.85% 3,302.00 26,244.83 29,546.83O1-Oct-2002 7.85% 3,561.00 25,985.62 29,546.6201-Oct-2003 7.85% 3,840.00 25,706.08 29,546.0801-Oct-2004 7.85% 4,142.00 25,404.64 29,546.6401-Oct-2005 7.85% 4,467.00 25,079.49 29,546.4901-Oct-2006 7.85% 4,817.00 24,728.83 29,545.8301-Oct-2007 7.85% 5,196.00 24,350.70 29,546.7001-Oct-2008 7.85% 5,604.00 23,942.81 29,546.8101-Oct-2009 7.85% 6,043.00 23,502.90 29,545.9001-Oct-2010 7.85% 6,518.00 23,028.52 29,546.5201-Oct-2011 7,85% 7,030.00 22,516.86 29,546.8601-Oct-2012 7.85% 7,581.00 21,965.01 29,546.0101-Oct-2013 7.85% 8,176.00 21,369.90 29,545.9001-Oct-2014 7.85% 8,818.00 20,728.08 29,546.0801-Oct-2015 7.85% 9,510.00 20,035.87 29,545.8701-Oct-2016 7.85% 10,257.00 19,289.33 29,546.3301-Oct-2017 7.85% 11,062.00 18,484.16 29,546.1601-Oct-2018 7.85% 11,931.00 17,615.79 29,546.7901-Oct-2019 7.85% 12,867.00 16,679.21 29,546.2101-Oct-2020 7.85% 13,877.00 15,669.15 29,546.1501-Oct-2021 7.85% 14,967.00 14,579.81 29,546.8101-Oct-2022 7.85% 16,141.00 13,404.90 29,545.9001-Oct-2023 7.85% 17,409.00 12,137.83 29,546.8301-Oct-2024 7.85% 18,775.00 10,771.22 29,546.2201-Oct-2025 7.85% 20,249.00 9,297.38 29,546.3801-Oct-2026 7.85% 21,838.00 7,707.84 29,545.8401-Oct-2027 7.85% 23,553.00 5,993.55 29,546.5501-Oct-2028 7.85% 25,402.00 4,144.64 29,546.6401-Oct-2029 7.85% 27,3.96.00 2,150.59 29,546.59

356,633.00 808,194.87 1,164,827.87

____=====5===S===SS==SSS=iS=SS=S'L-==SlS.S=.7,iU.33:= i7.rii.'iiC.=3.33.'CT.3=3

6.

ASSIGNMENT


the within Bond and does hereby irrevocably constitute and appointAttorney to transfer


Dated:

In the presence of:

04/13/90FNPSDJ.W130305/89001

7.

(SPECIMEN BOND)



SERIES 1990 B

No. BR-1

$16,642

KNOW ALL MEN BY THESE PRESENTS: That FOUNTAIN PUBLICSERVICE DISTRICT, a public corporation and political subdivision ofthe State of West Virginia in Mineral County of said State (the"Issuer"), for value received, hereby promises to pay, solely from thespecial funds provided therefor, as hereinafter set forth, to theWest Virginia Water Development Authority (the "Authority") orregistered assigns the sum of SIXTEEN THOUSAND SIX HUNDRED FORTY-TWODOLLARS ($16,642), in annual installments on October 1 of each yearas set forth on the "Schedule of Annual Debt Service" attached asExhibit A hereto and incorporated herein by reference, withoutinterest.

Principal installments of this Bond are payable in any coinor currency which, on the respective dates of payment of suchinstallments, is legal tender for the payment of public and privatedebts under the laws of the United States of America, at the officeof the West Virginia Municipal Bond Commission, Charleston,West Virginia (the "Paying Agent").

This Bond may be redeemed prior to its stated date ofmaturity in whole or in part, but only with the express writtenconsent of the Authority, and upon the terms and conditions prescribedby,_and otherwise in-compliance-with,--the-Supplemental-Loan Agreementbetween the Issuer and the Authority, dated April 20, 1990.

This Bond is issued (i) to pay a portion of the costs ofacquisition and construction of certain new waterworks facilities ofthe Issuer (the "Project"); and (ii) to pay certain costs of issuancehereof and related costs for the Bonds of this Series (the "Bonds").The Project and any additions, extensions or improvements thereto isherein called the "System." This Bond is issued under the authorityof and in full compliance with the Constitution and statutes of theState of West Virginia, including particularly Chapter 16, Article 13Aof the West Virginia Code of 1931, as amended (the "Act"), and aResolution duly adopted by the. Issuer on April 18, 1990, and aSupplemental Resolution duly adopted by the Issuer on April 18, 1990(collectively called the "Bond Legislation"), and is subject to all

3

the terms and conditions thereof. The Bond Legislation provides forthe issuance of additional bonds under certain conditions, and suchbonds would be entitled to be paid and secured equally and ratablyfrom and by the funds and revenues and other security provided for theBonds under the Bond Legislation.

THIS BOND IS JUNIOR AND SUBORDINATE WITH RESPECT TO LIENS,PLEDGE AND SOURCE OF AND SECURITY FOR PAYMENT TO THE WATER REVENUEBONDS, SERIES 1990 A, OF THE ISSUER ISSUED CONCURRENTLY HEREWITH, INTHE AGGREGATE PRINCIPAL AMOUNT OF $356,633 AND DESCRIBED IN THE BONDLEGISLATION (THE "SERIES 1990 A BONDS").

This Bond is payable only from and secured by a pledge ofthe Net Revenues (as defined in the Bond Legislation) to be derivedfrom the operation of the System after there has first been paid fromsaid Net Revenues all payments then due and owing on account of theSeries 1990 A Bonds, all moneys in the reserve account created underthe Bond Legislation for the Bonds (the "Series 1990 B Bonds ReserveAccount") and unexpended proceeds of the Bonds. Such Net Revenuesshall be sufficient to pay the principal of and interest on all bondswhich may be issued pursuant to the Act and which shall be set asideas a special fund hereby pledged for such purpose. This Bond does notconstitute a corporate indebtedness of the Issuer within the meaningof any constitutional or statutory provisions or limitations, norshall the Issuer be obligated to pay the same, except from saidspecial fund provided from the Net Revenues, the moneys in theSeries 1990 B Bonds Reserve Account and unexpended Bond proceeds.Pursuant to the Bond Legislation, the Issuer has covenanted and agreedto establish and maintain just and equitable rates and charges for theuse of the System and the services rendered thereby, which shall besufficient, together with other revenues of the System, to provide forthe reasonable expenses of operation, repair and maintenance of theSystem, and to leave a balance each year equal to at least 115% of themaximum amount payable in any year for principal of and interest, if--any,-on-the-Bonds,-the- Series 1990- A Bonds secured by a lien on or payable from such revenues prior to or on aparity therewith, provided however, that so long as there exists inthe Series 1990 B Bonds Reserve Account and the reserve accountestablished for the Series 1990 A Bonds, respectively, amounts atleast equal to the maximum amount of principal and interest, if any,which will become due on the Bonds and the Series 1990 A Bonds in thethen current or any succeeding year, and any reserve account for anysuch prior or parity obligations, is funded at least at therequirement therefor, such percentage may be reduced to 110%. TheIssuer has entered into certain further covenants with the registeredowner of the Bonds for the terms of which reference is made to theBond Legislation. Remedies provided the registered owner of the Bonds

2.

are exclusively as provided in the Bond Legislation, to whichreference is here made for a detailed description thereof.

Subject to the registration requirements set forth herein,this Bond is transferable, as provided in the Bond Legislation, onlyupon the books of One Valley Bank, National Association, Charleston,West Virginia, as registrar (the "Registrar"), by the registeredowner, or by its attorney duly authorized in writing, upon thesurrender of this Bond together with a written instrument of transfersatisfactory to the Bond Registrar duly executed by the registeredowner or its attorney duly authorized in writing.

Subject to the registration requirements as set forthherein, this Bond, under the provision of the Act is, and has all thequalities and incidents of, a negotiable instrument under the UniformCommercial Code of the State of West Virginia.

All money received from the sale of this Bond, afterreimbursement and repayment of all amounts advanced for preliminaryexpenses as provided by law, shall be applied solely to the paymentof the Costs of the Project described in the Bond Legislation, andthere shall be and hereby is created and granted a lien upon suchmoneys, until so applied, in favor of the registered owner of theBonds, which lien is subordinate to the lien in favor of theregistered owner of the Series 1990 A Bonds.

IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,conditions and things required to exist, happen and be performedprecedent to and in the issuance of this Bond have existed, havehappened, and have been performed in due time, form and manner asrequired by law, and that the amount of this Bond, together with allother obligations of the Issuer, does not exceed any limit prescribedby the Constitution or statutes of the State of West Virginia and thata sufficient amount of the revenues of the System has been pledged to-and_will -be--set--as-ide---into--sa-id--spec-ial--fundby -the-Issuerfot-theprompt payment of the principal of this Bond.


3.

fl

IN WITNESS WHEREOF, FOUNTAIN PUBLIC SERVICE DISTRICT hascaused this Bond to be signed by its Chairman and its corporate sealto be hereunto affixed and attested by its Secretary, and has causedthis Bond to be dated April 20, 1990.

[SEAL]

Chairman

ATTEST:

Secretary

4.

fl


This Bond is one of the Series 1990 B Bonds described in thewithin-mentioned Bond Legislation and has been duly registered in thename of the registered owner set forth above, as of the date set forthbelow.

Date: April 20, 1990.


By

Its Authorized Officer

5.

n

EXHIBIT A


sssszaaas =====z:srtsassassxsassassxs===rp=0#si=sass:

Fountain Public Service DistrictDebt Service ScheduleAnalysis of Borrowing from Series 1989 B Pool39 Principal PaymentsClosing Date20Apr90

...................................................

