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HomeMy WebLinkAboutResolution No. 2010-37a KENAI. SKA CITY OF KENAI RESOLUTION NO. 2010 -37 Suggested by: Administration A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI AUTHORIZING THE CITY TO ISSUE REVENUE BONDS, 2010 (DOUBLE GLACIER BUILDERS, LLC PROJECT) IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $1,700,000; THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT TO SECURE THE BONDS; FIXING CERTAIN DETAILS OF SUCH BONDS AND AUTHORIZING THEIR SALE. WHEREAS, the City of Kenai, Alaska (the "City is a home rule city and under Section 11 of Article X of the Alaska Constitution may exercise all legislative power not prohibited by law or the charter of the City, and it has been determined that the matters set forth in this resolution are not prohibited by law or the charter; and; WHEREAS, Section 6 -5 of the Kenai City Charter authorizes the City to borrow money and to issue bonds or other evidence of indebtedness for the purpose of promoting economic development in and adjacent to the City, provided that such bonds shall not be repayable from taxes levied by the City nor be a charge against the general credit of the City; and, WHEREAS, Double Glacier Builders, LLC (the "Borrower an Alaska limited liability company, has requested that the City assist it with providing financing for the acquisition, construction and equipping of an approximately 2,500 square foot commercial building located at Lot 3, Baron Park 2008 Replat, Kenai Alaska (the "Project and, WHEREAS, the City has determined that the Project serves a public purpose of the City by promoting economic development in the City, and has determined this purpose will be realized by the issuance of its Revenue Bonds, 2010 (Double Glacier Builders, LLC Project) (the "Bonds in the aggregate principal amount not to exceed $1,700,000, and lending the proceeds of the Bonds to the Borrower to provide all or part of the funds required to accomplish the Project; and, WHEREAS, under the Internal Revenue Code of 1986, as amended, the City may issue bonds for costs of the Project other than the acquisition of land, as tax- exempt "Recovery Zone Facility Bonds and bonds to finance land acquisition as taxable bonds; and, WHEREAS, by Resolution No. 2010 -49 adopted June 8, 2010, the Kenai Peninsula Borough allocated $2,000,000 of Recovery Zone Facility Bond volume cap to the City; and, WHEREAS, the Council finds that it is necessary and appropriate to delegate to each of the City Manager and the City Finance Director authority to determine the principal amount of Bonds to be issued as tax- exempt Recovery Zone Facility Bonds and the Resolution No. 2010 -37 Page 2 of 24 principal amount of Bonds to be issued as taxable bonds, with each type of Bonds being issued in a separate series, to determine the maturity amounts, interest rates and other details of each series of Bonds, and to determine other matters that are not provided for in this resolution; and, WHEREAS, in order to enable the financing contemplated herein, the City will enter into a Loan Agreement, to be dated the date of issuance of the Bonds (the "Loan Agreement with the Borrower; and, WHEREAS, the Loan Agreement will require the Borrower to make or cause to be made payments in amounts and at times sufficient to pay the principal of and premium, if any, and interest on the Bonds when due pursuant to their terms or upon the redemption, purchase or acceleration thereof; and, WHEREAS, the City will sell the Bonds to First National Bank Alaska (the "Bank and, WHEREAS, to secure the payment of all of the principal of and premium, if any, and interest on the Bonds, the City will assign its rights, title and interest in the Loan Agreement, without recourse, to the Bank, as the initial purchaser of the Bonds; and, WHEREAS, there has been presented to this meeting the form of the Loan Agreement; and, WHEREAS, it appears that the document described above, which now is before this meeting, is in appropriate form and is an appropriate instrument for the purposes intended; and, WHEREAS, to provide for the execution, issuance and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and premium, if any, and interest thereon, the City has adopted this Resolution. NOW, THEREFORE, BT IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that: ARTICLE I DEFINITIONS 1.1 Definitions. In addition to terms that are defined in the recitals above, the following terms shall have the following meanings in this resolution: "Bank" means First National Bank Alaska, in its capacity as the original Owner of the Bonds, and its successors and assigns. "Bond" or "Bonds" means any of the "Revenue Bonds, 2010 (Double Glacier Builders, LLC Project)" of the City of Kenai issued in one or more series, the issuance and sale of which are authorized herein. Resolution No. 2010 -37 Page 3 of 24 "Bond Counsel" means a firm of nationally recognized bond counsel, duly admitted to practice law before the highest court of any state and designated by the City as its bond counsel for the Bonds. "Bond Register" means the registration books maintained by the Registrar, which include the names and addresses of the Registered Owners of the Bonds or their nominees. "City" means the City of Kenai, a municipal corporation of the State of Alaska, organized as a home rule city under Title 29 of the Alaska Statutes. "Code" means the Internal Revenue Code of 1986, as amended from time to time, together with all regulations applicable thereto. "Council" means the Council of the City of Kenai, as the general legislative authority of the City of Kenai, as the same shall be duly and regularly constituted from time to time "Condemnation Award" means the total condemnation proceeds actually paid by the condemnor as a result of the condemnation of all or any part of the Project, less the actual costs and expenses, including attorneys' fees, incurred by the Borrower or the City in obtaining such award. "Date of Issue" means the date the Bonds are issued and delivered to the initial purchaser thereof. "Declaration of Acceleration" means a declaration given in accordance with the provisions of Section 6.2 that all principal of and interest on the Bonds are due and payable immediately. "Deed of Trust" means the Deed of Trust, Assignment of Rents and Leases and Security Agreement dated the Date of Issue, under which the Borrower is grantor and the Bank is beneficiary, conveying a lien on the real property and improvements constituting the Project, as the same may be amended., restated, supplemented or otherwise modified from time to time "Determination of Taxability" means, with respect to Recovery Zone Facility Bonds, (i) the enactment of legislation or the adoption of final regulations or a final decision, ruling or technical advice by any federal judicial or administrative authority which has the effect of requiring interest on such Bonds to be included in the gross income of the Owners for federal income tax purposes. or (ii) the receipt by the Bank of a written opinion of Bond Counsel selected by the Borrower and approved by the Bank to the effect that interest on such Bonds must be included in the gross income of the Owners for federal income tax purposes; provided that no decision by any court or decision, ruling or technical advice by any administrative authority shall be considered final (a) unless the City or the Owner involved in the proceeding or action giving rise to such decision, ruling or technical advice (1) gives the Borrower prompt notice of the commencement thereof and (2) offers the Borrower the opportunity to control the contest thereof, provided the Borrower shall have agreed to bear all expenses in connection therewith and to indemnify that Owner and the City against all liabilities in connection therewith, and (b) until the expiration of all periods for judicial review or appeal. "Event of Default" means any of the events specified as such in Section 6.1. "Government Obligations" means obligations that are either (i) direct obligations of the United States of America or (ii) obligations of an agency or instrumentality of the Resolution No. 2010 -37 Page 4 of 21 United States of America the timely payment of the principal of and interest on which are unconditionally guaranteed by the United States of America. "Insurance Proceeds" means the total proceeds of