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1989-11 Providing for the Issuance of 1989 General Obligation School Refunding Bonds of the Borough in the Aggregate Principal Amount of not to Exceed $10,100,000Ordinance No. 89 -11 -0 Page 1 of 14 KODIAK ISLAND BOROUGH ORDINANCE NO. 89 -11 -0 By: Mayor Selby Drafted by: Bond Counsel Introduced: 3/16/89 Amended: 3/16/89 Public Hearing: 4/06/89 Adopted: 4/06/89 AN ORDINANCE OF THE KODIAK ISLAND BOROUGH, ALASKA, PROVIDING FOR THE ISSUANCE OF 1989 GENERAL OBLIGATION SCHOOL REFUNDING BONDS OF THE BOROUGH IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $10,100,000 TO PROVIDE FUNDS REQUIRED TO REFUND CERTAIN OUTSTANDING GENERAL OBLIGATION BONDS OF THE BOROUGH, FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING THEIR SALE WHEREAS, there are now outstanding $9,495,000 Kodiak Island Borough General Obligation School Construction Bonds, 1980 Series A authorized by the voters of the Borough on December 11, 1979 and by Ordinance No. 80 -17 -0 of the Borough adopted on May 1, 1980 (the "Outstanding Bonds "), and WHEREAS, after due consideration it appears to the Assembly that it is advisable for the Borough to advance refund the Outstanding Bonds by the issuance of refunding general obligation bonds in the principal amount of not to exceed $10,100,000 in a single series entitled "1989 General Obligation School Refunding Bonds" (the "Bonds "), in order to effect savings on debt service, and WHEREAS, Section 29.47.320 of the Alaska Statutes provides that refunding general obligation bonds may be issued without an election, and WHEREAS, in order to effect such advance refunding in the most economical manner, it is deemed necessary and advisable that the net proceeds of the sale of the Bonds herein authorized and other moneys available for refunding purposes be invested in obligations to be later specified by resolution of the Assembly, maturing in such amounts and at such times as are required to pay the maturing principal of and interest on the Outstanding Bonds prior to their respective dates of redemption and to redeem the Outstanding Bonds on the earliest dates on which the Outstanding Bonds may be called for redemption, and WHEREAS, because the amount of Bond proceeds and the obligations necessary to effect the advance refunding of the Outstanding Bonds depend, in part, on the interest rate to be borne by the Bonds to be issued pursuant to this Ordinance, the exact amount and maturities of the Bonds to be issued and the specific obligations to be acquired shall hereafter be fixed by resolution of the Assembly; NOW, THEREFORE, THE KODIAK ISLAND BOROUGH ASSEMBLY HEREBY ORDAINS: Section 1. Purpose. The purpose of this Ordinance is to authorize the issuance and sale of not to exceed $10,100,000 of refunding general obligation bonds to provide part of the funds to advance refund the Outstanding Bonds, to pay the costs of issuance of the Bonds, including the bond insurance premium, if any, and to fix certain details of said bonds to be issued. Section 2. Definitions. The following terms shall have the following meanings in this Ordinance: (a) "Assembly" means the Kodiak Island Borough Assembly, as the general legislative authority of the Borough, as the same shall be duly and regularly constituted from time to time. (b) "Bond" or "Bonds" means any of the bonds of the Borough, the issuance and sale of which are authorized herein. (c) "Bond Insurer" means, with respect to the Bonds, any insurance company which issues a policy of insurance with respect to payment of the interest on and principal of the Bonds, as designated by resolution of the Assembly. (d) "Bond Register" means the registration books maintained by the Paying Agent as agent of the Borough, which include the names and addresses of the owners or nominees of the owners of the Bonds. (e) "Bond Year" means the one -year period beginning on the date of issue of the Bonds and ending on the date prior to the first anniversary thereof, and each subsequent one -year period. (f) "Borough" shall mean the Kodiak Island Borough, a municipal corporation of the State of Alaska, organized as a second class borough under Title 29 of the Alaska Statutes. (g) "Computation Period" means the period from the date of issue of the Bonds through the date as of which the Rebate Amount is determined pursuant to Section 21 of this Ordinance. (h) "Escrow Agent" means Security Pacific Bank Washington, N.A., Seattle, Washington, as Escrow Agent under the Escrow Agreement. (i) "Escrow Agreement" means the Escrow Agreement between the Escrow Agent and the Borough, pursuant to which the Escrow Obligations will be deposited, together with other moneys, if necessary, to pay and redeem the Outstanding Bonds. (j) "Escrow