1984-15 Authorizing $9,950,000 Principal Amount of General Obligation BondsKodiak Island Borough
Ordinance No. 84 -15 -0
AN ORDINANCE OF THE KODIAK ISLAND BOROUGH ASSEMBLY
AUTHORIZING $9,500,000 PRINCIPAL AMOUNT OF GENERAL OB-
LIGATION VARIABLE RATE DEMAND BONDS, SERIES B (1984),
OF KODIAK ISLAND BOROUGH, ALASKA, THE EXECUTION OF A
CREDIT AGREEMENT AND A SALES AGENCY AGREEMENT WITH
RESPECT TO THE BONDS, AND PROVIDING FOR AN EFFECTIVE
DATE.
WHEREAS, pursuant to Ordinance No. 79 -28 -OA of the
'Borough passed and approved on November 7, 1979, the following
;question:
ii
PROPOSITION NO. 1
1.
Shall the Kodiak Island Borough incur indebtedness
and issue general obligation bonds in an amount
not to exceed $29,000,000 for the purpose of ac-
quiring property for planning, designing, equip-
ping, improving, and constructing the following
school and related capital improvements in the
Borough pursuant to Ordinance No. 79- 28 -OA:
Main Elementary- new or renovate;
Junior High- renovate; Multi -
Purpose Auditorium; Maintenance
Shop and Storage Space; Physical
Education Space at East Elementary;
New School at Akhiok; Outside
Physical Education and playground
Facilities for Villages; and Major
Maintenance Repair Projects.
Said general obligation bonds are to mature within
thirty (30) years from the date of issue; bear in-
terest at a rate not to exceed the maximum allowed
bylaw; and be secured by a pledge of the full
faith and credit of the Kodiak Island Borough.
(herein called the "Proposition ") was passed and approved by a
vote of 626 for and 532 against Proposition No. 1, at the spe-
cial election held in the Borough on December 11, 1979, and
1 said election has been duly canvassed and the results thereof
certified and confirmed in accordance with law; and
WHEREAS, the Borough Assembly of the Kodiak Island
i Borough has determined and does hereby determine that it is
' necessary to proceed to acquire property for planning, design-
ing, equipping, improving, and constructing capital improve-
; ments to the school system of the Kodiak Island Borough (all
hereinafter collectively referred to as the "Project "); and
WHEREAS, by Ordinance No. 80 -17 -0 the Kodiak Island
Borough Assembly did, on May, 1, 1980, authorize the first sale
of bonds for this purpose and such bonds in the amount of
1 $12,100,000 were sold on August 1, 1980 to the Alaska Municipal
j Bond Bank; and
WHEREAS, by Ordinance No. 83 -26 -0 the Kodiak Island
Borough did on May 12, 1983 authorize the sale of General Obli-
gation Variable Rate Demand Bonds Series A in the amount of
$7,400,000 for the partial financing of the Project;
WHEREAS, it is now deemed necessary and advisable and
in the beat interests of the Borough and its inhabitants that
$9,500,000 principal amount of the general obligation bonds,
referred to in the Proposition, be issued at this time in a
single series, as hereinafter fixed and determined, for the
purpose of raising funds to pay the cost of constructing and
acquiring the Project;
NOW, THEREFORE BE IT ORDAINED BY THE BOROUGH ASSEMBLY
!' OF KODIAK ISLAND BOROUGH, ALASKA, AS FOLLOWS:
ARTICLE I
Definitions
Section 1.01. Definitions. The following terms as
l used herein shall have the following meanings, unless the con -
text otherwise requires:
"Agent" shall mean John Nuveen & Co. Incorporated, as
,' agent under the Sales Agency Agreement or any successor as such
Agent.
"AIR" shall mean an alternative interest rate equal
j to the lesser of 19.9% per annum or 70% of the interest rate
applicable to 13 -week U.S. Treasury Bills determined on the
basis of the average per annum discount rate at which such
13 -week Treasury Bills were sold at the weekly Treasury auction
for any week with respect to which such rate applies to the
Bonds. If no auction shall have been conducted during any such
week, AIR for that week shall be the same as the most recent
AIR.
"Authorized Officer" shall mean the Mayor or Manager
it of the Borough and, in the case of an act to be performed or a
duty to be discharged, any member, officer, employee, agent or
!;representative of the Borough then duly authorized to perform
such act or discharge such duty. .
"Bank" shall mean Rainier National Bank, a national
banking association having its principal office in the City of
Seattle, Washington.
"Bankruptcy" shall mean the Borough shall either (i)
become insolvent or generally fail to pay, or admit in writing
its inability to pay its debts as they become due, or (ii)
voluntarily commence any proceeding or file any petition under
any bankruptcy, insolvency or similar law seeking dissolution
or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for itself or substantial portion of
its property, assets or business or to effect a plan or other
' arrangement with its creditors, or shall file any answer ad-
mitting the jurisdiction of the court and the material allega-
' tions of an involuntary petition filed against it in any bank -
ruptcy, insolvency or similar proceeding, or shall be adjudi-
cated bankrupty, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the
appointment of a receiver, trustee, custodian or liquidator for
itself or a substantial portion of its property, assets or
business or (iii) take any corporate action for the purpose of
effectuating any of the foregoing.
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of Anchora "Bond Counsel" shall mean Messrs. Wohlforth & Flint
g , Alaska, or such other nationally recognized bond
counsel as the Borough shall select.
li
"Bond" or "Bonds" shall mean one or more of the
$9,500,000 General Obligation Variable Rate Demand Bonds, Ser-
;1ies B, (1984) of the Borough authorized, authenticated and
delivered pursuant to this Ordinance.
11 "Borough" shall mean Kodiak Island Borough, a munici-
'pal corporation and political subdivision of the State organiz-
I ed as a second class borough pursuant to Title 29 of the Alaska
!Statutes.
"Business Da"
!and Sunday and excluding any a day which any all be a excluding gal hol holiday a day on which banking institutions in the State of Washing -
I/of j'ton or dealers located in the City of New York who are members
the National Association of Securities Dealers, Inc. are
Il ;'authorized or obligated by law or administrative order to
close.
I
"Code" shall mean the Internal Revenue Code of 1954,
as amended.
"Cost" shall mean the cost of acquiring and
ing the Project, including interest on the Bonds to and
during the period of acquiring and developing the Project, and
reasonable fees of the Trustee for the a _ such ' est, the cost whether incurred by the Borough or otherslforr
,field surveys and advance planning undertaken in connection
'!with the Project properly allocable to the Project and the cost
of acquisition of any land or interest therein required as the
site of the Project or for use in connection therewith, the
cost of preparation of the site of the Project and of any land
oto be used in connection therewith, the cost of any indemnity
and surety bonds and premiums incurred in connection with the
IlProject prior to or during construction thereof and all related
'(direct administrative and inspection expenses whether incurred
by it or by another in connection with the Project
( 'during construction thereof and allocable prior to or
costs of the Borough, legal fees, fees and expenses of the
'Trustee, Agent and Bank to the extent payable by the Borough,
it cost of issuance of the Bonds by the Borough and financing
charges and fees and expenses of bond counsel, financial advi-
,isors and consultants in connection therewith, credit fees with
�j respect to the Letter of Credit, cost of audits, the cost of
Ijall machinery, apparatus and equipment, cost of engineering,
;I ;'architectural services, design, plans, specifications, and sur-
veys, estimates of cost, the reimbursement of all moneys ad-
vaned from whatever source, for the payment of any item or
'I items of cost of the Project, and all other expenses necessary
;th for incident to determining the feasibility or practicability of
e Project, and such other expenses not specified herein as
:j ;may be necessary or incident to the acquisition and construc-
tion of the Project.
I
"Credit Agreement" shall mean the Credit Agreement by
j and between the Borough and the Bank relating to the repayment
of Unpaid Drawings.
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"Debt Service" shall mean, as of any particular date
of computation and with respect to a specified period, an
amount of money equal to the sum of (a) all interest payable
during such period on all Bonds Outstanding on said date of
computation and (b) all Principal Installments payable during
such period with respect to all Bonds Outstanding on said date
of computation, all calculated on the assumption that Bonds
will after said date of computation cease to be Outstanding by
reason, but only by reason, of the payment when due and appli-
cation in accordance with this Ordinance of Principal Install-
ments payable at or after said date of computation.
"Event of Default" shall have the meaning assigned to
that term in Article VI hereof.
"Final Payment Date" shall mean the seventh calendar
day after (but not including) the date of delivery of the
Notice and Demand provided for in Section 2.03(c) to the Agent
and the Trustee or, if such day is not a Business Day, the
Business Day next preceding such day.
"Holders" shall mean the registered holders of all
Outstanding Bonds and the Bank with respect to Unpaid Drawings.
"Interest Payment Date" shall mean, with respect to
each Bond, the first Business Day of January, April, July and
October, beginning with the first Business Day of October, 1984
and the date of maturity of such Bond.
"Indexing Agent" shall mean John Nuveen & Co. Incor-
porated or any successor indexing agent appointed pursuant to
this Ordinance.
"Investment Securities" shall mean direct obligations
of the United States of America with a remaining term to
maturity of 30 days or less.
"Letter" or "Letter of Credit" shall mean a Letter of
Credit and any substitutes or renewals therefor issued pursuant
; to the Credit Agreement.