casualty insurance actually paid or payable in respect of insurance on all or any part of the Project, less the actual costs and expenses, including attorneys' fees, incurred by the Borrower or the City in "Interest Payment Date" means the first day of each month. "Loan" has the meaning set forth in the definition of "Loan Agreement." "Loan Agreement" means the Loan Agreement dated the Date of Issue, by and between the City and the Borrower, relating to the loan of Bond proceeds (the "Loan") and repayment of the Loan by the Borrower, and includes any supplements or amendments thereto made in conformity herewith. "Loan Payments" means the payments of principal of and interest on the Loan made by the Borrower pursuant to the Loan Agreement. "Outstanding," when used as of any particular time with reference to Bonds, means all Bonds theretofore, or thereupon being, executed and delivered by the City under this Resolution except (1) Bonds theretofore cancelled by the Registrar or surrendered to the Registrar for cancellation; (2) Bonds with respect to which all liability of the City shall have been discharged in accordance with Section 7.1 or as described in Section 7.3, and (3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been executed and delivered by the City pursuant to this Resolution. In determining whether the Owners of the requisite principal amount of Outstanding Bonds have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the Borrower or an affiliate thereof shall be disregarded and deemed not to be Outstanding. Notwithstanding the foregoing, if all Bonds are owned by the Borrower or any affiliate thereof, all Bonds shall be considered Outstanding for the purpose of such determination. "Owner," whenever used herein with respect to a Bond, means the Person in whose name such Bond is registered on the Bond Register. "Person" means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Project" means, depending on the context, (1) the acquisition, construction and equipping by the Borrower of a commercial building located at Lot 3, Baron Park 2008 Replat, and legally described in Exhibit A to the Deed of Trust and located in the City of Kenai, Alaska and (2) that commercial building and appurtenances to such commercial building. "Record Date" means the 15th day of the month preceding each Interest Payment Date. "Recovery Zone Facility Bonds" means Bonds that are described in Section 1400U- 3(b)(1) of the Code. "Registrar" means the City Finance Director, or any successor that the City may appoint by resolution. "Resolution" means Resolution Number 2010 -37 adopted by the City Council on June 16, 2010, authorizing the issuance of the Bonds, as it may from time to time be supplemented, modified or amended by any Supplemental Resolution. Resolution No. 2010 -37 Page 5 of 24 "Supplemental Resolution" means any Resolution hereafter duly adopted by the City Council, supplementing, modifying or amending this Resolution; but only if and to the extent that such Supplemental Resolution is specifically authorized hereunder. "Taxable Bonds" means Bonds the interest on which is not excludable from gross income under Section 103 of the Code. ARTICLE II THE BONDS 2.1 Authorization, Amount and Designation of Bonds. The Bonds are authorized to be issued hereunder in the aggregate principal amount of not to exceed $1,700,000 to obtain money to carry out the purposes of this Resolution. The Bonds are designated "City of Kenai, Alaska Revenue Bonds, 2010 (Double Glacier Builders, LLC Project)." No other bonds may be issued under this Resolution. 2.2 Nature of Security. The Bonds are secured solely by and payable solely from the sources described herein and in the Loan Agreement. The Bonds are not a debt or liability of the City, the State of Alaska or any political subdivision thereof and do not create or constitute an indebtedness, liability, or obligation of the City, the State of Alaska or any political subdivision thereof, nor do they constitute a pledge of faith, credit, or taxing power of the City, the State of Alaska or any political subdivision thereof. The City is not obligated to pay the principal of or premium, if any, or interest on the Bonds except from the sources set forth herein and in the Loan Agreement, and neither the faith and credit nor the taxing power of the City, the State of Alaska or any political subdivision thereof is pledged to the payment of principal of or premium, if any, or interest on the Bonds. 2.3 Terms of the Bonds. The Bonds shall be dated as of the Date of Issue. The Bonds shall be fully registered as to principal and interest and shall be numbered separately in the manner and with any additional designation as the Registrar deems necessary for the purpose of identification. The Bonds shall be issued in one or more series in one or more of the following categories: Recovery Zone Facility Bonds and Taxable Bonds. The Bonds shall mature on one or more dates commencing no earlier than 2011 and ending no later than 2031. The Bonds shall bear interest from their date, or from the last Interest Payment Date to which interest has been paid. Interest on the Bonds shall be computed upon the basis of a 360 -day year consisting of twelve 30 -day months. Subject to Section 2.1 and the remainder of this section, the dated date, the principal and interest payment dates and the record dates for principal and interest payments on each series of Bonds, the aggregate principal amount of Bonds and of each series of Bonds, and the principal amount of each maturity and the interest rates for each series of Bonds, shall be determined at the time of execution of the Loan Agreement under Section 10.9. 2.4 Payment of Bonds. When the Bank is the Owner of the Bonds, payment of principal and interest on the Bonds shall be made as provided in the Loan Agreement. When the Bank is not the Owner of the Bonds, installments of principal on any Bond shall be paid upon surrender of such Bond at the office of the Registrar, and interest on any Bond on each Interest Payment Date in respect thereof shall be payable by check mailed to the address of the person entitled thereto as such address shall appear in the Bond Register; provided that at the written request of the owner of Resolution No. 2010 -37 Page 6 of 24 at least 51,000,000 aggregate principal amount of Bonds received by the Registrar at least one Business Day before the corresponding Record Date, interest accrued on the Bonds will be payable by wire transfer within the United States in immediately available funds to the bank account number of such owner specified in such request; and provided further that interest payable at maturity (or redemption) shall be paid only upon presentation and surrender of such Bond. The Bonds shall be payable in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts, including funds evidenced by wire transfer. Subject to the foregoing provisions of this Section 2.4, each Bond delivered under this Resolution upon registration of transfer of or exchange for or in lieu of any other Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond. 2.5 Form and Execution of Bonds. The Bonds shall be in substantially the form attached hereto as Exhibit A. The Bonds shall be executed in the name of the City by the manual or facsimile signature of the Mayor, and its corporate seal (or a facsimile thereof) shall be impressed or otherwise reproduced thereon and attested by the manual or facsimile signature of the City Clerk. The execution of a Bond on behalf of the City by persons who at the time of the execution are duly authorized to hold the proper offices shall be valid and sufficient for all purposes, although any such person shall have ceased to hold office at the time of delivery of the Bond or shall not have held office on the date of the Bond. 2.6 Ownership of Bonds. The City and the Registrar may deem and treat the Person in whose name any Bond is then registered on the Bond Register or its nominee, whether or not that Bond is overdue, as the Owner of that Bond for the purpose of receiving payment of the principal of and premium, if any, and interest on that Bond and for all other purposes whatsoever, and the City and the Registrar shall not be affected by any notice to the contrary. 