Obligations" means direct noncallable obligations of, or obligations the principal of and interest on which are unconditionally guaranteed as to timely payment by, the United States of America. (k) "Excess Earnings Account" means the special account authorized to be created, pursuant to Section 21 hereof, and designated as the "1989 General Obligation School Refunding Bonds Excess Earnings Account." (I) "1989 General Obligation School Refunding Bond Account" means the special account established, pursuant to Section 12 hereof, for the purpose of holding moneys, including Bond proceeds, to be used to pay and redeem the Outstanding Bonds. (m) "1986 Code" means the Internal Revenue Code of 1986, as ,amended from time to time, together with all regulations effective or promulgated and applicable thereto. (n) "Ordinance" shall mean this Ordinance of the Borough. Ordinance No. 89 -11 -0 Page 2 of 14 (o) "Outstanding Bonds" means that portion of the Kodiak Island Borough General Obligation School Construction Bonds, 1980 Series A which have not previously been redeemed, defeased or advance refunded, all of which shall be advance refunded with the proceeds of the Bonds. (p) "Paying Agent" means Security Pacific Bank Washington, N.A., Seattle, Washington. (q) "Rebate Amount" means the amount determined pursuant to Section 21 of this Ordinance that is to be rebated to the United States of America under the circumstances set forth therein. Section 3. Authority for Ordinance. The Borough has ascertained and hereby determines that each and every matter and thing as to which provision is made in this Ordinance is necessary in order to carry out and effectuate the purposes of the Borough in accordance with the Constitution and statutes of the State of Alaska, and to incur the indebtedness and issue the Bonds. Section 4. Obligation of Bonds. The Bonds shall be direct and general obligations of the Borough and the full faith and credit of the Borough are hereby pledged to the payment of the principal of and interest on the Bonds. Section 5. Authorization of Bonds and Purpose of Issuance. For the purpose of providing part of the funds required to purchase Escrow Obligations and to provide beginning cash to effect the refunding of the Outstanding Bonds in the manner and at the times hereinafter set forth, and to provide for original issue discount, if any, and to pay all costs incidental thereto and to the issuance of the Bonds, including but not limited to any bond insurance premium, the Borough hereby authorizes and determines to issue and sell the Bonds in the aggregate principal amount of $10,100,000 or so much thereof as is required, together with other moneys available and used for such purpose, to effect the advance refunding of the Outstanding Bonds. The aggregate principal amount of the Bonds to be issued shall be as hereafter fixed by resolution of the Assembly. Section 6. Maturities. Payment Dates. Designation and Form of Bonds. The Bonds shall be designated "Kodiak Island Borough, Alaska, 1989 General Obligation School Refunding Bonds ", shall be dated and mature on such dates and may be redeemed in such manner as shall be established by resolution. The Bonds shall bear interest from their date payable on such dates at such rates as may be fixed and determined by resolution adopted prior to the delivery thereof. The Bonds shall be registered as to principal and interest as herein provided. The Bonds shall each be of the denomination of Five Thousand Dollars ($5,000) or any integral multiple of $5,000 of the same interest rate and maturity, approved by the Borough, such approval to be evidenced by the execution of such Bonds. The Bonds Shall be numbered separately in the manner and with such additional designation as the Paying Agent deems necessary for purposes of identification. The Bonds may be delivered with the aggregate principal Ordinance No. 89 -11 -0 Page 3 of 14 amount of Bonds maturing on one date represented by one Bond, in typewritten, printed or lithographed form. The Bonds shall be substantially in the form of such Bond hereinafter set forth, with such appropriate variations, omissions or insertions as are permitted or required by this Ordinance, and may have endorsed thereon such legends or text as may be necessary or appropriate to conform to the rules and regulations of any governmental authority, or any usage or requirement of law with respect thereto. Each Bond shall bear a number or letter, or a number and letter, distinguishing it from every other Bond. Section 7. Details of Bonds. Each of the Bonds shall be signed by the manual or facsimile signature of the Mayor, and the official seal of the Borough (or a facsimile thereof) shall be affixed, imprinted or otherwise reproduced on the Bonds, and