COMBINATION TRUST INDENTURE, SECURITY AGREEMENT AND FIXTURE FILING STATEMENT. among SUSSEX SCHOOL, INC., Grantor, FIRST SECURITY BANK OF MISSOULA,

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1 After Recording, please return to: DRAFT First Security Bank of Missoula 1704 Dearborn Avenue Missoula, Montana Attn: Andrew Larson This Combination Trust Indenture, Security Agreement and Fixture Filing Statement (i) is a Trust Indenture under the Small Tract Financing Act of Montana, (ii) contains future advance and after-acquired property provisions, (iii) creates a security interest in Fixtures, (iv) constitutes an assignment of the interests of Sussex School, Inc., as lessor, in leases with respect to the trust estate, (v) secures an obligation incurred to finance construction of an improvement on land and is a construction mortgage within the meaning of Montana Code Annotated, Section 30-9A-334(8) and (vi) constitutes a fixture filing statement under Montana Code Annotated, Section 30-9A-502(3), and is to be filed in the public real estate records. COMBINATION TRUST INDENTURE, SECURITY AGREEMENT AND FIXTURE FILING STATEMENT among SUSSEX SCHOOL, INC., Grantor, FIRST SECURITY BANK OF MISSOULA, Beneficiary, and WESTERN TITLE AND ESCROW, Trustee Dated July, 2010 Relating to: $900,000 City of Missoula, Montana Economic Development Revenue Note (Sussex School Qualified 501(c)(3) Project) Series 2010

2 TABLE OF CONTENTS (For convenience only; not a part of this Trust Indenture) Page PARTIES... 1 RECITALS... 1 GRANTING CLAUSES... 2 ARTICLE ONE - DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION... 4 Section 1-1. Definitions... 4 Section 1-2. Exhibits... 8 Section 1-3. Rules of Interpretation... 8 ARTICLE TWO - GENERAL COVENANTS... 8 Section 2-1. Title and Instruments of Further Assurance... 8 Section 2-2. Rights Under the Loan Agreement... 9 Section 2-3. Performance of and Authority for Covenants Section 2-4. Recording and Filing... 9 Section 2-5. Improvements, Fixtures and Equipment Covenants... 9 Section 2-6. Assignment of and Security Interest in Leases and Rents Section 2-7. Future Advances... Section 2-8. Construction Mortgage... Section 2-9. Waiver of Purchase Money Mortgage... Section Indemnification... ARTICLE THREE - POSSESSION AND USE OF THE TRUST ESTATE AND POWERS OF BENEFICIARY AND TRUSTEE Section 3-1. Possession and Use Section 3-2. Powers of Beneficiary and Trustee Section 3-3. Protection of Security ARTICLE FOUR - MAINTENANCE, MODIFICATION, TAXES, INSURANCE AND FINANCIAL STATEMENTS Section 4-1. Maintenance Section 4-2. Liens Section 4-3. Modifications to Facilities Section 4-4. Taxes and Other Governmental Charges and Utility Charges Section 4-5. Insurance Section 4-6. Advances Section 4-7. Financial Statements Section 4-8. Environmental Matters ARTICLE FIVE - DAMAGE, DESTRUCTION AND CONDEMNATION Section 5-1. Grantor To Repair, Replace, Rebuild or Restore Section 5-2. Cooperation of the Trustee and Beneficiary

3 ARTICLE SIX - EVENTS OF DEFAULT AND REMEDIES Section 6-1. Events of Default Section 6-2. Acceleration Section 6-3. Other Remedies Section 6-4. Application of Payments Section 6-5. Surrender of Possession after Sale Section 6-6. Title Evidence and Insurance Policies Section 6-7. Effect of Discontinuation of Proceedings Section 6-8. Costs of Invoking Remedies Section 6-9. Waivers, Cumulative Rights, Etc Section Appointment of Receiver ARTICLE SEVEN - MISCELLANEOUS Section 7-1. Supplements or Amendments to this Trust Indenture Section 7-2. Interest Limitations Section 7-3. Subrogation Section 7-4. Further Assurances Section 7-5. Right To Deal with Successors Section 7-6. No Claim against Beneficiary or Trustee Section 7-7. Binding on Successors Section 7-8. Trustee Section 7-9. Request for Notice of Default Section Security Interest and Fixture Filing Statement Section Severability Section Notices Section Counterparts Section Montana Law Section Appointment of a Successor Trustee Section 7-16 Reconveyance Section Certain Payments SIGNATURES ACKNOWLEDGMENTS REQUEST FOR PARTIAL RECONVEYANCE REQUEST FOR FULL RECONVEYANCE EXHIBIT A... A-1 3