"Loan Documents" shall mean this Ordinance, the Cre-
i
j; dit Agreement, the Letter of Credit, the Sales Agency Agreement
and the Bonds.
I
"Offering Memorandum" shall mean the Offering Memor-
andum prepared for the information of Bondholders in connection
with the sale of the Bonds.
"Officer' s Certificate" shall mean a document signed
by an Authorized Officer either attesting to or acknowledging
the circumstances, representations or other matters therein
stated or set forth or directing that an action authorized by a
Loan Document be taken by the Person to whom such document is
addressed.
"Outstanding," when used with reference to Bonds,
shall mean, as of any date of determination, all Bonds thereto-
fore issued except:
(1) Bonds theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
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(2) Bonds theretofore paid and redeemed or Bonds due
but not presented when adequate moneys are held by the
Trustee for payment thereon; or
(3) Bonds in lieu of which other Bonds have been
issued pursuant to the provisions of Section 3.03 hereof
relating to Bonds destroyed, stolen or lost unless proof
satisfactory to the Trustee is presented that any such
Bonds are held by persons in whose hands any of such Bonds
is a valid, binding and ,legal obligation of the Borough.
i
"Person" shall mean an individual or a corporation,
partnership, trust, incorporated or unincorporated association,
i'joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Prime Rate" shall mean the rate of interest which
! the Bank announces publicly from time to time at its Seattle,
Washington offices as its "Prime Rate" or "Large Business
Prime Rate".
"Principal Installment" shall mean, as of any
particular date of computation, an amount of money equal to the
,aggregate of (a) the principal amount of Outstanding Bonds
which mature on a single future date, reduced by the aggregate
principal amount of such Outstanding Bonds which would at or
before said future date be retired by reason of the payment
when due and application in accordance with this Ordinance of
.'Sinking Fund Installments payable at or before said future date
for the retirement of such Outstanding Bonds, plus (b) the
amount of any Sinking Fund Installments payable on said future
date for the retirement of any Outstanding Bonds, and said
future date shall, for all purposes hereof, be deemed to be the
date when such Principal Installment is payable and the date of
such Principal Installment.
"Project" shall mean the improvements authorized by
and described in the Proposition.
"Proposition" shall mean the bond proposition passed
and approved by the voters of the Borough on December 11, 1979
as more fully set forth in the recitals to this Ordinance.
"Redemption Fund" shall mean the fund created
pursuant to Section 2.02.
"Redemption Fund Requirement" shall mean, as of any
particular date of computation, an amount of money equal to the
Debt Service payable during the 125 day period next ensuing,
calculated on the assumption that interest will accrue on the
Outstanding Bonds during all of such period at the rate of
twenty percent (20 %) per annum.
"Sales Agency Agreement" shall mean the Sales Agency
Agreement by and between the Borough and the Agent, or any
successor to such agreement.
"Sinking Fund Installment" shall mean, as of any
particular date of determination and with respect to the
Outstanding Bonds, the amount required by Section 2.03(b) to be
paid by the Borough on a single future date for the retirement
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of Bonds which mature after said future date, but does not
includtany amount payable by the Borough by reason only of the
maturity of a Bond.
"State" shall mean the State of Alaska.
"Stated Amount" shall mean the stated amount of the
Letter of Credit.
"STIR" shall mean the lesser of (i) 19.4% per annum
or (ii) the Short -Term Interest Rate as announced from time to
time by the Indexing Agent reflecting current bid -side yields
on short -term tax - exempt paper (U.S. government - guaranteed
housing project notes, other high - quality municipal bonds, and
tax- exempt commercial paper) under prevailing market condi-
tions.
"Trustee" shall mean Seattle -First National Bank, a
national bank association having its principal office in the
City of Seattle, Washington, or any successor trustee appointed
pursuant to this Ordinance.
"Undrawn Stated Amount" shall mean, as of the time
' any determination thereof is to be made, the excess, if any, of
(i) the Stated Amount minus (ii) all Unpaid Drawings.
"Unpaid Drawings" shall mean the aggregate amount of
each payment or disbursement made by the Bank under the Letter
of Credit honoring any demand for payment made by the Trustee
thereunder, to the extent not theretofore reimbursed by the
Borough pursuant hereto and to the Credit Agreement.
Section 1.02. Use of Defined Terms. All terms de-
, fined herein shall have the defined meanings when used in any
certificates, reports or other documents made or delivered pur-
suant hereto unless the context otherwise requires.
Section 1.03. References to Assembly and Officers.
' Any reference herein to any officers of the Borough or the Bor-
ough Assembly of the Borough shall include those succeeding to
its functions, duties or responsibilities pursuant to or by
operation of law or those who are lawfully performing their
functions.
Section 1.04. Singular, Plural and Reference to
Ordinance. Unless the context shall otherwise indicate, words
importing the singular shall include the plural, and vice
versa, and the terms "herein," "hereof," "hereby," "hereto,"
"hereunder" and similar terms refer to this Ordinance.
ARTICLE II
Authorization and Terms of Bonds
Section 2.01. Authorization of Bonds. Of the
$9,500,000 principal amount of general obligation bonds of the
1Borough remaining unissued of the $29,000,000 principal amount
of such bonds authorized by virtue of the adoption by the vot-
ers of the Borough of the Proposition, $9,500,000 are hereby
authorized to be issued under and pursuant to the provisions of
AS 29.58 and this Ordinance for the purpose of financing school
capital improvements of the Borough as described in the Propo-
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Isition. The proceeds of sale of the Bonds are hereby appro-
; for the payment of Costs of said improvements. Except
,that should the Bonds not be issued more than 125 days prior to
the first interest payment date then Bond proceeds equal to
Redemption Fund Requirement shall be deposited in the Redemp-
Iltion Fund. Each Bond shall be designated "General Obligation
i ariable Rate Demand Bond, Series B ( 1984) ".
Upon their execution in the form and manner as in
provided, the Bonds to be issued initially shall be delivered
to the Trustee for authentigation, but before such Bonds shall
;jbe authenticated and delivered by the Trustee there shall be
lIfiled with or delivered to the Trustee the following:
(a) A certified copy of this Ordinance authorizing
the issuance of such Bonds;
cation and An Officer's Certificate directing the delivery of such Bonds to the purchasers named
therein, upon payment to the Trustee of the purchase price
stated therein;
(c) Bond Counsel's opinion to the effect that such
Bonds are valid and binding general obligations of the
Borough, enforceable in accordance with their terms and
the terms of this Ordinance, and such Bonds have been duly
and validly authorized and issued (provided that any such
opinion may be qualified to the extent that enforcement of
any agreement or Bond may be limited by bankruptcy, insol-
vency, reorganization or other laws or equitable prin-
ciples affecting the enforcement of creditors' rights);
The Bonds shall be dated as of the date of their ini-
tial issuance and delivery. Each Bond shall bear interest from
!isuch date, or from the most recent Interest Payment Date to
;which interest has been paid or duly provided for, as the case
',may be, payable on each Interest Payment Date, at the rate per
ilannum hereinafter set forth until the principal thereof is duly
iIpaid or provided for, shall be in a.form payable to the person
,Iwho is the registered holder on the Interest Payment Date. The
ilBonds shall mature on July 1, 1989.
The Bonds shall be issued in the denominations of
I; $50, 000 or any integral multiple thereof and shall be numbered
from one consecutively upwards. The Bonds shall be executed in
the name of the Borough by the manual or facsimile signature of
its Mayor and its corporate seal shall be affixed or imprinted
thereon and attested by the manual or facsimile signature of
its Borough Clerk.
The Bonds shall bear interest at a variable rate per
I annum except as otherwise provided in this Section, equal to
STIR plus one -half (1/2) of one percent as in effect from time
to time. Any change in STIR shall take effect on the Business
Day immediately following the day such change is announced by
the Indexing Agent. If the Indexing Agent shall fail to
announce STIR in any week, the Bonds shall continue to bear
interest at STIR as announced the immediately preceding week
plus one -half (1/2) of one percent and such rate shall be deem-
ed to become effective on Thursday of such week, and if the
Indexing Agent shall fail to announce STIR for a second succes-
sive week the interest rate for the Bonds shall be AIR, as in
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effect from time to time, commencing on Thursday of such week
and until the Business Day immediately following the day the
.Indexing Agent next announces STIR. Notwithstanding the fore-
' going, with respect to any Bond, no adjustment in the interest
rate shall be made for a change in STIR or in AIR, or a change
; in the interest rate from STIR to AIR or from AIR to STIR, if
I; such change takes effect on a Business Day which is less Date Or
five Business Days prior to (i) an Interest Payment
(ii) a date on which such Bond is to be paid or redeemed (in-
I cluding the day such change takes a f ent date) not or not
!I Payment Date, redemption date or p yn►
' interest is actually paid on such Interest or redemption date.
the
'l Bond is paid or redeemed on such payment
II payment pursuant to Sec -
, I If any Bond is tendered for P
. gn 2. 03(C), Agreement is purchased by the Bank pursuant to the Sales
.1 A Ageency Agreement and remains Outstanding after the first Inter-
lest Payment Date on which such Bond could have been selected
for redemption by application of Sinking Fund Installments pur-
Li suant to Section 2.02(b) but was not so selected because the
iI aggregate principal amount of Bonds held by the Bank as afore -
!I said at such time of selection of Bonds for redemption exceeded
i� the amount of such Sinking Fund Installment; then, from and
ii after such Interest Payment Date, such Bond shall bear interest
at the Prime Rate until the Bank is no longer the Holder there -
I of. During any period in which the Bank is the Holder of any
Bond by o n 2 t such Bond shall bear of
nterest at 20° %, of
i to Secti
on 2.03(f),
the Prime Rate.