attested by the manual or facsimile signature of the Borough Clerk. In case any officer whose signature or facsimile of whose signature shall appear on any Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes the same as if he or she had remained in office until such delivery. In the event both the signature of the Mayor and the signature of the Borough Clerk are in facsimile form, the Bonds shall contain a certificate of the Paying Agent certifying the authentication such signatures in the following form: This bond is one of the Bonds described in the within mentioned Ordinance and the signatures imprinted hereon are the authentic signatures in facsimile of the Mayor and Clerk of the Borough. The principal, redemption price of, and the interest on the Bonds shall be payable in any coin or currency of the United States of America, which at the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal on all Bonds shall be payable at the corporate trust offices of the Paying Agent. Payment of the interest on the Bonds shall be made by check or draft mailed to the registered owner of record as Ordinance No. 89 -11 -0 Page 4 of 14 PAYING AGENT'S CERTIFICATE OF AUTHENTICATION Paying Agent By Authorized Officer of the 15th day of the month preceding each interest payment date at the address appearing on the Bond Register of the Borough kept at the corporate trust office of the Paying Agent, provided that any owner of Bonds in an aggregate principal amount of 51,000,000 or more may, at its option, receive interest payments by wire transfer at any location within the United States upon notice delivered to the Paying Agent not later than the 15th day of the month preceding any interest payment date. Section 8. Redemption of Bonds. The Bonds may be subject to redemption by or on behalf of the Borough prior to maturity and upon notice as hereinafter provided, as a whole or in part as may be fixed and determined by resolution adopted by the Assembly prior to or at the time of sale of the Bonds. Section 9. Notice of Redemption. When the Borough determines to redeem any Bonds, it shall give notice of such redemption in the manner then provided by law, which notice shall state the redemption date and identify the Bonds to be redeemed by reference to their numbers and further state that on such redemption date there shall become due and payable upon each such Bond the principal amount thereof plus the applicable premium, if any (the "Redemption Price "), together with interest accrued to the redemption date, and that from and after such date interest thereon shall cease to accrue. Such notice shall be given at least thirty (30) days but not more than sixty (60) days prior to the redemption date by first class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address of the registered owner appearing on the Bond Register. In addition to the above required mailing, the Borough shall mail notice of such intended redemption to the underwriters of the Bonds and to The Depository Trust Company, Standard 6 Poor,s Corporation and Moody's Investors Service, Inc., New York, New York, or to their successors, if any, by certified or registered mail two (2) business days prior to the mailing of such notice to the registered owners, but the mailing of such notice to the underwriters of the Bonds, The Depository Trust Company, Standard 8 Poor's Corporation and Moody,s Investors Service will not, however, be a condition precedent to or otherwise affect the call of any Bond for redemption. When there is a bond insurance policy with respect to the Bonds, notice of such redemption shall also be given to the Bond Insurer by certified or registered mail. Section 10. Payment of Redeemed Bonds. Notice of redemption having been given in the manner provided in this Ordinance, the Bonds so called for redemption shall become due and payable on the redemption date stated in said notice at the applicable Redemption Price on said date plus interest accrued and unpaid to the redemption date upon presentation and surrender thereof at the corporate trust office of the Paying Agent. If, on the redemption date, moneys for the redemption of all the Bonds to be redeemed, together with interest accrued and unpaid to the redemption date, shall be held on behalf of the Borough at the corporate trust office of the Paying Agent so as to be available therefor on said date Ordinance No. 89 -11 -0 Page 5 of 14 and if notice of redemption shall have been given as aforesaid, then from and after the redemption date the Bonds so called for redemption shall cease to bear interest. Section 11. Form of Bond. Each Bond shall be in substantially the following form, with such variations, omissions and insertions as may be required or permitted by this Ordinance or by resolution