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Between
City of Ketchikan, Alaska
and
The Bank of New York Mellon Trust Company, N.A.,
as Depositary
Dated November 2, 2016
Re: City of Ketchikan, Alaska
Port Revenue Bonds
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This Reserve Account Depositary Agreement, dated November 2, 2016 (this
"Agreement"), is entered into between the City of Ketchikan, Alaska, a duly constituted home
rule municipality of the State of Alaska (the "City"), and The Bank of New York Mellon Trust
Company, N.A., a national banking association duly established and validly existing under and
by virtue of the laws of the United States, with its corporate trust office located in San Francisco,
California, as Depositary (the "Depositary"), and
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WHEREAS, the City of Ketchikan, Alaska (the "City"), issued and sold its Port Revenue
Bond, 2006, in the original principal amount of $38,500,000 (the "2006 Bond"), to the Alaska
Municipal Bond Bank (the "Bond Bank"), as authorized by Ordinance No. 06-1549 of the City
(the "Bond Ordinance") and Resolution No. 06-2171 of the City Council (together with the Bond
Ordinance, the "2006 Bond Legislation"), on the terms and conditions set forth in the 2006 Bond
Legislation and in a loan agreement between the City and the Bond Bank dated as of July 1,
2006 (the "2006 Loan Agreement"); and
WHEREAS, the Bond Bank issued and sold its General Obligation Bonds, 2006 Series
Two (the "2006 Bond Bank Bonds"), to provide funds to purchase the 2006 Bond, as provided in
the 2006 Loan Agreement; and
WHEREAS, as required by the 2006 Bond Legislation and the 2006 Loan Agreement,
the City established, funded, and has maintained a debt service reserve account (the "Reserve
Account") to secure payment of debt service on the 2006 Bond and any port revenue bonds
issued on a parity therewith ("Future Parity Bonds"); and
WHEREAS, to refinance the 2006 Bond Bank Bonds to achieve debt service savings for
borrowers including the City, the Bond Bank is issuing a series of its general obligation bonds
(the "2016 Bond Bank Bonds") to currently refund the outstanding 2006 Bond Bank Bonds; and
WHEREAS, in connection with the issuance of the 2016 Bond Ban Bonds to refund the
2006 Bond Bank Bonds, the City and the Bond Bank have entered into an Amendatory Loan
Agreement dated October 18, 2016, under which the City will issue to the Bond Bank its Port
Revenue Refunding Bond, 2016 (the "2016 Refunding Bond"), in exchange for the 2006 Bond;
and
WHEREAS, the 2016 Refunding Bond will be issued on a parity of lien with the 2006
Bond and will be secured by the Reserve Account; and
WHEREAS, Bond Bank now requires that debt service reserves for the bonds of any
borrowers be held by the Depositary as the trustee for the Bond Bank; and
WHEREAS, to comply with this requirement, the City wishes to transfer to the
Depositary funds currently held elsewhere for the Reserve Account; and
WHEREAS, the City may from time to time request that the Depositary accept
additional deposits to the Reserve Account held hereunder in connection with the City's issuance
of Future Parity Bonds to the Bond Bank;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree as follows, intending to be legally bound:
Section 1. Establishment of Account; Deposits
The Depositary agrees to establish and maintain a separate account (the "Account") in its
capacity as Depositary, acting as a custodian for the benefit of the City, under the terms of this
Agreement. The Account established hereby will remain the property of the City. Sub-accounts
may be established within the Account when deemed necessary or convenient by the City or the
Depositary. The Depositary shall have custody of the Account, which will be held on behalf of
and for the benefit of the City and kept separate from the other assets of the Depositary, and the
money on deposit in the Account will be held, invested, and disbursed as directed by the City
pursuant to this Agreement.
The City hereby deposits with the Depositary, in trust, the sum of $2,240,000 to be held
by the Depositary.
From time to time hereafter, if the City issues Future Parity Bonds to the Bond Bank, the
Depositary agrees to accept additional deposits for the Reserve Account held under this
Agreement on the terms and conditions set forth in this Agreement. Each such additional deposit
must be described and approved in writing by the City in substantially the form set forth as
Exhibit C to this Agreement. Each such fully executed additional deposit form will be attached
to Exhibit D of this Agreement.
Section 2. Investments
(a) The Depositary agrees to invest and reinvest funds in the Account in Permitted
Investments (as defined below), as directed in writing by the Authorized Representative of the
City.