4 THIS COMBINATION TRUST INDENTURE, SECURITY AGREEMENT AND FIXTURE FILING STATEMENT, dated as of July, 2010, among SUSSEX SCHOOL, INC., a Montana nonprofit corporation with its office in Missoula, Montana (as hereinafter defined, the Grantor ), WESTERN TITLE AND ESCROW, a [ ], (as hereinafter defined, the Trustee ), and FIRST SECURITY BANK OF MISSOULA, a Montana banking corporation (as hereinafter defined, the Beneficiary ). W I T N E S S E T H: WHEREAS, the City of Missoula, Montana (the City ), will issue and deliver its Economic Development Revenue Note (Sussex School Qualified 501(c)(3) Project), Series 2010, in the aggregate principal amount of $900,000 (the Note ), under and pursuant to Montana Code Annotated, Title 90, Chapter 5, Part 1, as amended (the Act ), and a resolution adopted by the City Council of the City on July 19, 2010 (the Note Resolution ); and WHEREAS, the Beneficiary has agreed to purchase the Note; WHEREAS, the City will lend the proceeds of the Note to the Grantor pursuant to a Loan Agreement, dated as of the date hereof (the Loan Agreement ), between the City and the Grantor, for the purposes of providing funds to be used, with other available funds of the Grantor, to design and construct thereon a new school building, which is of the character and accomplishes the purposes provided by the Act and the Code; and WHEREAS, the proceeds of the Note are to be disbursed by the Beneficiary from time to time pursuant to a Disbursing Agreement, dated the date hereof (the Disbursing Agreement ), among the City, the Grantor and the Beneficiary; and WHEREAS, pursuant to the Loan Agreement, the Grantor has covenanted, among other things, to make Loan Repayments sufficient to pay the principal of, premium, if any, and interest on the Note when due; and WHEREAS, the City has, by an Assignment of Loan Agreement, dated as of the date hereof (the Assignment ), between the City and the Beneficiary, pledged and assigned to the Beneficiary all of its rights, title and interests in the Loan Agreement (except for certain rights for payment and indemnification), including, but not limited to, Loan Repayments, in order to secure the full and prompt payment of the principal of, premium, if any, and interest on the Note; and WHEREAS, the Beneficiary has required, as a condition for its purchase of the Note, that the Grantor secure the Note and the obligations of the Grantor under the Loan Agreement by this Trust Indenture. NOW, THEREFORE, THIS COMBINATION TRUST INDENTURE, SECURITY AGREEMENT AND FIXTURE FILING STATEMENT WITNESSETH: The Grantor, in consideration of the premises, the issuance of the Note and the execution of the Loan Agreement by the City, the acceptance by the Trustee of the trust hereby created, and of the purchase and acceptance of the Note by the Beneficiary and as security for the payment of principal of, premium, if any, and interest on the Note and the observance and performance by the Grantor of each of its covenants and obligations under the Loan Agreement and the Disbursing Agreement, does hereby irrevocably grant, convey, warrant, and assign to the Trustee, in trust, with the power of sale as set forth in the Small Tract Financing Act (as hereinafter defined), the following properties (all herein referred to as the Trust Estate ) and does also hereby grant, to the Trustee, in trust, a security interest in all of said properties constituting goods, fixtures and other items of personal property tangible and intangible subject to the operation of the Montana Uniform Commercial Code: 4

5 GRANTING CLAUSE FIRST The real estate and interests in real estate described in Exhibit A attached hereto and made a part hereof (the Land ), which do not exceed forty (40) acres in area, situated in the City of Missoula, County of Missoula, and State of Montana, and good and marketable title to which inheres in the Grantor; GRANTING CLAUSE SECOND All buildings, structures, additions, improvements and Fixtures (as hereinafter defined) now or hereafter located on the Land, including all right, title and interest of the Grantor in and to all building material and landscaping of every kind and nature whatsoever on said premises or in any building now or hereinafter located thereon, together with all the Grantor s rights, if any, in and to land lying in streets, alleys and woods adjoining said real estate and all water rights and ditch rights, rights of way, the reversion or reversions, remainder or remainders in and to said real estate, and all tenements, hereditaments, appurtenances, rights, privileges and immunities thereunto belonging or appertaining whether now owned or hereafter acquired, however evidenced, used or enjoyed with said property; GRANTING CLAUSE THIRD All rights, interests and privileges of the Grantor, if any, in and to any and all leases, subleases, licenses, concessions or grants to occupy all or any part of the Facilities (as hereinafter defined), including, but not limited to, all rentals, revenues and income derived by the Grantor from the Facilities and all rentals, revenues and income derived by the Grantor from the leasing, subleasing or licensing of the Facilities or any part thereof; GRANTING CLAUSE FOURTH All and singular the goods, equipment, furniture, machinery and any and all other properties constituting the Equipment (as hereinafter defined) and Fixtures on, arising out of, related to, or used in connection with the Facilities subject to the operation of the Montana Uniform Commercial Code, of whatever sort, real, personal or mixed; GRANTING CLAUSE FIFTH Any and all claims made for the damage of or destruction to all or any part of the Facilities under the policies of insurance required by Section 4-5 hereof, and any and all awards or compensation made by any governmental or other lawful authority for the taking or damaging by eminent domain of the whole or any part of the Facilities, including any awards for a temporary taking, change of grade of streets, or taking of access; GRANTING CLAUSE SIXTH All right, title and interest hereinafter acquired in or to any of the property, real or personal, described above, hereby also releasing, relinquishing and waiving all exemptions in or to said property, vested or inchoate; GRANTING CLAUSE SEVENTH All proceeds from any property described in the Granting Clauses hereof, and any and all other property of every name and nature from time to time hereafter by delivery or by writing of any kind conveyed, pledged, assigned or transferred, as and for additional security hereunder by the Grantor or by anyone in its behalf or with its written consent to the Trustee, which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms hereof; IT BEING RECOGNIZED AND RECONFIRMED, that to the extent any of the Granting Clauses first through seventh relates to property that is or that is determined to be personal property under Montana law, the grant of and by the Grantor shall be of a security interest in and to such personal property subject to the operation of the Montana Uniform Commercial Code; 5