of the Assembly: Ordinance No. 89 -11 -0 Page 6 of 14 UNITED STATES OF AMERICA STATE OF ALASKA KODIAK ISLAND BOROUGH (A Municipal Corporation of the State of Alaska) $ 1989 GENERAL OBLIGATION SCHOOL REFUNDING BOND INTEREST RATE MATURITY DATE CUSIP NO. Registered Owner Principal Amount DOLLARS The Kodiak Island Borough, a municipal corporation of the State of Alaska (the "Borough "), for value received, acknowledges itself indebted and hereby promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, upon presentation and surrender hereof, the Principal Amount shown above, and pay interest on such principal sum from the date hereof until its obligation with respect to the payment of such principal sum shall be discharged, at the Interest Rate per annum shown above, payable on the first days of and in each year beginning 1989. The principal, interest and redemption price of this Bond shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Principal shall be paid to the Registered Owner or assigns upon presentation and surrender of the Bond at the corporate trust office of Security Pacific Bank Washington, N.A. in Seattle, Washington (hereinafter called the "Paying Agent ") or its successors. Payment of interest shall be made by check or draft mailed to the Registered Owner of record as of the 15th day of the month preceding each interest payment date at the address appearing on the Bond Register of the Borough kept at the corporate trust office of the Paying Agent, provided that interest to be paid to a Registered Owner of Bonds in the aggregate principal amount of $1,000,000 or more may be made by wire transfer to any location within the United States as provided in the hereinafter defined Ordinance. This Bond is one of the 1989 General Obligation School Refunding Bonds of the Kodiak island Borough, Alaska, of like tenor and effect except as to interest rates, serial numbers, redemption terms and and maturity, aggregating $ in principal amount, and constituting Bonds authorized for the purpose of refunding certain general obligation bonds issued by the Borough, and is issued pursuant to Ordinance No. 89 -11 -0 of the Borough entitled: AN ORDINANCE OF THE KODIAK ISLAND BOROUGH, ALASKA, PROVIDING FOR THE ISSUANCE OF 1989 GENERAL OBLIGATION SCHOOL REFUNDING BONDS OF THE BOROUGH IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $10,100,000 TO PROVIDE FUNDS REQUIRED TO REFUND CERTAIN OUTSTANDING GENERAL OBLIGATION BONDS OF THE BOROUGH, FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING THEIR SALE. (with Resolution No. 89 -_ R of the Borough, herein called the "Ordinance "). The Bonds maturing on or after are subject to redemption by or on behalf of the Borough prior to maturity and upon notice as set forth in the Ordinance on or after as a whole on any date or in part on any interest payment date in inverse order of maturity any by lot within a maturity, at the following redemption prices expressed as a percentage of the principal amounts thereof, together with interest thereon to the redemption date: Period During Which Redeemed (Both Dates Inclusive) Ordinance No. 89 -11 -0 Page 7 of 14 through through through and thereafter Redemption Price If fewer than all of the Bonds of like maturity are to be redeemed, the particular Bonds to be redeemed shall be selected by lot within such maturity as provided in the Ordinance. In addition, the Bonds maturing on are subject to redemption out of sinking fund payments on any on or after at 100% of the principal amount of the Bonds so to be redeemed plus accrued interest, if any, to the redemption date. Bonds subject to such mandatory redemption are to be selected by lot. This Bond is transferable as provided in the Ordinance, (i) only upon the Bond Register of the Borough kept for that purpose at the corporate trust office of the Paying Agent, and (ii) upon surrender of this Bond together with a written instrument of transfer duly executed by the Registered Owner or the attorney of the Registered Owner duly authorized in writing, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount and maturity shall be issued to the transferee in exchange therefor as provided in the Ordinance and upon the payment of charges, if any, as therein prescribed. The Borough and the Paying Agent may treat and consider the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal or redemption price, if any, hereof and interest due hereon and for all other purposes whatsoever. This Bond is a general obligation of the Kodiak Island Borough, Alaska, and the full faith and credit of the Borough are pledged for the payment of the principal of and interest on the Bond as the same shall become due. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, or things required by the Constitutic.i or statues of the State of Alaska to exist, to have happened or have been performed precedent to or in the issuance of this Bond, exist, have happened and have been performed, and that the series of Bonds of which this is one, together with all other indebtedness of the Borough, is within every debt and other limit prescribed by said Constitution or statutes. IN WITNESS WHEREOF, THE KODIAK ISLAND BOROUGH, ALASKA, has caused this Bond to be signed in its name and on its behalf by the facsimile signature of its Mayor and its corporate seal (or a facsimile thereof) to be hereunto affixed, imprinted or otherwise reproduced, and attested by the facsimile signature of its Clerk, all as of the _ day of , 1989. (SEAL) A T T E S T: Gaye J. Vaughan Borough Clerk Section 12. Disposition of the Proceeds of Sale of the Bonds. The proceeds received from the sale of the Bonds (exclusive of accrued interest) shall be deposited in the "1989 General Obligation School Refunding Bond Account" which is hereby created, and used, together with such moneys as may be transferred to said account pursuant to resolution of the Assembly, to deposit cash and to purchase Escrow Obligations maturing as to principal and interest in such amounts and at such times as to provide for the payment of the principal of and interest on the Outstanding Bonds and to pay interest to the date of redemption on and the redemption price of the remaining Outstanding Bonds, and to pay all costs incidental to the issuance of the Bonds and the acquisition and safekeeping of the Escrow Obligations. Such money and Escrow Obligations shall be irrevocably set aside and held in the 1989 General Obligation School Refunding Bond Account and deposited in a trust account for safekeeping with Security Pacific Bank Washington, N.A. as Escrow Agent. Such money and obligations are hereby pledged to be held and applied solely for the purpose set forth herein, provided, however, that the Borough may from time to time transfer, or cause to be transferred, free of trust from such 1989 General Obligation School Refunding Bond Account, any moneys not required for such purpose Ordinance No. 89 -11 -0 Page 8 of 14 Jerome M. Selby Mayor upon securing a verification from a certified public accountant and opinion of bond counsel as set forth in the next succeeding paragraph. The Borough reserves the right to substitute other Escrow Obligations for investments in the 1989 General Obligation School Refunding Bond Account in the event it may do so pursuant to Section 148 of the 1986 Code and applicable regulations thereunder, provided that at all times the moneys and Escrow Obligations in the 1989 General Obligation School Refunding Bond Account shall be sufficient to accomplish the refunding of the Refunded Bonds as provided herein. Prior to each such substitution the Borough shall obtain (1) a verification by a certified public accountant which shall be satisfactory to bond counsel to the Borough that the moneys and Escrow Obligations on deposit after such substitution will be sufficient to effect such refunding of the Outstanding Bonds, and (2) an opinion from bond counsel that such substitution shall not cause any of the Bonds to lose their tax - exempt status under Section 148 of the 1986 Code and the applicable regulations promulgated thereunder. When all of the Outstanding Bonds shall have been redeemed and retired, the Borough may cause to be transferred from the 1989 General Obligation School Refunding Bond Account free of trust all moneys remaining therein. Section 13. Call of Outstanding Bonds for Redemption. The Borough hereby elects to redeem the Outstanding Bonds on July 1, 1990. Notice of redemption of the Outstanding Bonds to be called for redemption shall be given in the manner set forth in Ordinance No. 80 -17 -0 and the Loan Agreement between the Borough and the Alaska Municipal Bond Bank dated July 22, 1980. The election to make such call for redemption shall be subject to the delivery of the Bonds to the initial purchasers thereof and shall become irrevocable upon such delivery. Section 14. Pledge. The Borough hereby irrevocably pledges and covenants that it will levy and collect taxes upon all taxable property within the Borough without limitation as to rate or amount, in amounts sufficient, together with other funds legally available therefor, to pay principal, interest and redemption premiums (if any) on the Bonds as the same become due and payable. In the event that any Bond Insurer makes any payment under a bond insurance policy with respect to the Bonds, such payment shall not be deemed a payment of the Borough, and such payment amounts shall continue to be due and payable by the Borough under this Ordinance. Section 15. Paying Agent and Bond Registrar. Security