Section 2.02. Redemption Fund. There is hereby
, created and established with the Trustee an irrevocable trust Isla
,I fund in the name of the Borough Redemption Fund," which shaldesignated
be expended inlaccordance
;
with the provisions of this Ordinance. Amounts drawn under the
il Letter of Credit shall be held in a separate sub- account of
I Redemption Fund and shall not be commingled with other moneys
.! held in the Redemption Fund. The moneys in the Redemption Eund
' shall be used only for the purpose.of paying principal
interest on the Bonds and reimbursing the Bank for Unpaid
Drawings and paying the interest thereon. The Trustee shall
'. maintain within the Redemption Fund a separate account for each
!I payment received from the Borough for deposit therein and shall
expend moneys from the Redemption Fund in the order in which
ll such moneys are received. The Trustee shall have the sole
1 1 right of withdrawal with respect to moneys in the Redemption
Fund. Earnings on moneys deposited in the Redemption Fund
shall be deposited in such Fund and shall be used for the same
i purposes and in the same manner as other moneys in such Fund.
money in the Redemption Eund,
I The Trustee shall app 1 y
II together with the proceeds of the investment thereof, to the
I I payment of the principal of, premium, if any, and interest on
1 the Bonds when due, whether at their maturity or upon the re-
i demption thereof or by acceleration or otherwise, in the
to the manner
and at the time specified in this Ordinance but subject
following order of priority:
(1) money derived from the proceeds of the Bonds
which may be on deposit in the Redemption Fund;
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II •
1 i I
(2) money paid by the Borough pursuant to this Or-
dinance or proceeds of refunding bonds which has been on
deposit in the Redemption Fund for a period of at least
125 days during which 125-day
filed by the Borough bankruptcy;
no petition has been
h i
P Y:
(3) money received by the Trustee from the Bank as a
draw on the Letter of Credit or for the purpose of pur-
chasing the e Bonds pursuant to Article VII of the Credit
Agreement;
(4) money paid by the Borough which has not been on
deposit in the Redemption Fund for a period of at least
125 days; and
Fund. (5) any other money on deposit in the Redemption
I ;The money in the foregoing priorities (1) and (2) are herein
,;The
to as g
constituting, or being derived from "Eligible
IiMoneys."
In no event (other than as set forth in the next suc-
Iceeding sentence) shall any money other than money derived from
;;Eligible Moneys or money drawn under the Letter of Credit or
, received from the Bank for the purpose of purchasing Bonds pur-
;suant to Article VII of the Credit Agreement be applied to the
;payment of the principal of, premium, if any, or interest on
'the Bonds if money is available and may be drawn under the Let -
ter of Credit for such purpose. If and to the extent money de-
rived from Eligible Moneys or drawn under the Letter of Credit
or available from the Bank for the purchase of Bonds are
;,insufficient or unavailable or unobtainable therefor, the Tus-
tee shall apply any other money which is available therefor,
jincluding money in the foregoing priorities (4) and (5) to the
1, payment of the principal of, premium, if any, and interest on
the Bonds.
Section 2.03. Payment of Bonds.
(a) Optional Redemption. The Bonds shall be redeem-
able at any time on or after January 1, 1985, at the option of
the Borough, as a whole or in part, but only from Eligible
:,Moneys deposited in the Redemption Fund pursuant to Subsection
li I'2.03(e) at a redemption price equal to the principal amount
j thereof plus accrued interest thereon to the date of redemp-
i tion, upon notice of redemption given by delivery of such
notice in writing by the Borough to the Trustee at least
forty -five days prior to the date of redemption and upon not
less than thirty days notice by the Trustee to the Holders of
l i the Outstanding Bonds, as provided in the form of Bond. On the
I redemption date, notice having been given to the Holders of the
!1 Bonds and Eligible Moneys for the payment of the redemption
price being held irrevocably in trust by the Trustee in the Re-
demption Fund, all as provided in this Ordinance, interest on
the Bonds shall cease to accrue, such Bonds shall cease to be
entitled to any lien, benefit or security under this Ordinance,
and the Holders of the Bonds shall have no rights in respect
thereof except to receive payment of the redemption price upon
presentation thereof.
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(b) Sinking Fund Redemption. The Bonds shall be
art but only from Eligible
.'.. subject to mandatory redemption, in
to the principal amount
Moneys, at a redemption price equ
thereof plus accrued interest thereon to the months and redempt
the ion
on the first Business Day of the following
following amounts, each of which shall constitute a Sinking
,Fund Installment for the retirement of the Bonds:
Month
Year Sinkin Fund Installment
$ 400,000
1984
October 400,000
January 1985 400,000
April 1985 400,000
July 1985 400,000
i October 1985 0,000
January 1986 4 4 00 0,000
April 1986 450,000
July 1986 450,000
October 1986 0,000
January 1987 45 450,000
April 1987 500,000
July 1987 500,000
October 1987 0,000
January 1988 5 5 00 0,000
April 1988 550,000
July 1988 550,000
October 1988 550,000
January 1989 550,000
April 1989 550,000
July 1989
(c) Redem tion Pursuant to D the Bank which
;no longer Each
j Holder of receive any may, by execu-
a Bond, other any benefits of the Letter of Credit as
specified in the terms of the L t the Agent and the Trustee of
,I tion and simultaneous delivery
irrevocable written notice in the ft nder of the Bond to the
, 2.09 (the "Notice and Demand") ends of and accrued inter -
Trustee, demand payment of the principal e of such
est on such Bond to the settlement date for r payment the Final
Bond which shall be the Business Day reed upon by the
Payment Date or such earlier date mutually a 9
shall co the Agent and such ointment of the Agent to arrange Demand
for
shell ace constitute
o the on d at a purchase price not less than par
the placement of the Bon
plus accrued interest to the settlement t t the Upon
ond and an t
II from the Agent of notice of the tp nice which shall be
'l amount of money equal to such purchase
all
I j paid to such Holder on the settle tount of Bonds to e er shupon date, the
ij deliver a like aggregate principal price moneys shall b
the order of the Agent. The purchase p be
ll time. no If
j comingled with other funds held by the Trustee at any
ii the Agent is unable to arrange a placement of a tendered Bond
New York time, on the Business Day next preceding
�I b 2:00 Final Payment Date, the Trustee shall, on the Final Payment
Date, e , d e em t he Bond at par P lus accrued interest to the Final
i paymment t Datte e the m mon oneys deposited in the Redemption Fund pur-
suant to Subsection 2.03(e).
ii (d) Pa ant of Debt Service• Redemption Trustee
the shall pay
, shall. . vi a me du t ue and d Bpayable m the Borough shall deposit money
shall co dn payable.
1 with the Trustee sufficient to maintain the Redemption Fund e-
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I I
II
1 ;f) 1 i 1 ri 4 r
quirement at least 125 days prior to each and every date on
which a payment of Debt Service shall be due and payable, whe-
ther by optional redemption, sinking fund redemption or other -
wise. At all times the Borough shall maintain on deposit in
the Redemption Fund an amount equal to the Redemption Fund Re-
quirement. If at any time the amount held in the Redemption
Fund is less than the Redemption Fund Requirement, the Trustee
shall make demand on the Bank for an immediate payment under
the Letter of Credit for an amount sufficient to cure such de-
ficiency and redeem all bonds as specified in Section 2.03(f)
(subject to the limits of the/Letter of Credit and in accor-
dance with the provisions of Section 2.04) and shall deposit
the proceeds of such drawings in the Redemption Fund. If any
funds .remain in the Redemption Fund after the principal of and
interest on all Bonds have been paid in full, upon written
demand from an officer of the Bank specifying the amount of Un-
paid Drawings and the accrued interest thereon, the Trustee
shall immediately pay over such funds to the Bank to the extent
required to reimburse the Bank for such Unpaid Drawings and to
pay such accrued interest.
(e) Transfers from Redemption Fund. In the case of
Debt Service clue on any Interest Payment Date or a redemption
pursuant to Section 2.03(a) or Section 2.03(b) or a mandatory
purchase pursuant to Section 6.01, the Trustee shall make de-
mand on the Bank for payment under the Letter of Credit on the
applicable Interest Payment Date, redemption date or purchase
' date of an amount sufficient to pay the balance required to pay
in full. the Debt Service due on such Interest Payment Date or,
with respect to a redemption date or purchase date, principal
of and the interest on Bonds to be redeemed on such redemption
idate or purchased on such purchase date.
In the case of a redemption pursuant to Section
2.03(c), the Trustee shall, immediately after receiving a copy
of the Notice and Demand, make demand on the Bank for payment
under the Letter of Credit on the Final Payment Date for an
amount sufficient to pay the principal of and accrued interest
on the Bond to be redeemed. If the receives written
notice from the Agent prior to 2:00 P.M., New York time, on the
last Business Day immediately preceding the Final Payment Date
that a placement of the tendered Bond has occurred, the Trustee
shall revoke the demand for payment under the Letter of Credit
as provided in the Letter of Credit; provided, however, that
the Trustee shall incur no liability for its failure to revoke
such demand in the event of the placement of the tendered Bond.