InterestDate Free Loan

01-Oct-9001-Oct-91 426.6401-Oct-92 426.7201-Oct-93 426.7201-Oct-94 426.7201-Oct-95 426.7201-Oct-96 426.7201-Oct-97 426.7201-Oct-98 426.7201-Oct-99 426.72

01-Oct-2000 426.7201-Oct-2001 426.7201-Oct-2002 426.7201-Oct-2003 426.7201-Oct-2004 426.7201-Oct-2005 426.7201-Oct-2006 426.7201-Oct-2007 426.7201-Oct-2008 426.7201-Oct-2009 426.7201-Oct-2010 426.7201-Oct-2011 426.7201-Oct-2012 426.7201-Oct-2013 426.7201-Oct-2014 426.7201-Oct-2015 426.7201-oct-2016 426.7201-Oct-2017 426.72-01-Oct-2018 426.7201-Oct-2019 426.7201-Oct-2020 426.7201-Oct-2021 426.7201-Oct-2022 426.7201-Oct-2023 426.7201-Oct-2024 426.7201-Oct-2025 426.72O1-Oct-2026 426.7201-Oct-2027 426.7201-Oct-2028 426.7201-Oct-2029 426.72

16,642.00

2=s2:=.=M.======Mass=.M=M==a== o»«=.==42M.Sas=sas

6.

ASSIGNMENT




Dated:

In the presence of:

04/13/90FNPSDJ.X130305/89001

7.

STEPTOE 8C JOHNSONCHARLES W. YEAGER ATTORNEYS AT LAW RICHARD M. YURKO, JR.CARL F. STUCKY, JR. GARY W. NICKERSONHERBERT G. UNDERWOOD SIXTH FLOOR CURTIS G. POWER IIIJACKSON L. ANDERSON STEPHEN R. KERSHNEROTIS L. O'CONNORROBERT G. STEELE UNION NATIONAL CENTER EAST

W. RANDOLPH FIFEMARTIN R. SMITH, JR.

J. LEE VAN METRE, JR.JAMES M. WILSON

LOUIS E. ENDERLE, JR.ROBERT J. SCHIAVONI

PATRICK D. DEEM P. O. BOX 2190 JOHN K. DORSEYROBERT M. STEPTOE, JR.ANNE R. WILLIAMS

WALTER WASHINGTONJOSEPH R. FERRETTI

JAMES R. WATSON CLAR%SBU13G, W. VA. 26302-2190 MARK E. KINLEYJAMES D. GRAY MARCIA J. POLLARD

(304) 624-8000DOUGLAS S. ROCKWELL BRYAN R. COKELEYVINCENT A. COLLINS PATRICK D. KELLYJAMES A. RUSSELLLUCIEN G. LEWIN TELECOPIER (304) 624-8183

FRANCESCA TANCHRISTINE S. VAGLIENTI

WILLIAM T. BELCHER WILLIAM P. YOUNGMICHAEL L. BRAY DAVID M. HAMMERJAMES D. STEPTOE WILLIAM F. ROHRBAUGHDAVID C. CLOVIS CAROLINE J. STAFFORDDANIEL R. SCHUDA CHARLESTON OFFICE

MORGANTOWN OFFICE MATTHEW J:MULLANEYJ. GREG GOODYKOONTZIRENE M. KEELEY 715 CHARLESTON NATIONAL PLAZA

1000 HAMPTON CENTERBRENT O. BURTONPAUL R. CRANSTON

EVANS L. KING, JR.WALTER L. WILLIAMS P. O. BOX 1588

P. O. BOX 1616 JONATHAN P. JESTERGRACE J. WIGAL

SUSAN S. BREWER CHARLESTON, W. VA. 25326

MORGANTOWN, W. VA. 26507-1616 GINA M. HOUSEHOLDERSPRAGUE W. HAZARDHERSCHEL H. ROSE IIIDAVID LAYVA

(304) 342-2191

(304) 598-8000MICHAEL KOZAKEWICH, JR.CYNTHIA R. TRIBBLE

GRAY SILVER III TELECOPIER (304) 342-0726

TELECOPIER (304) 598-8116RONALD H. HANLANC. DAVID MORRISONHARRY P. WADDELL CHARLES TOWN OFFICECLEMENT D. CARTER III MARTINSBURG OFFICE

104 WEST CONGRESS STREETOF COUNSEL

RALPH BOHANNONW. HENRY LAWRENCE IVJ. ROBERT GWYNNEWILLIAM E. GALEOTACHRISTOPHER P. BASTIEN

126 EAST BURKE STREETP. O. BOX 100

MARTINSBURG, W. VA. 25401 CHARLES TOWN, W. VA. 25414

ROGER J. PERRY

GORDON H. COPLAND (304) 263-6991(304) 725-1414

RANDALL C. LIGHT TELECOPIER (304) 263-4785STEVEN P. McGOWAN

TELECOPIER (304) 725-1913

WRITER'S DIRECT DIAL NUMBER

April 20, 1990

Fountain Public Service DistrictWater Revenue Bonds, Series 1990 A

West Virginia Water Development Authority1201 Dunbar AvenueDunbar, West Virginia 25064

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance byFountain Public Service District (the "Issuer"), a public service district andpublic corporation and political subdivision created and existing under the lawsof the State of West Virginia, of its $356,633 Water Revenue Bonds,Series 1990 A, dated the date hereof (the "Local Bonds").

- - -- We have-examined-the-law-and-certified-copies-of -proceedings--and otherpapers relating to the authorization of a loan agreement, dated April 20, 1990,including all schedules and exhibits attached thereto (the "Loan Agreement"),between the Issuer and the West Virginia Water Development Authority (the"Authority") and the Local Bonds, which are to be purchased by the Authority inaccordance with the provisions of the Loan Agreement. The Local Bonds areoriginally issued in the form of one bond, registered as to principal andinterest to the Authority, with interest payable April 1 and October 1 of eachyear, commencing October 1, 1990, at the rate of 7.85% per annum, and withprincipal installments payable on October 1 in each of the years 1991 through2029, inclusive, all as set forth in "Schedule X," attached to the Loan Agreementand incorporated in and made a part of the Local Bonds.

9

West Virginia Water Development AuthorityPage 2

The Local Bonds are issued under the authority of and in fullcompliance with the Constitution and statutes of the State of West Virginia,including particularly, Chapter 16, Article 13A of the West Virginia Code of1931, as amended (the "Local Statute"), for the purposes of (i) paying a portionof the costs of acquisition and construction of certain new waterworks facilitiesof the Issuer (the "Project"); (ii) paying interest on the Local Bonds duringthe construction of the Project and for not more than 6 months thereafter; and(iii) paying certain issuance and other costs in connection therewith.

We have also examined the applicable provisions of the Local Statute,the bond and notes resolution duly adopted by the Issuer on April 18, 1990, assupplemented by a supplemental resolution adopted April 18, 1990 (collectively,the "Local Act"), pursuant to and under which Local Statute and Local Act theLocal Bonds are authorized and issued and the Loan Agreement that has beenundertaken. The Local Bonds are subject to redemption prior to maturity to theextent, at the time, under the conditions and subject to the limitations setforth in the Local Act and the Loan Agreement.

Based upon the foregoing, and upon our examination of such otherdocuments as we have deemed necessary, we are of the opinion, under existinglaw, as follows:

1. The Issuer is a duly organized and validly existing public servicedistrict and political subdivision of the State of West Virginia, with corporatepower and authority to acquire and construct the Project, to operate and maintainthe System referred to in the Loan Agreement and to issue and sell the LocalBonds, all under the Local Statute and other applicable provisions of law.

2. The Loan Agreement has been duly authorized by and executed onbehalf of the Issuer, is a valid and binding special obligation of the Issuerenforceable in accordance with the terms thereof, and inures to the benefit ofthe Authority and cannot be amended so as to affect adversely the rights of theAuthority or diminish the obligations of the Issuer without the written consentof the Authority.

3. The Local Act and all other necessary orders and resolutions havebeen duly and effectively adopted by the Issuer and constitute valid and bindingobligations-of the-Issuer enforceable upon the -Issuer- . The Local Act contains'provisions and covenants substantially in the form of those set forth inSection 4.1 of the Loan Agreement.

4. The Local Bonds have been duly authorized, issued, executed anddelivered by the Issuer to the Authority and are valid, legally enforceable andbinding special obligations of the Issuer, payable from the Net Revenues of theSystem referred to in the Local Act and secured by a first lien on and pledgeof the Net Revenues of said System, all in accordance with the terms of the LocalBonds and the Local Act.

5. The interest on the Local Bonds is excluded from gross incomefor federal income tax purposes and is not an item of tax preference for purposes


of the federal alternative minimum tax imposed on individuals and corporations;it should be noted, however, that, for purposes of computing the alternativeminimum tax imposed on corporations (as defined for federal income tax purposes),such interest is taken into account in determining adjusted net book income(adj usted current earnings for taxable years beginning after December 31, 1989) .The opinions set forth in the preceding sentence are subject to the conditionthat the Issuer comply with all requirements of the Internal Revenue Code of1986, as amended, that must be satisfied subsequent to the issuance of the LocalBonds in order that interest thereon be, or continue to be, excluded from grossincome for federal income tax purposes. The Issuer has covenanted to comply witheach such requirement. Failure to comply with certain of such requirements maycause the inclusion of interest on the Local Bonds in gross income for federalincome tax purposes to be retroactive to the date of issuance of the Local Bonds.We express no opinion regarding other federal tax consequences arising withrespect to the Local Bonds.

6. The Local Bonds are, under the Local Statute, exempt from directtaxation by the State of West Virginia, and the other taxing bodies of the State,and the interest on the Local Bonds is exempt from personal and corporate incometaxes imposed directly thereon by the State of West Virginia.

7. The time for appeal of the Final Order of the Public ServiceCommission of West Virginia entered March 2, 1990 (Case No. 89-620-PWD-CN),granting to the Issuer a Certificate of Public Convenience and Necessity andapproving rates and charges for the System and the proposed financing of theProject has expired prior to the date hereof without appeal.

It is to be understood that the rights of the holders of the LocalBonds and the enforceability of the Local Bonds, the Loan Agreement, the LocalAct and the liens and pledges therein may be subject to and limited bybankruptcy, insolvency, reorganization, moratorium and other similar lawsaffecting creditors' rights heretofore or hereafter enacted to the extentconstitutionally applicable and that their enforcement may also be subject tothe exercise of judicial discretion in appropriate cases.

We have examined the executed and authenticated Local Bond numberedAR-l, and in our opinion the form of said bond and its execution andaut h entication are regular and proper.