Pacific Bank Washington, N.A., Seattle, Washington, is hereby appointed as Paying Agent and Bond Registrar for the Bonds and the terms "Paying Agent" and "Bond Registrar" shall include any successor or successors thereto. The Paying Agent as Bond Registrar shall at its corporate trust office maintain a Bond Register which shall include the names and addresses bf the owners or nominees of the owners of the Bonds and which shall provide for the registration, transfer and exchange of Bonds. The Borough shall indemnify and save harmless the Paying Agent against any liabilities Ordinance No. 89 -11 -0 Page 9 of 14 which it may incur in the exercise and performance of its powers and duties as Paying Agent which are not due to its gross negligence or willful default and shall pay its reasonable charges for its services as Paying Agent. The Paying Agent may become the owner of or may deal in Bonds, as fully and with the same rights as if it was not the Paying Agent. Section 16. Mutilated. Destroyed. Stolen or Lost Bonds. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Borough may cause to be executed, and shall deliver, a new Bond of like interest rate, principal amount and maturity in exchange and substitution for and upon cancellation of such mutilated Bond, or in lieu of and in substitution for such Bond destroyed, stolen or lost, upon the owner thereof paying the reasonable expenses and charges of the Borough in connection therewith and in the case of a Bond destroyed, stolen or lost, filing by the owner with the Paying Agent evidence satisfactory to the Borough that such Bond was destroyed, stolen or lost, and of the owner,s ownership thereof, and furnishing the Borough and the Paying Agent with indemnity satisfactory to them. Any new Bond so delivered may bear a number differing from the number of the Bond it replaces. Section 17. Transfer of Bonds and Delivery of New Bonds. Any Bond may be transferred only upon the books kept for the registration and transfer of Bonds by the Paying Agent, as Bond Registrar, upon surrender thereof at the corporate trust office of the Paying Agent, together with an assignment duly executed by the registered owner or his attorney in such form as shall be satisfactory to the Paying Agent. Upon the transfer any such Bond, there shall be executed in the name of the transferee, and the Borough shall authenticate and deliver, a new registered Bond or Bonds of the same aggregate principal amount and maturity of any of the authorized denominations. In all cases in which Bonds may be transferred under this Ordinance, there shall be executed, and the Borough shall authenticate and deliver, Bonds in accordance with the provisions of this Ordinance. Any such transfer shall be without cost to the registered owner, except that the Borough and the Paying Agent may make a charge for every such registration, exchange or transfer of Bonds sufficient to reimburse them for any tax, fee, or other governmental charge required to be paid with respect to such registration, exchange or transfer, and such charge or charges shall be paid before any such new Bond shall be delivered. Section 18. Ownership of Bonds. As to any Bond, the person in whose name the same shall be registered on the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal on such Bond and the interest on such Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond, including the interest thereon to the extent of the sum or sums so paid. Ordinance No. 89 -11 -0 Page 10 of 14 Section 19. Arbitrage Covenant. The Borough covenants with the registered owners of all Bonds at any time outstanding that it will make no use of the proceeds of the Bonds which will cause the Bonds to be "arbitrage bonds" subject to Federal income taxation by reason of Section 148 of the 1986 Code. To that end, so long as any of the Bonds are outstanding, the Borough, with respect to the proceeds of the Bonds, shall comply with all requirements of said Section 148 and of all regulations of the United States Department of Treasury issued thereunder, to the extent that such requirements are, at the time, applicable and in effect. Section 20. Compliance with 1986 Code. The Borough hereby covenants to comply with any and all applicable requirements set forth in the 1986 Code in effect from time to time to the extent that such compliance shall be necessary for the exemption from Federal income taxes of the interest on the Bonds. The Borough hereby further covenants to observe any and all applicable requirements in any future Federal tax legislation to the extent that such compliance is determined by the Borough to be legal and practicable and required for such exemption. The covenants of this Section 20 shall also be deemed to have been made for the