The Trustee shall deposit the proceeds of drawings
under the Letter of Credit made pursuant to this Section 2.03
in the Redemption Fund; provided, however, if a drawing is made
under the Letter of Credit with respect to the redemption of
tendered Bonds pursuant to Section 2.03(c) and all or any por-
tion of the proceeds of such drawing are not required to com-
plete such redemption, the Trustee shall immediately pay to the
Bank, to reimburse it for the Unpaid Drawings resulting from
such drawings, an amount equal to the proceeds thereof not re-
quired to complete the redemption.
(f) Mandatory Purchase. Upon the declaration of an
Event of Default, the Bonds shall be purchased from moneys de-
posited in the Redemption Fund pursuant to Section 6.01, at a
purchase price equal to the principal amount thereof plus
accrued interest thereon to the date of purchase, upon five
days notice by the Trustee to the Holders of the Outstanding
Bonds; as provided in the form of Bond.
Upon notification of Bankruptcy pursuant to Section
5.04 the Bonds shall be purchased from moneys deposited in the
Redemption Fund at a purchase price equal to the principal
amount thereof plus accrued interest thereon to the date of
purchase, upon five days notice by the Trustee to the Holders
of the Outstanding Bonds, as provided in the form of the Bond.
The Trustee shall pay the purchase price upon the date of
purchase from moneys deposited in the Redemption Fund subject
to the following order of priority:
(1) Eligible Moneys as defined in Sect ion 2.02;
(2) Funds received from the Bank as the purchase
price pursuant to Article VII of the Credit
Agreement;
Funds received from the Bank as a draw on the
Letter of Credit.
(3)
In the event that moneys are not available from priorities (1)
and (2) by 4:00 p.m. two days prior to the earlier of the date
of purchase or the scheduled interest payment date, then the
Trustee is authorized and directed to draw on the Letter of
,Credit.
Whenever the Trustee is required to purchase Bonds as
.1 provided in this Section 2.03(f), the Trustee shall pay on the
purchase date the purchase price to the Holders entitled there-
to from moneys deposited in the Redemption Fund and shall
, authenticate and deliver to the Bank as a transferee as provid-
ed in Section 2.08, a like principal amount of Bonds which from
and after the purchase date thereof shall bear interest at 120%
of the Prime Rate.
(g) Selection of Bonds for Redemption. In selecting
the Bonds to be redeemed in part pursuant to Section 2.03(a) or
2.03(b), the Trustee shall assign a distinctive number for each
$50,000 of the principal amount of each Bond and shall select
' by lot, using such method of selection as it shall deem proper
in its discretion, from the numbers so assigned of Bonds pur-
., chased by the Bank pursuant to the Sales Agency Agreement as
the
many numbers as, at $50,000 for each number, sha d that if ef-
principal amount of Bonds to be redeemed; p
;, ter selecting all of such Bonds for redemption the principal
II amount of Bonds so selected is less than the principal amount
of Bonds to be redeemed, then the Trustee shall select by lot,
using such method of selection as it shall deem proper in its
� discretion, from the numbers so assigned to all other Bonds as
II many additional numbers as, at $50,000 for each number shall
; I equal (together with Bonds held by the Bank and selected for
redemption as aforesaid) the principal amount of Bonds to be
redeemed.
The Bonds to be redeemed shall be the Bonds to which
were assigned the numbers so selected, but only so much of the
principal amount thereof as shall equal $50,000 for each number
assigned to it and so selected. Notice of the redemption of
the Bonds or portions thereof so select=d r the date fixed fal
be given not less than thirty days prior
-12-
) r) ? ! • z `) a
such redemption by the Trustee to the Holders of the Outstand-
ing Bonds, as provided in the form of Bond. On the redemption
date, notice having been given to the Holders of the Bonds and
moneys for the payment of the redemption price being held irre-
vocably in trust by the Trustee in the Redemption Fund, all as
provided in this Ordinance, interest on the Bonds or portions
,thereof so called for redemption shall cease to accrue, such
Bonds or portions thereof shall cease to be entitled to any
lien, benefit or security under this Ordinance, and the Holders
of such Bonds or portions thereof shall have no rights in res-
,;pect thereof except to receive payment of the redemption price
;upon presentation thereof.. -
Section 2.04. Authorization to Draw Under Letter of
Credit. The Borough hereby authorizes and directs the Trustee
to draw moneys under the Letter of Credit for payment of prin-
;cipal of :: Id interest on the Bonds, other than Bonds held by
lithe Bank .+hich no longer receive any benefits of the Letter of
'!Credit as specified in the terms of the Letter of Credit, as
jlprovided in this Ordinance and as necessary to make any such
payment principal or interest to the extent moneys in the
,■Redemption Fund are unavailable or are insufficient for such
ipayment. The Bank will not remarket or otherwise dispose of
Bonds which no longer receive any benefits of the Letter of
'Credit. These Bonds are effectively removed from all further
transactions once they have been purchased with a draw under
the Letter of Credit.
Section 2.05. Pledge Effected by Ordinance. To se-
cure the payment of the principal of and interest on the Bonds
the Borough hereby pledges, for the equal benefit of the Hold-
ers of the Bonds, all amounts held in the Redemption Fund. To
secure the payment of the principal of and interest on the
Bonds and the reimbursement of the Unpaid Drawings and interest
thereon as provided in the Credit Agreement, the Borough fur -
ther hereby pledges for the benefit of the Holders, the pro-
ceeds of any reimbursements by the Alaska Department of Educa-
tion held by the Borough and available to repay the Bonds or
the Unpaid Drawings, provided that at all times during which
the Borough is not in default under any provision of this Or-
dinance or the Credit Agreement, such amounts may be expended
by the Borough for any other lawful purpose.
Section 2.06. Ordinance to Constitute Contract. In
consideration of the purchase and acceptance of the Bonds by
those who shall hold the same from time to time, the provisions
of this Ordinance shall be a part of the contract of the Bor-
ough with the Holders and shall be deemed to be and shall con-
stitute a contract between the Borough, the Trustee and the
!Holders. The pledge effected hereby and the provisions, cov-
enants and agreements herein set forth to be performed by or on
behalf of the Borough shall be for the equal benefit, protec-
tion and security of the Holders of any and all of the Bonds,
each of which, regardless of the time or times of its issue,
'making or maturity, shall be of equal rank without preference,
priority or distinction over any other thereof except as ex-
pressly provided in this Ordinance.
Section 2.07. Obligation and Authentication 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 for the prompt payment of the Bonds and the in-
terest thereon. Unless paid from other sources, the Borough is
-13-
obligated to levy ad valorem taxes upon all taxable property in
the Borough without limitation as to rate or amount for the
payment of the Bonds and the interest thereon.
Only such Bonds as shall have endorsed thereon a cer-
tificate of authentication substantially in the form set forth
duly in Section 2.09 executed by the Trustee shall be entitled
to any right or benefit under this Ordinance. No Bond shall be
valid or obligatory for any purpose unless and until such cer-
tificate of authentication shall have been duly executed by the
Trustee, and such executed certificate of the Trustee upon any
I' such Bond shall be conclusive evidence that such Bond has been
authenticated and delivered under this Ordinance. The Trus-
t tee' s certificate of authentication on any Bond shall be deemed
! to have been executed by it if signed with an authorized signa-
ture of the Trustee, but it shall not be necessary that the
same person sign the certificate of authentication on all of
!I the Bonds issued hereunder.
Section 2.08. Registration of Bonds. Title to each
Bond shall be registered on books for the registration and
transfer of the Bonds kept by the Trustee at its principal
II office. A Bond may be transferred only in the manner provided
herein, such transfer to be made on such books and endorsed on
the Bond by the Trustee.
The Bonds may be transferred only upon the books for
the registration and transfer of Bonds, upon the surrender
thereof at the principal office of the Trustee, together with a
form of transfer duly executed by the registered holder or his
attorney duly authorized in writing, substantially in the form
set forth in Section 2.09. Upon the transfer of any Bond,
there shall be issued in the name of the transferee or trans-
ferees a new fully registered Bond or Bonds of any of the auth-
orized denominations of the same aggregate principal amount as
the surrendered Bond. The new Bond or Bonds shall bear the
same date as the date of the surrendered Bond but shall bear
interest from the immediately preceding Interest Payment Date
to which interest has been paid or duly provided for.
Al]. Bonds shall be exchangeable for Bonds or a Bond
of other authorized denominations having the same aggregate
principal amount without payment of any charge, other than tax
or other governmental charge. The new Bond or Bonds shall bear
the same date as the date of the Bond exchanged therefor but
shall bear interest from the immediately preceding Interest
Payment Date to which interest has been paid or duly provided
for. Neither the Borough nor the Trustee shall be required to
exchange or transfer any Bond within five days of an Interest
Payment Date or, in the case of any redemption of Bonds, within
five days of the redemption date.
The Trustee is hereby authorized and directed to en-
ter into an agreement with J. Henry Schroder Bank & Trust Com-
pany providing for the deposit of Bonds at the principal cor-
porate trust office of J. Henry Schroder Bank & Trust Company
in the City of New York, New York, for transmission to the
Trustee for purposes of tender, payment, transfer or exchange.