Authorized Representative of the City means the Finance Director and his or her
designee.
Permitted Investment means securities in which the City may invest under the laws of
the State of Alaska, as amended from time to time, and subject to the limitations and procedures
set forth therein.
(b) The City recognizes and agrees that the Depositary will not provide supervision,
recommendations or advice relating to either the investment of money held in the Account or the
purchase, sale, retention or other disposition of Permitted Investments. Earnings on Permitted
Investments shall be added to the Account. The Depositary shall be under no obligation to invest
money in the Account other than as directed by an Authorized Representative of the City and
shall be entitled to rely on such direction as to the legality of the directed investment. Any loss
or expense incurred as a result of an investment will be borne by the Account.
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(c) The Depositary is hereby authorized to trade, with disclosure to the Authorized
Representative of the City, with itself and any affiliated entity in the purchase and sale of
securities for investment, and is authorized to execute purchases and sales of Permitted
Investments through the facilities of its own trading or capital markets operations or those of any
affiliated entity. The Depositary shall send statements to the City on a monthly basis reflecting
activity in the Account for the preceding month. Although the City recognizes that it may obtain
a broker confirmation or written statement containing comparable information at no additional
cost, the City hereby agrees that confirmations of Permitted Investments are not required to be
issued by the Depositary for each month in which a monthly statement is rendered.
(d) The City acknowledges and agrees that any delivery to the City of the funds held
hereunder is subject to the sale and final settlement of Permitted Investments. Proceeds of a sale
of Permitted Investments will be delivered on the business day on which the appropriate
instructions are delivered to the Depositary if received prior to the deadline for same day sale of
such Permitted Investments. If such instructions are received after the applicable deadline,
proceeds will be delivered on the next succeeding business day.
(e) The Depositary will cooperate and provide records as reasonably requested by the
Authorized Representative of the City in order to comply with the City's requirements to
compute and pay arbitrage rebate with respect to the funds held hereunder.
Section 3. Disbursement of Account
Money deposited in the Account shall be paid out from time to time by the Depositary
within one business day after receipt (not later than noon local time in San Francisco, California,
or the second business day thereafter, if received after noon local time) by the Depositary of a
direction from the Authorized Representative of the City, properly completed and executed in
substantially the form of Exhibit A attached hereto.
Section 4 Concerning the Depositary
Notwithstanding any provision contained herein to the contrary, the Depositary, including
its officers, directors, employees and agents:
(a) is not liable for any action taken or omitted under this Agreement so long
as it shall have acted in good faith and without negligence;
(b) has no responsibility to inquire into or determine the genuineness, or
sufficiency of any securities, checks, or other documents or instruments submitted to it in
connection with its duties hereunder;
(c) is entitled to deem the signatories of any documents or instruments
submitted to it hereunder as being those purported to be authorized to sign such documents or
instruments on behalf of the City, and are entitled to rely on the genuineness of the signatures of
such signatories without inquiry and without requiring substantiating evidence of any kind;
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(d) has no responsibility or liability for any diminution in value of any assets
held hereunder that may result from any investments or reinvestment made in accordance with
any provision which may be contained herein;
(e) is entitled to compensation for its services hereunder as per Exhibit B
attached hereto, which is made a part hereof, and for reimbursement of its out-of-pocket
expenses including, but not by way of limitation, the fees and costs of attorneys or agents that it
may find necessary to engage in performance of its duties hereunder, all to be paid by the City;
(f) if the Depositary renders any service hereunder not provided for in this
Agreement, or the Depositary is made a party to or intervenes in any litigation pertaining to this
Agreement or institutes interpleader proceedings relative hereto, the Depositary will be
compensated reasonably by the City for such extraordinary services and reimbursed for any and
all claims, liabilities, losses, damages, fines, penalties, and expenses, including out-of-pocket and
incidental expenses and legal fees and expenses occasioned thereby;
(g) is under no obligation to institute any suit or action or other proceeding
under this Agreement or to enter any appearance in any suit, action or proceeding in which it
may be a defendant or to take any steps in the enforcement of its rights and powers hereunder,
nor will be deemed to have failed to take any such action, unless and until it has been
indemnified by the City to its satisfaction against any and all costs and expenses, outlays,
counsel fees and expenses, and other disbursements, including its own reasonable fees, and if
any judgment, decree or recovery be obtained by the Depositary, payment of all sums due it, as
aforesaid, will be a first charge against the amount of any such judgment, decree or recovery. No
provision of this Agreement requires the Depositary to risk or expend its own funds;
(h) has only those duties as are specifically provided herein and is neither