benefit of any Bond Insurer for so long as the Bond Insurer maintains a policy of insurance with respect to the Bonds. Section 21. Rebate Requirement. The Borough covenants and agrees to calculate the Rebate Amount and to pay the Rebate Amount to the United States in the manner and at the times required in this Section 21; provided, however, that any of the following provisions established by this Section 21 may be added to, modified or deleted upon written advice of bond counsel to the Borough to the effect that such additions, modifications or deletions will not adversely affect the tax - exempt status of interest on the Bonds. (a) There is hereby authorized to be created a "1989 General Obligation School Refunding Bond Excess Earnings Account" (the "Excess Earnings Account ") to be held separate from other accounts of the Borough. The Borough shall make deposits into and withdrawals and payments from the Excess Earnings Account at such times and in such manner as provided herein. (b) The Borough shall calculate the Rebate Amount for each Bond Year and shall deposit the Rebate Amount in the Excess Earnings Account in the next succeeding Bond Year, less the amounts, if any, previously paid to the United States as provided herein. The Rebate Amount shall be calculated as follows: (1) The aggregate amount earned on the amounts allocable to the Bonds, if any, deposited in the 1989 General Obligation School Refunding Bond Account for the Computation Period, minus (2) The aggregate amount that would have been earned on the amounts allocable to the Bonds, if any, deposited in the 1989 General Obligation School Refunding Bond Account for the Computation Period if Ordinance No. 89 -11 -0 Page 11 of 14 such amounts had been invested at a yield equal to the actuarial yield on the Bonds for the Computation Period, plus (3) Any income (whether or not that income exceeds such yie( on the Bonds) attributable to the excess of the amount computed under subparagraph (a) above over the amount computed under subparagraph (b) above. Any earnings on amounts deposited in the 1989 General Obligation School Refunding Bond Account must be retained in such Account. Any adjustments in the foregoing shall be made solely upon written instructions from the Borough's bond counsel. (c) The Borough shall make deposits into the Excess Earnings Account to maintain it at the Rebate Amount, less the amounts, if any, previously paid to the United States of America as provided herein. Such deposits may be made from any available moneys of the Borough (other than money on deposit in the 1989 General Obligation School Refunding Bond Account, which shall be held solely for the benefit of owners of the Outstanding Bonds). Any amounts that are withdrawn from the Excess Earnings Account as a result of a decrease in the Rebate Amount may be deposited in any account of the Borough. Earnings on amounts in the Excess Earnings Account must remain therein and may not be taken into account in determining a decrease in the Rebate Amount. (d) The Borough shall make installment payments from the Excess Earnings Account to the United States. The first payment shall be made not later than thirty (30) days after the end of the fifth Bond Year (unless th Borough is hereafter advised in writing by its bond counsel that another da. has been established for such payment). Each subsequent installment payment shall be made not later than five (5) years after the next preceding payment was due (unless the Borough is hereafter advised in writing by its bond counsel that another date has been established for such payment). Each installment payment shall be such that at least ninety percent (90 %) of the Rebate Amount for the Computation Period ending immediately prior to such installment payment will have been paid to the United States. Not later than sixty (60) days after retirement of last obligation of the Bonds, the final installment payment shall be made such that one hundred percent (100 %) of the Rebate Amount for the final Computation Period is paid to the United States. (e) The Rebate Amount shall be calculated within thirty (30) days of the end of the first Bond Year, within thirty (30) days of the end of each subsequent Bond Year, and within sixty (60) days of the retirement of the last obligation of the Bonds. Any required deposits into the Excess Earnings Account shall be made within the foregoing required calculation periods, respectively. (f) If, during any computation Period, the Rebate Amount is less that the amounts previously paid to the United States of America, such a deficit may not be recovered from amounts previously paid to the United States of America. Ordinance No. 89 -11 -0 Page 12 of 14 (g) The aggregate amount earned must include all income