Section 2.09. Form of Bonds. The Bonds shall be
substantially in the following form:
-14-
; 0 1
No.
1 r
f
FORM OF BOND
STATE OF ALASKA
KODIAK ISLAND BOROUGH
General Obligation Variable Rate Demand Bond,
Series B (1984)
Kodiak.Island Borough (the "Borough "), a municipal
corporation and a political subdivision of the State of Alaska,
for value received, hereby promises to pay to
j or registered assigns, on , , the principal
sum of $ - , or to redeem this Bond on demand
as described below.
Except as otherwise herein provided, this Bond shall
bear interest from the later of the date hereof or from the
most recent Interest Payment Date (as herinafter defined) to
which interest has been paid or duly provided for, as the case
may be, at a variable rate equal to STIR plus one -half (1/2)
of one percent as in effect from time to time. If John Nuveen
& Co. Incorporated or its successor as Indexing Agent under the
Ordinance hereinafter referred to (the "Indexing Agent ") shall
fail to announce STIR in any week, this Bond shall bear inter-
est at STIR as announced the immediately preceding week plus
one -half (1/2) of one percent, and if the Indexing Agent shall
'fail to announce STIR for a second successive week the interest
rate for this Bond shall be AIR as in effect from time to time,
..commencing on Thursday of such week and continuing until the
::Business Day (as defined in the Ordinance hereinafter referred
to) immediately following the day the Indexing Agent next
announces STIR. Any changes in STIR shall take effect on the
Business Day immediately following the day such change is
announced by the Indexing Agent, and in the case of AIR such
change shall take effect on the Thursday immediately following
the Treasury auction. Notwithstanding the foregoing, no ad-
justment in the interest rate on this Bond shall be made for a
change in STIR or in AIR, or a change in the interest rate from
STIR to AIR or from AIR to STIR, if such change takes effect on
a Business Day which is less than five Business Days prior to
(1) an Interest Payment Date (as herinafter defined) or (ii) a
date on which this Bond is to be paid or redeemed (including
the day such change takes effect but not the Interest Payment
Date, payment date or redemption date), whether or not interest
is actually paid on such Interest Payment Date or the Bond is
paid or redeemed on such payment date or redemption date.
"AIR" shall mean an alternative interest rate equal
to the lesser of 19.9% per annum or 70% of the interest rate
applicable to 13 -week U.S. Treasury Bills determined on the
basis of the average per annum discount rate at which such
13 -week Treasury Bills were sold at the weekly Treasury auction
for any week with respect to which such rate applies to the
Bonds. If no auction shall have been conducted during any such
week, AIR for that week shall be the same as the most recent
AIR.
"STIR" shall mean the lesser of (i) 19.4% per annum
or (ii) the Short -Term Interest Rate as announced from time to
-15-
time by the Indexing Agent reflecting current bid-site yields
on short -term tax - exempt paper (U.S. government-guaranteed
housing project notes, other high - quality municipal bonds, and
tax- exempt commercial paper) under prevailing market condi-
tions.
Interest shall be paid on the maturity date of this
;Bond and on the first Business Day of January, April, July and
(October beginning October 1, 1984 (each such day being referred
to herein as an "Interest Payment Date ") to the registered
H holder on the Interest Payment Date.
Payments of both principal and interest are to be
made in lawful money of the United States of depositing immmereni
;l of principal and interest shall be made by
rely available funds in a bank account secifid ctions in the form
registered owner in duly executed i st u
attached hereto delivered to the Trustee (as hereinafter de-
fined) no less than five Business Days prior to the date such
I po the ent is to , aad If
h shall be
made by check mailed to deliver the
,Ito re ted
Trustee, payment
holder'' s ent
s address as it appears on the register
maintained by the Trustee. Notwithstanding the foregoing, no
, I payment of principal shall be made unless and until this Bond
is tendered to the Trustee for cancellation.
This Bond is one of a duly authorized issue of Bonds
of the Borough designated as "Kodiak Island Borough General
Obligation Variable Rate Demand Bonds, s, the Cons (19 ( h
"Bonds ") , issued under and pursuant proposal
laws of the State of Alaska, and by virtue of a p ro P
adopted by the voters of the Borough at a special bond election
held on December 11, 1979 and an ordinance of19he4Borough
adopted by its Borough Assembly on April 13,
"Ordinance "), under which Seattle -First National Bank, Seattle,
Washington or a duly appointed successor is appointed to act as
trustee (the "Trustee"). Reference is made to the Ordinance
for the provisions, among others, relating to lication of n
security of the Bonds, the collection and application drawn by
pledged to the payment of the Bonds including
the Trustee to pay principal and interest on the Bonds under an
,irrevocable letter of credit (the "Letter of Credit "), issued
in favor of the Trustee at the request and for the account of
the Borough by Rainier National Bank, Seattle, Washington, (the
III "Bank ") the custody and application of the proceeds of the
Bonds, the rights and remedies of the holders of the Bonds, the
(i rights, duties and obligations of the Borough and of the
Trustee, and each successive holder of this Bond, by
'i acceptance hereof, irrevocably assents to all of the terms,
I I conditions and provisions of the Ordinance.
The Bonds are subject to redemption at any time on or
after January 1, 1985 as a whole or in part by lot as provided
in the Ordinance, at the option of the Borough, at a redemption
price equal to the principal amount thereof plus
accrued
red in rough
est thereon to the date of redemption, up on the Borough
tion given by delivery of such no prior i in
the d ate of he Bo -
II to the Trustee at least 45 days
11
tion.
The Bonds are also subject to mandatory redemption
1 in part by lot as provided in the Ordinance,
I I prior to maturity,
it -16-
i
11
1
n
't
Il at a redemption price equal to the principal amount thereof
'.plus accrued interest thereon, upon 30 days written notice by
'the Trustee to the registered holders of the Bonds, on each
Interest Payment Date in the sinking fund installment amounts
;'specified in the Ordinance.
The registered holder of this Bond may by execution
lof irrevocable written notice in the form attached to this Bond
Itender this Bond to the Trustee, and demand payment, within
! 'seven calendar days after (but not including) the date of such
notice and tender, of the principal of and accrued interest on
!this Bond to the date of payment.
Any redemption made at the option of the Borough
shall be made as provided in the Ordinance upon not less than
30 days notice to the registered holders of the Bonds. Notice
of the call for any such redemption, and notice of the call for
mandatory redemption, identifying the Bonds to be redeemed,
will be given by mailing copies of such notice to the register-
ed holders of Bonds to be redeemed at their addresses as they
appear on the register maintained by the Trustee. When funds
sufficient to pay the principal or redemption price of any
Bonds becoming due at maturity, by call for redemption, or
otherwise, together with interest accrued to the due date, have
been deposited with, or shall be held by, the Trustee, inter-
est on such Bonds will cease to accrue on the due date, and
thereafter the holders will be restricted to the funds so
deposited as provided in the Ordinance.
This Borough and its full
faith and credit are pledged for the the
„ment of the principal and interest hereon. pay
If an Event of Default defined
occurs, the pr ncipal of andin ere ton all Bonds issued under
!'the Ordinance will be declared due and payable upon the condi-
'tions and in the manner and with the effect provided in the Or-
•'dinance. Whenever Bonds are declared due and payable as afore -
l said, the Bank is obligated to purchase this Bond at a purchase
I equal to the principal amount hereof plus interest accru-
; hereon to the date of purchase.
it
This Bond is transferable by the registered holder
hereof or his attorney duly authorized in writing at the prin-
II il cipal corporate trust office of the Trustee upon surrender of
this Bond, accompanied by a duly executed instrument of trans-
fer in the form attached hereto and with guaranty of signature
satisfactory to the Trustee, subject to such reasonable regula-
1 tions as the Borough or the Trustee may prescribe, and upon
payment of any tax, fee or other governmental charge incident
l to such transfer. Upon any such transfer there shall be issued
' in the name of the transferee a new fully registered Bond or
Bonds of authorized denominations of the same aggregate princi-
pal amount as this Bond. The person in whose name this Bond is
registered shall be deemed the owner hereof for all purposes,
and the Borough and the Trustee shall not be affected by any
I notice to the contrary. Bonds may be deposited at the princi-
pal corporate trust office of J. Henry Schroder Bank & Trust
Company, in the City of New York, New York, for transmission to
the Trustee for tender, payment, transfer or exchange.
-17-
If this Bond is purchased by the Bank pursuant to the
Sales Agency Agreement and remains outstanding after the first
Interest Payment Date on which this Bond could have been sel-
ected for redemption by application of sinking fund install-
ments, then from and after such Interest Payment Date this Bond
during any period when the Bank is the holder, shall bear
interest at a rate per annum equal to the rate of interest
which the Bank announces publicly from time to time at its
Seattle, Washington offices as its "Prime Rate" or "Large Busi-
ness Prime Rate" (herein called the "Prime Rate "). If this
Bond is purchased by the Ban); pursuant to the mandatory pur-
chase provisions of the Ordinance, then from and after such
date of purchase this Bond shall bear interest at 120% of the
Prime Rate.
In any case where the date fixed for the payment of
.1 principal of or interest on this Bond shall not be a Business
Day, then payment of such principal or interest need not be
made on such date but may be made on the next succeeding Busi-
ness Day with the same force and effect as if made on the date
fixed for the payment thereof.