2.7 Transfer of Bonds. (1) The City shall cause books for the registration and for the transfer of the Bonds (the "Bond Register as provided in the Bonds and this Resolution to be kept by the Registrar. (2) Upon surrender for transfer of any Bond at the office of the Registrar, the City shall execute and deliver in the name of the transferee or transferees a new Bond or Bonds of the same interest rate, maturity and for the aggregate principal amount the Owner is entitled to receive. No transfer of any Bond shall be binding upon the City or the Registrar unless made at that office and shown on the Bond Register. (3) Bonds to be exchanged shall be surrendered at an office of the Registrar, and the City shall execute and deliver in exchange therefor the Bond or Bonds that the Owner making the exchange shall be entitled to receive. (4) Any Bond presented for transfer or payment (if so required by the Registrar) shall be accompanied by a written instrument or instruments of transfer or authorization for payment, in form and with guaranty of signature satisfactory to the Registrar, duly executed by the Owner thereof or by its attorney duly authorized in writing. Resolution No. 2010 -37 Page 7 of 24 (5) The costs of printing any new Bonds and any services rendered or expenses incurred by the City or the Registrar in connection with any exchange or transfer of Bonds (including the exchange or transfer of a Bond redeemed only in part) shall be paid by the Borrower, except that as a condition to a transfer of a particular Bond, the Registrar may require payment by the Owner of a sum sufficient to cover any tax, fee or other governmental charge that the Registrar is required to pay in relation thereto. (6) Each Bond delivered upon transfer of or in lieu of any other Bond shall be a valid obligation of the City evidencing the same debt as the Bond surrendered, and except as otherwise provided herein shall be entitled to all of the security and benefits hereof to the same extent as the Bond surrendered, shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond, and shall be so dated that neither gain nor loss of interest shall result from such transfer or exchange. (7) The Registrar shall not be required to exchange or transfer any Bond or portion thereof that has been selected for redemption and also shall not be required to transfer or exchange any Bond or portion thereof during the period in which the City is selecting Bonds for redemption or during the 15 days preceding any principal payment or redemption date. 2.8 Mutilated, Lost, Stolen and Destroyed Bonds. In case any Bond issued hereunder shall become mutilated or be destroyed, stolen or lost, the City shall, if not then prohibited by law, cause to be executed and delivered a new Bond of like amount, interest rate, maturity date, and tenor in exchange and substitution for and upon cancellation of that mutilated Bond, or in lieu of and in substitution for such destroyed, stolen or lost Bond, upon payment by the Owner thereof of any applicable tax or governmental charge and the reasonable expenses and charges of the City and the Registrar in connection therewith, and in the case of a Bond destroyed, stolen or lost, the filing with the Registrar of evidence satisfactory to it that that Bond was destroyed, stolen or lost, and of the ownership thereof, and furnishing the City and the Registrar with indemnity satisfactory to each of them. If the mutilated, destroyed, stolen or lost Bond already has matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Bond prior to payment. 19 Destruction of Bonds. Whenever any Bonds shall be delivered to the Registrar for cancellation pursuant to this Resolution or if received by the Registrar pursuant to Section 2.8, those Bonds shall be cancelled promptly and destroyed by the Registrar after payment, if applicable, of the principal thereof and premium, if any, and interest accrued thereon, in each case after a reasonable period of time, and counterparts of a certificate of destruction evidencing such destruction shall be furnished by the Registrar to the Borrower and the City. ARTICLE III REDEMPTION OF BONDS 3.1 Optional Redemption. The Bonds, if any, subject to optional redemption by the City, the time or times when such Bonds are subject to optional redemption, the terms upon which such Bonds may be redeemed, and the redemption price or Resolution No. 2010 -37 Page 8 of 24 redemption prices for such Bonds, shall be determined at the time of execution of the Loan Agreement under Section 10.9. For all purposes of this Resolution, unless the context otherwise requires, all provisions relating to the redemption of Bonds shall relate, in the case of any Bond redeemed or to be redeemed only in part, to the portion of the principal of that Bond that has been or is to be redeemed. 3.2 Extraordinary Redemption. The Bonds are subject to extraordinary redemption prior to maturity, as a whole or in part as described below, at a redemption price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, (1) as a whole or in part, on the first date for which timely notice of redemption may be given, with Insurance Proceeds or a Condemnation Award (and, if necessary, other money legally available therefor), if so required by Section 6.02 of the Loan Agreement, (2) as a whole, on the first Interest Payment Date for which timely notice of redemption may be given, at the option of the City, upon an occurrence of an event of default under the Loan Agreement, or (3) only in the case of Bonds that are Recovery Zone Facility Bonds, as a whole or in part, on the first date for which timely notice of redemption can be given upon receipt by the Bank of an opinion of Bond Counsel to the effect that such redemption is required to prevent a Determination of Taxability. as a whole or in part, on the first date for which timely notice of redemption can be given upon receipt by the Bank of an opinion of Bond Counsel to the effect that such redemption is required to prevent a Determination of Taxability. No Bonds shall be redeemed upon the occurrence of any of the events specified above unless sufficient funds are deposited with the City to pay the principal of and premium, if any, and interest on the Bonds to be redeemed. The City shall not be required to obtain any opinion of Bond Counsel described in subsection (2), and the expense of obtaining any such opinion shall be paid by the Borrower. Bonds shall be selected for redemption such that the principal amount of Bonds of each maturity after the extraordinary redemption shall be proportional to the principal amount of Bonds of each maturity prior to the extraordinary redemption or in such other manner as directed in writing by the Borrower to meet the requirements of Section 6.02 of the Loan Agreement. 3.3 Notice and Effect of Call for Redemption. When the Bank is the Owner of the Bonds, notice of any intended redemption of Bonds shall be given as provided in the Loan Agreement. When the Bank is not the Owner of all Outstanding Bonds, The City shall give notice of redemption by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date to each Owner of Bonds to be redeemed at the address of such Owner appearing in the Bond Register, and to such other Persons as the City shall deem appropriate, including all Persons then required by law or regulation to receive notice of redemption of the Bonds. The failure of the Registrar to mail notice of redemption to Persons other than the Owners of Bonds to be redeemed shall not affect the sufficiency of the proceedings for redemption. All notices of redemption shall be dated and shall state: (1) the redemption date; (2) the redemption price; (3) if fewer than all outstanding Bonds are to be redeemed, Resolution No. 2010 -37 Page 9 of 24 the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed; (4) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date; and (5) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the office of the Registrar. Notwithstanding the foregoing, notice of the extraordinary redemption of Bonds in accordance with Section 3.2(3) shall be given by the City within five Business Days after receipt by the City of an opinion of Bond Counsel to the effect that such redemption is required and of sufficient funds to pay the redemption price of the Bonds to be redeemed, and the redemption date shall be not more than 10 days after the notice of such redemption is mailed by the City. Notice of redemption having been given as aforesaid, the principal of