Very truly yours,

EPTOE J SON04/19/90FNPSDJ.F430305/89001

CHARLES W. YEAGERCARL F. STUCKY, JR.HERBERT G. UNDERWOODJACKSON L. ANDERSONOTIS L. O'CONNORROBERT G. STEELEJ. LEE VAN METRE, JR.JAMES M. WILSONPATRICK D. DEEMROBERT M. STEPTOE, JR.ANNE R. WILLIAMSJAMES R. WATSONJAMES D. GRAYDOUGLAS S. ROCKWELLVINCENT A. COLLINSJAMES A, RUSSELLLUCIEN G. LEWINWILLIAM T. BELCHERMICHAEL L. BRAYJAMES D. STEPTOEDAVID C. CLOVISDAN IEL R: -SCHU DAJ. GREG GOODYKOONTZIRENE M, KEELEYEVANS L. KING, JR.WALTER L. WILLIAMSSUSAN S. BREWERSPRAGUE W. HAZARDHERSCHEL H. ROSE IIIDAVID LAYVAGRAY SILVER IIIRONALD H. HANLANC. DAVID MORRISONHARRY P. WADDELLCLEMENT D. CARTER IIIW. HENRY LAWRENCE IVJ. ROBERT GWYNNEWILLIAM E. GALEOTACHRISTOPHER P. BASTIENGORDON H. COPLANDRANDALL C. LIGHTSTEVEN P. McGOWAN

STEPTOE 8c JOHNSONATTORNEYS AT LAW

SIXTH FLOOR

UNION NATIONAL CENTER EAST

P. O. BOX 2190

CLARKSBURG, W. VA. 26302-2190

(304) 624-8000


CHARLES TOWN OFFICE

104 WEST CONGRESS STREET

P. O. BOX 100

CHARLES TOWN, W. VA. 25414(304) 725-1414


RICHARD M. YURKO, JR.GARY W. NICKERSONCURTIS G. POWER IIISTEPHEN R. KERSHNERW. RANDOLPH FIFEMARTIN R. SMITH, JR.LOUIS E. ENDERLE, JR.ROBERT J. SCHIAVONIJOHN K. DORSEYWALTER WASHINGTONJOSEPH R. FERRETTIMARK E. KINLEYMARCIA J. POLLARDBRYAN R. COKELEYPATRICK D. KELLYFRANCESCA TANCHRISTINE S. VAGLIENTIWILLIAM P. YOUNGDAVID M. HAMMERWILLIAM F. ROHRBAUGHCAROLINE J. STAFFORDMATTHEW J. MULLANEYBRENT O. BURTONPAUL R. CRANSTONJONATHAN P. JESTERGRACE J. WIGALGINA M. HOUSEHOLDERMICHAEL KOZAKEWICH, JR.CYNTHIA R. TRIBBLE

OF COUNSELRALPH BOHANNONROGER J. PERRY


CHARLESTON OFFICE

715 CHARLESTON NATIONAL PLAZA

P. O. BOX 1588

CJH A RT.ESTON, W. VA. 25326(304) 342-2191


MARTINSBURG OFFICE

126 EAST BURKE STREET

MARTINSBURG, W. VA. 25401(304) 263-6991


MORGANTOWN OFFICE

1000 HAMPTON CENTER

P. O. BOX 1616

MORGANTOWN, W.VA. 26507-1616(304) 598-8000


April 20, 1990

Fountain Public Service DistrictWater Revenue Bonds, Series 1990 B



We have acted as bond counsel in connection with the issuance byFountain Public Service District (the "Issuer"), a public service district andpublic corporation and political subdivision created and existing under the lawsof the State of West Virginia of its $16,642 Water Revenue Bonds, Series 1990 B,dated the date hereof (the "Supplemental Bonds").

We have examined the law and certified copies of proceedings and otherpapers relating to the authorization of a supplemental loan agreement, datedApril--20-,- 1990-, including- all -schedules- and--exhbis- -attached- -thereto -(the"Supplemental Loan Agreement"), between the Issuer and the West Virginia WaterDevelopment Authority (the "Authority") and the Supplemental Bonds, which areto be purchased by the Authority in accordance with the provisions of theSupplemental Loan Agreement. The Supplemental Bonds are originally issued inthe form of one bond registered as to principal to the Authority, withoutinterest thereon, with principal payable in installments on October 1 in eachof the years 1991 through 2029, inclusive, all as set forth in "Schedule X,"attached to the Supplemental Loan Agreement and incorporated in and made partof the Supplemental Bonds.

The Supplemental Bonds are issued under the authority of and in fullcompliance with the Constitution and statutes of the State of West Virginia,

10


including particularly, Chapter 16, Article 13A of the Code of West Virginia,1931, as amended (the "Local Statute"), for the purposes of (i) paying a portionof the costs of acquisition and construction of certain new waterworks facilitiesof the Issuer (the "Project"); and (ii) paying certain issuance and other costsin connection therewith.

The Supplemental Loan Agreement is supplemental to a loan agreementalso dated April 20, 1990, between the Issuer and the Authority (the "LoanAgreement"). The Supplemental Bonds are junior, subordinate and inferior as toliens, pledge and source of and security for payment to the bonds issued pursuantto the Loan Agreement and designated "Water Revenue Bonds, Series 1990 A" (the"Local Bonds"), which Local Bonds are issued simultaneously herewith.

We have also examined the applicable provisions of the Local Statute,the bond and notes resolution duly adopted by the Issuer on April 18, 1990, assupplemented by a supplemental resolution adopted April 18, 1990 (collectively,the "Local Act"), pursuant to and under which Local Statute and Local Act theSupplemental Bonds are authorized and issued and the Supplemental Loan Agreementthat has been undertaken. The Supplemental Bonds are subject to redemption priorto maturity to the extent, at the time, under the conditions and subject to thelimitations set forth in the Local Act and the Supplemental Loan Agreement.

Based upon the foregoing, and upon our examination of such otherdocuments as we have deemed necessary, we are of the opinion, under existinglaw, as follows:

1. The Issuer is a duly organized and validly existing public servicedistrict and political subdivision of the State of West Virginia, with corporatepower and authority to acquire and construct the Project, to operate and maintainthe System referred to in the Supplemental Loan Agreement and to issue and sellthe Supplemental Bonds, all under the Local Statute and other applicableprovisions of law.

2. The Supplemental Loan Agreement has been duly authorized by andexecuted on behalf of the Issuer, is a valid and binding special obligation ofthe Issuer enforceable in accordance with the terms thereof, and inures to thebenefit of the Authority and cannot be amended so as to affect adversely therights -of-the-Authority-or-diminish the obligations-of-the-Issuer-without-thewritten consent of the Authority.

3. The Local Act and all other necessary orders and resolutions havebeen duly and effectively adopted by the Issuer and constitute valid and bindingobligations of the Issuer enforceable upon the Issuer. The Local Act containsprovisions and covenants substantially in the form of those set forth inSection 4.1 of the Supplemental Loan Agreement.

4. The Supplemental Bonds have been duly authorized, issued, executedand delivered by the Issuer to the Authority and are valid, legally enforceableand binding special obligations of the Issuer, payable from the Net Revenues ofthe System referred to in the Local Act and secured by a lien on and pledge of


the Net Revenues of said System, junior and subordinate only to the Local Bonds,all in accordance with the terms of the Supplemental Bonds and the Local Act.

5. The Issuer has reserved the right to issue additional bondsranking on a parity with the Supplemental Bonds, as provided in the Local Act.

6. The Supplemental Bonds are, under the Local Statute, exempt fromdirect taxation by the State of West Virginia, and the other taxing bodies ofthe State._

7. The time for appeal of the Final Order of the Public ServiceCommission of West Virginia entered March 2, 1990 (Case No. 89-620-PWD-CN),granting to the Issuer a Certificate of Public Convenience and Necessity andapproving rates and charges for the System and the proposed financing of theProject has expired prior to the date hereof without appeal.

It is to be understood that the rights of the holders of theSupplemental Bonds and the enforceability of the Supplemental Bonds, theSupplemental Loan Agreement, the Local Act and the liens and pledges thereinmay be subject to and limited by bankruptcy, insolvency, reorganization,moratorium and other similar laws affecting creditors' rights heretofore orhereafter enacted to the extent constitutionally applicable and that theirenforcement may also be subject to the exercise of judicial discretion inappropriate cases.

We have examined the executed and authenticated Supplemental Bondnumbered BR-1, and in our opinion the form of such bond and its execution andauthentication are regular and proper.

Very truly yours,

STEPTOE JOHNSON

04/19/90FNPSDJ.G330305/89001

CHARLES W. YEAGERCARL F. STUCKY, JR.HERBERT G. UNDERWOODJACKSON L. ANDERSONOTIS L. O'CONNORROBERT G. STEELE.1. LEE VAN METRE, JR.JAMES M. WILSONPATRICK D. DEEMROBERT M. STEPTOE, JR.ANNE R. WILLIAMSJAMES R. WATSONJAMES D. GRAYDOUGLAS S. ROCKWELLVINCENT A. COLLINSJAMES A. RUSSELLLUCIEN G. LEWINWILLIAM T. BELCHERMICHAEL L. BRAYJAMES D. STEPTOEDAVID C. CLOVISDANIEL R. SCHUDAJ. GREG GOODYKOONTZIRENE M. KEELEYEVANS L. KING, JR.WALTER L. WILLIAMSSUSAN S. BREWERSPRAGUE W. HAZARDHERSCHEL H. ROSE IIIDAVID LAYVAGRAY SILVER IIIRONALD H. HANLANC. DAVID MORRISONHARRY P. WADDELLCLEMENT D. CARTER IIIW. HENRY LAWRENCE IVJ. ROBERT GWYNNEWILLIAM E. GALEOTACHRISTOPHER P. BASTIENGORDON H. COPLANDRANDALL C. LIGHTSTEVEN P. McGOWAN