This Bond is not valid unless the Trustee's Certifi-
cate of Authentication endorsed hereon is duly executed.
It is hereby certified, recited and declared that all
acts, conditions and things required by the Constitution and
statutes of the State of Alaska and the Ordinance to exist, to
have happened and to have been performed precedent to and in
the issuance of this Bond, exist, have happened and have been
performed in due time, form and manner as required by law and
that the issue of Bonds of which this Bond is one, together
with all other indebtedness of the Borough, is within every
debt and other limit prescribed by law.
IN WITNESS WHEREOF, Kodiak Island Borough has caused
this Bond to be executed in its name and on its behalf by the
manual or facsimile signature of its Mayor, attested by the
manual or facsimile signature of its Borough Clerk, and has
caused its corporate seal to be affixed hereunto.
(SEAL)
Attest:
Borough Clerk
Dated: May _ , 1984.
-18-
KODIAK ISLAND BOROUGH
By
Mayor
mentioned
able Rate
Borough.
Ij
it
FOR VALUE RECEIVED, the undersigned hereby sells, the
'!ass igns and transfers unto
'within General Obligation Variable Rate Demand Bond, Series B
(1984), of Kodiak Island Borough, Alaska, No.
and hereby irrevocably constitutes and appoints Seattle -First
National Bank attorney to transfer said Bond
of the registry in
'books kept for that purpose with full power
the premises.
Dated:
_, 198_.
,Witness:
Trustee' s Certificate of Authentication
This Bond is one of the Bonds described int the within
Ordinance and is one of the General Obligati Island
Demand Bonds, Series B (1984), of
SEATTLE -FIRST NATIONAL BANK,
as Trustee
By
Form of Transfer
-19-
Authorized o d Officer
) ; r) ") 1 1 " � .� 5
1i
i t The undersigned, , is the
'iregistered holder of the attached General Obligation Variable
Rate Demand Bond, Series B (1984), of Kodiak Island Borough,
II Alaska (the "Borough "), No. (the "Bond "). The
II undersigned hereby irrevocably tenders the Bond to
ji Seattle-First National Bank, as trustee (the "Trustee ") under
the Ordinance authorizing the Bond, adopted on April, 5, 1984
by the Borough Assembly of the Borough and demands payment of
the principal of and accrued interest on the Bond to the date
of payment.
Payment shall be made in immediately available funds,
deposited in accordance with instructions provided by the
undersigned to the Trustee or, if no such instructions are pro-
vided, by check mailed to the undersigned at the address
appearing on the register maintained by the Trustee. Payment
shall occur not later than the seventh calendar day after (but
not including) the date of delivery of this notice to the Trus-
tee and simultaneous delivery of a copy thereof to John Nuveen
& Co. Incorporated, as agent (the "Agent ") of the Borough and
simultaneous delivery to Rainier National Bank, as issuer of
the Letter of Credit or, if such day is not a Business Day (as
defined in said Ordinance), the Business Day next preceding
such seventh day. Delivery shall be made in person or by reg-
istered mail, return receipt requested, and shall occur upon
I actual receipt by the Agent and the Trustee.
Form of Irrevocable Notice and Demand for Payment
(To be delivered to Seattle -First National Bank,
Bond Trustee Services,
9th Floor
1001 Fourth Avenue
Seattle, Washington, 98124
with a copy to John Nuveen & Co. Incorporated
140 Broadway
New York, New York 10005
Attention: Public Finance Group)
and
Rainier National Bank
P.O. Box 3966
Seattle, Washington 98124
Attention: Public Finance Department
Date: , 198_.
-20-
Authorized Signature
1
•
Form of Instructions for
Payment of Principal and Interest
Seattle -First National Bank
Bond Trustee Services,
9th Floor
1001 Fourth Avenue
Seattle, Washington, 98124
The undersigned, . , is the
registered holder of General Obligation Variable Rate Demand
Bond, Series B (1984), of Kodiak Island Borough, Alaska, No.
(the "Bond "). Until further notice or until the
undersigned ceases to be the registered holder of the Bond, you
are instructed to make payment of all principal and interest
due on the Bond on the date due by depositing immediately
available funds on such date in the undersigned's Account No. _
with
Date: , 198_.
ARTICLE III
Authorized Signature
General Provisions
Section 3.01. Execution of Bonds. The Bonds shall
be executed by the manual or facsimile signatures of the Bor-
ough' s Mayor and Borough Clerk who are in office at the date of
such execution. Said signatures shall be effective so long as
any Bonds are Outstanding irrespective of the fact that either
or both of the persons holding such offices may no longer be in
office prior to the issuance of any Bond herein authorized.
Bonds bearing the signatures of such Mayor and Borough Clerk
shall be valid when authenticated and delivered by the Trustee
in accordance with the terms hereof .
Section 3.02. Medium and Place of Payment. Interest
on the Bonds shall be payable in any coin or currency which, on
the dates of payment, is lawful money of the United States of
America. Payments of principal and interest shall be made by
depositing immediately available funds in an account specified
by the registered holder in duly executed instructions in the
form set forth in Section 2.09 delivered to the Trustee no less
than five Business Days prior to the date such payment is to be
made. If such instructions are not delivered to the Trustee in
accordance with the immediately preceding sentence, payment
shall be made by check mailed to the registered holder' s add-
s ress as it appears on the register maintained by the Trustee.
Section 3.03. Lost, Destroyed or Improperly Cancell-
ed Bonds. If any Bond is lost, destroyed (whether by mutila-
tion, damage, in whole or in part, or otherwise) or improperly
-21-
cancelled, the Borough may execute and the Trustee may authen-
ticate a new Bond of like date and denomination and e that (a) in
number not contemporaneously outstanding, provided
the case of any mutilated Bond, such mutilated Bond shall first
be surrendered to the Trustee, and (b) in the case of any Bond
lost or destroyed in whole, there shall be first furnished to
the Borough and the Trustee evidence of such loss or destruc-
tion, together with indemnity, satisfactory to them. In the
I event any lost, destroyed or improperly cancelled Bond shall
'have matured or is about to mature, or has been called for re-
,demption, instead of issuing a duplicate Bond the Borough may,
in its discretion, pay the same without surrender thereof if
there shall be first furnished to the Borough and the Trustee
• evidence of such loss, destruction or cancellation, together
with indemnity, satisfactory to them. Upon the issuance of any
substitute Bond, the Borough and the Trustee may require the
.I payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
The Trustee may charge the Holder of any such Bond with the
Trustee' s reasonable fees and expenses in connection with any
,transaction described in this Section 3.03.
Every substitute Bond issued pursuant to the
provisions of this Section 3.03 by virtue of the fact that any
Bond is lost, destroyed or improperly cancelled shall
constitute an additional contractual obligation of the Borough,
, whether or not the lost, destroyed or improperly cancelled Bond
shall be at any time enforceable, and shall be entitled to all
the benefits of this Ordinance equally and proportionately with
any and all other Bonds duly issued hereunder.
Section 3.04. Cancellation of Bonds. All Bonds sur-
rendered for the purpose of payment, redemption, exchange or
registration of transfer shall be delivered to the Trustee and
promptly cancelled by it, or, if surrendered to the Trustee,
shall be promptly cancelled by it, and no Bonds shall be issued
in lieu thereof except as expressly permitted by any of the
provisions of this Ordinance. The Trustee shall destroy can-
t celled Bonds and deliver a certificate of such destruction to
the Borough.
■I Section 4.01. Appointment. Seattle -First National
Bank is hereby appointed as Trustee and Paying Agent. The
,, Trustee shall signify its acceptance of the duties and oblige-
I tions imposed upon it by this Ordinance by executing an accep-
tance delivered to the Borough upon the issuance of the Bonds.
Section 4.02. Investments. The Trustee shall invest
and reinvest amounts in the Redemption Fund in such Investment
tI Securities as the Borough may from time to time direct in writ -
;i ing or pursuant to an investment agreement to be entered into
ii by the Trustee at the direction of the Borough. Investments
shall be made in such manner as shall provide cash for the pay-
ment of Debt Service as the same becomes due and payable. The
Trustee may act as principal or agent in the acquisition or
I� disposition of any Investment Securities and shall not be
1 liable for any Loss resulting from such acquisition or disposi-
�j
ARTICLE IV
Concerning the Trustee
-22-
tion except for any such loss resulting from its own negligence
or default.
Section 4.03. Responsibility of Trustee. The reci-
tals of fact herein and in the Bonds contained shall be taken
as the statements of the Borough, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee
makes no representations as to the validity or sufficiency of
this Ordinance or of any Bonds issued thereunder or in respect
of the security afforded by this Ordinance, and the Trustee
shall incur no responsibility in respect thereof. The Trustee
shall, however, be responsible for its representation contained
in its certificate on the Bonds. The Trustee shall be under no
responsibility or duty with respect to the application of any
moneys paid to the Borough. The Trustee shall be under no ob-
ligation or duty to perform any act which would involve it in
expense or liability or to institute or defend any suit in
;respect hereof, or to advance any of its own moneys, unless
!;properly indemnified. The Trustee shall not be liable in con -
Inection with the performance of its duties hereunder except for
its own negligence or bad faith.