6 TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended so to be to the Trustee and its successors and to them and their assigns forever; SUBJECT TO the Permitted Encumbrances (as hereinafter defined); FOR THE PURPOSE OF SECURING: (a) Payment of the principal sum of $900,000 with interest thereon according to the terms of the Note, and any extensions or renewals or modifications thereof, and the last installment of principal of which, unless sooner paid, will be due and payable no later than December 23, 2030; (b) payment of all other sums, with interest thereon at the Taxable Rate specified in the Note, becoming due or payable under the provisions hereof, either to the Trustee or to the Beneficiary; (c) performance of each agreement and covenant of the Grantor contained herein and in the Loan Agreement; and (d) the performance of each agreement and covenant herein (including, without limitation, sums advanced and expenses incurred by Beneficiary for insuring, preserving, or protecting the Facilities and its value and making advances under this in connection therewith). The total principal amount of the indebtedness that may be outstanding at any given time and subject to the protection of this Trust Indenture is $900,000. This Trust Indenture secures all future advances made in connection with the Note and related instruments or agreements (such as, without limitation, the Loan Agreement and Disbursing Agreement and other Loan Documents), even though all or a part may not yet be advanced. All such future advances are secured as if made on the date of this Trust Indenture. Nothing in this Trust Indenture shall constitute a commitment or obligation to make such future advances. PROVIDED, HOWEVER, that if the City shall well and truly pay, or cause to be paid, the principal of the Note and the interest due or to become due thereon, at the times and in the manner mentioned in the Note according to the true intent and meaning thereof, and if the Grantor, its successors or assigns, shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Trust Indenture and the other Loan Documents to be kept, performed and observed by it and shall pay to the Beneficiary all sums of money due or to become due to it in accordance with the terms and provisions thereof and there shall be no Default or Event of Default in existence or continuing, then upon the written request of the Beneficiary stating that all sums secured hereby have been paid, and upon surrender of the Note and all other evidences of indebtedness secured hereby to the Trustee for cancellation and upon payment of all fees, expenses and charges of the Trustee, the Beneficiary and the City, the Trustee shall release and reconvey to the Grantor, without warranty, its right, title and interest in and to the Facilities then held hereunder. The grantee in such release may be described as the person or persons legally entitled thereto. The Beneficiary shall also thereupon direct that appropriate Financing Statements (as hereinafter defined) effecting terminations of perfected security interests be filed at Grantor s expense. The Grantor, the Trustee, and the Beneficiary mutually covenant and agree as follows: ARTICLE ONE DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION Section 1-1. Definitions. In this Trust Indenture the following terms have the following respective meanings unless the context hereof clearly requires otherwise: Act: Montana Code Annotated, Title 90, Chapter 5, Part 1, and all amendments thereto. Assignment: the Assignment of Loan Agreement, of even date herewith, from the City in favor of the Beneficiary. Beneficiary: First Security Bank of Missoula, a Montana banking corporation, and its successors and assigns under this Trust Indenture. Business Day: any day other than a Saturday or Sunday or other day on which commercial banks in the city in which the principal office of the Beneficiary is located are not open. City: the City of Missoula, Montana, or any successor to its functions under the Loan Agreement. 6

7 Code: the Internal Revenue code of 1986, as amended. Counsel: an attorney or firm of attorneys designated by the Grantor and acceptable to the Beneficiary. Default: any event which is, or after notice or lapse of time or both would be, an Event of Default. Equipment: all of Grantor s equipment and furnishings, whether now owned or hereafter acquired, that are located on the Land or in any building, structure, addition or improvement thereon. Event of Default: any event referred to as such in Section 6-1 hereof. Existing Facilities: the existing school known as the Sussex School located at 1800 South 2nd Street West, in Missoula, Montana. Facilities: the Land, the New School Facility, the Existing Facilities, the Equipment, the Fixtures and the Improvements, as they may at any time exist. Financing Statements: financing statements comporting with the Montana Uniform Commercial Code recorded or filed in conjunction herewith. Fixtures: any and all items or fixtures now owned or hereafter acquired by the Grantor and now or hereafter attached to or installed within or used in connection with the Facilities, including, but not limited to, any and all heating, plumbing and lighting apparatus, elevators and motors, engines and machinery, electrical equipment, incinerator apparatus, ventilating, air-conditioning and air cooling apparatus, water and gas apparatus, pipes, water heaters, mirrors, mantels, partitions, cleaning, intercom and sprinkler systems, fire extinguishing apparatus and equipment, water tanks, water softeners, carpets, carpeting, storm windows and doors, window screens, screen doors, storm sash, window shades or blinds, awnings, locks, fences, trees, shrubs and all other non-consumable personal property of every kind and nature whatsoever permanently affixed to the Land or the Improvements, including all extensions, additions, improvements, betterments, renewals and replacements of any of the foregoing, all of which are hereby declared and shall be deemed to be fixtures and an accession to the freehold and a part of the realty, as they may at any time exist. Grantor: Sussex School, Inc., a Montana nonprofit corporation, or its permitted successors and assigns under the Loan Agreement. Grantor Certificate: a written certificate or statement of the Grantor, signed by the President, any Vice President or the Treasurer of the Grantor, and by the Secretary or any Assistant Secretary of the Grantor, and delivered to the Beneficiary. Holder: the person or persons in whose name or names the Note or Notes are registered in the Note Register. Improvement: any alteration, addition or extension of the Facilities as such may at any time exist, and any other structure or building hereafter constructed or installed on the Land, including the New School Facility resulting from the undertaking of the Project. Land: the real estate and interests in real estate and other rights, licenses and permits with respect to real estate, described in Exhibit A hereto. Leases: any and all leases, subleases, licenses, concessions or other occupancy agreements or agreement for guarantee of payments in lieu of Rents between the Grantor, as lessor, sublessor, licensor or grantor, and Lessees, as lessee, sublessee, licensee or grantee, with respect to the Facilities, including any amendment or supplement thereto. 7