STEPTOE 8c JOHNSONATTORNEYS AT LAW

SIXTH FLOOR

UNION NATIONAL CENTER EAST

P. O. BOX 2190

CLARKSBURG, W. VA. 26302-2190

(304) 624-8000


CHARLES TOWN OFFICE

104 WEST CONGRESS STREET

P. 0. BOX 100

CHARLES TOWN, W. VA. 25414(304) 725-1414


RICHARD M. YURKO, JR.GARY W. NICKERSONCURTIS G. POWER IIISTEPHEN R. KERSHNERW. RANDOLPH FIFEMARTIN R. SMITH, JR.LOUIS E. ENDERLE, JR.ROBERT J. SCH IAVONIJOHN K. DORSEYWALTER WASHINGTONJOSEPH R. FERRETTIMARK E. KINLEYMARCIA J. POLLARDBRYAN R. COKELEYPATRICK D. KELLYFRANCESCA TANCHRISTINE S. VAGLIENTIWILLIAM P. YOUNGDAVID M. HAMMERWILLIAM F. ROHRBAUGHCAROLINE.). STAFFORDMATTHEW J. MULLANEYBRENT O. BURTONPAUL R. CRANSTONJONATHAN P. JESTERGRACE J. WIGALGINA M. HOUSEHOLDERMICHAEL KOZAKEWICH, JR.CYNTHIA R. TRIBBLE

OF COUNSELRALPH BOHANNONROGER J. PERRY


CHARLESTON OFFICE

71S CHARLESTON NATIONAL PLAZA

P. O. BOX 1588

CHARLESTON, W.VA. 25326(304) 342-2 191


MARTINSBURG OFFICE

126 EAST BURKE STREET

MARTn SBURG, W.VA. 25401(304) 263-6991


MORGANTOWN OFFICE

1000 HAMPTON CENTER

P. O. BOX 1616

MORGANTOWN, W.VA. 26507-1616(304) 598-8000


April 20, 1990

Fountain Public Service DistrictWater Revenue Bonds, Series 1990 A



We have examined a transcript of proceedings relating to the issuanceof $356,633 aggregate principal amount of Water Revenue Bonds, Series 1990 A (the"Local Bonds"), of Fountain Public Service District (the "Issuer"), and aCertificate as to Arbitrage executed by the Chairman of the Issuer on this date.

Based upon such Certificate as to Arbitrage, we are of the opinion thatthe facts, estimates and circumstances set forth in the Certificate as toArbitrage are sufficient to satisfy the requirements of Section 148 of theInternal Revenue-Code-of-1986;-as-amended--(the-"-Code")- to-support the conclusionthat the Local Bonds are not "arbitrage bonds" as therein defined. While we haveundertaken no independent verification or investigation of the certifications,statements, expectations or representations set forth in such Certificate as toArbitrage, no matters have come to our attention which make unreasonable orincorrect such certifications, statements, expectations or representations.

Assuming compliance with the certifications, representations,warranties and covenants contained in such Certificate as to Arbitrage, underexisting statutes, regulations, rulings and court decisions, the proceeds fromthe sale of the Local Bonds in the Bond Construction Trust Fund described in suchCertificate as to Arbitrage will not be subject to rebate to the United Statesunder Section 148(f) of the Code.


Accordingly, it is our opinion that, under existing statutes,regulations, rulings and court decisions, the Local Bonds are not "arbitragebonds" as so defined.

The opinions set forth above are subject to the condition that theIssuer comply with all requirements of the Code relating to arbitrage that mustbe satisfied subsequent to the issuance of the Local Bonds in order that interestthereon be, or continue to be, excluded from gross income for federal incometax purposes. The Issuer has covenanted to comply with all such requirements.Failure to comply with such requirements may cause the inclusion of interest onthe Local Bonds in gross income for federal income tax purposes to be retroactiveto the date of issuance of the Local Bonds.

04/19/90FNPSDJ.H330305/89001

L_J

Lynn A. Nelson

Attorney-At-Law

P.O. Drawer 458Keyser, WV 26726(304)-788-0300

April 20, 1990

West Virginia Water Development Authority1201 Dunbar AvenueDunbar, West Virginia

25064

Steptoe & JohnsonPost Office Box 2190Clarksburg, West Virginia 26301

Fountain Public Service DistrictWater Revenue Bonds

Series 1990 A and Series 1990 B

Ladies and Gentleman:

I am Counsel to Fountain Public Service District, a public

service district, in Mineral

County,

West

Virginia (the

"Issuer"). As such Counsel, I have examined copies of the

approving opinions of Steptoe & Johnson, as bond Counsel, a loan

agreement and supplemental loan agreement, both dated April 20,

1990, by and between the West Virginia Water Development

Authority (the "Authority") and the Issuer (collectively, the

"Loan Agreement"); the Local Act (as defined therein) and other

documents, papers, agreements, instruments and certificates

relating to the above-captioned Bonds of the Issuer and orders of

the County Commission of Mineral County relating to the Issuer

and the appointment of members of the Public Service Board of the

Issuer. Terms used in said opinions, Local Act and Loan

Agreement and not otherwise defined herein have the same meanings

herein.

I am of the opinion that:

1. The Issuer is duly created and validly existing as a

public service district and as a public corporation and political

subdivision of the State of West Virginia.

2. The Loan Agreement has been duly authorized, executed

and delivered by the Issuer and, assuming due authorization,

execution and delivery by the Authority, constitutes a valid and

binding agreement of the Issuer in accordance with its terms.

3. The members and officers of the Public Service Board of

the Issuer have been duly, lawfully and properly appointed and

elected, have taken the requisite oaths, and are authorized to

act in their respective capacities on behalf of the Issuer.

4. The Local Act has been duly adopted by the Issuer and is

in full force and effect.

5. The execution and delivery of the Bonds and the Loan

Agreement and the consummation of the transactions contemplated

by the Bonds, the Loan Agreement and the Local Act, and the

carrying out of the terms thereof, do not and will not in any

material respect conflict with or constitute on the part of the

Issuer a breach of or default under any agreement, document or

instrument to which the Issuer is a party or by which the Issuer

or its properties are bound or any existing law, regulation,

rule, order or decree to which the Issuer is subject.

6. The Issuer has received, or there have been entered, all

permits, licenses, approvals, consents, exemptions, orders,

certificates and authorizations necessary for the creation and

existence of the Issuer, the issuance of the Bonds, the

acquisition and construction of the Project, the operation of the

System and the imposition of rates and charges, including,

without limitation, all requisite orders, consents, certificates

and approvals from the County Commission of Mineral County and

the Public Service Commission of West Virginia, and the Issuer

has taken any other action required for the imposition of such

rates and charges, including, without limitation, the adoption of

a resolution prescribing such rates and charges. The time for

appeal of the final order of the Public Services Commission of

West Virginia entered March 2, 1990, in Case No. 89-620-PWD-CN,

among other things, approving and consenting to the issuance of

the Bonds and granting to the Issuer a certificate of public

convenience and necessity for the Project has expired prior to

the date hereof without appeal.

7. The -Issuer has duly published a notice of - the

acquisition and construction of the Project, issuance of the

Bonds and related matters, as required under Chapter 16, Article

13A, Section 25 of the West Virginia Code of 1931, as amended,

and has duly complied with the provisions thereof.

8. To the best of my knowledge, there is no action, suit,

proceeding or investigation at law or in equity before or by any

court, public board of body, pending or threatened, wherein an

unfavorable decision, ruling or finding would adversely affect

the transactions contemplated by the Loan Agreement, the Bonds

and the Local Act, the acquisition and construction of the

Project, the operation of the System or the validity of the bonds

or the collection or pledge of the Net Revenues therefor.

re/9 '*All counsel to this transaction may r-e-l-ecy

this opinion

as if specifically addressed to them.

Very Truly Yours,

LAN:dg


Water Revenue Bonds,Series 1990 A

CERTIFICATE AS TO ARBITRAGE

I, Gerald L. Cosner, Chairman of the Public Service Boardof Fountain Public Service District, in Mineral County, West Virginia(the "Issuer"), being one of the officials of the Issuer duly chargedwith the responsibility for the issuance of $356,633 aggregateprincipal amount of Water Revenue Bonds, Series 1990 A, of the Issuer,dated April 20, 1990 (the "Local Bonds"), hereby certify as follows:

1. This certificate is being executed and deliveredpursuant to Section 148 of the Internal Revenue Code of 1986, asamended, and the temporary and permanent regulations promulgatedthereunder or under any predecessor thereto (the "Code"). I am oneof the officers of the Issuer duly charged with the responsibility ofissuing the Bonds, hereinafter defined. I am familiar with the facts,circumstances and estimates herein certified and am duly authorizedto execute and deliver this certificate on behalf of the Issuer.

2. This certificate may be relied upon as the certificateof the Issuer.

3. The Issuer has not been notified by the InternalRevenue Service of any listing or proposed listing of it as an issuerthe certification of which may not be relied upon by holders ofobligations of the Issuer or that there is any disqualification of theIssuer by the Internal Revenue Service because a certification madeby the Issuer contains a material misrepresentation.

4. This certificate is based upon facts, circumstances,estimates and expectations of the Issuer in existence on April 20,1990, the date on which the Bonds are to be physically delivered inexchange for the issue price thereof, and to the best of my knowledgeand belief, the expectations of the Issuer set forth herein arereasonable.

5. In the Resolution pursuant to which the Bonds areissued, the Issuer has covenanted that (i) it shall not take, orpermit or suffer to be taken, any action with respect to the gross orother proceeds of the Bonds which would cause the Bonds to be"arbitrage bonds" within the meaning of Section 148 of the Code, and(ii) it will take all actions that may be required of it (including,without implied limitation, the timely filing of a federal information

return with respect to the Bonds) so that the interest on the Bondswill be and remain excluded from gross income for federal income taxpurposes, and will not take any actions which would adversely affectsuch exclusion.

6. The Local Bonds and the Series 1990 B Bonds (the"Supplemental Bonds"), which Supplemental Bonds bear no interest, weresold on April 20, 1990, to the West Virginia Water DevelopmentAuthority (the "Authority") for an aggregate purchase price of$373,275 (100% of par), there being no accrued interest paid thereon.The Supplemental Bonds are junior and subordinate to the Local Bonds.The Local Bonds and the Supplemental Bonds are collectively hereinreferred to as the "Bonds."