and premium, if any, on the Bonds so to be redeemed shall become due and payable on the date fixed for redemption, and on and after such date (unless the City shall default in the payment of the redemption price) the principal amount of those Bonds shall cease to bear interest. Upon surrender of any such Bond for redemption in accordance with such notice, that Bond shall be paid at the redemption price thereof to the extent that money is on deposit with the City for that purpose. Neither the failure of an Owner to receive such notice nor any defect in any notice to any other Owner shall affect the sufficiency of the proceedings for such redemption with respect to that Owner. If any Bond called for redemption shall not be so paid on the redemption date upon proper surrender of the Bond for redemption, the redemption price and, to the extent lawful, interest thereon shall, until paid, bear interest from the redemption date at the rate borne by the Bond immediately before the redemption date. Notwithstanding the foregoing, with respect to optional redemptions only, if the City does not have funds in its possession on the redemption date sufficient to pay the redemption price (including interest accruing to the date fixed for redemption) of all of the Bonds to be optionally redeemed for any reason (including failure to issue any refunding bonds intended for such purpose on or prior to the redemption date), then the purported optional redemption and such notice of redemption shall be void. Such event shall not constitute an Event of Default hereunder, and the City shall not be subject to any liability to the Owners or any other person as a result of such failure to redeem Bonds. If any Bond is to be redeemed only in part, it shall be surrendered to the Registrar (with, if the Registrar so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Registrar duly executed by, the Owner thereof or its attorney duly authorized in writing) and the appropriate officers of the City shall execute and deliver to the Owner of that Bond, without service charge, a new Bond or Bonds of the same maturity and interest rate, as requested by that Owner, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond surrendered. 3.4 Cancellation. All Bonds that have been redeemed shall be cancelled by the Registrar upon receipt and shall not be reissued. 3.5 Purchases for Cancellation. Notwithstanding anything in this Resolution to the contrary, the City or the Borrower may at any time purchase Bonds for Resolution No. 2010 -37 Page 10 of 24 cancellation. Any Bonds purchased pursuant to this Section shall be immediately delivered to the Registrar for cancellation. ARTICLE IV APPLICATION OF BOND PROCEEDS 4.1 Application of Bond Proceeds. All of the proceeds of the Bonds received by the City from the purchaser thereof shall be paid to the Borrower at the time and in the manner provided in the Loan Agreement. Upon receipt thereof, the Borrower shall deposit and apply such amounts as provided in the Loan Agreement. ARTICLE V CITY COVENANTS 5.1 Performance of and Authority for Covenants. The City covenants and represents: (1) that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Resolution, in any and every Bond executed, authenticated and delivered hereunder and in all proceedings of the City Council pertaining thereto; (2) that it is duly authorized under the Constitution and laws of the State, including the Act, to issue the Bonds and to pledge, grant and /or assign a security interest in the Loan Payments and Bond proceeds and its rights under the Loan Agreement and its interest in the Property in the manner and to the extent set forth herein; (3) that all action on its part for the issuance of the Bonds and for the execution and delivery thereof will be duly and effectively taken; and (4) that the Bonds in the hands of the Owners thereof will be valid and enforceable special obligations of the City according to the terms thereof. (5) The City acknowledges and agrees that all covenants contained in this Resolution are with and for the benefit of all Owners and can be enforced by the Owners as provided in accordance with the provisions of Article VI. 5.2 Extensions of Payment of Bonds. The City shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of the interest thereon without the consent of the Owners of all Outstanding Bonds. 5.3 Concerning the Loan Agreement. The City shall execute the Loan Agreement on the Date of Issue. The City shall do or cause to be done all things to be performed on its part under the Loan Agreement so that the obligations of the Borrower thereunder shall not be impaired or excused. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES OF OWNERS 6.1 Events of Default. The following events shall be Events of Default: (1) default in the due and punctual payment of the principal of or premium, if any, or interest on any Bond when and as the same shall become due and Resolution No. 2010 -37 Page 11 of 24 payable, whether at maturity as expressed therein, by proceedings for redemption (except as otherwise provided in Section 3.5), by acceleration, or otherwise; and (2) default by the City or Borrower in the observance of any of the other covenants, agreements or conditions on its part contained in this Resolution, the Loan Agreement or the Bonds, if such default shall have continued beyond any applicable cure period and for a period of 30 days (or such longer period, if any, as is specified herein for particular defaults) after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the City and the Borrower by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or, if cure cannot be completed within such 30 -day period through the exercise of diligence and the City or the Borrower commences the required cure within such 30 -day period and continues the cure with diligence and it is reasonably anticipated that the default could be cured within 60 days, the City or the Borrower shall have 60 days following receipt of such notice to effect the cure). 6.2 Acceleration of Maturity. Upon the occurrence of an Event of Default described in paragraph (1) of Section 6.1, at the direction of the Bank the principal of the Bonds shall be immediately due and payable, whereupon that portion of the principal of the Bonds thereby coming due and the interest thereon accrued to the date of payment shall, without further action, become and be immediately due and payable, anything in this Resolution or in the Bonds to the contrary notwithstanding. 6.3 Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, then and in every such case the Owners may pursue any one or more of the following remedies to the extent permitted by applicable law: (1) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Owners hereunder and require the City or the Borrower to carry out any agreements with or for the benefit of the Owners and to perform its duties under the Act, the Loan Agreement and this Resolution, provided that any such remedy may be taken only to the extent permitted under the applicable provisions of those agreements, the Act, the Loan Agreement or this Resolution, as the case may be; (2) bring suit upon the Bonds; (3) by action or suit in equity require the Borrower to account as if it were the trustee of an express trust for the Owners; or (4) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Owners hereunder. 6.4 Owners' Direction of Proceedings. No Owner shall have the right to institute any proceeding, judicial or otherwise, for the enforcement of the covenants contained herein, without the written concurrence of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding; but the Owners of this principal amount of Bonds may, either at law or in equity, by suit, action, mandamus, application for appointment of a receiver or other proceeding, protect and enforce the rights of all Owners, and may enforce the performance of all covenants and duties of the City and its officials as set forth in this Resolution, including the collection and proper segregation and application of all Loan Payments. Nothing herein shall be construed as limiting or otherwise modifying the rights of the Owners under this Resolution, nor shall anything herein impair the absolute and unconditional right of the Owner of each Bond to receive payment of the principal Resolution No. 2010 -37 Page 12 of 24 thereof and premium, if any, and interest thereon at the times provided in that Bond and in this Resolution, and to institute suit for the enforcement of any such payment. 