responsible for, nor chargeable with, knowledge of the terms and conditions of any other
agreement, instrument or document of the City. This Agreement sets forth all matters pertinent
to the Account, and no additional obligations of the Depositary may be inferred from the terms
of this Agreement or any other agreement. IN NO EVENT SHALL THE DEPOSITARY BE
LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES
ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES
THAT RESULT FROM THE DEPOSITARY'S FAILURE TO ACT IN ACCORDANCE WITH
THE STANDARDS SET FORTH IN THIS AGREEMENT, OR (ii) SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES, EVEN IF THE DEPOSITARY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES;
(i) has the right, but not the obligation, to consult with counsel of choice and
will not be liable for action taken or omitted to be taken by Depositary either in accordance with
the advice of such counsel or in accordance with any opinion of counsel to the City addressed
and delivered to the Depositary;
(j) has no liability or obligation with respect to any failure or delay in the
performance of its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of
God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
interruptions; labor disputes; acts of civil or military authority or governmental actions; it being
understood that the Depositary shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable under the
circumstances; and
(k) has the right to perform any of its duties hereunder through agents,
attorneys, custodians or nominees chosen with reasonable care.
The Depositary shall have the right to accept and act upon instructions, including funds
transfer instructions ("Instructions") given pursuant to this Agreement and delivered using
Electronic Means; provided, however, that the City shall provide to the Depositary an
incumbency certificate listing officers with the authority to provide such Instructions
("Authorized Officers") and containing specimen signatures of such Authorized Officers, which
incumbency certificate shall be amended by the City whenever a person is to be added or deleted
from the listing. If the City elects to give the Depositary Instructions using Electronic Means
and the Depositary in its discretion elects to act upon such Instructions, the Depositary's
understanding of such Instructions shall be deemed controlling. The City understands and agrees
that the Depositary cannot determine the identity of the actual sender of such Instructions and
that the Depositary shall conclusively presume that directions that purport to have been sent by
an Authorized Officer listed on the incumbency certificate provided to the Depositary have been
sent by such Authorized Officer. The City shall be responsible for ensuring that only Authorized
Officers transmit such Instructions to the Depositary and that the City and all Authorized
Officers are solely responsible to safeguard the use and confidentiality of applicable user and
authorization codes, passwords and/or authentication keys upon receipt by the City. The
Depositary shall not be liable for any losses, costs or expenses arising directly or indirectly from
the Depositary's reliance upon and compliance with such Instructions notwithstanding such
directions conflict or are inconsistent with a subsequent written instruction. The City agrees: (i)
to assume all risks arising out of the use of Electronic Means to submit Instructions to the
Depositary, including without limitation the risk of the Depositary acting on unauthorized
Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed
of the protections and risks associated with the various methods of transmitting Instructions to
the Depositary and that there may be more secure methods of transmitting Instructions than the
method(s) selected by the City; (iii) that the security procedures (if any) to be followed in
connection with its transmission of Instructions provide to it a commercially reasonable degree
of protection in light of its particular needs and circumstances; and (iv) to notify the Depositary
immediately upon learning of any compromise or unauthorized use of the security procedures.
"Electronic Means" shall mean the following communications methods: e-mail, facsimile
transmission, secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Depositary, or another method or system
specified by the Depositary as available for use in connection with its services hereunder.
Any banking association or corporation into which the Depositary may be merged,
converted or with which the Depositary may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Depositary shall be a party, or any banking
association or corporation to which all or substantially all of the corporate trust business of the
Depositary shall be transferred, shall succeed to all the Depositary's rights, obligations and
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immunities hereunder without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 5. Resignation or Removal of Depositary
Each of the City and the Depositary may terminate this Agreement by giving 30 days'
prior written notice to the other party. In that event, the duties of the Depositary shall terminate
30 days after receipt of such notice (or as of such earlier date as may be mutually agreeable) and
the Depositary shall then deliver the balance of the money or assets then in its possession to the
City as the City shall direct.
Section 6. Notices
Any notice, direction or request to be given in connection with any of the terms or
provisions of this Agreement must be in writing and be given in person, by facsimile
transmission, courier delivery service or by mail, and will become effective (a) on delivery if
given in person, (b) on the date of delivery if sent by facsimile or by courier delivery service, or
(c) four business days after being deposited in the mails, with proper postage for first-class
registered or certified mail, prepaid.