7. The Local Bonds are being delivered simultaneously withthe delivery of this certificate and are issued for the purposes of(i) paying a portion of the costs of acquisition and construction ofcertain new waterworks facilities of the Issuer (the "Project");(ii) paying interest on the Local Bonds during the construction ofthe Project and for not more than 6 months thereafter; and(iii) paying costs of issuance of the Local Bonds. The SupplementalBonds are being delivered simultaneously with the delivery of thiscertificate and are issued for the purposes of (i) paying a portionof the costs of acquisition and construction of the Project; and(ii) paying costs of issuance. of the Supplemental Bonds.

8. The Issuer shall, within 30 days following delivery ofthe Bonds, enter into agreements which require the Issuer to expendin excess of $100,000 on the Project, constituting a substantialbinding commitment, or has already done so. Acquisition, constructionand equipping of the Project will proceed with due diligence tocompletion, and, with the exception of proceeds constitutingcapitalized interest, all of the proceeds from the sale of the Bonds,together with any investment earnings thereon, will be expended forpayment of Costs of the Project on or before September, 1990, except

_ as otherwise required for- rebate --to-the-United States under

Section 148(f) of the Code. Construction of the Project is expectedto be completed by July, 1990.

9. The total cost of the Project (including all costs ofissuance of the Bonds) is estimated at $880,275. Sources and uses offunds for the Project are as follows:

2.

n

SOURCES

Gross Proceeds of Local Bonds

$356,633Gross Proceeds of SupplementalBonds

16,642Small Cities Block Grant

500,000Anticipated Investment Earnings

7,000Total Sources

$880,275

USES

Acquisition and Constructionof Project

$851,320Capitalized Interest onLocal Bonds

21,955Funded Reserve forLocal Bonds

-0-Funded Reserve for

Supplemental Bonds

-0-Costs of Issuance of Bonds

7.000Total Uses

$880,275

The amount of Project costs not expected to be reimbursed or paid fromSupplemental Bond proceeds and Grant receipts is estimated to be atleast equal to the gross proceeds of the Local Bonds. Except for theproceeds of the Local Bonds, the Supplemental Bonds, Grant receipts,and interest earnings during construction (to the extent not requiredfor rebate to the United States under Section 148(f) of the Code), noother funds of the Issuer will be available to meet costs of theProject, and no balances are available to meet such costs in anyaccount which may, without legislative or judicial action, be invadedto pay such expenditures without a legislative, judicial orcontractual requirement that such account be reimbursed.

10. Pursuant to Article V of the Local Act, the followingspecial-funds--oraccounts-havebeen-created:

(1) Revenue Fund;

(2) Renewal and Replacement Fund;

(3) Bond Construction Trust Fund;

(4) Rebate Fund;

(5) Series 1990 A Bonds Sinking Fund, and within theSeries 1990 A Bonds Sinking Fund, the Series 1990 A BondsReserve Account; and

3.

(6) Series 1990 B Bonds Sinking Fund, and within theSeries 1990BBonds Sinking Fund, theSeries 1990 BBondsReserve Account.

11. Pursuant to Article VI of the Local Act, the proceedsof the Local Bonds (and the Supplemental Bonds ) will be deposited asfollows:

(1) Local Bonds proceeds in the amount of $21,955 willbe deposited in the Series 1990 A Bonds Sinking Fund andapplied to payment of interest on the Local Bonds duringconstruction of the Project and for a period not to exceedsix months following completion thereof.

(2) Local Bonds proceeds in the amount of $-0- andSupplemental Bonds proceeds in the amount of $-0- will bedeposited in the Series 1990 A Bonds Reserve Account and theSeries 1990 B Bonds Reserve Account, respectively.

(3) The balance of the proceeds of the Local Bondsand the Supplemental Bonds will be deposited in the BondConstruction Trust Fund and applied solely to payment ofCosts of the Project, including costs of issuance of theBonds and related costs. Amounts in the Bond ConstructionTrust Fund, if invested, will be invested without yieldlimitation for a period necessary to complete the Project,not to exceed 3 years.

12. Moneys held in the Series 1990 A Bonds Sinking Fund and. the Series 1990 B Bonds Sinking Fund will be used solely to payprincipal of and interest on the Local Bonds and the SupplementalBonds, respectively, and will not be available to meet costs ofacquisition and construction of the Project. Except to the extenttransferred to the Rebate Fund at the request of the Issuer, all

-investment earnings on moneys in the Series 1990 A Bonds Sinking Fundand Series 1990 A Bonds Reserve Account and the Series 1990 B BondsSinking Fund and Series 1990 B Bonds Reserve Account will be withdrawntherefrom, not less than once each year, and, during construction ofthe Project, deposited into the Bond Construction Trust Fund, andfollowing completion of construction of the Project, will be depositedin the Revenue Fund, and such amounts will be applied in full, firstto the next ensuing interest payments, if any, due on the respectiveseries of Local Bonds and Supplemental Bonds, and then to the nextensuing principal payments due thereon.

13. Except for the Series 1990 A Bonds Sinking Fund and theSeries 1990 A Bonds Reserve Account and the Series 1990 B Bonds

4.

Sinking Fund and Series 1990 B Bonds Reserve Account, there are noother funds or accounts established or held by the Issuer which arereasonably expected to be used to pay debt service on the Local Bondsor the Supplemental Bonds, respectively, or which are pledged ascollateral for the Local Bonds or the Supplemental Bonds and for whichthere is a reasonable assurance that amounts therein will be availableto pay debt service on the Local Bonds or the Supplemental Bonds, ifthe Issuer encounters financial difficulties. The Issuer does notexpect that moneys in the Rebate Fund or the Renewal and ReplacementFund will be used or needed for payments upon the Bonds are availableand, because such amounts may be expended for other purposes, thereis no reasonable assurance that such amounts would be available tomeet debt service if the Issuer encounters financial difficulties;thus, such amounts may be invested without yield limitation. Exceptas provided herein, no funds which have been or will be used toacquire directly or indirectly securities, obligations, annuitycontracts, investment-type property or any residential rental propertyfor family units which is not located within the jurisdiction of theIssuer and which is not acquired to implement a court ordered orapproved desegregation plan producing a yield in excess of the yieldon the Bonds, have been or will be pledged to payment of the Bonds.Less than 10% of the proceeds of the Local Bonds, if any, will bedeposited in the Series 1990 A Bonds Reserve Account or any otherreserve or replacement fund, and less than 10% of the proceeds of theSupplemental Bonds, if any, will be deposited in the Series 1990 BBonds Reserve Account or any other reserve or replacement fund. Theamounts deposited in the Series 1990 A Bonds Reserve Account and theSeries 1990 B Bonds Reserve Account from time to time by the Issuerwill not exceed the maximum annual principal and interest on the LocalBonds and the Supplemental Bonds, respectively, and will not exceed125% of average annual principal and interest on the Local Bonds andthe Supplemental Bonds, respectively. Amounts in the Series 1990 ABonds Reserve Account and the Series 1990 B Bonds Reserve Account, notto exceed 10% of the proceeds of the Local Bonds and the SupplementalBonds, respectively, if invested, will be invested without yield1imi-tat-ion-. -The es-t-ab-l-ishment--of---the---Ser-ie-s--1990-A--Bonds-Reserve-Account and the Series 1990 B Bonds Reserve Account are required bythe Authority, are vital to its purchase of the Local Bonds and theSupplemental Bonds, respectively, and are reasonably required toassure payments of debt service on the Local Bonds and theSupplemental Bonds, respectively.

14. The Issuer expects to enter into a contract within6 months of the date hereof, or has already entered into such acontract, for the construction of the Project, and the amount to beexpended pursuant to such contract exceeds the lesser of 2 1/2% ofthe estimated total Project cost financed with proceeds from the saleof the Bonds or $100,000.

5.

0

15. Work with respect to the acquisition and constructionof the Project will proceed with due diligence to completion.Acquisition and construction is expected to be completed within4 months.

16. The Issuer will comply with the provisions of the Code,for which the effective date precedes the date of delivery of itsBonds to the Authority.

17. With the exception of the amount deposited in theSeries 1990 A Bonds Sinking Fund for payment of interest on the LocalBonds and amounts deposited in the Series 1990 A Bonds Reserve Accountand the Series 1990 B Bonds Reserve Account, all of the proceeds ofthe Bonds will be expended on the Project within 6 months from thedate of issuance thereof.

18. The Series 1990 A Bonds Sinking Fund and theSeries 1990 B Bonds Sinking Fund (other than the Series 1990 A BondsReserve Account and the Series 1990 B Bonds Reserve Account therein)are intended primarily to achieve a proper matching of payments ofdebt service on the Local Bonds and the Supplemental Bonds,respectively, each year. The Series 1990 A Bonds Sinking Fund and theSeries 1990 B Bonds Sinking Fund (other than the Series 1990 A BondsReserve Account and the Series 1990 B Bonds Reserve Account therein)will be depleted at least once a year except for a reasonablecarryover amount not in excess of the greater of 1/12th of annual debtservice on the Local Bonds or the Supplemental Bonds, respectively,or 1 year's interest earnings on the Series 1990 A Bonds Sinking Fundand the Series 1990 B Bonds Sinking Fund (other than the Series 1990 ABonds Reserve Account and the Series 1990 B Bonds Reserve Accounttherein). Except as otherwise allowed, any money deposited in theSeries 1990 A Bonds Sinking Fund and in the Series 1990 B BondsSinking Fund for payment of the principal of or interest on the LocalBonds and the Supplemental _Bonds,_ respectively_ (other_ than__the_Series 1990 A Bonds Reserve Account and Series 1990 B Bonds ReserveAccount therein), will be spent within a 13-month period beginning onthe date of receipt and will be invested without yield limitation.

19. All the proceeds of the Local Bonds which were usedfor the payment of costs of the Project will be expended for suchpurposes within three years of December 27, 1989.

20. The amount designated as cost of issuance of the Bondsconsists only of costs which are directly related to and necessary forthe issuance of the Bonds.

6.

21. All property financed with the proceeds of the Bondswill be held for federal income tax purposes by (or on behalf of) aqualified governmental unit.

22. The Issuer shall file Form 8038-G in a timely fashionwith the Internal Revenue Service Center, Philadelphia, Pennsylvania,19255.