6.5 Absolute Obligation of City. Nothing in any other provision of this Resolution, or in the Bonds, shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on the Bonds to the respective Owners of the Bonds at the times stated therein, but only out of the sources provided for the payment of the Bonds in this Resolution, or affect or impair the rights of such Owners, which are also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. 6.6 Termination of Proceedings. In case any proceedings taken by any one or more Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Owners, then in every such case the City, the Borrower and the Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the City, the Borrower and the Owners shall continue as though no such proceedings had been taken. 6.7 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. 6.8 No Waiver of Default. No delay or omission of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy given by this Resolution to the Owners may be exercised from time to time and as often as may be deemed expedient. ARTICLE VII DISCHARGE OF OBLIGATIONS TO OWNERS 7.1 Defeasance of Bonds. (1) In the event that, in accordance with a refunding or defeasance plan, the City shall issue refunding bonds or have money available from any other lawful source to pay the principal of and premium, if any, and interest on the Bonds or such portion thereof included in the refunding or defeasance plan as the same become due and payable and to refund or defease such then Outstanding Bonds and to pay the costs of refunding or defeasance, and shall have set aside irrevocably in a special fund for and pledged to such payment, refunding or defeasance, money and /or Governmental Obligations that are not subject to redemption prior to maturity sufficient in amount, together with known earned income from the investments thereof but without regard to reinvestment thereof, to make such payments and to accomplish the refunding or defeasance as scheduled (the "trust account and shall make irrevocable provisions for redemption of such Bonds, if applicable, then in that case all right and interest of the Owners of the Bonds to be so retired, refunded or defeased (collectively, the "defeased Bonds in the covenants of this Resolution, in the Loan Agreement, and in the funds and accounts obligated to the payment of such defeased Resolution No. 2010 -37 Page 13 of 24 Bonds, other than the right to receive the funds so set aside and pledged, thereupon shall cease and become void, except that such Owners shall have the right to receive payment of the principal of and premium, if any, and interest on the defeased Bonds from the trust account, provided, however, that such rights as exist with respect to payment, exchange and transfer of such Bonds under the pertinent provisions of this Resolution shall continue in full force and effect. The City shall include in the refunding or defeasance plan such provisions as the City deems necessary for the random selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the Owners of the defeased Bonds and to such other Persons as the City shall determine, and for any required replacement of Bond certificates for defeased Bonds. After the establishing and full funding of the trust account, the defeased Bonds shall be deemed to be discharged and the Borrower then may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to such lawful purposes as it shall determine, subject only to the rights of the Owners of any other Bonds then Outstanding. (2) In connection with such defeasance, the Borrower shall provide to the Owners at the expense of the Borrower (a) an opinion of Bond Counsel stating that the defeased Bonds are no longer deemed Outstanding under this Resolution and that the defeasance and, if applicable, refunding will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or, if applicable, the refunding bonds; (b) verification by an Accountant of the conformity of the trust account with the provisions of this Section; (c) an escrow agreement relating to the trust account (the "Escrow Agreement (d) an opinion of counsel (i) regarding the validity and enforceability of the Escrow Agreement; (ii) that the deposit under the Escrow Agreement will not constitute a voidable preference or transfer under the federal Bankruptcy Code or any other similar state or federal statute in the event the City or the Borrower becomes a debtor within the meaning of the federal Bankruptcy Code or comes within the protection of such similar state or federal statute (each, an "Insolvency Event and (iii) in an Insolvency Event, the deposit under the Escrow Agreement will not be treated as part of the estate of the City or the Borrower. (3) The Escrow Agreement shall provide that: (a) any substitution of securities shall require a verification by an Accountant; and (b) the City and the Borrower will not exercise any optional redemption of Bonds secured by the Escrow Agreement or any other redemption other than mandatory sinking fund redemptions unless the right to make any such redemption has been expressly reserved in the Escrow Agreement. 7.2 Discharge of Resolution. The obligations of the City hereunder shall remain in effect with respect to all Bonds until the principal of and premium, if any, and interest on all Bonds shall have been paid in full or discharged, notwithstanding that the lien of this Resolution may have been discharged with respect to some of the Bonds pursuant to Section 7.1. 7.3 Nonpresentment of Bonds. In the event any Bond shall not be presented for payment when the principal thereof becomes due, either at maturity or at the date fixed for redemption thereof or otherwise, if funds sufficient to pay the principal thereof and premium, if any, and interest accrued thereon to such date shall have been made available to the Registrar for the benefit of the Owner thereof, the Registrar Resolution No. 2010 -37 Page 14 of 24 shall hold such principal, premium and interest, without liability to the Owner for further interest thereon, for the benefit of the Owner of such Bond, for a period of three years from the date such Bond shall have become due, either at maturity or upon earlier redemption or otherwise, and thereafter the Registrar shall remit such funds to the City unless otherwise required by Chapter 34.45 of the Alaska Statutes. In the event State law should require other action to be taken by the Registrar, then the Registrar shall comply with that law and this Section shall be deemed amended. After remittance as provided herein, the Registrar's liability for payment to the Owner of such Bond shall forthwith cease, terminate and be completely discharged and thereafter the Owner shall be restricted exclusively to his or her rights of recovery provided under Chapter 34.45 of the Alaska Statutes. Unclaimed money shall be invested only upon the direction of the City and only in short -term Governmental Obligations. In the absence of written directions from the City, the Registrar shall hold such unclaimed money uninvested. ARTICLE VIII AMENDMENT OF RESOLUTION 8.1 Amendments to Resolution. (1) This Resolution shall not be supplemented or amended in any respect subsequent to the initial issuance of the Bonds, except as provided in and in accordance with and subject to the provisions of this Section. (2) The City may from time to time and at any time, without the consent of or notice to the Owners, except as set forth below in this subsection (2), adopt Supplemental Resolutions for the following purposes: (a) to cure any formal defect, omission, inconsistency or ambiguity in this Resolution in a manner not adverse to the Owner of any Bond; (b) to confer upon the Owners of the Bonds any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with this Resolution as theretofore in effect; (c) to add to the covenants and agreements of, and limitations and restrictions upon, the City in this Resolution other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with this Resolution as theretofore in effect; (d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by, this Resolution of any other money, securities or funds; (e) to comply with any future federal law, regulation or interpretation to prevent the occurrence of an event that