8 Lessee: any Person leasing, subleasing or occupying all or some portion of the Facilities or guaranteeing payments in lieu of Rents from the Grantor pursuant to a Lease and any successor or assign of such Person. Loan: the loan by the City to the Grantor of the proceeds of the Note. Loan Agreement: the Loan Agreement, dated the date hereof, between the City and the Grantor, including any amendment thereof or supplement thereto entered into in accordance with the provisions thereof. Loan Documents: collectively, this Trust Indenture, the Loan Agreement, the Assignment, the Note and the Disbursing Agreement. Loan Repayments: the payments required to be made by the Grantor pursuant to Section 3.02 of the Loan Agreement. Maturity Date: December 23, Net Proceeds: with respect to any insurance payment or condemnation award, the amount remaining therefrom after payment of all expenses (including attorneys fees and any extraordinary fee or expense of the Grantor, the Beneficiary, the Trustee and the City) incurred in the collection thereof. New School Facility: the new school building to be constructed at 1800 South 2nd Street West, in Missoula, Montana. Note: the Economic Development Revenue Note (Sussex School Qualified 501(c)(3) Project), Series 2010, of even date herewith, in the maximum principal amount of $900,000, issued by the City pursuant to the Note Resolution. Note Register: the register maintained by the City pursuant to the Note Resolution. Note Resolution: the resolution of the City July 19, 2010, pursuant to which the Note is issued, including any amendment thereof or supplement thereto. Payment Date: a date on which payment of principal or interest or both is due under the Note. Permitted Encumbrances: this Trust Indenture and, as of any particular time, (A) liens for taxes and special assessments not then delinquent, or delinquent but being contested by the Grantor in accordance with Section 4-4 hereof; (B) any mechanic s laborer s, materialman s, supplier s or vendor s lien or right in respect thereof if payment is not yet due under the contract in question or if the lien or right is being contested by the Grantor in accordance with Section 4-2 hereof; (C) a mortgage, trust indenture or security agreement from the Grantor to the Beneficiary securing repayment of indebtedness and the lien and security interest of which are expressly made junior and subordinate to the lien and security interest of this Trust Indenture; and (D) date hereof. exceptions to title shown on that certain [Commitment for Title Insurance], dated on the Person: any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. 8

9 Principal Balance: as of the date of determination, the aggregate original principal amount of the Note less the aggregate amount of installments thereon theretofore paid that are attributable to payment of principal. Project: designing and constructing the New School Facility. Rents: any rents, income, profits or proceeds from any Leases, license, concession or other arrangement entered into with respect to the Trust Estate. Small Tract Financing Act: Montana Code Annotated, Title 71, Chapter 1, Part 3, and amendments hereafter enacted. Term: the duration of the Loan Agreement (except as otherwise provided specifically therein for particular provisions thereof), which shall be from the date thereof until the Maturity Date or, if a default is then continuing thereunder, until such default has been remedied, unless the Loan Agreement is sooner terminated in accordance with its terms. Trust Estate: the property, interests in property, and funds described in the Granting Clauses of this Trust Indenture. Trust Indenture: this Combination Trust Indenture, Security Agreement and Fixture Filing Statement, including any amendment or supplement entered into in accordance with the provisions hereof. Trustee: Western Title and Escrow, a [ ], or any successor Trustee appointed, qualified and acting as such under this Trust Indenture. Section 1-2. Exhibits. Attached to and by reference made a part of this Trust Indenture is Exhibit A, the legal description of the Land. Section 1-3. Rules of Interpretation. (1) This Trust Indenture shall be interpreted in accordance with and governed by the laws of the State of Montana and more particularly is executed pursuant to and is to be interpreted in accordance with the Small Tract Financing Act. (2) The words herein, hereof and hereunder and words of similar import, without reference to any particular article, section or subdivision, refer to this Trust Indenture as a whole rather than to any particular article, section or subdivision hereof. (3) Any term not defined herein but defined in the Loan Agreement shall have the same meaning herein as that given in the Loan Agreement unless the context hereof requires otherwise. (4) The Table of Contents and headings of articles and sections herein are for convenience only and are not a part of this Trust Indenture. (5) Unless the context hereof clearly requires otherwise, the singular shall include the plural and vice versa, and the masculine shall include the feminine and vice versa. ARTICLE TWO GENERAL COVENANTS Section 2-1. Title and Instruments of Further Assurance. The Grantor represents, warrants, covenants and agrees that it is the lawful owner of good and marketable fee simple title to the Land and the lawful owner of good title to the balance of the Trust Estate and that it has good, right and lawful authority to grant, convey, warrant and assign the Trust Estate as provided herein; and that it will do, warrant and will defend the title to the Trust Estate; 9