23. No more than 10% of the proceeds of the Bonds will beused (directly or indirectly) in any trade or business carried on by,and less than 5% of the proceeds of Bonds or $5,000,000 have been orwill be used to make or finance loans to, any person who is not agovernmental unit.

24. The original proceeds of the Bonds will not exceed theamount necessary for the purposes of the issues, except to the extentany such proceeds are required for rebate to the United States.

25. The Issuer shall use the Bond proceeds solely for theProject, and the Project will be operated solely for a public purposeas a local governmental activity of the Issuer.

26. The Issuer shall not permit at any time or times anyof the proceeds of the Bonds or any other funds of the Issuer to beused directly or indirectly in a manner which would result in theexclusion of the Bonds from treatment afforded by Section 103(a) ofthe Code by reason of classification of the Bonds as "private activitybonds" within the meaning of the Code. The Issuer will take allactions necessary to comply with the Code and the Treasury Regulationspromulgated or to be promulgated thereunder.

27. The Bonds are not, and will not be, in whole or part,directly or indirectly, federally guaranteed within the meaning ofSection 149(b) of the Code.

Z8--- The-I-ssuer-will-rebate to the-United-States-the-amount;

- -if any, required by the Code and to take all steps necessary to makesuch rebates. In the event the Issuer fails to make such rebates asrequired, the Issuer shall pay any and all penalties and other amountsfrom lawfully available sources, and obtain a waiver from the InternalRevenue Service, if necessary, in order to maintain the exclusion ofinterest on the Bonds from gross income for federal income taxpurposes.

29. The Issuer has retained the right to amend theResolution authorizing the issuance of the Bonds if such amendment isnecessary to assure compliance with Section 148(f) of the Code or as

7.

may otherwise be necessary to assure the exclusion of interest on theBonds from the gross income of the holders thereof.

30. The Issuer shall comply with the yield restriction onBond proceeds as set forth in the Code.

31. The Issuer has either (a) funded the Series 1990 ABonds Reserve Account at the maximum amount of principal and interestwhich will mature and become due on the Local Bonds in the thencurrent or any succeeding year with the proceeds of the Local Bonds,or (b) created the Series 1990 A Bonds Reserve Account which will befunded with equal payments made on a monthly basis over a 10 yearperiod until such Series 1990 A Bonds Reserve Account holds an amountequal to the maximum amount of principal and interest which willmature and become due on the Local Bonds in the then current or anysucceeding year. Moneys in the Series 1990 A Bonds Reserve Accountand the Series 1990 A Bonds Sinking Fund (established for the annualpayment of principal and interest) will be used solely to payprincipal of and interest on the Local Bonds and will not be availableto pay costs of the Project.

32. The Issuer shall submit to the Authority within 15 daysfollowing the end of each bond year a certified copy of its rebatecalculation and a certificate with respect thereto or, if the Issuerqualifies for the small governmental issuer exception to rebate, orany other exception thereto, then the Issuer shall submit to theAuthority a certificate stating that it is exempt from the rebateprovisions and that no event has occurred to its knowledge during thebond year which would make the Bonds subject to rebate.

33. The Issuer expects that no part of the Project financedby the Bonds will be sold or otherwise disposed of prior to the lastmaturity date of the Bonds.

34. The Issuer covenants and agrees to comply with the--rebate--requirements--of-the- Codeif- not-exempted- therefrom, -and-withall other requirements of the Code necessary, proper or desirable tomaintain the tax-exempt status of the Bonds and the interest thereon.In addition, the Issuer has covenanted to comply with all Regulationsfrom time to time in effect and applicable to the Bonds as may benecessary in order to fully comply with Section 148(f) of the Code,and has covenanted to take such actions, and refrain from taking suchactions, as may be necessary to fully comply with such Section 148(f)of the Code and such Regulations, regardless of whether such actionsmay be contrary to any of the provisions of the Resolutionsauthorizing issuance of the Bonds.

8.

The Issuer has further covenanted to calculate, annually,the rebatable arbitrage, determined in accordance with Section 148(f)of the Code. Upon completion of each such annual calculation, unlessotherwise agreed by the Authority, the Issuer shall deposit, or causeto be deposited, in the Rebate Fund such sums as are necessary tocause the aggregate amount on deposit in the Rebate Fund to equal thesum determined to be subject to rebate to the United States, whichshall be paid from investment earnings on the underlying fund oraccount established hereunder and on which such rebatable arbitragewas earned or from other lawfully available sources. The Issuer hasfurther covenanted pay, or cause to be paid, to the United States,from the Rebate Fund, the rebatable arbitrage in accordance withSection 148(f) of the Code and such Regulations. The Issuer shallremit payments to the United States in the time and at the addressprescribed by the Regulations as the same may be in time to time ineffect with such reports and statements as may be prescribed by suchRegulations. In the event that, for any reason, amounts in the RebateFund are insufficient to make the payments to the United States whichare required, the Issuer shall assure that such payments are made bythe Issuer to the United States, on a timely basis, from any fundslawfully available therefor.

35. The Bonds are a fixed yield issue. No interest orother amount payable on any of the Bonds (other than in the event ofan unanticipated contingency) is determined by reference to (or byreference to an index that reflects) market interest rates or stockor commodity prices after the date of issue.

36. None of the Bonds has a yield-to-maturity more thanone-fourth of one percent higher than the yield on the Bond determinedby assuming the Bond is retired on the date that when used incomputing the yield on the Bond produces the lowest yield.

37. No portion of the proceeds of the Bonds will be used,directly or indirectly, to replace funds which were used, directlyorindir-ec-tly-,--to-acquirehigher-yielding-investments, -all -within the-meaning of Section 148 of the Code.

38. There are no other obligations of the Issuer which(a) are to be issued at substantially the same time as the Bonds,(b) are to be sold pursuant to a common plan of financing togetherwith the Bonds and (c) will be paid out of substantially the samesources of funds of funds or will have substantially the same claimto be paid out of substantially the same sources of funds as theBonds.

39. The Issuer will expend the gross proceeds of the Bonds(other than any gross proceeds held in the Series 1990 A Bonds Sinking

9.

Fund and the Series 1990 B Bonds Sinking Fund) for the Project nolater than the day which is two years after the date of issuance ofthe Bonds. The Issuer will expend the net proceeds (including,without limitation, investment proceeds earned before the close of theperiod involved on the investment of the sale proceeds of the Bonds)of the Bonds for the Project within the following periods beginningon the date of issuance of the Bonds:

Not less than 10 percent within 6 months,

Not less than 45 percent within 1 year,

Not less than 75 percent within 18 months, and

Not less than 100 percent within 2 years

(except for a reasonable retainage not exceeding 5% of the netproceeds of the Bonds which will be spent within 3 years). The Issuershall, within 30 days after the end of each six month period describedabove, and every six month period thereafter until all the proceedsof the Bonds have been expended for the Project, certify to theAuthority the amount of expenditure from Bond proceeds as of the endof such period. The Issuer has elected the application ofSection 148(f)(4)(B)(iv)(V) of the Code to the Bonds and has agreedto pay a penalty with respect to the close of each 6-month periodafter the date the Bonds are issued equal to 1-1/2 percent of theamount of the net proceeds of the Bonds which, as of the close of suchperiod, are not spent as set forth in this paragraph. At least 75%of the net proceeds of the Bonds are to be used for constructionexpenditures with respect to property owned by the Issuer, and theProject will be owned by the Issuer.

40. The transaction contemplated herein does not representan, exploitation of the difference between taxable and tax-exemptinterest rates and the execution and delivery of the Bonds is notoccurring sooner than otherwise necessary, nor are the Bonds inprincipal amounts greater than otherwise necessary or to beoutstanding longer than otherwise necessary.

41. On the basis of the foregoing, it is not expected thatthe proceeds of the Bonds will be used in a manner that would causethe Bonds to be "arbitrage bonds" within the meaning of Section 148of the Code.

42. To the best of my knowledge, information and beliefthere are no other facts, estimates and circumstances which wouldmaterially change the expectations herein expressed.

10.

43. Steptoe & Johnson is entitled to rely upon therepresentations, expectations, covenants, certifications andstatements contained herein in rendering its opinions regarding thetax-exempt status of interest on the Bonds.

44. To the best of my knowledge, information and belief,the-foregoing expectations are reasonable.

IN WITNESS WHEREOF, I have set my hand this 20th day ofApril, 1990.


04/13/90FNPSDJ.K230305/89001

11.

CERTIFICATE

The- undersigned certifies that I am duly authorized toexecute this Certificate on behalf of R. W. Smith & Associates, P.C.,Consulting Engineer for Fountain Public Service District, and, basedon the anticipated construction schedule and schedule of expendituresof the proceeds of the Bonds (as defined in the Certificate as toArbitrage to which this Certificate is attached), the representationsset forth in Paragraph 39 of such Certificate as to Arbitrage withrespect to the expenditures of proceeds of the Bonds are reasonable.


R. W. SMITH & ASSOCIATES, P.D.

,By 6,-1- l

04/13/90FNPSDJ.U130305/89001

Its



ENGINEER'S CERTIFICATE

I, y--O'j'ev E-y(jam= . M (7774 , Registered ProfessionalEngineer, West Virginia License No. 7771, of R. W. Smith &Associates, P.C., consulting engineers, of Staunton, Virginia, herebycertify as follows:

1. My firm is engineer for the acquisition andconstruction of certain new waterworks facilities (the "Project") ofFountain Public Service District in Mineral County, West Virginia (the"Issuer"). Certain costs of such acquisition and construction arebeing financed by proceeds of the above-captioned bonds (the "Bonds")anticipated to be purchased by the West Virginia Water DevelopmentAuthority (the "Authority") and certain grant proceeds from the Stateof West Virginia.