in the opinion of Bond Counsel would lead to a Determination of Taxability; (f) to make such changes as are elsewhere expressly permitted by this Resolution; and (g) to modify, alter, amend or supplement this Resolution in any other respect which is not materially adverse to the Owners of the Bonds and which does not involve a change described in subsection (3) of this Section. Resolution No. 2010 -37 Page 15 of 24 Before the City shall adopt any such Supplemental Resolution pursuant to this subsection or simultaneously with such adoption, there shall be or have been delivered to the City an opinion of Bond Counsel, stating that such Supplemental Resolution is authorized or permitted by this Resolution and will, upon the execution and delivery thereof, be valid and binding upon the City in accordance with its terms and will not cause the interest on the Recovery Zone Facility Bonds to be included in gross income for federal income tax purposes. Notwithstanding any provision in this subsection (2) of this Section to the contrary, if one Owner holds all of the Bonds then Outstanding, the consent and approval of such Owner must be obtained prior to the adoption of any Supplemental Resolution pursuant to this subsection (2). (3) (a) Except for any Supplemental Resolution entered into pursuant to subsection (2) of this Section, subject to the terms and provisions contained in this subsection and not otherwise, the Owners of not less than a majority in aggregate principal amount of Bonds then Outstanding shall have the right from time to time to consent to and approve the adoption by the City of any Supplemental Resolution deemed necessary or desirable by the City for the purpose of modifying, altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in this Resolution; and except that, unless approved in writing by the Owners of all Bonds then Outstanding, nothing contained in this Section shall permit, or be construed as permitting: (i) a change in the times, amounts or currency of payment of the principal of or premium, if any, or interest on any Outstanding Bond, or a reduction in the principal amount or redemption price of any Outstanding Bond or a change in the method of redemption or redemption price of any Outstanding Bond, or (ii) a preference or priority of any Bond over any other Bond, or (iii) a reduction in the aggregate principal amount of Bonds, the consent of the Owners of which is required for any such Supplemental Resolution, or (iv) the modification of any of the provisions of this Section. (b) If at any time the City shall desire to adopt any Supplemental Resolution for any of the purposes of this subsection, the City shall cause notice of the proposed Supplemental Resolution to be given by first class mail, postage prepaid, to all Owners of the then Outstanding Bonds. Such notice, which shall be prepared by or on behalf of the City, shall briefly set forth the nature of the proposed Supplemental Resolution and shall state that a copy thereof is on file at the office of the Registrar for inspection by all Owners of Outstanding Bonds. (c) Within four weeks after the date of the mailing of such notice, the City may adopt such Supplemental Resolution substantially in the form described in such notice, but only if there shall have first been or is simultaneously delivered to the City (i) the required consents, in writing, of the Owners of the Bonds, and (ii) an opinion of Bond Counsel, stating that such Supplemental Resolution is authorized or permitted by this Resolution and, upon the execution and delivery thereof, will be valid and binding upon the City in accordance with its terms and will not cause interest on Resolution No. 2010 -37 Page 16 of 24 the Recovery Zone Facility Bonds to be includable in gross income for federal income tax purposes. (d) if the Owners of not less than the percentage of Bonds required by this subsection shall have consented to and approved the execution and delivery thereof as provided herein, no Owner of any Bond shall have any right to object to the adoption of such Supplemental Resolution, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the City from adopting the same or from taking any action pursuant to the provisions thereof. Any written consent to a permitted amendment may be embodied in and evidenced by one or any number of concurrent written instruments of substantially similar tenor signed by Owners in person or by an agent duly appointed in writing, and such consent shall become effective when such instrument or instruments are delivered to the City. (4) Proof of the execution of any such consent or of a writing appointing any such agent shall be sufficient for any purpose and shall be conclusive in favor of the City if made in the following manner: the fact and date of the execution by any Person of any such consent or appointment may be proved by the affidavit of any witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the Person signing such consent or appointment acknowledged to him the execution thereof. The fact and date of execution of such consent or appointment may also be proved in any other manner which the City may deem sufficient; but the City may nevertheless, in its discretion, require further proof in cases where it deems further proof desirable. Any consent by the Owner of any Bond shall bind any future Owner of the same Bond with respect to any Supplemental Resolution executed by the City pursuant to such consent. (5) Upon the execution and delivery of any Supplemental Resolution pursuant to the provisions of this Section, this Resolution shall be, and be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the City and all Owners of Bonds then Outstanding shall thereafter be determined, exercised and enforced under this Resolution subject in all respects to such modifications and amendments. 8.2 Notice of Amendment. The City shall promptly notify the Owners of all amendments made to this Resolution. 8.3 Notice to Borrower; Rights of Borrower Unaffected. (1) The City shall cause notice of the proposed adoption of any Supplemental Resolution, together with a copy of the proposed Supplemental Resolution, to be mailed to the Borrower and the Bank at least 30 days prior to the proposed date of execution and delivery of any such Supplemental Resolution; provided, that the Borrower and the Bank may waive such notice in writing delivered to the City. (2) Anything herein to the contrary notwithstanding, so long as the Borrower is not in default under any of its obligations hereunder or under the Loan Agreement, a Supplemental Resolution under this Article which, in the opinion of counsel to the Borrower, delivered to the City, adversely affects the rights of the Borrower under the Loan Agreement or this Resolution, so long as the Loan Agreement is in effect, shall not become effective unless and until the Borrower and the Bank Resolution No. 2010 -37 Page 17 of 24 shall have consented in writing to the execution and delivery of such Supplemental Resolution. ARTICLE IX MODIFICATION OF LOAN AGREEMENT 9.1 Modification of Loan Agreement without Consent of Owners. After the Date of Issue and subject to the conditions and restrictions of this Resolution, the City and the Borrower may consent to and execute such supplements or amendments to the Loan Agreement as may or shall by them be deemed necessary or desirable and as they all shall approve, from time to time and at any time, without the consent of, but with prior notice to, any Owner except as set forth below in this Section, for any one or more of the following purposes: (a) To add covenants and agreements to the Loan Agreement for the protection of Owners; and /or (b) To cure any ambiguity or correct any defect or inconsistent provision in the Loan Agreement; and /or (c) To make subject to the lien of the Bonds additional revenues, properties or collateral; and /or (d) To preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes and preserve the right of the City to continue to issue bonds, debts or other obligations of any nature the interest income on which is likewise excluded from gross income for federal income tax purposes; and /or (e) To make any other change which is not to the prejudice of the Owners of Outstanding Bonds. Notwithstanding any provision to this Section 9.1 to the contrary, if one Owner holds all of the Bonds then Outstanding, the consent and approval of such Owner must be obtained prior to the execution and delivery of any supplements or amendment to the Loan Agreement. 