91-20 Agreement With Seattle -First National BankFIRST AMENDMENT OF REIMBURSEMENT AGREEMENT
AND
E%TENSION OF LETTER OF CREDIT
This First Amendment of Reimbursement Agreement and
Extension of Letter of Credit (the "Amendment") is made and
entered into as of the 19th day of April, 1991, between KODIAK
ISLAND BOROUGH, ALASKA, a municipal corporation and political
subdivision of the State of Alaska (the "Borough"), and BARCLAYS
BANK PLC (the "Bank").
Preamble
1. The Borough and the Bank entered into a Reimbursement
Agreement dated as of May 1, 1986 (the "Reimbursement
Agreement"), pursuant to which the Bank issued an irrevocable
direct -pay letter of credit (the "Letter .of Credit") in the
initial stated amount of $10,195,254. The Reimbursement
Agreement and Letter of Credit were executed and issued in
connection with the issuance and sale by the Borough of its
General Obligation Variable Rate Demand Bonds, 1986 Series A (the
"Bonds").
2. The Borough and the Bank wish to extend the termination
date of the Letter of Credit and amend the terms of the
Reimbursement Agreement in accordance with the provisions of this
Amendment.
Terme of Amendment
NOW, THEREFORE, the Borough and the Bank agree as follows:
1. Section 1 of the Reimbursement Agreement is amended by
adding the following definition in alphabetical order:
"Base Rate" means a fluctuating rate of interest
per annum equal to the higher of: (i) the Prime Rate; or
(ii) the overnight federal funds rate published by the
Federal Reserve Bank of New York, plus 50 basis points.
Each change in the Base Rate will take effect
simultaneously with the corresponding change or changes
in the Prime Rate or overnight federal funds rate, as
the case may be.
2. Section 2.2(c) of the Reimbursement Agreement is amended
to read as follows:
(c) If funds are so drawn by the Borough and Bonds so
delivered, interest shall be payable by the Borough on
unpaid amounts with respect to any such drawing, on the
earlier of the first day of each calendar month in
arrears or when the principal repayment is made, and at
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the following fluctuating
(computed on the basis of a
elapsed calendar days):
interest rates per annum
year of 360 days and actual
(1) From the time of drawing to 30 days after the
drdRing: the Base Rate;
(2) From 31 through 90 days after the drawing:
the Base Rate plus 1/2$;
(3) From 91 through 180 days after the drawing:
the Base Rate plus 1%;
(4) From 181 through 365 days after the drawing:
the Base Rate plus 1-1/2%;
but such fluctuating interest shall in no event be
higher (with respect to each amount due and payable
hereunder, from the date such amount is due and payable
until the date such amount is paid in full) than the
maximum rate permitted by applicable law.
3. Section 2.4(c) of the Reimbursement Agreement is amended
to read as follows:
(c) Subsequent Letter of Credit fees, payable in
advance semi-annually on June 15 and December 15,
commencing December 15, 1986, through and including
December 15, 1990. Following December 15, 1990, the
Letter of Credit fees will be payable quarterly in
advance on June 15, 1991, September 15, 1991,
December 15, 1991, and March 15, 1992. The fees in each
case shall cover the periods following that covered by
the initial fee and any lesser final coverage period.
All such fees due through December 15, 1990, shall be
based on the Stated Amount on the fee payment date (the
determination of the Stated Amount to assume, throughout
this Agreement, compliance with all conditions for
drawing). All such fees due after December 15, 1990,
shall be based on the Stated Amount on the fee payment
date (the determination of the Stated Amount to assume
(i) no reduction for the Interest Portion of any
Principal and Interest Drawing, (ii) no reduction for
any Tender Drawing, and (iii) compliance with all
conditions for drawing). At or prior to each fee
payment due date, the Bank shall inform the Borough of
specified dollar amounts due for such Letter of Credit
fees; provided, however, that the Bank's failure to so
inform the Borough does not relieve the Borough of its
obligations under this Section.
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4. The first sentence in Section 2.4(e) of the
Reimbursement Agreement is amended to read as follows:
(e) The initial fee required by Section 2.4(b) has
been, and all subsequent fees required by Section 2.4(c)
shall bir, computed (on the basis of a year of 360 days
and actual elapsed calendar days) at the rate of
(1) three quarters of one percent (3/4$) per annum,
through the fee due on December 15, 1990; and (2) one
and one-half percent (1-1/2%) per annum for all fees due
on or after June 15, 1991, each assessed on the relevant
Stated Amount of the Letter of Credit.
5. Section 6 of the Reimbursement Agreement is amended by
adding a new subsection 6.18 that reads as follows:
6.18. New Indebtedness. On and after April 19,
1991, and while the Letter of Credit is outstanding, the
Borough shall not incur any additional indebtedness
that, in the aggregate, exceeds $10,000,000, unless the
Borough obtains the Bank's prior written consent to the
indebtedness. For purposes of this Subsection,
"indebtedness" excludes: (a) bonds issued or other debt
obligations incurred by the Borough for the purpose of
refunding bonds that already were outstanding on the
date of this Amendment; and (b) bonds issued or other
debt obligations incurred by the Borough for the purpose
of funding obligations incurred where a legal action has
been brought against the Borough by third parties in
state or federal court, the action has been reduced to
judgment against the Borough, and the Borough has
concluded, in its reasonable opinion, that the size of
the resulting judgment warrants issuance of bonds.