10 and it has not made, done, executed or suffered, and will not make, do, execute or suffer, any act or thing whereby its estate or interest in and title to the Trust Estate or any part thereof shall or may be impaired or changed or encumbered in any manner whatsoever (except by Permitted Encumbrances) without the prior written consent of the Beneficiary; and that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such instruments supplemental hereto and such further acts, instruments and transfers as the Trustee or the Beneficiary may reasonably require for better assuring, transferring, pledging, assigning and confirming unto the Trustee and the Beneficiary all and singular the property herein described and the revenues assigned and pledged hereby to the payment of the principal of and interest on the Note. Section 2-2. Rights Under the Loan Agreement. The Loan Agreement sets forth the covenants and obligations of the Grantor and the City, including a provision that the Loan Agreement may not be effectively amended, changed or modified without the written consent of the Beneficiary, and reference is hereby made to the same for a detailed statement of said covenants and obligations. The Grantor agrees to perform and observe its obligations, agreements and covenants and agrees that the Trustee or the Beneficiary in their names may enforce all obligations of the Grantor under and pursuant to the Loan Agreement for and on behalf of the Trustee or the Beneficiary. Section 2-3. Performance of and Authority for Covenants. The Grantor covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in the Loan Agreement and this Trust Indenture. Section 2-4. Recording and Filing. The Grantor covenants that it will do all things reasonably required, at its own expense, to cause this Trust Indenture and all supplements hereto, and all Financing Statements and continuations thereof, to be kept, recorded and filed in such manner and in such places as may be required by law in order to preserve and fully protect the security of the Trustee and the Beneficiary hereunder. Section 2-5. Improvements, Fixtures and Equipment. The Grantor warrants, represents and covenants as follows: (a) Except for Permitted Encumbrances, the Grantor is the sole owner of the Facilities, and will be the sole owner of the Facilities, free from any adverse lien, security interest, encumbrance or adverse claims thereon of any kind. The Grantor will notify the Beneficiary of, and will defend the Facilities against, all claims and demands of all Persons at any time claiming the same or any interest therein, except as otherwise permitted herein. (b) The Grantor will not sell, convey or in any manner transfer its interest in the Facilities, or any part thereof, without the prior written consent of the Beneficiary. (c) The Grantor will not remove from the Facilities, or any part thereof, any Fixtures or Equipment, without the prior written consent of the Beneficiary, except such portions or items which are consumed or worn out in ordinary usage, all of which shall be promptly replaced by the Grantor with new items of equal or greater quality or value. Section 2-6. Assignment of and Security Interest in Leases and Rents. The Grantor will perform and discharge its obligations, covenants and agreements under any and all Leases and will enforce and secure the performance of each and every covenant, obligation and agreement of each Lessee thereunder without cost or expense to the Trustee or the Beneficiary. The Grantor will promptly notify the Trustee and the Beneficiary of any default under any of the Leases and the Grantor will, upon written request of the Trustee or the Beneficiary, exercise, in a prompt and diligent manner and at its own expense, the remedies available to it under the Leases then in default and prescribed by the Trustee or a Beneficiary in its request, including, without limitation and if available and requested by the Trustee or a Beneficiary, instituting a proceeding for eviction, or to collect delinquent rent or enforce other covenants or obligations of the Lessees under the Leases. Each Lessee shall agree to subordinate its Lease to the lien of this Trust Indenture and attorney to the Trustee and the Beneficiary. 10

11 Neither the Trustee nor the Beneficiary shall be obligated to collect or attempt to collect any Rents which are not in fact paid to them, further, they shall not be obligated to perform or discharge, nor do any of them hereby undertake to perform or discharge, any obligation, duty or liability under the Leases, or under or by reason of their assignment. As additional security for the performance of the Grantor s obligations, the Grantor does hereby grant, transfer and assign to the Beneficiary all of its right, title and interest in and to all existing and future Leases and all extensions, modifications and renewals, if any, thereof, and any guarantees of the Lessee s obligations under any of the Leases. The Grantor does further hereby grant, transfer and assign to the Trustee and the Beneficiary all of the Rents now or hereafter accruing or owing from the Leases or otherwise as a result of any use, possession or occupancy of the Facilities or any part thereof. This assignment shall constitute an actual and present assignment of the Rents and Leases; provided that so long as no Event of Default hereunder has occurred and is subsisting, the Grantor shall be entitled to collect, but not more than 30 days before due and payable, all of the Rents, and to retain, use and enjoy the same unless and until an Event of Default occurs hereunder. Upon the occurrence of an Event of Default hereunder, and upon written notice of the Beneficiary, all Rents payable under the Leases by the Lessees to the Grantor shall be payable directly to the Beneficiary. The Grantor s obligations to make Loan Repayments under Section 3.02 of the Loan Agreement or other payments under the Loan Agreement shall be satisfied to the extent and in the amount of the Rents applied thereto in accordance with this Section 2-6. The Lessees under each of the Leases, if any, are hereby irrevocably authorized and directed to recognize the claims of the Beneficiary and the Trustee hereunder without investigating the reason for any action taken by the Beneficiary or the Trustee, or the validity or the amount of indebtedness owing to the Beneficiary or the Trustee, or the existence of any default under this Trust Indenture, the Loan Agreement or the application of the Rents to be made by the Beneficiary. The Grantor hereby irrevocably directs and authorizes each of the Lessees upon an Event of Default hereunder or under the Loan Agreement and notification thereof by the Beneficiary to pay to the Beneficiary such sums due under its Lease as will satisfy the obligations of the Grantor hereunder and under the Loan Agreement. To the extent that such sums are paid to the Beneficiary, the Grantor agrees that the Lessee shall have no further liability to the Grantor for the same. The sole signature of the Beneficiary shall be sufficient for the exercise of any rights hereunder, and the sole receipt of the Beneficiary for any sums received shall be a full discharge and release therefor to any such Lessee. Section 2-7. Future Advances. Notwithstanding anything to the contrary herein, this Trust Indenture secures all future advances now contemplated and made pursuant to and/or in connection with the Loan Agreement and the other Loan Documents, even though a portion thereof may not yet be advanced. Any such future advances are so secured hereby as if made on the date hereof; provided that nothing in this Trust Indenture shall constitute a commitment or obligation to make such future advances, the terms of which are governed solely by the applicable Loan Documents. The total indebtedness, including future advances, that may be outstanding at any given time and be subject to the Trust Indenture and secured hereby is the sum of $900,000. Section 2-8. Construction Mortgage. This Trust Indenture secures an obligation incurred to finance the construction of an improvement on land and is entitled to the priority of a construction mortgage within the meaning of the Montana Uniform Commercial Code, Montana Code Annotated, Section 30-9A-334(8); but it shall not be considered a construction mortgage for any other purpose. Section 2-9. Waiver of Purchase Money Mortgage. The Grantor, the Beneficiary and the Trustee hereby acknowledge and agree that this Trust Indenture shall not be deemed or interpreted to be a purchase money mortgage under Montana Code Annotated, Section Section Indemnification. The Grantor shall indemnify and hold harmless the Trustee and the Beneficiary and their respective officers, directors, employees and agents, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursement of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Trustee or the Beneficiary in any way relating to or arising out of the Trust Estate (including any bodily injury or death or property damage occurring in or upon or in the vicinity of the Facilities), this Trust Indenture or the transactions contemplated hereby or the 11