9.2 Modification of Loan Agreement with Consent of Majority of Owners. Except for the supplements and amendments necessary or desirable to accomplish the purposes set forth in Section 9.1, neither the City nor the Borrower shall consent to any other supplement or amendment to the Loan Agreement after the execution thereof without the approval of both of them and the prior written consent of the Owners of not less than a majority in aggregate principal amount of Bonds then Outstanding; provided, that no such amendment, change or modification shall ever affect the unconditional obligation of the Borrower to make Loan Payments as they become due and payable. If the Owners of not less than a majority in aggregate principal amount of Bonds then Outstanding shall have consented to and approved the execution thereof as provided herein, no Owner shall have any right to object to any of the terms and provisions contained therein, or in the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the City or the Borrower from executing the same or from taking any action pursuant to the provisions thereof. 9.3 Modification of Loan Agreement with Consent of All Owners. Without the approval of the City and the Borrower and the prior written consent of the Owners of all the Outstanding Bonds, no supplement or amendment to the Loan Agreement shall Resolution No. 2010 -37 Page 18 of 24 change the terms of redemption or maturity of the principal of any Bonds or of any installment of interest on any Bonds; shall deprive any Owner of any Outstanding Bond of the lien or right created by this Resolution or the Loan Agreement; shall give priority to any Bond over any other Bond; shall reduce or extend the due date of any of the Loan Payments; or shall amend this Section. 9.4 Opinion of Bond Counsel. No amendments shall be made to the Loan Agreement unless the City and the Bank shall have received an opinion of Bond Counsel to the effect that the amendment is authorized or permitted by this Resolution and the Loan Agreement, and will not cause the interest on the Recovery Zone Facility Bonds to be included in gross income for federal income tax purposes. ARTICLE X MISCELLANEOUS 10.1 Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions contained herein invalid, inoperative or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or paragraphs contained in the Resolution shall not affect the remaining portions of the Resolution or any part thereof. 10.2 Payments Due on Saturdays, Sundays and Holidays. In any case where the date of payment of principal of the Bonds, whether at the stated maturity thereof, on a redemption date or otherwise, or payment of premium, if any, or interest thereon, is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or redemption or the date such interest was due, as the case may be, and no interest shall accrue for the period from and after such date. 10.3 Successor Is Deemed Included in All References to Predecessor. Whenever in this Resolution the City or the Borrower is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements contained in this Resolution by or on behalf of the City shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. 10.4 Limitation of Rights. Nothing expressed or implied in this Resolution or in the Bonds is intended or shall be construed to give to any Person other than the City and the Owners any legal or equitable right, remedy or claim under or in respect of this Resolution or any covenant, condition or provision contained herein or in the Bonds, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the City and. the Owners. 10.5 Waiver of Notice. Except as otherwise provided herein, whenever in this Resolution the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person entitled to receive such notice and in Resolution No. 2010 -37 Page 19 of 24 any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 10.6 Notices. All notices to Owners shall be given by first class mail. Any notice to or demand upon the following parties shall be given by registered or certified mail, return receipt requested, as follows, or to such other address as is specified by the City or the Borrower to the other in writing: If to the City, to: City of Kenai 210 Fidalgo Avenue Kenai, Alaska 99611 Attn: City Manager If to the Borrower, to: Double Glacier Builders, LLC 425 G Street, Suite 210 Anchorage, Alaska 99501 Attn: Manager If to the Bank, to: First National Bank Alaska P.O. Box 100720 Anchorage, Alaska 99510 -0720 Attn: Michael Martin 10.7 Waiver of Personal Liability. No council member, officer, agent or employee of the City nor any person executing the Bonds shall be individually or personally liable for the payment of the principal of or premium, if any, or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing contained herein shall relieve any such council member, officer, agent, employee or other person from the performance of any official duty provided by law or by this Resolution. 10.8 Applicable Provisions of Law. This Resolution shall be governed by and construed in accordance with the laws of the State of Alaska without regard to the conflict or choice of laws provisions thereof. 10.9 Authorization of Bond Documents. The form and content of the Loan Agreement hereby are in all respects authorized, approved and confirmed, and the City Manager or her designee hereby is authorized, empowered and directed to execute and deliver to the counterparties said documents on behalf of the City, in substantially the form and content now before this meeting but with such changes, modifications, additions and deletions therein as shall to him seem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of approval of any and all changes, modifications, additions or deletions therein from the form and content of said documents now before this meeting, and from and after the execution and delivery of said documents, the City Manager and the Finance Director, and their respective designees, each hereby is authorized, empowered and directed to do all acts and things and to execute all documents as may be necessary to carry out and comply with the provisions of said documents as executed. 1 Authority of Officers. The City Manager and the Finance Director, and their respective designees, and any other officer of the City, each hereby is authorized to execute and deliver for and on behalf of the City any and all additional certificates, documents, opinions or other papers and perform all other acts as they may deem necessary or appropriate in order to implement and carry out the intent and purposes of this Resolution. Resolution No. 2010 -37 Page 20 of 24 10.11 Effective Date. This resolution shall become effective upon adoption. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of June, 2010. ATTEST: Carol L. Freas, City Clerk Approved by Finance: PAT PORTER, MAYOR R -1 EXHIBIT A FORM OF BOND CITY OF KENAI, ALASKA REVENUE BONDS, 2010 (DOUBLE GLACIER BUILDERS, LLC PROJECT) DATE: REGISTERED OWNER: FIRST NATIONAL BANK ALASKA PRINCIPAL AMOUNT: The City of Kenai, Alaska (the "City a home rule city and municipality of the State of Alaska (the "State for value received, promises to pay to the Registered Owner named above, or registered assigns (the "Registered Owner but solely from the sources and in the manner referred to herein, the principal amount detexuxined as provided herein, which shall not exceed the amount shown above, together with interest on said principal sum from the date hereof to 1, 2011 at the rate of percent and thereafter at a rate per annum determined as provided in the Loan Agreement dated the date hereof (the "Loan Agreement between the City and Double Glacier Builders, LLC (the "Borrower Interest only shall be payable on the first day of each month commencing 1, 2010, until 1, 2011. Thereafter, this Bond shall be payable in 240 equal installments of principal, plus accrued interest, payable on the first day of each month until 1, 2031, when the remaining principal of this Bond, plus accrued interest, shall be due and payable in full. Interest shall be computed on the basis of a 360 -day year consisting of twelve 30 -day months. Principal and interest shall be paid in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts. The principal or redemption price of any Bond shall be payable (i) while the provisions of the Loan Agreement so provide, directly to the Owner, and (ii) at all other times, upon surrender of such Bond at the office of the City Finance Director (the "Registrar in Kenai, Alaska. Interest on this Bond on each Interest Payment Date in respect thereof shall be payable (i) while the provisions of the Loan Agreement so provide, directly to the Owner, and (ii) at all other times, by check mailed to the address of the person in whose name that Bond is registered at the close of business on the Record Date for such interest as such address shall appear in the Bond Register; provided that at the written request of the owner of at least $1,000,000 aggregate principal amount of Bonds received by the Registrar at least one Business Day before the corresponding Record Date, interest accrued on the Bonds will be payable by wire transfer within the United States in immediately available funds to the bank account number of such owner specified in such request; and provided further that interest payable at maturity (or redemption) shall be paid only upon presentation and surrender of such Bond. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY AND DO NOT REPRESENT OR CONSTITUTE A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF EXHIBIT A FORM OF BOND Page 2 of 4 THE CITY, THE STATE OF ALASKA, OR ANY POLITICAL SUBDIVISION THEREOF, AND WILL NOT BE SECURED BY AN OBLIGATION OR PLEDGE OF ANY MONEYS RAISED BY TAXATION AND THE BONDS DO NOT CONSTITUTE OR GIVE RISE TO A PECUNIARY LIABILITY OF THE CITY OR A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWERS. THE BOND SERVICE CHARGES ON THE BONDS WILL BE PAYABLE SOLELY FROM THE REVENUES PLEDGED AND ASSIGNED TO SECURE PAYMENT THEREOF BY THE RESOLUTION This Bond is one of a duly authorized series of bonds of the City of Kenai, Alaska, designated "Revenue Bonds, 201.0 (Double Glacier Builders, LLC Project)" (the "Bonds issued under Resolution Number 2010- of the City, adopted on June 16, 2010 (the "Resolution aggregating in principal amount S and issued for the purpose of making a loan under a Loan Agreement to pay for the acquisition, construction, and equipping of a commercial building located in Kenai, Alaska. Reference is made to the Resolution for a more complete description of the rights, duties and obligations of the City and the Owners, and the terms and conditions upon which the Bonds are issued and secured. All terms used herein with initial capitalization where the rules of grammar or context do not otherwise require shall have the meanings as set forth in the Resolution. Each Owner assents, by its acceptance hereof, to all of the provisions of the Resolution. The Borrower is required by the Loan Agreement to make payments in the amounts and at the times necessary to pay the principal of and interest and any premium on the Bonds. To provide for such payments, the City has absolutely and irrevocably assigned to the Bank all right, title and interest in and to the Loan Agreement (with certain reservations and exceptions noted in Article X of the Loan Agreement). The Bonds are subject to redemption prior to maturity only as provided herein. Redemption at Borrower's Option. The Bonds are subject to redemption at the option and direction of the Borrower as provided in the Loan Agreement. Extraordinary Redemption. The Bonds are subject to extraordinary redemption prior to maturity, as a whole or in part as described below, at a redemption price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, (1) as a whole or in part, on the first date for which timely notice of redemption may be given, with Insurance Proceeds or a Condemnation Award (and, if necessary, other money legally available therefor), if so required by Section 6.02 of the Loan Agreement, (2) as a whole, on the first Interest Payment Date for which timely notice of redemption may be given, at the option of the City, upon an occurrence of an event of default under the Loan Agreement, or (3) only in the case of Bonds that are Recovery Zone Facility Bonds, as a whole or in part, on the first date for which timely notice of redemption can be given upon receipt by the Bank of an opinion of Bond Counsel to the effect that such redemption is required to prevent a Determination of Taxability. EXHIBIT A FORM OF BOND Page 3 of 4 The Bonds are issuable only as fully registered bonds. This Bond is transferable by the registered owner hereof or his duly authorized attorney at the office of the Registrar, upon surrender of this Bond, accompanied by a duly executed instrument of transfer in form and with guaranty of signature satisfactory to the Registrar, subject to such reasonable regulations as the Borrower, the City or the Registrar may prescribe. Upon any such transfer, a new Bond or Bonds in the same aggregate principal amount will be issued to the transferee. Except as set forth in this Bond and as otherwise provided in the Resolution, the person in whose name this Bond is registered shall be deemed the owner hereof for all purposes, and the City, the Borrower and the Registrar shall not be affected by any notice to the contrary. The Resolution permits certain amendments or supplements to the Agreement and the Resolution not prejudicial to the Owners to be made without the consent of or notice to the Owners, and other amendments or supplements thereto to be made with the consent of the Owners of not less than a majority in aggregate principal amount of the Bonds then outstanding The Owners have only those remedies provided in the Resolution. The Bonds shall not constitute the personal obligation, either jointly or severally, of the members of the city council of the City or of any other officer of the City. It is certified and recited that there have been performed and have happened in regular and due form, as required by law, all acts and conditions necessary to be done or performed by the City or to have happened precedent to and in the issuing of the Bonds in order to make them legal, valid and binding obligations of the City, and that the Bonds do not exceed or violate any constitutional or statutory limitation. IN WITNESS WHEREOF, the City of Kenai, Alaska has caused this Bond to be executed on its behalf by the manual or facsimile signature of its Mayor and its corporate seal (or a facsimile thereof) to be impressed or otherwise reproduced hereon and attested by the manual or facsimile signature of its Clerk, all as of the date shown above. ATTEST: Clerk [SEAL] Mayor EXHIBIT A FORM OF BOND Page 4 of 4 ASSIGNMENT For value received, the undersigned sells, assigns and transfers to (print or typewrite name, address, zip code and Social Security number or other tax identification number of Transferee) this Bond and irrevocably constitutes and appoints attorney to transfer this Bond on the Bond Register, with full power of substitution in the premises. Dated: Signature Guaranteed: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of this Bond. the cit of KENAI, ALASKA Tillage with a Past, C# with a Future" FINANCE DEPARTMENT 210 Fidaigo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 283 -7535 ext 221 FAX: 907 283 -3014 To: Rick Koch, City Manager From: Terry Eubank, Finance Director Date: June 2, 2010 Re: Resolution 2010 -37 Authorizing the Sale of Revenue Bonds to support economic development within the City. Resolution 2010 -37 is the final step in the process of assisting Double Glacier Builders, LLC (formerly identified as Pfeffer Development Inc.) with a planned development in the City of Kenai. As part of the American Recovery and Reinvestment Act (ARRA) the Recovery Zone Facility Bond program was created allowing private entities to receive conduit funding through sponsoring public entities at tax exempt financing rates. Private entities typically borrow at taxable interest rates causing the cost of financing to typically be 1.5% higher. As the conduit for this financing, the City of Kenai will immediately assign all interest in the debt to First National Bank. The effect will be assuring the City of Kenai and its taxpayers in no way are obligated for the debt once the process is complete. Resolution 2010 -37 authorizes the City to issue revenue bonds for the project and authorizes the City Manager and Finance Director to determine the appropriate terms of the financing.