Until notified in writing by the appropriate party of a change to a different address,
notices shall be addressed as follows:
(i) if to the City:
City of Ketchikan
Attention: Finance Director
334 Front Street
Ketchikan, AK 99901
Fax Number: 907-228-5617
(ii) if to the Depositary:
The Bank of New York Mellon Trust Company, N.A.
Attention: Corporate Trust Public Finance Group
100 Pine Street, Suite 3200
San Francisco, CA 94111
Fax: 415-399-1647
Section 7. Governing Law, Counterparts
This Agreement shall be construed in accordance with the laws of the State of Alaska. It
may be executed in several counterparts, each one of which shall constitute an original and all
collectively shall constitute but one instrument.
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Section 8. Amendment, Modification or Waiver
This Agreement may be amended or modified and any term of this Agreement may be
waived if such amendment, modification or waiver is in writing and signed by both parties.
Section 9. Assignments of Interests
No assignment of the interest of either of the parties hereto shall be binding in the
absence of the written consent of the other party; provided, however, that the Depositary may
assign its interest under the circumstances set forth in the last paragraph of Section 4 hereof
without such written consent.
IN WITNESS WHEREOF, the parties have duly executed this Depositary Agreement
as of the date first above written.
City of Ketchikan. Alaska
f_/I...... By
Name: Robert L Nee11, Jr.
Title: Finance Director
The Bank of New York Mellon Trust
Company, N.A., as Depositary
By
Name:
Title: Authorized Officer
Signature Page to Reserve Depositary Agreement
Section 8. Amendment, Modification or Waiver
This Agreement may be amended or modified and any term of this Agreement may be
waived if such amendment, modification or waiver is in writing and signed by both parties.
Section 9. Assignments of Interests
No assignment of the interest of either of the parties hereto shall be binding in the
absence of the written consent of the other party; provided, however, that the Depositary may
assign its interest under the circumstances set forth in the last paragraph of Section 4 hereof
without such written consent.
IN WITNESS WHEREOF, the parties have duly executed this Depositary Agreement
as of the date first above written.
City of Ketchikan, Alaska
By
Name: Robert E. Newell, Jr.
Title: Finance Director
The Bank of New York Mellon Trust
Company, N.A., as Depositary
By
Name: (
Title: Authorized Officer
Signature Page to Reserve Depositary Agreement
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Disbursement Direction
To: The Bank of New York Mellon Trust Company, N.A.
Attention: Corporate Trust, Public Finance Group
Re: Reserve Account Depositary Agreement dated November 2, 2016
by and between the City of Ketchikan, Alaska, and
The Bank of New York Mellon Trust Company, N.A., as Depositary
(the "Depositary Agreement")
Ladies and Gentlemen:
You are hereby authorized and directed as Depositary under the above-referenced
Depositary Agreement to wire $_________________ to
City of Ketchikan, Alaska
By:_
Name:
Title:
A-i
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Fee Waived
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Form for Additional Deposits
To: The Bank of New York Mellon Trust Company, N.A.
Attention: Corporate Trust, Public Finance Group
Re: Reserve Account Depositary Agreement dated November 2, 2016
by and between the City of Ketchikan, Alaska (the "City"), and
The Bank of New York Mellon Trust Company, N.A., as Depositary
(the "Depositary Agreement")
Ladies and Gentlemen:
You are hereby authorized and directed as Depositary under the above-referenced
Depositary Agreement to accept $________________
for deposit to the Reserve Account in
connection with the City's issuance of the Future Parity Bond to the Bond Bank, as described
below.
The Future Parity Bond is the City's F Bond, (the
"Bond"), issued pursuant to Ordinance No. F 1, passed on F , 1 (the "Bond
Ordinance"). The Bond will be delivered to the Alaska Municipal Bond Bank (the "Bond
Bank") to evidence and secure the City's obligations under the terms of a Loan Agreement, dated
as of F , 1, between the Bond Bank and the City. The Loan Agreement and the
Bond Ordinance require this deposit to the Reserve Account to secure its obligations under the
Bond and Loan Agreement.
City of Ketchikan, Alaska
By:_
Name:
Title:
C-i
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Additional Deposits
[Attach here an executed copy of each form for an additional deposit.]
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