12 enforcement of any of the terms hereof; provided that the Grantor shall not be liable for any of the foregoing to the extent they are determined by a court having competent jurisdiction to have arisen from the gross negligence or willful misconduct of the Trustee or the Beneficiary. The Grantor further agrees to pay, and to indemnify, save and hold harmless the Trustee and the Beneficiary and their respective successors and assigns from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Trust Indenture. The agreements in this Section shall not terminate upon the release, foreclosure or other termination of this Trust Indenture but will survive the enforcement of any remedy provided in any Loan Document including the foreclosure of this Trust Indenture or conveyance in lieu of foreclosure, the repayment of the Loan, the discharge and release of this Trust Indenture and the other Loan Documents, any bankruptcy or other proceeding under any bankruptcy, insolvency or similar law affecting the rights of creditors, and any other event whatsoever. ARTICLE THREE POSSESSION AND USE OF THE TRUST ESTATE AND POWERS OF BENEFICIARY AND TRUSTEE Section 3-1. Possession and Use. Subject to the terms of the Loan Agreement and this Trust Indenture, the Grantor shall be permitted to possess, use and enjoy the Trust Estate and to receive and use the rents, issues, revenues, royalties and profits of the Facilities. Section 3-2. Powers of Beneficiary and Trustee. Without affecting the liability of any Person, including the City, for the payment of any indebtedness secured hereby or the lien of this Trust Indenture on the Trust Estate for the full amount of any indebtedness unpaid, the Beneficiary and the Trustee are respectively empowered as follows: the Beneficiary may from time to time, without notice and without regard to the consideration, if any, paid therefor, and notwithstanding the existence at that time of any inferior liens thereon: (a) release any Person, other than the Grantor, liable for the payment of any of the indebtedness; (b) extend the time or otherwise alter the terms of payment of any of the indebtedness; (c) alter, substitute or release any property securing the indebtedness; or (d) accept any additional security or resort to any security in such order as the Beneficiary may determine. The Trustee may from time to time, upon the written request of the Beneficiary: (a) consent to the making of any map or plat of the Land; (b) with the consent of the Grantor, join in granting any easement or creating any restriction thereon; (c) join in any subordination or other agreement affecting this Trust Indenture or the lien or charge thereof; (d) reconvey, without warranty, all or any part of the Facilities; or (e) release from lien of this Trust Indenture all or part of the Fixtures or items of Equipment. The Beneficiary shall not be required, prior to exercising its rights against any Person or at any other time, by reason of any demand or otherwise, to commence proceedings against any Person liable under this Trust Indenture or under any indebtedness secured hereby. Section 3-3. Protection of Security. If the Grantor defaults hereunder in any respect, or if the Beneficiary or Trustee in their sole judgment and discretion deem it necessary to disburse funds, appear in actions or take other action to protect the full security interest intended to be created by this instrument, then the Beneficiary or Trustee, without obligation to do so, without notice to or demand upon the Grantor, and without releasing the Grantor from any obligation hereunder, may make such appearances, disburse such funds and take such action as either may deem necessary to protect the security hereof, the Beneficiary and the Trustee being authorized to enter upon the Land for such purposes. The Grantor will on demand reimburse the Beneficiary and Trustee for all reasonable amounts expended, including reasonable attorneys fees, pursuant to this Section, together with interest thereon at the Taxable Rate stated in the Note for the indebtedness, and all such amounts shall be secured hereby. ARTICLE FOUR MAINTENANCE, MODIFICATION, TAXES, INSURANCE AND FINANCIAL STATEMENTS 12