realized under Federal income tax accounting principles (whether or not the entity earning the income is subject to Federal income taxation) with respect to any obligation and with respect to the reinvestment of investment receipts from such obligations. Transaction costs incurred in acquiring, carrying, selling or redeeming such obligations may not be offset in determining the aggregate amount earned. If any investments are retained after retirement of the last obligation of the Bonds, any unrealized gain or loss as of such retirement date must be taken into account in determining aggregate earnings. Gain or loss must be computed with reference to the fair market value of an obligation or security on the date on which it is deposited into any fund or account created hereunder. (h) The Borough covenants and agrees to make payments of the Rebate Amount to the United States as described in this Section 21 or in such other manner necessary to comply with the then applicable Federal tax law. Section 22. Sale of Bonds and Approval of Official Statement. The Bonds shall be sold at negotiated sale to John Nuveen & Co., Incorporated. The Mayor and Finance Director of the Borough are hereby authorized to negotiate the purchase of the Bonds in such manner as they deem appropriate and in the best interests of the Borough. The Mayor and the Finance Director are each authorized to review and to approve, on behalf of the Borough, the Official Statement (and any Preliminary Official Statement) relating to the issuance and sale of the Bonds with such changes, if any, as may be deemed by them to be appropriate. Section 23. Amount. Dates. Maturities and Redemption. Sale and Other Details of Bonds. The Assembly shall by resolution establish the total amount of the Bonds to be issued, the date of the Bonds, denominations, numbers, interest rates, interest payment dates, maturities, redemption provisions, and any other details of the Bonds. Section 24. Authority of Officers. The Mayor, the acting Mayor from time to time, the Finance Director, the Borough Clerk and the acting Borough Clerk from time to time, are, and each of them hereby is, authorized and directed to do and perform all things and determine all matters not determined by this Ordinance, or to be determined by a subsequent ordinance or resolution of the Borough, to the end that the Borough may carry out its obligations under the Bonds and this Ordinance. Section 25. Authorization of Temporary Bonds. Until the definitive Bonds are prepared, the Borough may, if deemed necessary by the Finance Director of the Borough, issue a temporary Bond or Bonds which shall be typewritten, and which shall be delivered to the purchaser or purchasers of the Bonds in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds. The temporary Bond or Bonds shall be dated as of the date of the Bonds, shall be in an aggregate principal amount equal to the principal amount of Bonds sold, shall be numbered from T -I upward, shall be substantially of the tenor of such Ordinance No. 89 -11 -0 Page 13 of 14 definitive Bonds, but with such omissions, insertions and variations as may be appropriate to temporary Bonds, and shall be signed by the Mayor or Borough Manager of the Borough and the Borough Clerk. Section 26. Miscellaneous. (a) All payments made by the Borough of, or on account of, the principal of or interest on the Bonds shall be made on the several Bonds ratably and in proportion to the amount due thereon respectively for principal or interest as the case may be. (b) No recourse shall be had for the payment of the principal of or the interest on the Bonds or for any claim based thereon or on this Ordinance against any member of the Assembly or officer of the Borough or any person executing the Bonds. The Bonds are not and shall not be in any way a debt or liability of the State of Alaska or of any political subdivision thereof, except the Borough, and do not and shall not create or constitute an indebtedness or obligation, either legal, moral or otherwise, of said State or of any political subdivision thereof, except the Borough. Section 27. Severability. If any one or more of the covenants and agreements provided in this Ordinance to be performed on the part of the Borough shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements shall be null and void and shall be deemed separable from the remaining covenants and agreements in this Ordinance and shall in no way affect the validity of the other provisions of this Ordinance or of the Bonds. Section 28. Effective Date. This Ordinance shall take effec immediately. PASSED AND APPROVED by the Assembly of the Kodiak Island Borough, this 6th day of April, 1989. ATTEST: Borou6ly Clerk Ordinance No. 89 -11 -0 Ma !� 1 / e ld in P g Officer