2. I hereby certify that (i) the Project will beconstructed in accordance with the approved plans, specifications anddesigns prepared by my firm or amendments thereto and as described inthe Application submitted to the Authority and approved by allnecessary governmental bodies and will be situate wholly or chieflywithin the boundaries of Fountain Public Service District; (ii) theProject is adequate for the purpose for which it was designed and allapplicable and necessary governmental approvals, certificates,permits, exemptions, consents and authorizations for the acquisitionand construction thereof have been obtained; (iii) I have examined andreviewed all plans, specifications, bid documents_ and constructioncontracts relating to the Project and all bids for acquisition andconstruction of the Project have been received in an amount and areotherwise compatible with the plan of financing described in saidApplication and I will ascertain that all contractors have maderequired provisions for all insurance and payment and performancebonds and such insurance policies or binders and such bonds will beverified for accuracy and completeness prior to commencement ofacquisition and construction of the Project; (iv) the Issuer hasobtained all permits required by the laws of the State ofWest Virginia and the United States of America . necessary foracquisition and construction of the Project; (v) the acquisition andconstruction of and funding for the Project should proceed to asuccessful conclusion within the time schedules proposed; (vi) theuseful life of the facilities constituting the Project is not lessthan 40 years; (vii) the rates and charges for the sewerage system of

/5

the Issuer comply with the applicable provisions of the Loan Agreementand Supplemental Loan Agreement by and between the Authority and theIssuer; (viii) the net proceeds of the Bonds, together with theproceeds of the grants and other moneys on deposit or to besimultaneously deposited and irrevocably committed therefor, will besufficient to pay the costs of acquisition and construction of theProject as set forth in the Application submitted to the Authority asof the date of the Loan Agreement; and (ix) attached hereto asExhibit A is the final amended "Schedule A - Total Cost of Project andSources of Funds" for the Project.

WITNESS my signature on this 20th day of April, 1990.

e4tstsrY1

V11 '•,,S

°4sR. W. SMITH & .9

0Sc t 'vAT.Et 'j^ .^

04/11/90FNPSDJ.L230305/89001

[SEAL]

2.

1

EXHIBITA

DATE: 4/16/90

AMENDED SCHEDULE ANAME OF GOVERNMENTAL AGENCY: FOUNTAIN PUBLIC SERVICE DISTRICT

TOTAL COST. OF PROJECT AND SOURCES OF.FUNDS

A.

Cost of Project

.

1.

Construction2.

Technical

Services3.

Legal

and Fiscal4.

Administrative

$_ .6701 873.

$

851,320.

$_ 120,300.$

5,000.$

10,000._5.

Site and Other Lands6.

Step

I

and/or Step

II Design or OtherLoan Repayment

(Specify Type:

$___15 000.

$

-0-7.

Interim Financing Costs8.

Contingency9.

Total

of

Lines

1

through

$

-0-$

30,147.8

B.

Sources of Funds

10.

Federal

Grants: '$

-500,000.(Specify Source)

$

-

11.

State

Grants : '(Specify Source)

$$

12.

Other

Grants: ' $(Specify Source) $

13.

Any Other

Source 2

Interest During Construction $

7,000.(Specify) $

14. Total

of Lines

10 through

13 507,000.15. Proceeds Required from Bond

Issue(Line

9

less

Line

14) $

344,320.C.

Cost

of

Financing

16. Capitalized

Interest

$

21,955.(construction period plus

six months)17. Funded Reserve Account '$

-0-18. Other Costs '$

-0-$

7,000_.19. Total Cost of Financing $

28,955.20. Size of . Bond

Issue(Line

15

plus

Total

from Line

19) $

373,275.

2

3

Attach supporting documentation not previously submitted.

If not yetavailable, state such and expectations as to availability.

t-For example, interest earnings during construction, if applicable.Include the proceeds of any parity or subordinate bond issue to beused for such purpose and attach supporting documentation if available(if not yet available, state such and expectations as to availability.Consult with bond counsel and the Authority before assuming a fundedreserve.

`For -example, fees of bond counsel for the Governmental Agency.

Additional or explanatory material may be provided on additional sheetsattached to Amended Schedule A.

APPLICANT

CONSULTING ENGINEER

WV MUNICIPAL

'D COMMISSIONSuite 337 Building 31800 Washington St. EState Capitol ComplexCharleston, WV 25305

(304) 348-3971

NEW ISSUE REPORT FORM

Date of Report: April 20, 1990

(See Reverse for Instructions)

ISSUE:

Fountain Public Service DistrictWater Revenue Bonds, Series 1990 Ac o

inera

oun y

omission,ADDRESS: Keyser, West Virqinia '26726

firms ran•

reeCOUNTY: Mineral_

PURPOSE

New Money

x

OF

ISSUE:

Refunding

Refunds

issue(s) dated:

ISSUE DATE: April 20, 1990 CLOSING DATE:

April 20, 1990

ISSUE AMOUNT:$ 356,633

RATE:

7.85%

1st DEBT SERVICE DUE: October 1, 1990 1st PRINCIPAL DUE:

October 1, 1991

1st DEBT SERVICE AMOUNT:

$12,520.29 PAYING AGENT:Municipal Bond Commission

ISSUERSBOND COUNSEL:

Steptoe& JohnsonUNDERWRITERS

Jackson & KellyBOND COUNSEL:

Contact Person: Vincent A. Collins, Esq. Contact Person: Samme L. Gee, Esq.

Phone: 624-8000 Phone: 340-1318

CLOSING BANK:

First National Bank ESCROW TRUSTEE:

Contact Person: Contact Person:

Phone: 355-2313 Phone:

KNOWLEDGEABLE ISSUER CONTACT OTHER:

Contact Person: Gerald L. Cosner Contact Person:

Position: Chairman Function:


DEPOSITS TO MBC AT CLOSE:

Accrued Interest: $

By

Wirex

Capitali zed Interest:

$ 21,955Reserve Account: $x

CheckOther: $

---------------------------------------- ----------------------------------------------

REFUNDS & TRANSFERS BY MBC AT CLOSE:By

Wire To Escrow Trustee:

$To

Issuer:Check IGT To Cons. Invest.

Fund :

$To Other:

$

NOTES:

FOR MUNICIPAL BOND COMMISSION USE ONLY:DOCUMENTSREQUIRED:TRANSFERSREQUIRED:

The purpose of the NEW ISSUE REPORT FORM is to provide the WVMunicipal Bond Commission with an early warning of three basis factsno later than the day ofclosing on any issue for which the Commissionis to act as fiscal agent. These are:

1. Formal notification that a new issue is outstanding.2. Date of first action or debt service.3. Contact people should we lack documents, information, or funds

needed to administer the issue by the date of the firstaction or debt service.

The Commission recognizes that as bond transcripts becomeincreasingly long and complex, it has become more difficult to assembleand submit them to the Commission within the 30 days specified by the WVCode 13-3-8. This notice is not intended to provide all the informationneeded to administer an issue, but to alert the Commission and ensurethat no debt service payments are missed due to delays in assemblingbond transcripts. If, at the time of closing, documents such as theordinance and all suppliments, debt service schedules, and a specimenbond or photostat are available and submitted with this form, it willgreatly aid the Commission in the performance of its duties. Thesedocuments are needed to set up the proper accounts and to advise theissuer of monthly deposit requirements as far in advance of the firstdebt service as possible.

It is not necessary to complete all items if they are; not pertinentto your issue. Indicate the County of the issuer. With PSDs that over-lap more than one county, indicate the county of their business office.Complete "Rate" only if the issue has only one rate.

Please complete aseparate form for each series of an issue.

Other important informationcan be recorded under "Notes".

Again, please submit this form on each new issue on the day ofclosing. If fund transfers into or out of the Commission at close arerequired, please submit this form before closing.

If no significantfacts change by closing, no resubmission at close is required. If,however, there are changes, please submit an updated form, with changesnoted, at close.

If you should have any questions concerning this forrh, please callthe Commission.

WV MUNICIPAL E^ ^) COMMISSIONSuite 337 duilding 31800 Washington St. EState Capitol ComplexCharleston, WV 25305

(304) 348-3971

NEW ISSUE REPORT FORM

Date of Report: April 20, 1990

(See Reverse for Instructions)

ISSUE:

Fountain Public Service District Water Revenue Bonds, Series 1990B

c o Minera

County Commission,

• , rms ro 0

reeADDRESS: Keyser, West Virgin i a

'26726

COUNTY: MineralPURPOSE

New Money

xOF

ISSUE:

Refunding

Refunds

issue(s) dated:

ISSUE DATE:

April 20, 1990 CLOSING DATE:

April 20, 1990

ISSUE AMOUNT:$

16,642

RATE: 0%

1st DEBT SERVICE DUE:

October 1, 1991 1st PRINCIPAL DUE:

October 1,1991

1st DEBT SERVICE AMOUNT: 426.64 PAYING AGENT:

Municipal Bond Commission

ISSUERS

Steptoe & Johnson UNDERWRITERS

Jackson & KellyBOND COUNSEL: BOND COUNSEL:

Contact Person: Vincent A. Collins, Esq. Contact Person:Samme L. Gee,Esq.

Phone: 624-8000 Phone: 340-1318

CLOSING BANK:

First National Bank ESCROW TRUSTEE:

Contact Person: Contact Person:


KNOWLEDGEABLE ISSUER CONTACT OTHER:

Contact Person: Gerald L. Cosner Contact Person:

Position: Chairman Function:


DEPOSITS TO MBC AT CLOSE:

Accrued

Interest:

$

By

Wire

Capitalized

Interest:

$Reserve Ac

Check

count:

$Other: $

REFUNDS & TRANSFERS BY MBC AT CLOSE:By

Wire

To EscrowTrustee:

$Check

To Issuer: $- -I-G--T--

- To-Cons-Invest-FundTo Other: $

NOTES:

FOR MUNICIPAL BOND COMMISSION USE ONLY:DOCUMENTSREQUIRED:TRANSFERSREQUIRED:

a5^

The purpose of the NEW ISSUE REPORT FORM is to provide the WVMunicipal Bond Commission with an early warning of three basis factsno later than the day of closing on any issue for which the Commissionis to act as fiscal agent. These are:

1. Formal notification that a new issue is outstanding.2. Date of first action or debt service.3. Contact people should we lack documents, information, or funds

needed to administer the issue by the date of the firstaction or debt service.