13 Section 4-1. Maintenance. During the term of the Loan Agreement, the Grantor will keep the Facilities in good repair and operating condition and in as safe condition as its operations will reasonably permit, making all repairs thereto and renewals and replacements thereof which may be necessary for this purpose, in the reasonable judgment of the Grantor, so that the Facilities will remain suitable for use as facilities of the character described in and contemplated by the Loan Agreement, or such other uses as are not inconsistent with the Act or the Code. Grantor will maintain all permits and licenses for the ownership, operation and use of its properties required by any federal, state or local governmental unit or authority having jurisdiction with respect thereto, and shall provide equipment, furnishings, supplies and other personal property required or necessary for the proper operation, repair and maintenance of the Facilities. Section 4-2. Liens. Except for Permitted Encumbrances, the Grantor will not permit any mechanics or other liens to be filed or established or to remain undischarged and unsatisfied against the Facilities for labor or materials furnished in connection with any Improvements, repairs, renewals or replacements; provided that if the Grantor shall first notify the Beneficiary of its intention so to do, it may in good faith contest any mechanics or other liens filed or established and in such event may permit the items contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom, unless the Beneficiary shall notify the Grantor that, in the Beneficiary s opinion, by nonpayment of any such item the lien of this Trust Indenture as to any part of the Facilities will be materially endangered or the Facilities or any part thereof will be subject to loss or forfeiture, in which event the Grantor shall promptly pay all such unpaid items and cause them to be satisfied and discharged, or shall apply for and obtain a release of the lien by proceeding in accordance with Montana Code Annotated, Section The Beneficiary and the Trustee will cooperate fully with the Grantor in any such contest; provided that the Grantor shall undertake to pay all costs and expenses incurred by the Beneficiary and the Trustee and to indemnify the Beneficiary and the Trustee and save them harmless against any risks, claims or liabilities arising out of such contest. Section 4-3. Modifications to Facilities. The Grantor may from time to time, at its own expense, make any additions, modifications or improvements to the Facilities located wholly within the boundary lines of the Land that it may deem desirable for its business purposes and that do not adversely affect the value of the Facilities; provided that such additions, modifications or improvements will conform to the policies and purposes of the Act and the Code and shall be made in such a manner or to such an extent as to not affect the exemption from federal taxation of the interest on the Note. All additions, modifications and improvements made by the Grantor within the boundary lines of the Land shall become a part of the Facilities and the lien and security interest of this Trust Indenture shall immediately attach thereto. Section 4-4. Taxes and Other Governmental Charges and Utility Charges. (1) The Grantor will make promptly all payments due during the Term on taxes and special assessments lawfully levied upon or with respect to the Facilities, other charges lawfully made by any governmental body for public improvements that may be or become secured by a lien on the Facilities, and utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Facilities, including but not limited to taxes or governmental charges on any property of the Grantor brought in or upon the Facilities, sales and other excise taxes on products thereof, and any taxes levied upon or with respect to income or profits from the Facilities which, if not paid, would become a lien thereon prior to or on a parity with the pledge and assignment of such revenues and receipts made in this Trust Indenture. With respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, with or without interest, the Grantor shall be obligated under this Trust Indenture to pay only such installments and interest as are required to be paid during the Term. (2) The Grantor shall have the right to contest by legal proceedings, at its own expense and, if necessary, in the name of the Trustee and the Beneficiary, the validity or amount of any imposition of said real property taxes and assessments; provided, however, that any unpaid amount shall also be placed in escrow with the Beneficiary, together with the Beneficiary s reasonable estimate of penalties and interest thereon, pursuant to the foregoing provisions and disbursed by the Beneficiary either in accordance with the resolution of said legal proceedings or prior thereto if at any time the Facilities or any part thereof shall, in the Beneficiary s reasonable opinion, be in danger of being forfeited or sold by reason of the nonpayment of taxes or assessments. 13

14 It is recognized by the Grantor that under the provisions of Montana Code Annotated, Section , the Facilities are subject to taxation, unless otherwise exempt from taxation. Section 4-5. Insurance. (1) The Grantor shall procure and maintain continuously in effect with respect to the Facilities, policies of insurance against such risks and in such amounts as are customary for a prudent owner of properties comparable to those comprising the Facilities. Without limiting the generality of the foregoing provision, unless and until the Beneficiary notifies the Grantor in writing to the contrary, the Grantor shall specifically maintain the following insurance (A) The policies described the Agreement to Provide Insurance attached as Exhibit C to the Loan Agreement. (B) General liability insurance against liability or injuries to or death of any person or damage to or loss of property arising out of or in any way relating to the condition of the Facilities or any part thereof, in amounts not less than $1,000,000 for death of or personal injury to any one person, $1,000,000 for all personal injuries and deaths resulting from any one accident and $1,000,000 for property damage in any one accident. (C) Workers compensation insurance or qualified self-insurance against liability for compensation under a workers compensation act now or hereafter enacted in Montana to cover all persons employed by the Grantor and to cover liability for compensation under any such act. (D) Such additional insurance as is necessary to keep the Grantor and the Facilities insured against such other casualties and contingencies as the Beneficiary may from time to time in writing require, all in such manner and for such amounts as may be reasonably satisfactory to the Beneficiary. (2) All policies of insurance required in paragraph (A) of Subsection (1) of this Section 4-5 shall be written in the names of the Grantor, the Beneficiary (denominated as the secured party or lienholder on the insurance policy), and the Trustee, as their respective interests may appear. These policies shall provide that the proceeds of such insurance shall be payable to the Beneficiary by means of a standard mortgagee clause. The policies of insurance required under paragraph (B) of Subsection (1) of this Section 4-5 shall be endorsed to show the City, the Trustee, and the Beneficiary as additional insureds. (3) All insurance required in this Section 4-5 shall be taken out and maintained in responsible insurance companies selected by the Grantor and approved by the Beneficiary. The Grantor will deposit with the Beneficiary policies evidencing all such insurance, or a certificate or certificates of the respective insurers stating that such insurance is in force and effect. Each policy of insurance herein required shall contain a provision that the insurer shall not cancel, refuse to renew or materially modify the policy without giving written notice to the City and the Beneficiary at least 30 days before the cancellation, nonrenewal or modification becomes effective. Before the expiration of any policy of insurance herein required, the Grantor shall furnish the Beneficiary evidence satisfactory to the Beneficiary that the policy has been renewed or replaced by another policy conforming to the provisions of this Section 4-5, or that there is no necessity therefor under the terms thereof. In lieu of separate policies, the Grantor may maintain blanket policies having the coverage required herein, in which event it shall deposit with the Beneficiary a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Facilities. Section 4-6. Advances. If the Grantor shall fail to make all repairs, pay all liens, taxes, assessments and other charges and maintain all insurance required in this Article Four, the Trustee or the Beneficiary may, but shall not be obligated to, take such action as may be necessary to cure such failure, including advancement of money, and the Grantor shall be obligated to repay all such advances on demand, with interest at the Taxable Rate specified in the Note or at such higher annual rate as the Grantor may consent to in writing, from the date of each such advance. 14

