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BIRCH HORTON BITTNER & CHEROT A PROFESSIONAL CORPORATION
1127 WEST SEVENTH AVENUE • ANCHORAGE, ALASKA 99501-3301 • TELEPHONE 907.276,1550 • FACSIMILE 907.276.3680
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WRITER'S DIRECT DIAL 907.263.7268. WRITER'S DIRECT FAX 907.276.3680. lklinkner@bhb.wm
November 23, 2010
VIA ELECTRONIC DELIVERY ONLY
Mr. Rick Gifford
Borough Manger
Kodiak Island Borough
710 Mill Bay Road
Kodiak, AK 99615-6340
RE: Proposed Issuance of $8,000,000 Kodiak Island Borough General Obligation
Bonds for New High School and School Administrative Building
Our File No.: 505,315.25
Dear Rick:
As you requested, I have prepared this letter to set forth the role we propose to
serve and responsibilities we propose to assume as bond counsel in connection with
the issuance of the above -referenced bonds (the 'Bonds") by the Kodiak Island
Borough (the "Issuer"). This letter supersedes and replaces our engagement letter
dated August 13, 2008.
Bond counsel is engaged as a recognized expert whose primary responsibility is
to render an objective legal opinion with respect to the authorization and issuance of
bonds.
As bond counsel, we will: examine applicable law; prepare authorizing and
operative documents; consult with the parties to the transaction prior to the issuance of
the Bonds; review certified proceedings; and undertake such additional duties as we
deem necessary to render the opinion.
Subject to the completion of proceedings to our satisfaction, we will render our
opinion that:
(1) the Bonds are valid and binding general obligations of the Issuer;
(2) all taxable property in the territory of the Issuer is subject to ad valorem
taxation without limitation as to rate or amount to pay the Bonds; and
F: W5315\25\00148614. DOC
BIRCH HORTON BITTNER & CHEROT
A PROFESSIONAL CORPORATION
Mr. Rick Gifford
November 23, 2010
Page 2
(3) the interest paid on the Bonds will be excluded from gross income for
federal income tax purposes.
The opinion will be executed and delivered by us in written form on the date the
Bonds are exchanged for their purchase price (the "Closing") and will be based on facts
and law existing as of its date. Upon delivery of the opinion, our responsibilities as bond
counsel will be concluded with respect to this financing; specifically, but without implied
limitation, we do not undertake (unless separately engaged) to provide continuing
advice to the Issuer or any other party concerning any actions necessary to assure that
interest paid on the Bonds will continue to be excluded from gross income for federal
income tax purposes.
In rendering the opinion, we will rely upon the certified proceedings and other
certifications of public officials and other persons furnished to us without undertaking to
verify the same by independent investigation.
In performing our services as bond counsel, our client will be the Issuer and we
will represent its interest. We assume that other parties to the transaction will retain
such counsel as they deem necessary and appropriate to represent their interests in
this transaction. Our representation of the Issuer does not alter our responsibility to
render an objective opinion as bond counsel.
As bond counsel, we will not assume or undertake responsibility for the
preparation of an Official Statement or any other disclosure document with respect to
the Bonds, nor are we responsible for performing an independent investigation to
determine the accuracy, completeness or sufficiency of any such document. However,
if a disclosure document will be adopted or approved by the Issuer, our responsibility
will include the preparation or review of any description therein of: (i) Alaska and
federal law pertinent to the validity of the Bonds and the tax treatment of interest paid
thereon, (ii) the terms of the Bonds, and (iii) our opinion.
Based upon: (i) our current understanding of the terms, structure, size and
schedule of the financing, (ii) the duties we will undertake pursuant to this letter, (iii) the
time we anticipate devoting to the financing, and (iv) the responsibilities we assume, we
estimate that our fee as bond counsel will be $16,250.00. Such fee may vary (i) if the
principal amount of Bonds actually issued differs significantly from the amount stated
above, (ii) if material changes in the structure of the financing occur, or (iii) if unusual or
unforeseen circumstances arise which require a significant increase in our time or
responsibility. If, at any time, we believe that circumstances require an adjustment of
our original fee estimate, we will consult with you. In addition, we will expect to be
reimbursed for all out-of-pocket expenses, including travel costs, photocopying,
deliveries, long distance telephone charges, filing fees, and other necessary office
F15 0 5 31 512 5\00148614. DOC
BIRCH HORTON BTTTNER & CHEROT
A PROFESSIONAL CORPORATION
Mr. Rick Gifford
November 23, 2010
Page 3
disbursements. We estimate that such out-of-pocket expenses will be in the range of
$1,000.00 to $2,500.00.
Our fee is usually paid at the Closing out of Bond proceeds, and we customarily
do not submit any statement until the Closing unless there is a substantial delay in
completing the financing.
If the foregoing terms of this engagement are acceptable to you, please so
indicate by signing and returning a copy of this letter, retaining the original for your files.
We look forward to working with you.
Yours truly,
BIRCH, HORTON, BITTNER and CHEROT
Thomas F. Klinkner
ACCEPTED AND APPROVED this 3 D day of
TFK/cmm
cc (by email only): Karl Short
F:\505315\25\00148614.DOC
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