6. The Bank will extend the Termination Date of the Letter
of Credit to the earlier of June 11, 1992, or the occurrence of
the events listed in consecutive paragraphs (b) -(g) on pages 4
and 5 of the Letter of Credit. Upon the effective date of this
Amendment (as specified below), paragraph (a) on page 4 of the
Letter of Credit will be read with "June 11, 1992" replacing
"June 11, 1991", and this Agreement will constitute the written
agreement by the Borough and the Bank to an extension of the
Letter of Credit, in accordance with page 4 of the Letter of
Credit. As so extended, the existing Letter of Credit will
remain in full force and effect. The parties signing this
Amendment (including the Trustee) agree that the extended Letter
of Credit does not constitute an "Alternate Letter of Credit"
within the meaning of the Indenture (as defined in the
Reimbursement Agreement) and the Reimbursement Agreement.
7. The Borough agrees to pay on demand all costs and
expenses (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Bank) in connection
with the extension of the Letter of Credit and the preparation,
execution, delivery and administration of this Amendment and any
other documents that may be delivered pursuant to or in
connection with this Amendment. The obligation of the Borough to
pay such costs and expenses is in addition to, and not in lieu
of, the Borough's obligations under Section 9.9 of the
Reimbursement Agreement.
8. This Amendment will not become effective until the Bank
has received the following, in form and substance satisfactory to
the Bank:
(a) Evidence of the adoption by the Borough Assembly
of a resolution authorizing the execution, delivery and
performance of this Amendment.
(b) An opinion of Wohlforth, Argetsinger, Johnson &
Brecht, in substantially the form of Exhibit A to this
Amendment.
(c) Such other documents, instruments, approvals or
opinions as the Bank or its counsel may reasonably request.
9. Except as otherwise expressly set forth in this
Amendment, the Borough agrees that all of the terms, conditions,
and covenants of the Reimbursement Agreement remain in full force
and effect.
10. This Amendment supercedes the terms of the commitment
letter dated March 19, 1991 from the Bank to the Borough.
This Amendment has been executed and delivered by duly
authorized officers of the Borough and the Bank.
Accepted and Agreed to as of
the 19th day of April, 1991:
SEATTLE -FIRST NATIONAL BANK,
as Trustee
By
Its
BARCLAYS BANK PLC
By
Its
By
Its
KODIAK ISLAND BOROUGH, ALASKA
By
Jerome M. Selby, Mayor
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BSBIBIT A
(Form of opinion of Bond counsel]
Seattle -First National Bank, as Trustee
1001 4th Avenue, 11th Floor
Seattle, WA 98154-1102
Barclays Bank PLC
222 Broadway
New York, NY 10038
Re: Kodiak Island Borough, Alaska
General Obligation variable Rate Demand
Bonds, 1986 Series A
Ladies and Gentlemen:
This opinion is furnished pursuant to the First Amendment of
Reimbursement Agreement and Extension of Letter of Credit dated
as of April 19, 1991 (the "Amendment") between the Kodiak Island
Borough, Alaska (the "Borough") and Barclays Bank PLC (the
"Bank").
We have examined the Amendment as well as a certified copy
of the resolution of the Borough authorizing the execution and
delivery of the Amendment (the "Resolution"), and on the basis of
such examination and a review of such other information, records
and documents -as was deemed necessary or advisable, we are of the
opinion that:
1. The Borough is a municipal corporation duly organized
and existing under the laws of the State of Alaska, has full
legal right, power and authority to enter into the Amendment, and
has duly authorized and approved the execution and delivery of
the Amendment and the performance by the Borough of its
obligations under the Amendment.
2. No further authorization or approval is required for the
execution and delivery of the Amendment by the Borough. The
Amendment establishes legally valid and binding obligations of
the Borough, enforceable in accordance with its terms; and except
as contemplated in the Amendment, no further authorization or
approval is required for the performance by the Borough of its
obligations under the Amendment.
3. The Reimbursement Agreement dated as of May 1, 1986
between the Borough and the Bank (the "Reimbursement Agreement"),
as modified by the Amendment, and the Indenture dated as of
May 1, 1986 (the "Indenture") between the Borough and Seattle -
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First National Bank, as Trustee, remain in full force and effect,
and continue to constitute legal, valid and binding obligations
of the Borough, enforceable in accordance with their respective
terms.
4. To the extent of any drawing under the Letter of Credit
issued pursuant to Reimbursement Agreement and extended by the
Amendment (together with any interest payable on any such
drawing), the Reimbursement Agreement, as modified by the
Amendment, constitutes a general obligation of the Borough to
which the full faith and credit of the Borough is pledged, and
for the payment of principal of and interest on which taxes may
be levied and collected and proceeds of taxes levied may be
applied to such payment.
5. The execution and delivery of the Amendment do not and
will not conflict with, or constitute on the part of the Borough
a breach of or a default under, any existing law (including,
without limitation, the Constitution of Alaska), any court or
administrative regulation, decree or order or any agreement,
indenture, mortgage, lease or other instrument to which the
Borough is subject or by which it is bound.
6. All legislation necessary to fulfill the terms and
conditions of, and to carry out the transactions contemplated by,
the Indenture and the Reimbursement Agreement, as modified by the
Amendment, remain in full force and effect.
7. No term or provision of the Reimbursement Agreement, as
modified by the Amendment, contravenes Alaska law relating to the
amount of interest to be charged for a loan of money.
8. The interest rate applying to amounts outstanding under
the Letter of Credit (as defined in the Amendment) is within
applicable state law limitations, if any.
This opinion is directed to the Bank, is solely for the
benefit of the Bank, and may not be relied upon by others without
our express written consent.
Very truly yours,
WOHLFORTH, ARGETSINGER, JOHNSON &
BRECHT
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