The Commission recognizes that as bond transcripts becomeincreasingly long and complex, it has become more difficult to assembleand submit them to the Commission within the 30 days specified by the WVCode 13-3-8. This notice is not intended to provide all the informationneeded to administer an issue, but to alert the Commission and ensurethat no debt service payments are missed due to delays in assemblingbond transcripts. If, at the time of closing, documents such as theordinance and all suppliments, debt service schedules, and a specimenbond or photostat are available and submitted with this form, it willgreatly aid the Commission in the performance of its duties. Thesedocuments are needed to set up the proper accounts and to advise theissuer of monthly deposit requirements as far in advance of the firstdebt service as possible.

It is not necessary to complete all items if they are not pertinentto your issue. Indicate the County of the issuer. With PSDs that over-lap more than one county, indicate the county of their business office.Complete "Rate" only if the issue has only one rate.

Please complete aseparate form for each series of an issue.

Other important informationcan be recorded under "Notes".

Again, please submit this form on each new issue on the day ofI-ffund---tr--ansf-ers--in-to--or--out -of---the-Commission

-- at c--lose- are-required, please submit this form before closing.

If no significantfacts change by closing, no resubmission at close is required. If,however, there are changes, please submit an updated form, with changesnoted, at close.

If you should have any questions concerning this form, please callthe Commission.

XX:-Minerai County

ARCH A. MOORE. JR.

GOVERNOR

STATE OF WEST VIRGINIA

OFFICE OF THE GOVERNORCHARLESTON 25305

March 25, 1988

The Honorable David W. FertigPresidentMineral County CommissionPost Office Drawer 250Keyser, West Virginia 26726

Dear Commissioner Fertig:

I am pleased to confirm my a pproval of the Small CitiesBlock Grant application in the amount of $500,000 to the MineralCounty Commission. These funds will enable you to construct awater system far the Fountainhead community.

In order to most effectively use the limited dollarsavailable, I hereby commit $250,000 from our FY 1987 allocationwhich will be immediately available to you. The remaining$250,000 necessary to complete this project will be evaluated andcommitted in the coming fiscal year. I encourage the MineralCounty Commission to immediately expedite this project and reachits completion as quickly as possible with this funding strategyin mind.

It is with great pleasure that I am able to work with you tomake this improvement a reality for the citizens of mineralCounty.

AAMJr: rs

Q6 A



ACCEPTANCE OF DUTIES OF REGISTRAR

ONE VALLEY BANK, NATIONAL ASSOCIATION, a national bankingassociation with its principal office in the City of Charleston,West Virginia, hereby accepts appointment as Registrar in connectionwith the Fountain Public Service District Water Revenue Bonds,Series 1990 A and Series 1990 B, all dated April 20, 1990, in theaggregate principal amount of $373,275 and agrees to perform allduties of Registrar in connection with such Bonds, all as set forthin the Local Act authorizing issuance of the Bonds.

Dated this 20th day of April, 1990.

ONE VALLEY BANK, NATIONAL ASSOCIATION

By

04/13/90FNPSDJ.P230305/89001



ACCEPTANCE OF DUTIES OF DEPOSITORY BANK

THE NATIONAL BANK OF KEYSER, a national banking corporation,with principal office in Keyser, West Virginia, hereby acceptsappointment as Depository Bank in connection with a Bond and NotesResolution of Fountain Public Service District, adopted April 18,1990, authorizing issuance of the District's Water Revenue Bonds,Series 1990 A and Series 1990 B, both dated April 20, 1990, in theaggregate principal amount of $373,275 (collectively, the "Bonds") andagrees to perform all duties of Depository Bank in connection withsuch Bonds, all as set forth in said Resolution.

Dated this 20th day of April, 1990.

THE NATIONAL BANK OF KEYSER

04/18/90FNPSDJ.Y130305/89001

as



CERTIFICATE OF REGISTRATION OF BONDS

I, CHARLOTTE S. MORGAN, Corporate Trust AdministrativeOfficer of ONE VALLEY BANK, NATIONAL ASSOCIATION, as Registrar underthe Local Act and Registrar's Agreement providing for the $373,275aggregate principal amount of Water Revenue Bonds, Series 1990 A andSeries 1990 B, of Fountain Public Service District (the "Issuer"),hereby certify that on the 20th day of April, 1990, the single fullyregistered Series 1990 A Bond of the Issuer in the principal amountof $356,633 designated "Water Revenue Bond, Series 1990 A," numberedAR-1, and the single fully registered Series 1990 B Bond of the Issuerin the principal amount of $16,642 designated "Water Revenue Bond,Series 1990 B," numbered BR-l, were registered as to principal andinterest (the Series 1990 B Bond being registered as to principalonly) in the name of "West Virginia Water Development Authority" inthe books of the Issuer kept for that purpose at our office, by a dulyauthorized officer on behalf of One Valley Bank, National Association,as Registrar.

WITNESS my signature as of this 20th day of April, 1990.

04/13/90FNPSDJ.R230305/89001

a9

REGISTRAR'S AGREEMENT

THIS REGISTRAR'S AGREEMENT, dated as of the 20th day ofApril, 1990, by and between FOUNTAIN PUBLIC SERVICE DISTRICT, a publiccorporation and political subdivision of the State of West Virginia(the "Issuer"), and ONE VALLEY BANK, NATIONAL ASSOCIATION, a nationalbanking association (the "Registrar").

WHEREAS, the Issuer has, contemporaneously with theexecution hereof, issued and sold its $373,275 aggregate principalamount of Water Revenue Bonds, Series 1990 A and Series 1990 B, infully registered form (collectively, the "Bonds"), pursuant to a Bondand Notes Resolution adopted April 18, 1990, and a SupplementalResolution adopted April 18, 1990 (collectively, the "Local Act");

WHEREAS, capitalized words and terms used in thisRegistrar's Agreement and not otherwise defined herein shall have therespective meanings given them in the Local Act, a copy of which isattached as Exhibit A hereto and incorporated herein by reference;

WHEREAS, the Local Act provides for an appointment by theIssuer of a Registrar for the Bonds; and

WHEREAS, the Issuer desires to appoint, and by the LocalAct and this Registrar's Agreement does appoint, the Registrar to actas Registrar under the Local Act and to take certain other actionshereinafter set forth;

_ NOWTHEREFORE ,__ it is - agree-d-__by __and_ _between __the- par-ties

- -hereto as follows:

1. Upon the execution of this Registrar's Agreement bythe Issuer and the Registrar and during the term hereof, the Registrardoes accept and shall have and carry out the powers and duties ofRegistrar for the Bonds, all as set forth in the Local Act, suchduties including, among other things, the duties to authenticate,register and deliver Bonds upon original issuance and when properlypresented for exchange or transfer, and shall do so with the intentionof maintaining the exclusion of interest on the Bonds from grossincome for federal income tax purposes, in accordance with any rulesand regulations promulgated by the United States Treasury Departmentor by the Municipal Securities Rulemaking Board or similar regulatorybodies as the Issuer advises it of and with generally acceptedindustry standards.

3()

2. The Registrar agrees to furnish the Issuer withappropriate records of-alltransactions carried out by it as Registrarand to furnish the Issuer with the names and specimen signatures ofthe Registrar's authorized officers for the purposes of acting as theRegistrar and with such other information and reports as the Issuermay from time to time reasonably require.

3. The Registrar shall have no responsibility or liabilityfor any action taken by it at the specific direction of the Issuer.

4. As compensation for acting as Registrar pursuant tothis Registrar's Agreement, the Issuer hereby agrees to pay to theRegistrar, from time to time, the compensation for services renderedas provided in the annexed schedule and reimbursement for reasonableexpenses incurred in connection therewith.

5. It is intended that this Registrar's Agreement shallcarry out and implement provisions of the Local Act with respect tothe Registrar. In the event of any conflict between the terms of thisRegistrar's Agreement and the Local Act, the terms of the Local Actshall govern.

6. The Issuer and the Registrar each warrants andrepresents that it is duly authorized and empowered to execute andenter into this Registrar's Agreement and that neither such executionnor the performance of its duties hereunder or under the Local Actwill violate any order, decree or agreement to which it is a party orby which it is bound.

7. This Registrar's Agreement may be terminated by eitherparty upon 60 days' written notice sent by registered or certifiedmail to the other party, at the following respective addresses:

ISSUER:

Fountain Public Service Districtc/o Mineral County Commission150 Armstrong StreetKeyser, West Virginia 26726Attention: Chairman

REGISTRAR:

One Valley Bank, National AssociationPost Office Box 1793One Valley SquareCharleston, West Virginia 25326Attention: Corporate Trust Department

2.

8. The Registrar is hereby requested and authorized toauthenticate and deliver the Bonds in accordance with the Local Act.

IN WITNESS WHEREOF, FOUNTAIN PUBLIC SERVICE DISTRICT and ONEVALLEY BANK, NATIONAL ASSOCIATION, have respectively caused thisRegistrar's Agreement to be signed in their names and on their behalf,all as of the day and year first above-written.


By

04/13/90FNPSDJ.S230305/89001

3.

EXHIBIT A

[Included in transcript as Document No. 1]

4.

SCHEDULE OF COMPENSATION

5.

Invoice ONWALLEYBANK

0

1rFOUNTAIN PUBLIC SERVICE DISTRICTATT: CHAIRMANKEYSER,- WV 26726

L

APRIL 2-0-, 1990DATE

J

UNITS ITEM DESCRIPTION^GcJ^T i 'C^

$373,275 PARAOUNTAIN PUBLIC SERVICEDISTRICT

REVENUE BONDS, SERIES 1990AAND SERIES 1990 B.

ONE TIME FEE FOR SERVICES AS REGISTRARAND AUTHENICATING AGENT.

TOTAL

$500.00

SEND REMITTANCE TO: One Valley BankOne Valley SquareP.O. Box 1793Charleston, WV 25326

Attn:CHARLOTTE S MORGAN

( ^)

ASSIGNMENT SEPARATE FROM BOND

FOR VALUE RECEIVED, the West Virginia Water DevelopmentAuthority hereby sells, assigns and transfers unto One Valley Bank,National Association, Charleston, West Virginia, the Water RevenueBond, Series 1990 A, of Fountain Public Service District in theprincipal amount of $356,633, numbered AR-1, standing in the name ofWest Virginia Water Development Authority on the books of said Issuer.


WEST VIRGINIA WATER DEVELOPMENT AUTHORITY

By

04/13/90FNPSDJ.T230305/89001

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