Section 4.04. Evidence on Which Trustee May Act.
(a) The Trustee shall be protected in acting upon
any notice, resolution, request, consent, order, certificate,
report, opinion, bond or other paper or document believed by it
to be genuine, and to have been signed or presented by the pro -
per party or parties. The Trustee may consult with counsel,
who may or may not be of counsel to the Borough, and the
opinion of such counsel shall be full and complete authoriza-
tion and protection in respect of any action taken or suffered
by it hereunder. Whenever the Trustee shall deem it necessary
or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, including payment of
moneys out of any fund or account, such matter (unless other
evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
,certificate signed by an Authorized Officer, and such certifi-
cate shall be full warrant for any action taken or suffered in
good faith under the provisions of this Ordinance upon the
faith thereof, but in its discretion the Trustee may in lieu
thereof accept other evidence of such fact or matter or may
require such further or additional evidence as to it may seem
reasonable. Except as otherwise expressly provided herein, any
request, order, notice or other direction required or permitted
to be furnished pursuant to any provision hereof by the Borough
to the Trustee shall be sufficiently executed if executed in
the name of the Borough by an Authorized Officer.
(b) Whenever the Trustee shall be required here-
under, pursuant to written demand from an officer of the Bank
specifying the amount of Unpaid Drawings and the interest
accrued thereon, to reimburse the Bank for such Unpaid Drawings
and such interest, the Trustee may conclusively rely upon the
written demand from the Bank as to the amount of any Unpaid
,Drawings and accrued interest thereon.
Section 4.05. Compensation. The Borough shall pay
to the Trustee from time to time reasonable compensation for
all services rendered under this Ordinance, and also all rea-
sonable expenses, charges, counsel fees and other disburse-
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ments, including those of their attorneys, agents and employ-
ees, incurred in and about the performance of their powers and
duties under this Ordinance, and the Trustee shall have a lien
therefor on any and all funds at any time held by it under this
Ordinance. The Borough further agrees to indemnify and save
the Trustee harmless against any loss, liabilities or expense
which it may incur in the exercise and performance of its pow-
ers and duties hereunder, which are not due to its negligence
or bad faith, including the costs and expenses of defending it-
self against any claim of liability.
Section 4.06. Resignation and Removal; Appointment
of Successor Trustee.
(a) The Trustee, or any successor trustee, may at
any time resign by giving written notice of resignation to the
Borough and by delivering by mail copies of such notice to each
Holder. Upon receiving such notice of resignation, the Borough
shall promptly appoint a successor trustee by written instru-
ment, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the succes-
sor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after
the delivery to the Borough of such notice of resignation, the
,resigning Trustee may petition any court of competent jurisdic-
tion for the appointment of a successor trustee, or any Holders
may, on behalf of himself and all others similarly situtated,
petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any,
as it may deem proper, appoint a successor trustee.
(b) The Holders of a majority in aggregate principal
amount of the Bonds at the time outstanding may at any time re-
'! move the Trustee and appoint a successor trustee.
(c) Any resignation or removal of the Trustee and
;' appointment of a successor trustee pursuant to any of the pro -
visions of this Section 4.06 shall become effective upon accep-
tance of appointment by the successor trustee as provided be-
low.
(d) Any successor Paying Agent or tender agent shall
be a commercial bank or trust company.
Section 4.07. Acceptance of Appointment by Successor
Trustee. Any successor trustee appointed as provided in Sec-
;1 tion 4.06 shall execute, acknowledge and deliver to the Borough
!i and to its predecessor trustee an instrument accepting such
jlappointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such
successor trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, duties and ob-
ligations of its predecessor hereunder, with like effect as if
the trustee ceasing to act shall, upon payment of its charges
then unpaid, execute, acknowledge and deliver and instrument
transferring to such successor trustee all the rights and pow-
ers of the trustee so ceasing to act. The delivery of such in-
strument to the successor trustee shall constitute a full re-
lease and discharge of the trustee ceasing to act from all fur-
ther liabilitities and responsibilities, either to the Borough
or the Holders of the then outstanding Bonds except that noth-
ing shall relieve the resigning trustee from liability for ac-
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tions or omissions occuring prior to such resignation. Upon
request of any such successor trustee, the Borough shall exe-
cute any and all instruments in writing for more fully and cer-
tainly vesting in and confirming to such successor trustee all
such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property or funds held or
collected by such trustee to secure any amounts then due it.
Upon acceptance of appointment by a successor trustee
as provided in this Section 4.07, the Borough shall deliver by
mail to each Holder notice of the succession of such trustee
!hereunder.
Section 4.08. Permitted Acts and Functions. The
;:Trustee may become the owner of any Bonds, with the same rights
it would have if it were not such Trustee. The Trustee may act
as depositary for, and permit any of its officers or directors
ijto act as a member of, or in any other capacity with respect
!;to, any committee formed to protect the rights of Bondholders
or to effect or aid in any reorganization growing out of the
;',enforcement of the Bonds or this Ordinance, whether or not any
"such committee shall represent the holders of a majority in
.principal amount of the Bonds then Outstanding.
Covenants
Section 5.01. Punctual Payment. The Borough cove -
nants that it will duly and punctually pay or cause to be paid
the principal of, premium, if any, and interest on the Bonds in
strict conformity with the terms of such Bonds and of this Or-
dinance, and that it will faithfully observe and perform all of
the conditions, covenants and requirements of this Ordinance
and the Bonds.
Section 5.02. Power to Issue and Secure Bonds. The
Borough is duly authorized under all applicable laws to issue
the Bonds, to adopt this Ordinance; to enter into the Loan
Documents, to pledge its full faith and credit for the prompt
payment of the Bonds and the interest thereon and to levy ad
valorem taxes without limitation as to rate or amount upon all
the taxable property in the Borough for such payment. The
"Bonds and the provisions of this Ordinance are and will be
valid and legally enforceable obligations of the Borough in
accordance with their terms.
II 'I Section 5.03. Tax Covenants. The Borough shall not
' issue bonds, notes or other obligations, the proceeds of which
;are to be used to refund any Bonds or Unpaid Drawings, in any
j
manner which would cause any Bonds or Unpaid Drawings to be
,I "arbitrage bonds" within the meaning of Section 103(c) of the
jI Coda, i any lawful regulations proposed or in effect there -
'
I I the Borough will not take any action or permit to be
taken any action or make any use or investment of the proceeds
of the Bonds or Unpaid Drawings that would cause any of the
Bonds or Unpaid Drawings to be "arbitrage bonds" within the
i meaning of Section 103(c) of the Code, and any lawful regula-
tions proposed or in effect thereunder.
The Borough will not take any action or permit to be
ARTICLE V
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taken any action which would result in interest payable on any
of the Bonds or Unpaid Drawings being includable for Federal
income tax purposes in the gross income of the Holders.
Section 5.04. Bankruptcy Covenants. The Borough
covenants that no ordinance or resolution of the Borough
Assembly authorizing a petition in bankruptcy shall be effec-
tive until same is filed with the Trustee. Upon receipt
, such a filing the Trustee will proceed with mandatory p urchase
of the Bonds pursuant to Section 2.03(f).
Section 5.05. Secondary Market Transactions. The
j Borough covenants that it will not under any circumstances buy
Bonds in the secondary market.
I
ARTICLE VI
li
Events of Default
Section 6.01. Even of Default. If any of the fol-
lowing events, acts or occurrences (herein called an "Event of
i Default ") shall occur:
(A) default in the payment when due of any principal
of or interest on any Bond;
(B) an Event of Default under the Credit Agreement
of which the Trustee has received written notice from the
Bank;
(C) the failure of the Borough to maintain in the
Redemption Fund an amount equal to not less than the Re-
demption Fund Requirement;
then, and in any such event, the Trustee shall
Bond to be forth-
sums
then owing by the Borough on any
with due and payable, whereupon all such sums shall become a and
be due and payable without presentment, demand, protest
notice of any kind, all of which are hereby expressly waived by
the Borough.
In the event the principal of and interest on the
Bonds are declared due and payable as provided in this Section
6.01, the Trustee shall give notice to all Holders of the man-
datory purchase of Bonds as provided in Section 2.03(f) and
shall make demand for payment under the Letter of Credit, which
oufic be deposited in the Redemption Fund, fr an
amount sufficient to pay all of the princ p l of and i
nterest
� �
1 I on the Outstanding Bonds due on the purchase date specified in
such notice.
Section 6.02. Application of M oneys Upon Acc elera-
{, tion. In the event of acceleration as provided for in
applied t o ne
.; 6.01, the moneys in the Redemption Fund shall be app
I Trustee in the following order:
(a) To the mandatory purchase of Bonds held by any
Holder other than the Bank.
(b) To the payment of costs, expenses and fees, a
reasonable compensation of the Trustee, its agents and attor-
neys, and all expenses and liabilities incurred and advances
made by the Trustee.
11 -26-
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) r) ")
(c) To the payment of the principal and interest
then due and unpaid upon the Bonds, without preference or pri-
ority of principal over interest or of interest over principal,
or of any installment of interest over any other installment of
interest, or of any Bond over any other Bond, ratably according
to the amount due respectively for principal and interest, to
! 'the Holders entitled thereto, without any discrimination or
preference.