15 Section 4-7. Financial Statements. The Grantor will keep proper books of record and account in which full, true and correct entries shall be made of all dealings or transactions of or in relation to the business and affairs of the Grantor, in accordance with generally accepted accounting principles consistently applied, and will furnish to the Beneficiary, the financial statements and documentation required pursuant to, and within the time periods specified in, the Compliance Agreement attached as Exhibit D to the Loan Agreement. The financial statements shall also be accompanied by a Grantor Certificate stating that the signers thereof have reviewed the activities of the Grantor during the last complete fiscal year and have determined that no Default has occurred, or if a Default has occurred describing such Default and its status. Section 4-8. Environmental Matters. The agreement of the Grantor in Section 4.15 of the Loan Agreement with respect to Hazardous Materials and environmental laws, as therein defined and described, is incorporated herein and made a part hereof as fully as though set forth separately herein and as though made for the benefit of the Beneficiary. ARTICLE FIVE DAMAGE, DESTRUCTION AND CONDEMNATION Section 5-1. Grantor To Repair, Replace, Rebuild or Restore. If there is any outstanding Principal Balance when all or any part of the Facilities is taken by eminent domain, or destroyed or damaged: (1) The Grantor shall proceed promptly, subject to the provisions of Subsection (2), to replace, repair, rebuild and restore the Facilities to substantially the same condition as existed before the taking or event causing the damage or destruction, with such changes, alterations and modifications (including substitution or addition of other property) as may be desired by the Grantor, will be suitable for continued operation of the Facilities for the business purposes of the Grantor, will be consistent with the policies and purposes of the Act, and are approved by the Beneficiary. (2) All Net Proceeds of the condemnation award or insurance claim shall be paid directly to the Beneficiary, and the Beneficiary shall be entitled at its option to commence, appear in and prosecute in its own name any action or proceedings. The Beneficiary shall also be entitled to make any compromise or settlement in connection with such taking or damage, with the written consent of the Grantor, which consent shall not be unreasonably withheld, delayed or conditioned. In the event any portion of the Facilities is so taken or damaged, the Beneficiary shall have the option, in its sole and absolute discretion, to apply all such Net Proceeds, after deducting therefrom all costs and expenses (regardless of the particular nature thereof and whether incurred with or without suit), including attorneys fees, incurred by it in connection with such Net Proceeds, upon any indebtedness secured hereby and in such order as the Beneficiary may determine, or to apply all such Net Proceeds, after such deductions, to the restoration of the Facilities upon such conditions as the Beneficiary may determine. If the Net Proceeds are not sufficient to pay such costs in full, the Grantor will nonetheless complete the same and will pay that portion of the cost thereof in excess of the amount of the Net Proceeds. All Net Proceeds received from the condemnation of unimproved land and any balance of Net Proceeds remaining after payment of all costs of any repair, rebuilding, replacement or restoration shall be paid to the Beneficiary and considered a loan prepayment and the Principal Balance of the Note shall be reduced thereby (such reduction to be applied in inverse order of principal installments payable under the Note). No prepayment premium shall be payable pursuant to this subparagraph (2) of Section 5.1. (3) The Grantor shall not, by reason of the payment of any costs of repair, rebuilding, replacement or restoration, be entitled to any reimbursement from the City or the Beneficiary or any abatement of the Loan Repayments payable under Article 3 of the Loan Agreement or the other sums payable by the Grantor under the Loan Agreement, nor shall such application of Net Proceeds cure or waive any default hereunder or invalidate any act done pursuant to such default. (4) All buildings, improvements and equipment acquired in the repair, rebuilding, replacement or restoration of the Facilities, together with any interests in land acquired by the Grantor as necessary for such restoration, shall be deemed a part of the Facilities and available for use and occupancy by the Grantor without the payment of any additional amounts other than those provided in Article 3 of the Loan Agreement, to the same extent as if they had been specifically described and demised in the Loan Agreement; provided that no land, interest in 15