(d) The moneys remaining, if any, shall, upon
;written demand from an officer of the Bank specifying the
;amount of Unpaid Drawings and the accrued interest thereon, be
paid to the Bank to reimburse it for such Unpaid Drawings, if
;any, and to pay such interest.
Whenever moneys are to be applied by the Trustee
!pursuant to the provisions of this Section 6.02, such moneys
ishall be applied by the Trustee at such times, and from time to
!time, as the Trustee in its sole discretion shall determine,
�Ihaving due regard to the amount of such moneys available for
t, application and the likelihood of additional moneys becoming
Ilavailable for such application in the future; setting aside
iisuch moneys in trust for the proper purpose shall constitute
,proper application by the Trustee; and the Trustee shall incur
no liability whatsoever to the Borough, to any Holder or to any
other person for any delay in applying any such moneys, as long
' the Trustee acts with reasonable diligence, having due
:regard for the circumstances, and ultimately applies the same
in accordance with such provisions of this Ordinance as may be
applicable at the time of application by the Trustee. The
''Trustee shall fix the date (which shall be an Interest Payment
',Date unless the Trustee shall deem another date more suitable)
upon which such application is to be made and upon such date
interest on the amounts of principal to be paid on such date
shall cease to accrue. The Trustee shall give such notice as
it may deem appropriate for the fixing of any such date. The
Trustee shall not be required to make payment to the Holder of
any unpaid Bond unless such Bond shall be presented to the
Trustee for appropriate endorsement or for cancellation if
fully paid.
Section 6.03. Remedies Cumulative. No remedy herein
conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative and shall be in
addition to any other remedy given hereunder or now or here-
after existing at law, in equity, by statute or under the Cre-
dit Agreement.
Section 6.04. Notification of Default. The Trustee
shall give to the Holders of Bonds notice of each default here-
under known to the Trustee within 3 days after the occurrence
thereof in the manner and to the extent herein provided unless
such default shall have been remedied or cured before the giv-
ing of such notice; provided that except in the case of default
in the payment of the principal of, or interest on any of the
Bonds, the Trustee shall be protected in withholding such no-
tice if and so long as the board of directors, the executive
committee, or a trust committee of directors or a responsible
officer of the Trustee in good faith determines that the with-
holding of such notice is in the interests of the Holders.
Each such notice of Default shall be given by the Trustee by
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mailing, postage prepaid, written notice thereof to all regis-
tered appear upon the registration books of the Trustee.
ers own-
p
ARTICLE VII
Amendment to Ordinance and Agreement;
With and Without Holders' Consent
Section 7.01. Without Holders' Consent. Without the
'I consent of or notice to any of the Holders, subject to Section
7.03, the Borough may amend this Ordinance, but for only one or
;more of the following purposes:
A. To cure any ambiguity or defect;
B. To grant or confer upon the Holders any
additional rights, remedies, powers or Authority that may
lawfully be granted or conferred upon them;
C. To secure additional revenues of the Bonds d dd
tional security or reserves for payment
Unpaid Drawings;
D. To preserve the exemption of the interest income
borne on the Bonds and Unpaid Drawings from federal or
state income tax and to preserve the power of the Borough
to continue to issue bonds, evidences of indebtedness or
other obligations of any nature the interest income on
which is likewise exempt from federal and state income
taxation; provided that, in the opinion of Bond Counsel,
any such amendment hereto is not adverse to any Holder;
and
E. To make any other change which is not adverse to
any Holder.
Section 7.02. Unanimous Consent Required. Without
;i the unanimous consent of all of the Holders no amendment, modi-
fication or alteration hereof or of the Loan Documents shall be
made which would:
A. Reduce the principal amount of any Bonds Out-
standing or alter their rates of interest, redemption pro-
visions or maturity date;
I
B. Prefer one Holder over any other Holder;
!I
l C. Reduce the aggregate principal amount of Bonds
then Outstanding; or
1
!I D. Amend this Section 7.02.
i � ! Section 7.03. Procedure. Notice of the proposed
I I adoption of all amendments hereto shall be given by the Borough
I to the Trustee prior to adoption of such amendments. No such
j amendment which affects the rights, duties or immunities of the
I Trustee, Bank or the Agent shall be effective without the con-
sent of either the Trustee, Bank or Agent, whichever shall be
i, affected thereby. Amendments hereto or to the other Loan Docu-
i ments other than those permitted by Section 7.01 shall be pr The
i; posed by the Borough by ordinance of its Borough Assembly.
11
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Section 7.04. Amendment Prior to Sale. Notwith-
standing the above the Borough may, by resolution adopted prior
to sale of the Bonds pursuant to the Sales Agency Agreement,
amend the terms of the Bonds, including the Trustees holding
requirements for purchase price moneys in Section 2.03(c) and
the Bank's ability as specified in Section 2.04 to dispose of
Bonds which no longer receive any benefits of the Letter of
Credit, optional redemption,. interest rate, interest payment
date, or dates and amounts of Sinking Fund payments, or notice
periods. Any such amendment or amendments shall not be subject
to provisions of Sections 7.01, 7.02 or 7.03 hereof.
consent of the Holders shall be evidenced in such manner as may
be reasonably prescribed by the Borough and the Trustee.
and to deliver each document.
ARTICLE VIII
Miscellaneous
Section 8.01. Appointment of Indexing Agent. John
Nuveen & Co. Incorporated is hereby appointed as Indexing Agent
under this Ordinance. The Indexing Agent shall signify its
acceptance of the duties and obligations imposed upon it by
this Ordinance by executing an acceptance delivered to the Bor-
ough upon the issuance of the Bonds. The Indexing Agent or any
successor, may at any time resign by giving written notice of
resignation to the Borough and the Trustee. Upon receiving
such Notice of resignation, the Borough shall promptly appoint
a successor Indexing Agent which shall be a member of the
National Association of Securities Dealers. Notice of such
appointment shall be given to the Trustee.
Section 8.02. Execution of Documents. The Mayor,
Borough Manager and Borough Clerk are each authorized and
directed to execute, attest and deliver, on behalf of the Bor-
! ough, each of the following documents in substantially the form
It set forth herein or attached hereto with such deletions or
'insertions as the Borough Manager deems necessary; approval
thereof to be conclusively evidenced by the execution and de-
I livery, of the following documents.
A. The Credit Agreement;
B. The Sales Agency Agreement;
C. The Bonds;
D. The Offering Memorandum;
E. Such closing documents or other documents as may
be required to be executed by Bond Counsel, by counsel to
the Bank or by counsel to the Agent;
In addition, the Mayor and other officers of the Bor-
ough are authorized to approve and execute any amended, revised
or supplemental Offering Memorandum.
Section 8.03. Severability. If any one or more sec-
tions, clauses, sentences or parts hereof shall for any reason
be questioned in any court of competent jurisdiction and shall
be adjudged unconstitutional or invalid, such judgment shall
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1 1 3 5 "
not affect, impair or invalidate the remaining provisions here-
, of, or the Bonds issued pursuant hereto but shall be confined
to the specific sections, clauses, sentences and parts so ad-
judged. All ordinances or parts thereof in conflict herewith
be and the same are hereby repealed.
II Section 8.04. Non - Business Days. When any action is
provided herein to be done on a day named or within a time per -
iod named, and the day or the last day of the period is not a
I Business Day, it may be performed on the next ensuing Business
Day with effect as though performed on the appointed day or
,; within the specified period, except that interest on any Bond
or Unpaid Drawing will continue to run until said Bond or Un-
paid Drawing is paid.
Section 8.05. Headings. Any headings preceding por-
! tions of the text hereof and the table of contents appended
;; hereto shall be solely for convenience of reference, but shall
,; constitute a part hereof and shall not affect the meaning, con-
struction or effect hereof.
Section 8.06. Notices. All notices, demands,
instructions and other communications required or permitted to
be given to or made upon the Trustee, the Borough, the Bank or
the Agents shall be in writing and shall be personally deliver-
ed or sent by registered mail, postage prepaid, and shall be
deemed to be given for purposes of this Ordinance on the day
that such writing is delivered to the intended recipient there -
of in accordance with the provisions of thisSection. Unless
" otherwise specified in a notice sent or delivered in accordance
with the foregoing provisions of this Section, notices, de-
mands, instructions and other communications in writing shall
be given to or made upon the respective parties hereto at their
respective addresses indicated below, unless and until such
address is changed by a notice delivered in accordance with
this Section 8.06:
1'
If to the Borough:
With copies to:
If to the Bank:
If to the Trustee:
Kodiak Island Borough
P.O. Box 1246
Kodiak, Alaska 99615
Attention: Borough Manager
Wohlforth & Flint
900 West 5th Avenue
Suite 600
Anchorage, Alaska 99501
Rainier National Bank
Letter of Credit Department
22nd Floor
One Rainier Square
Seattle, Washington 98101
Seattle -First National. Bank
Bond Trustee Services,
9th Floor
1001 Fourth Avenue
Seattle, Washington 98154
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1
If to the Agent:
? .1
John Nuveen & Co. Incorporated
140 Broadway
New York, New York 10005
Attention: Public Finance
Syndication Desk
Section 8.07. Effective Date. This Ordinance shall
, effective in the manner provided by law.
PASSED AND ADOPTS by the Borough Assembly of Kodiak
Island Borough, Alaska on � , / , 1984.
ii
ii
it
i
»Attest: