HomeMy WebLinkAboutRes1985-091
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 85-Jl
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, APPROVING THE DI~OSITION
OF REAL PROPERTY OF THE CITY OF SEWARD KNOWN
AS THE SPRING CREEK CORRECTIONAL FACILITY
SITE; AUTHORIZING THE EXECUTION OF AN
AGREEMENT OF LEASE OF SAID REAL PROPERTY BY
hND BETWEEN THE CITY AND THE STATE OF ALASKA,
AND A TRUST INDENTURE AND ASSIGNMENT OF SAID
LEASE BY AND BETWEEN THE CITY AND RAINIER
NATIONAL BANK AS TRUSTEE; AND RELATED
MATTERS.
WHEREAS, the City of Seward, Alaska (the "City") is a
home rule city and under Section 11 of Article of the Alaska
Constitution may exercise all legislative power not prohibited by
law or by 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, the City is the owner of certain premises
described herein, known as the Spring Creek Correctional Facility
Site which it desires to lease to the State of Alaska so that the
State can use, operate and maintain a correctional facility on
said premises;
WHEREAS, the State is legally authorized to enter the
lease of said premises, and the Alaska Legislature has stated its
intention to appropriate lease payments for the lease of the
facility, when constructed by the City, to the State of Alaska
under various enactments of the First Session of the Fourteenth
Alaska Legislature; and
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 85-~
Page 2.
WHEREAS, the City considers that the construction,
equipping and leasing to the state of said correctional facility
and the financing of the same under the Trust Indenture and
Assignment of Lease will promote the public ~Yposes of the City;
and
WHEREAS, there have been presented to the City the form
of the following documents which the City proposes to enter into
in connection with the construction and financing of the proposed
facility:
1. The Form of the Agreement of Lease (the
"Lease") between the City and the State of Alaska; and
2. The Form of Trust Indenture and Assignment
of Lease (the "Indenture") between the City and Rainier
National Bank.
WHEREAS, it appears that each of the instruments above
referred to, which are now before the City, is in appropriate
form and is an appropriate instrument for the purposes intended;
WHEREAS, a public hearing has been held concerning the
disposition of real property of the City under the Lease and the
Indenture, after proper notice in accordance with Seward City
Code Section 2-87;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY, AS FOLLOWS:
Section 1. That the real property to be disposed of
under this Resolution consists of interests in the following
described real property (the "Property"):
Parcel "A", SPRING CREEK CORRECTIONAL FACILITY
SITE, according to Plat No. 84-12, filed
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CITY OF SEWARD, ALASKA
RESOLUTION ~O. 85- 91
Page 3.
August 23, 1984, in the Seward Recording District,
Third Judicial District, State of Alaska; and
Tract "E", FOURTH OF JULY CREEK TRACTS, according
to Plat No. 84-6, filed May 1, 1984, in the Seward
Recording District, Third Judicial District, State
of Alaska; ~
which interests are described in Sections 2 and 3 of this
Resolution.
Section 2. That the disposition of an interest in the
Property by negotiation to the State of Alaska under the lease
will serve the public interest and is hereby approved. The
essential terms of this disposition are set forth in Exhibit A
hereto, which is incorporated by reference herein.
Section 3. That the disposition of an interest in the
Property by negotiation to Rainier National Bank under the
Indenture will serve the public interest and is hereby approved.
The essential terms of this disposition are set forth in Exhibit
B hereto, which is incorporated by reference herein.
Section 4. That the public interest will not be served
by an appraisal of the interests in real property whose disposal
is approved by this Resolution, and such appraisals are hereby
waived.
Section 5. That the form and content of the Lease and
the Indenture be and the same hereby are in all respects
authorized, approved and confirmed, and the Mayor, Manager or
Assistant City Manager be and each hereby is authorized,
empowered and directed to execute and deliver the Lease to the
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CITY OF SEWARD, ALASKA
RESOLUTION ~O. 85-~1
Page 4.
State and the Indenture to the Trustee for and on behalf of the
City including necessary counterparts, in substantially the form
and content now before this meeting but with such changes,
modifications, additions and deletions there~ as shall to them
seem necessary, desireable or appropriate, the execution thereof
to constitute conclusive evidence of the approval of any and all
changes, modifications, additions or deletions thereon from the
form and content of the Lease and Indenture now before this
meeting, and that, from and after the execution and delivery of
the Lease and Indenture, the Mayor, Manager, Assistant City
Manager and the Clerk of the City are hereby authorized,
empowered and directed to do all such acts and things and to
execute all documents as may be necessary to carry out and comply
with the provisions of the Lease and Indenture as executed.
Section 6.
That the Mayor, Manager, Assistant City
Manager and the Clerk of the City or any other person authorized
by the City be and 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.
Section 7. That the provisions of this Resolution are
hereby declared to be separable and if any section, phrase or
provision shall for any reason be declared to be invalid such
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 85- 91
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Page 5.
declaration shall not affect the validity of the remainder of the
sections, phrases or provisions.
Section 8. That upon adoption of this Resolution, the
Clerk of the City shall cause a true copy of~me to be posted
for at least thirty days on the City Hall and Post Office
bulletin boards, as provided in Seward City Code Section 2-83.
Section 9. That this Resolution shall become effective
thirty days after passage and posting in accordance with Seward
City Code Section 2-83.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
SE\'IARD, ALASKA, this 19th day of August, 1985.
THE CITY OF SEWARD, ALASKA
~~"\~--
Michael J. Meehan~Vice-Mayor
Scholl, Simutis, Williams
AYES: Gillespie, Meehan,
NOES: None
ABSENT: Cripps, Hilton
ABSTAIN: None
ATTEST:
(City Seal)
APPROVED AS TO FORM:
HUGHES, THORSNESS, GANTZ, POWELL
AND BRUNDIN, Attorneys for the
City of Seward, Alaska
7~Ai (Jj ~
Fred B. Arvidson
City Attorney
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CITY OF SEWARD, ALASKA
to
RAINIER NATIONAL BANK,
as Trustee.
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TRUST INDENTURE AND ASSIGNMENT OF LEASE
Dated as of October I, 1985
$45,440,000 Spring Creek Correctional Center
Lease Certificates of Participation in Rent
1985 Series A
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RECITALS
GRANTING CLAUSE
HABENDUM
Definitions. . .
Section 2.01.
Section 2.02.
Section 2.03.
Section 2.04.
Section 2.05.
Section 2.06.
Section 2.07
Section 2.08
Section 3.01.
Section 3.02.
Section 4. Ol.
Section 4.02.
Section 4.03.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Authorization, Amount, Form, Denomina-
tion and Date of Initial Certificates.
Payment of Principal and Interest
Registration, Transfer and Exchange.
Mutilated, Destroyed, Lost or
Stolen Certificates
Cancellation and Destruction of
Surrendered Certificates .
Purpose of Issuance of Additional
Certificates .
Terms of Additional Certificates.
Issuance of Additional Certificates.
ARTICLE III
ISSUE OF CERTIFICATES
Issue of Certificates
Disposition of Proceeds of Initial
Certificates . .
ARTICLE IV
PROJECT CONSTRUCTION
Establishment of Construction Fund
Disbursement of Proceeds From The
Construction Fund Upon Requisition
Procedure Upon Final Completion of Project
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Section 5.01.
Section 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Section 5.06.
ARTICLE V
REVENUES, FUNDS AND APPLICATION THEREOF
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Revenues to be Paid Over to Trustee.
Payment Fund . .
Creation of Reserve Fund
Creation of the Expense Fund
Revenues to be Held for All Certifi-
cateownersi Certain Exceptions
Insurance Proceeds ....
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SECURITY FOR AND INVESTMENT OR DEPOSIT OF FUNDS
ARTICLE VI
Section 6.01.
Section 6.02.
Section 7.01.
Section 7.02.
Section 7.03.
Deposits and Security Therefor
Investment of Funds
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ARTICLE VII
REDEMPTION OF CERTIFICATES
Certificates Subject to Mandatory and
Optional Redemptioni Selection of Certi-
ficates to be Called for Redemption
Notice of Redemption
Payment of Redemption Price
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ARTICLE VII I
COVENANTS AND CONTINUING OBLIGATIONS OF THE CITY
Section 8.01. Continuing Obligations of the City 20
Section 8.02. Warranties and Covenants of City 21
Section 8.03. Compliance with Laws 22
Section 8.04. Further Assurances . . . 22
Section 8.05. Certificates Not to Become Arbitrage
Bonds 22
Section 8.06. Recordings . . 22
TABLE OF CONTENTS
Page 2.
Section 9.01.
Section 9.02.
Section 9.03.
Section 9.04.
Section 9.05.
Section 9.06.
Section 9.07.
Section 9.08.
Section 9.09.
Section 9.10.
Section 9.11.
Section 9.12.
Section 9.13.
Section 10.0l.
Section 10.02.
Section 10.03.
Section 10.04.
Section 10.05.
Section 10.06.
Section 10.07.
Section 10.08.
Section 10.09.
Section 10.10.
Section 10.11.
Section 10.12.
Section 10.13.
Section 10.14.
Section 10.15.
TABLE OF CONTENTS
Page 3.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Events of Default Defined
Remedies
Legal Proceedings by Trustee
Discontinuance of Proceedings by
Trustee
Certificateowners May Direct
Proceedings
Limitations on Actions by Certificate-
owners . .
Trustee May Enforce Rights Without
Possession of Certificates
Delays and Omissions Not to Impair
Rights .
Application of Moneys in Event of
Default
Trustee's Right to Receiver
Trustee and Certificateowners Entitled
to All Remedies; Remedies Not Exclusive
Waiver of Events of Default
Financial Guaranty Bond
ARTICLE X
THE TRUSTEE
No Responsibility for Recitals, etc.
Trustee May Act Through Agents;
Answerable Only for Willful Miscon-
duct or Gross Negligence .
Compensation and Indemnity.
Notice of Default; Right to Investi-
gate .
Obligation to Act on Defaults
Reliance on Requisition, etc.
Trustee May Own Certificates .
Construction of Ambiguous Provisions
Resignation of Trustee .
Removal of Trustee . . .
Appointment of Successor Trustee
Qualification of Successor
Instruments of Succession
Merger of Trustee
Appointment of Co-Trustee
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ARTICLE XI
ACTS OF CERTIFICATEOWNERS;
EVIDENCE OF OWNERSHIP OF CERTIFICATES
Page
Section 11.01. Acts of Certificateowners; Evidence
of Ownership . .
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ARTICLE XI I
AMENDMENTS AND SUPPLEMENTS
Section 12.01. Amendments and Supplements Without
Certificateowners' Consent. .
Section 12.02. Amendments With Certificateowners'
Consent
Section 12.03. Amendment of Lease.
Section 12.04. Trustee Authorized to Join in Amend-
ments and Supplements; Reliance on
Counsel
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ARTICLE XI II
DEFEASANCE
Section 13.01. Defeasance.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.0l. No Recourse 33
Section 14.02. Deposit of Funds for Payment of Cert-
ificates 34
Section 14.03. No Rights Conferred on Others 34
Section 14.04. Illegal, etc. Provisions Disregarded 34
Section 14.05. Notices to Trustee, City and the
State 34
Section 14.06. Successors and Assigns 35
Section 14.07. Headings for Convenience Only 35
Section 14.08. Counterparts 35
Section 14.09. Acceptance of Trust 35
TABLE OF CONTENTS
Page 4.
Section 14.10.
Section 14.11.
Approvals By the State . . . . . .
Payments Due on Saturdays, Sundays
and Holidays
Applicable Law
Nonwaiver
Page
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Section 14.12.
Section 14.13.
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EXECUTION . . .
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ACKNOWLEDGMENTS
EXHIBIT A - Property Description
EXHIBIT B - Form of Certificate
TABLE OF CONTENTS
Page 5.
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TRUST INDENTURE AND ASSIGNMENT OF LEASE (the "Inden-
ture"), dated as of the date shown on the title page, between the
CITY OF SEWARD, ALASKA, (the "City"), and RAINIER NATIONAL BANK,
as Trustee (the "Trustee"), a national banking association organ-
ized under the laws of the United States of America, having its
principal corporate trust office in Seattle, Wasington.
RECITALS
A. The City and State of Alaska (the "State"), have
entered into an Agreement of Lease, dated as of October 1, 1985,
(the "Lease") providing for the construction of a correctional
facility on the premises described on Exhibit A attached hereto
and made a part hereof (the "Project"); and for the lease of the
Project by the City to the State.
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B. Under the Lease the State is required to pay rent
to the City at the times and in the amounts set forth therein and
calculated pursuant thereto.
C. The Lease provides that the amounts payable as
rent thereunder (the "Rent"), consist of (i) principal and
(ii) interest components.
D. In order to provide Project financing it has been
determined to sell participations in the right to receive Rent
which participations are evidenced by the instruments authorized
herein called "Certificates" or "Certificates of Participation".
E. In order to facilitate the issuance of the Certifi-
cates of Participation, the City desires to assign its interest
and rights under the Lease to the Trustee, and the Trustee has
agreed to accept such assignment of the City's interest and
rights in and to the Lease and issue Certificates
of Participation.
F. The offer of Prudential Bache Securities Inc. and
Goldman, Sachs & Co., New York, New York (the "Underwriters"),
registered broker-dealers, to purchase all of the Certificates of
Participation has been accepted.
G. The City and the Trustee each have authority to
enter into this Indenture, have duly authorized its execution and
delivery, and through their duly qualified officers have duly
executed and delivered this Indenture.
H. The Certificates are to be in substantially the
form attached as Exhibit B.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to
provide for the payment of principal or redemption price (as the
case may be), together with interest, in respect of all Certifi-
cates issued and Outstanding under this Indenture, the rights of
the Certificateowners and the performance of the covenants
contained in said Certificates and herein, the City hereby sells,
assigns, transfers, sets over and pledges unto RAINIER NATIONAL
BANK, Trustee, its successors in the Trust and its assigns
forever without recourse all of the right, title and interest of
the City in and to the Lease and the "Revenues" as hereinafter
defined, and the rentals, including the Rents, payable
thereunder.
TO HAVE AND TO HOLD in trust, nevertheless, for the
equal and ratable benefit and security of all present and future
owners of the Certificates issued and to be issued under the
Indenture, without preference, priority or distinction as to lien
or otherwise (except as herein expressly provided) of anyone
Certificate over any other Certificate, upon the terms and sub-
ject to the conditions hereinafter set forth.
ARTICLE I
DEFINITIONS
In this Indenture and any indenture supplemental hereto
(except as otherwise expressly provided or unless the context
otherwise requires) the singular includes the plural, the mascu-
line includes the feminine, and the following terms shall have
the meanings specified in the foregoing recitals:
City
Indenture
Lease
Project
Rent
State
Trustee
Underwriters
In addition, the following terms shall have the
meanings specified in this Article, unless the context otherwise
requires:
"Additional Certificates" shall mean Additional Certi-
ficates of Participation issued under Article II.
"Authorized City Officer" shall mean each person
designated to act on behalf of the City by written certificate
furnished to the Trustee containing the specimen signature of
such person signed on behalf of the City by its Manager.
"Authorized State Officer" shall mean each person
designated to act on behalf of the State by written certificate
furnished to the Trustee containing the specimen signature of
TRUST INDENTURE
Page 2.
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such person signed on behalf of the State by its Commissioner of
Administration.
"Bond Insurer" shall mean United States Fidelity and
Guaranty Company, Issuer of the Financial Guaranty Bond.
"Certificate of Participation", "Certificate" or "Cert-
ificates" shall mean any certificate or certificates executed and
delivered under this Indenture evidencing a proportionate inter-
est in the Rent.
"Certificateowner" or "owner of Certificates" or
"Owner" or "Owner of Certificates" shall mean the registered
owner of any Certificate.
"Code" shall mean the Internal Revenue Code of 1954, as
amended, together with regulations promulagated thereunder and
published rulings and procedures.
"Construction Contracts" shall mean the contract for
the construction of the Project to be awarded on October 17,
1985, and any other contracts with subcontractors or additional
contractors, or supplemental contracts required to complete the
Project.
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"Construction Fund" shall mean the fund so designated
which is established pursuant to Section 4.01 hereof.
"Cost" or "Cost of the Project" shall mean Cost as
defined in the Lease.
"Costs of Issuance" shall mean all items of expense,
directly or indirectly payable or reimbursable by the State or
the City and related to the authorization, sale and issuance of
Certificates, including but not limited to printing costs, costs
of preparation and reproduction of documents, filing and record-
ing fees, initial fees and charges of any fiduciary, legal fees
and charges, fees and disbursements of consultants and profes-
sionals, costs of credit ratings, fees and charges for prepara-
tion, execution, transportation and safekeeping of Certificates,
costs and expenses of refunding, premiums for the insurance of
the payment of the Certificates, underwriter's discounts and any
other cost, charge or fee in connection with the original
issuance of Certificates.
"Counsel" shall mean an attorney at law or law firm
(who may be counsel for the City) satisfactory to the Trustee.
"Event of Default" shall mean any of the events
described in Section 9.01 hereof.
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TRUST INDENTURE
Page 3
"Expense Fund" shall mean the fund so designated which
is established pursuant to Section 5.04.
"Financial Guaranty Bond" means that certain insurance
policy insuring the payment of principal and interest on the
Initial Certificates.
"Indenture" shall mean this Indenture as amended or
supplemented at the time in question.
"Initial Certificates" shall mean the $45,440,000
aggregate principal of Spring Creek Correctional Center Lease
Certificates of Participation in Rent 1985 Series A initially
issued under this Indenture.
"Outstanding", in connection with Certificates (or a
series of Certificates) shall mean, as of the time in question,
all Certificates (or all Certificates of such series)
authenticated and delivered under the Indenture, except:
A. Certificates theretofore cancelled or required to
be cancelled under Section 2.05 hereof;
B. Certificates for the payment or redemption of which
the necessary amount shall have been or shall concurrently
be deposited with the Trustee or for which provision for
payment shall have been made in accordance with Section
13.01 hereof; provided that, if such Certificates are being
redeemed prior to maturity, the required notice of redemp-
tion shall have been given or provisions satisfactory to the
Trustee shall have been made therefor; and
C.
ficates
Article
Certificates in substitution for which other Certi-
have been authenticated and delivered pursuant to
I I hereof.
"Payment Fund" shall mean the fund so designated which
is established pursuant to Section 5.02 hereof.
"Plans and Specifications" shall mean those plans and
specifications for the Project prepared by or for the Project
Manager on file in the office of the City Clerk.
"Project Manager" shall mean the person designated by
the Department of Transportation and Public Facilities of the
State with primary responsibility and authority for the State's
p.erformance under the Project Management Services Agreement
between the City and the State dated October 16, 1985.
"Reserve Fund" shall mean the fund so designated which
is established pursuant to Section 5.03 hereof.
TRUST INDENTURE
Page 4.
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"Reserve Requirement" shall mean an amount equal to
maximum annual Rent.
"Revenues" shall mean (i) all amounts payable by the
State to the Trustee in respect of the Lease including the Rent,
(ii) any proceeds of Certificates originally deposited with the
Trustee for the payment of accrued or capitalized interest on the
Certificates, (iii) investment income in respect of any moneys
held by the Trustee (except investment income in respect of
moneys held in Account No.2 of the Construction Fund), (iv)
amounts collected by the Trustee in pursuit of remedies under the
Lease and any amounts received under any reletting of the Project
after termination of the Lease, (v) proceeds of insurance poli-
cies (except proceeds used to repair or reconstruct the Project),
and (vi) all other moneys and securities held by the Trustee from
time to time pursuant to the terms of this Indenture.
"State" shall mean the State of Alaska, where appli-
cable acting through an Authorized State Representative.
"Trustee" shall mean Rainier National Bank with princi-
pal offices in Seattle, Washington and its successor from time to
time in the trust hereunder.
The words "hereof", "hereto" and "hereunder" (except in
the form of Certificate) refer to the entire Indenture.
ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization, Amount, Form, Denomina-
tion and Date of Initial Certificates. Upon receipt of written
request from an Authorized City Officer, the Trustee shall
prepare, execute and deliver to the Underwriters, or the finan-
cial institutions and other entities or persons designated by the
Underwriters, one or more Initial Certificates in the name,
number and denomination specified in the aforesaid request
evidencing direct and undivided ownership interests in the Rent
to be paid by the State under the Lease. Each Initial Certifi-
cate shall be issued in the form attached hereto as Exhibit B, in
the denomination of $5,000 or any integral multiple thereof, be
dated October 1, 1985, be numbered serially with such other
designation, if any, as the Trustee deems appropriate, and be
issued in the aggregate principal amount of $ 45,440,000.
Section 2.02. Payment of Principal and Interest. The
principal of the Initial Certificates shall represent an interest
in and shall be payable from the principal component of the Rent
on October 1 in each of the following years and in the following
TRUST INDENTURE
Page 5.
amounts and interest on the Initial Certificates shall represent
an interest in and shall be paid from the interest component of
the Rent on April 1 and October 1 of each year beginning April 1,
1986 at the rates set opposite the maturity years as follows:
Maturity
Years
1988
1989
1990
1991
1992
1993
1994
1995
1996
2000
2007
Principal Interest
Component Rates
$ 925,000 6.90%
990,000 7.40
1,065,000 7.90
1,145,000 8.10
1,240,000 8.30
1,340,000 8.50
1,455,000 8.70
1,580,000 8.80
1,720,000 8.90
8,640,000 9.50
25,340,000 9.70
Interest represented by the Initial Certificates shall be paid
from amounts in the Payment Fund designated as Advance Rent in
the Lease on April 1, 1986, October 1, 1986, April 1, 1987,
October 1, 1987 and April 1, 1988. Interest shall be computed by
the Trustee on the basis of a 360-day year consisting of 12
thirty-day months and shall be payable by check or draft of the
Trustee mailed to the registered owner of the Certificate.
Section 2.03. Registration, Transfer and Exchange.
Transfer of Certificates shall be made only upon the books for
the registration and transfer of the Certificates to be kept at
the principal corporate trust office of the Trustee. Upon sur-
render for transfer or exchange of any registered Certificate at
such office, the Trustee shall execute and deliver a new Certifi-
cate or Certificates of authorized denomination for the aggregate
principal amount which the registered owner is entitled to
receive.
All Certificates presented for transfer, exchange,
registration, redemption or payment (if so required by the
Trustee) shall be accompanied by a written instrument or instru-
ments of transfer or authorization for exchange, in form and with
guaranty of signature satisfactory to the Trustee, duly executed
by the registered owner or by his duly authorized attorney.
The Trustee shall not be required (a) to issue, trans-
fer or exchange Certificates after the fifteenth day of the month
next preceding any interest payment date; or (b) to issue,
transfer or exchange any Certificates selected, called or being
called for redemption.
TRUST INDENTURE
Page 6.
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New Certificates delivered upon any transfer or ex-
change shall be valid obligations, evidencing the same participa-
tion in Rent as the Certificates surrendered, and shall be
secured by this Indenture and entitled to all of the security and
benefits hereof to the same extent as the Certificates surren-
dered.
Section 2.04. Mutilated, Destroyed, Lost or Stolen
Certificates. If any Certificate shall become mutilated, the
Trustee shall thereupon execute and deliver a new Certificate of
like tenor and denomination in exchange and substitution for the
Certificate so mutilated, but only upon surrender to the Trustee
of such mutilated Certificate for cancellation, and the Trustee
may require reasonable indemnity thereof. If any Certificate
shall be reported lost, stolen or destroyed, evidence as to the
ownership thereof artd the loss, theft or destruction thereof
shall be submitted to the Trustee; and if such evidence shall be
satisfactory and indemnity satisfactory to the Trustee shall be
given, the Trustee shall execute and deliver a new Certificate of
like tenor and denomination bearing the same number as the origi-
nal Certificate but carrying such additional marking as will
enable the Trustee to identify such Certificate as a replacement
Certificate. The cost of providing any substitute Certificate,
including indemnity as the Trustee deems proper under the provi-
sions of this Section, shall be borne by the Certificateowner for
whose benefit such substitute is provided. If any such mut-
ilated, lost, stolen or destroyed Certificate shall have matured
or be about to mature the Trustee may pay to the owner the prin-
cipal amount of such Certificate upon the maturity thereof and
the compliance with the aforesaid conditions by such owner,
without the issuance of a substitute Certificate therefor.
Every substitute Certificate issued pursuant to this
Section 2.04 shall constitute an additional contractual obliga-
tion, whether or not the Certificate alleged to have been des-
troyed, lost or stolen shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Inden-
ture equally and proportionately with any and all other Certifi-
cates duly issued hereunder.
All Certificates shall be held and owned upon the
express condition that the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 2.05. Cancellation and Destruction of Surren-
dered Certificates. Certificates surrendered for payment or
redemption, and Certificates purchased from any moneys held by
the Trustee hereunder or surrendered to the Trustee by the City,
shall be cancelled and destroyed by the Trustee.
TRUST INDENTURE
Page 7.
Section 2.06. Purpose of Issuance of Additional Certi-
ficates. Subsequent to the issuance and delivery of the Initial
Certificates, one or more series of Additional Certificates may
be authorized by the City and issued and delivered by the Trustee
for the purpose of (a) financing the cost of completing the
acquisition, construction and equipping of the Project, (b)
financing the cost of enlarging, improving, modifying, expanding,
replacing or renewing the Project or (c) paying or providing for
the payment of principal and interest with respect to any
Certificate theretofore issued.
In addition, subsequent to the issuance and delivery of
the Initial Certificates, one or more series of Additional Certi-
ficates may be authorized by the City and issued and delivered by
the Trustee for the purpose of refunding any or all of the
Certificates of any'one or more series issued under the provi-
sions of this Indenture and then Outstanding.
The aggregate principal amount of Additional Certifi-
cates which may be issued under the provisions of this Indenture
is not limited, except as may be provided in respect of a par-
ticular series of Additional Certificates in the supplemental
indenture creating such series.
Section 2.07. Terms of Additional Certificates. With
the consent of the Bond Insurer, Additional Certificates may be
issued, executed, and delivered at any time and from time to time
in one or more series, upon such terms and conditions as may then
be permitted by law and as shall be determined by the City and
provided in the respective indentures supplemental to this Inden-
ture whereunder such Additional Certificates are authorized.
Additional Certificates of any series:
(a) shall be dated, shall bear interest at a rate not
in excess of the maximum rate then permitted by applicable
law, and shall be payable and mature in such amounts and at
such time or times, as may be provided in the supplemental
indenture creating such series of Additional Certificates;
(b) shall be payable, as to the principal of, premium,
if any, and interest on such Additional Certificates, at
such place or places in lawful money of the United States of
America and may have such registration privileges and such
exchange privileges as may be provided in the supplemental
indenture creating such series of Additional Certificates
and allowable under then existing law;
(c) shall have such particular designations added to
their title, and shall be in such form and denominations, as
provided in the supplemental indenture creating such series
of Additional Certificates;
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(d) shall be limited as to the maximum principal amount
thereof which may be delivered by the Trustee or which may
be at any time Outstanding;
(e) may contain provisions for the redemption thereof
at such redemption price or prices, at such time or times,
upon such notice, in such manner, and upon such other terms
and conditions, not inconsistent with the provisions hereof
and the terms of the Lease, as may be provided in the sup-
plemental indenture creating such series of Additional
Certificates;
(f) may have mandatory provisions requiring payments
for the purchase and sinking fund redemption of such Addi-
tional Certifieates, in such amounts, at such time or times,
upon such notice, in such manner, and upon such other terms
and conditions, not inconsistent with the provisions hereof
and the terms of the Lease as shall be set forth in such
supplemental indenture; and
(g) may contain such other provisions and such other
special terms and conditions, not contrary to the provisions
hereof, as may be provided in such supplemental indenture.
Section 2.08. Issuance of Additional Certificates.
The Trustee shall issue and deliver Additional Certificates for
the purposes set forth in Section 2.06 hereof to the purchaser or
purchasers thereof as requested and authorized by the City in
accordance with the provisions of this Section 2.08.
Prior to the delivery by the Trustee of any such Addi-
tional Certificates there shall have been received by the
Trustee:
(a) An indenture supplemental to this Indenture pro-
viding for the terms and conditions upon which they shall be
issued, executed by the City and the Trustee of such supple-
mental indenture;
(b) An executed counterpart of an amendment to or
supplement of the Lease, effective on or before the date of
issuance of such Additional Certificates, making such revi-
sions to the Lease as, without prejudicing the rights of the
owners of Outstanding Certificates, may be required for the
issuance of such Additional Certificates, including all or
whichever of the following modifications is, in the Opinion
of Counsel, necessary to provide for the disposition of the
proceeds of the sale of such Additional Certificates and the
payment by the State of Rent consisting of principal and
interest components sufficient to pay principal, premium, if
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Page 9.
any, and interest represented by such Additional Certifi-
cates: (i) increasing or adjusting the aggregate Rents
payable under the Lease to an amount at least equal to the
principal of, premium, if any, and interest represented by
all Outstanding Certificates, including such Additional
Certificates, and (ii) providing for the disposition of the
proceeds of the sale of such Additional Certificates,
including the acquisition, construction, equipping, or
improvement of the facilities, the financing of all or part
of which is to be effected by the issuance and sale of such
Additional Certificates or the payment or refunding of the
Certificates to be paid or refunded;
(c) An opinion of Counsel of nationally recognized
standing on the subject of municipal bonds, to the effect
that the issua~ce of the Additional Certificates and the
execution thereof have been duly authorized, all conditions
precedent to the delivery thereof have been fulfilled, and
that the exemption from Federal income tax of the interest
on the Initial Certificates and on any Additional Certifi-
cates theretofore issued will not be affected by the issu-
ance of the Additional Certificates being issued.
(d) A written order to the Trustee by an Authorized
Officer of the City to issue and deliver the Additional
Certificates to the purchaser or purchasers therein identi-
fied upon payment to Trustee of a specified sum plus accrued
interest.
(e) such other documents and opinions as may be pro-
vided for in the supplemental indenture referred to subpara-
graph (a) hereof.
The proceeds of Additional Certificates shall be held
and disbursed as provided in the indenture supplemental hereto
providing for such Additional Certificates. The Trustee shall
issue and deliver such Additional Certificates to the purchaser
or purchasers thereof as directed and authorized by the City in
accordance the provisions of this Section 2.08.
Each series of Additional Certificates issued pursuant
to this Section shall rank pari passu and be equally and ratably
secured under this Indenture with the Initial Certificates and
all other series of Additional Certificates, if any, issued pur-
suant to this Section without preference, priority of distinction
of any Certificates over any other thereof.
Notwithstanding anything herein to the contrary, no
Additional Certificates shall be issued unless the Lease is in
effect and there is no default at the time of issuance under the
Lease or this Indenture.
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ARTICLE III
ISSUE OF CERTIFICATES
Section 3.01. Issue of Certificates. The Initial
Certificates shall be issued by the Trustee and delivered as
directed by the City upon receipt by the Trustee of the follow-
ing:
(a) From the State of Alaska, the sum of $15,307,349.00
for deposit in Account No. 2 of the Construction Fund;
(b) An original executed counterpart of the Lease with
evidence of its recording;
(c) An original executed counterpart of the Indenture,
with evidence of its recording; and
(d) The sum of $44,417,447.13 constituting the proceeds of
the Initial Certificates.
Section 3.02. Disposition of Proceeds of Initial
Certificates. The proceeds of the Certificates shall be
deposlted as follows in the funds and account created by Articles
IV and V:
.
Payment Fund
Account No. 1 of the
Construction Fund
Reserve Fund
Expense Fund
$10,758,598.13
$28,502,664.00
$ 5,156,185.00
$ -0-
ARTICLE IV
PROJECT CONSTRUCTION
Section 4.01. Establishment of ConstruCtion Fund.
There is created and establlshed wlth the Trustee a Construction
Fund for the payment of the Costs of the Project. The Construc-
tion Fund shall consist of the amounts deposited therein pursuant
to this Indenture and any other amount the City may deposit
therein. Account No. 1 and Account No. 2 are established in the
Construction Fund. The amounts in the Construction Fund, until
applied as hereinafter provided, shall be held for the security
of all Certificates outstanding hereunder, except that all income
and earnings on amounts held in Account No. 2 shall be paid to
the State of Alaska on completion of the Project.
.
The Trustee shall maintain records sufficient to permit
calculation of the income on investments and interest earned on
deposit of amounts held in the Construction Fund. Such income or
interest accrued on amounts held in Account No. 1 may be expended
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at any time or from time to time to pay Costs of the Project in
the same manner as the proceeds of the Certificates deposited in
the Construction Fund are expended.
Section 4.02. Disbursement of Proceeds From the Con-
struction Fund Upon Requisition. The Trustee shall make payments
for Costs of the Project from the Construction Fund upon receipt
of a requisition from the City, signed by an Authorized City
Officer and approved by the Project Manager. A requisition shall
set forth the following information:
(a) The unit, units or other classification or portion
of the Project and the nature of the work to which the
payment relates;
(b) The payee, which may be the City or the State of
Alaska in the case of work done by City or State of Alaska
personnel and in the case of reimbursement for payments
previously made by the City (other than payments made by way
of set-off of mutual claims between the City and the payee),
(c) The amount; and
(d) That the payment is due, is a proper Cost and has
not been the subject of any previous disbursement, and for
Costs incurred under Construction Contracts, that the ser-
vices have been performed, or the material, equipment or
other work covered by the requisition have been incorporated
into the Project, or the materials are available at the job
site or other site approved by the City and that amounts
remaining in the Construction Fund after such payment will
be sufficient, in the opinion of the Project Manager, to pay
remaining Costs of the Project.
Except for Costs of Issuance, which shall be paid from
Account No.1, all payments for Costs of the Project shall first
be made from Account No. 2 before any payments are made from
Account No.1.
Each construction related requisition shall be accom-
panied by supporting purchase orders, vouchers or statements of
costs as required herein. The Trustee shall retain copies or
records of each requisition from the City and shall not destroy
such records for a period of seven years after receipt without
the prior consent of the City, which consent will not be unrea-
sonably withheld.
Section 4.03. Procedure Upon Final Completion of
Project. Upon the final completion of the Project, any amounts
remaining in the Construction Fund (except for the earnings from
investments of Account No. 2 thereof) shall be deposited by the
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Trustee in the Reserve Fund to the extent necessary to cause the
amount therein to equal the Reserve Requirement. Any remaining
amounts shall be paid by the Trustee to the State if the State is
not in default of any of its obligations under the Lease.
ARTICLE V
REVENUES, FUNDS AND APPLICATION THEREOF
Section 5.01. Revenues to be Paid Over to Trustee.
The City has caused the Revenues to be payable directly to the
Trustee. If, notwithstanding these arrangements, the City
receives any payment pursuant to the Lease or any other payments
with respect to the Project, the City shall immediately pay over
the same to the Trustee to be held as Revenues.
Section 5.02. Payment Fund. There is hereby estab-
lished with the Trustee a Payment Fund, from which the Trustee
shall pay the principal of Certificates and the interest on Cert-
ificates as they become payable. Proceeds of the Certificates in
the amount set forth in Section 3.02 and all Rent and other
Revenues received by the Trustee shall be deposited immediately
upon receipt in the Payment Fund. When Certificates are redeemed
or purchased, the amount, if any, in the Payment Fund repre-
senting interest thereon shall be applied to the payment of
accrued interest in connection with such redemption or purchase.
Whenever the amounts in the Payment Fund, Reserve Fund and
Expense Fund are sufficient to redeem all of the Outstanding
Certificates in accordance with their terms and to pay interest
accrued to the redemption date and to pay fees, charges and
expenses of the Trustee then due or to become due in connection
with the redemption of Certificates hereafter mentioned, the
Trustee will, upon request of the City, redeem all such Certifi-
cates on the redemption date specified by the City or apply such
amounts to pay the principal of and premium (if any), on the
Certificates pursuant to Section 13.01. Any amounts remaining in
the Payment Fund after payment in full of the principal or
redemption price and interest on the Certificates (or provision
for payment thereof), reimbursement of the Bond Insurer to the
extent of its payments under the Financial Guaranty Bond, and
payment of the fees, charges and expenses of the Trustee and any
paying agents shall be paid to the State. Any amounts remaining
in the Payment Fund from time to time after provision has been
made for interest and principal next due shall be deposited in
the Expense Fund at least annually.
Section 5.03. Creation of the Reserve Fund. There is
created and established with the Trustee a Reserve Fund. There
shall be deposited in the Reserve Fund from the proceeds of the
Certificates immediately upon receipt thereof the amount set out
in Section 3.02. Amounts in the Reserve Fund shall be held in
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trust and deposited in the Payment Fund by the Trustee to pay
principal of, interest and premium (if any) on the Certificates
when amounts in the Payment Fund are not sufficient for the pay-
ment thereof. Any amounts remaining in the Reserve Fund after
payment in full of the principal or redemption price of and
interest on the Certificates (or provision for payment thereof)
and payment of the fees, charges and expenses of the Trustee and
any paying agent shall be paid to the State.
Any amounts in the Reserve Fund in excess of the
Reserve Requirement after each principal payment date shall (i)
prior to completion of the Project be paid into the Construction
Fund and (ii) after completion of the Project be paid into the
Expense Fund.
Section 5~04. Creation of the Expense Fund. There is
created and established with the Trustee an Expense Fund. There
shall be deposited in the Expense Fund from the proceeds of the
Certificates immediately upon receipt thereof the amount set out
in Section 3.02. There shall be deposited in the Expense Fund
any amounts required to be deposited from the Payment Fund pur-
suant to Section 5.02 and from the Reserve Fund pursuant to
Section 5.03. Amounts in the Expense Fund shall be used to pay
the fees and expenses of the Trustee. Any amounts remaining in
the Expense Fund after provision for the Trustee's fees and
expenses shall be deposited in the Reserve Fund at least annually
to the extent necessary to cause the amount therein to equal the
Reserve Requirement, and any remaining amounts shall be paid to
the State if the State is not in default of any of its obliga-
tions under the Lease. Any amounts remaining in the Expense Fund
after payment in full of the principal and interest on the Certi-
ficates (or provision for payment thereof) and payment of the
fees, charges and expenses of the Trustee and any Paying Agent
shall be paid to the State.
Section 5.05. Revenues to be Held For All Certificate-
owners; Certain Exceptions. Revenues and investments thereof
shall, until applied as provided in this Indenture, be held by
the Trustee for the benefit of the owners of all Outstanding
Certificates, except that any portion of the Revenues repre-
senting principal or redemption price of, and interest on, any
Certificates which have matured or previously have been called
for redemption, in accordance with Article VII of this Indenture,
shall be held for the benefit of the owners of such Certificates
only.
Section 5.06. Insurance Proceeds. Proceeds in an
amount exceeding of $1,000,000 received by the Trustee from
insurance on the Project shall be deposited in the Payment Fund
for redemption of Certificates pursuant to Section 7.01(a) if no
reconstruction or repair is to be undertaken pursuant to the
Lease. In the event that such reconstruction or repair is under-
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taken, insurance proceeds in an amount exceeding $1,000,000 shall
be deposited in the Construction Fund for disbursement upon
requisition by the City, approved by the Project Manager before
Substantial Completion or an Authorized State Representative
after Substantial Completion,for such reconstruction or repair as
provided in Section 4.02. Upon completion of the reconstruction
or repair, excess funds, if any, shall be transferred to the
Payment Fund for partial redemption of Certificates pursuant to
Section 7.0l(a).
ARTICLE VI
SECURITY FOR AND INVESTMENT OF DEPOSIT OF FUNDS
Section 6.01. Deposits and Security Therefor. All
moneys received by ~e Trustee under this Indenture shall, except
as hereinafter provided, be deposited with the Trustee, until or
unless invested or deposited as provided in Section 6.02. All
deposits with the Trustee as trust funds (whether original
deposits under this Section 6.01 or deposits or redeposits in
time accounts under Section 6.02) shall, to the extent not
insured, be secured by a pledge of securities as required by
applicable law for such trust deposits. The Trustee may deposit
such moneys with any other depository which is authorized to
receive them and is subject to supervision by the Comptroller of
the Currency. All deposits in any other depository in excess of
the amount covered by insurance (whether under this Section or
under Section 6.02 as aforesaid) shall, to the extent permitted
by federal law, be secured by a pledge of direct obligations of
the United States of America having an aggregate market value,
exclusive of accrued interest, at all times at least equal to the
moneys deposited.
Section 6.02. Investmezlt of Funds. Any moneys held as
part of any fund under this Indenture shall be invested or rein-
vested by the Trustee at the written request of and as directed
by an authorized officer of the State of Alaska, Department of
Revenue, in any of the following securities:
(a) direct obligations (including certificates or
evidences of ownership of interests in such direct obliga-
tions held by a bank or trust company which could act as
depository for such securities) of, or obligations the
principal of and interest on which are unconditionally
guaranteed by, the United States of America;
(b) bonds, debentures, notes or other evidences of
indebtedness issued or guaranteed by any of the following
agencies or any other like successor governmental or govern-
ment-sponsored agencies which may be hereafter created:
the Export-Import Bank of the United States, the Federal
National Mortgage Association, the Student Loan Marketing
TRUST INDENTURE
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Association, the Tennessee Valley Authority, the Government
National Mortgage Association, the Federal Financing Bank,
the Federal Home Loan Bank; International Bank for Recon-
struction and Developement; Small Business Administration;
and the Inter-American Development Banks;
(c) negotiable or non-negotiable certificates of
deposit, time deposits or other similar banking arrange-
ments, issued by any bank or trust company (including the
Trustee) (i) whose long term debt is rated in either of the
two highest rating categories by Standard & Poor's Corpora-
tion and Moody's Investors Service, or (ii) which deposits
are fully insured by the Federal Deposit Insurance Corpora-
tion; or to the extent not so insured, such certificates,
deposits or other banking arrangements are secured as to
principal by 'securities described in clause (a) or (b) above
having a current market value (exclusive of accrued inter-
est) at least equal to 100% of the amount of the deposits,
marked to market monthly, and which securities shall have
been deposited in trust by such bank or trust company with
the trust department of the Trustee or with a Federal
Reserve Bank or branch or, with the written approval of the
Trustee and the Bond Insurer, with another bank, trust
company or national banking association for the benefit of
the City and the appropriate Fund as collateral security for
such deposits;
(d) repurchase agreements with banks described in
clause (c)(i) of this paragraph (which may include the
Trustee) and government bond dealers reporting to and
trading with the Federal Reserve Bank of New York, which
agreements are fully secured as to principal by securities
which are obligations described in clause (a), (b) or (c)
above having a current market value at least equal to 100%
of the amount of the repurchase agreements, marked to market
weekly, and which securities shall have been deposited in
trust by such banks or dealers with the trust department of
the Trustee or with a Federal Reserve Bank or branch, or
with the written approval of the Trustee, with another bank,
trust company or national banking association for the bene-
fit of the City and the appropriate Fund as collateral
security for such repurchase agreements; and
(e) commercial paper rated within the top rating
category by Standard & Poor's Corporation or Moody's
Investors Service and issued by corporations having total
assets in excess of five hundred million dollars
($500,000,000). Eligible commercial paper may not represent
more than 10 percent of the outstanding paper of an issuing
corporation; and
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.
In the ahsence of any direction or re~uest of the
State, the Trustee may invest any moneys held as part of any fund
held under this Indenture in any of the foregoing securities.
All such investments shall at all times he a part of the fund
from whence the moneys used to ac~uire such investments shall
have come, and all income and profits on such investments shall
he credited to, and all losses thereon shall he charged aqainst,
such fund. Trustee may make any and all such investments through
its own trust investment division, and any such investments may
include those issued hy the Trustee or its affiliates if the
investments otherwise comply with the ahove investment stan-
dards. If the Trustee invests in hook entry securities, the
Trustee shall have an account with a Federal Reserve Rank of
New York, or with a Clearing Corporation or chain of Clearing
Corporations havinq an account with a Federal Reserve Rank of
New York. Trustee shall sell and reduce to cash a sufficient
amount of such investments in the respective fund whenever the
cash halance in the Payment Fund is insufficient to pay the
principal of, premium, if any, and interest on the Certificates
when due. Trustee shall not he liahle for losses on any invest-
ments made at the written request and direction of the State or
otherwise, except for losses occasioned hy its own gross
neqlience or willful misconduct.
No moneys held in any fund or account under this
Indenture shall he invested in securities under this section
unless the yield on the securities is equal to or less than the
yield on the Certificates computed under 1.103-13(h)(5)(iv) of
the Federal Income Tax Regulations or unless there is filed with
the Trustee an opinion of hond counsel that investment at an
increased yield will not cause interest on the Certificates to
he suhject to federal income tax.
.
ARTICLE VII
REDEMPTION OF CERTIFICATES
Section 7.01. Certificates Sub'ect to
Optional Redemption; SelectIon 0 ertl Icates to ~e Ca
Redemption. The Initial Certificates are non-callable
redemptIon except as stated herein.
(a) The Initial Certificates are subject to optional
redemption prior to maturity on any interest payment date on
or after October 1, 1995, in whole, or in part in inverse
order of maturity and by lot within any maturity, at the
redemption prices (expressed as percentages of principal
amount) set forth in the table helow plus accrued interest
to the redemption date:
.
Reciemption Date
October 1, 1995 and April 1, 1996
Octoher 1, 1996 and April 1, 1997
Octoher 1, 1997 and April 1, 1998
Octoher 1, 199R and April 1,1999
Octoher 1, 1999 and thereafter
Redemption Price
102%
101-1/2%
101%
100-1/2%
100%
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The City with the approval of the State may direct the
Trustee to call the Initial Certificates for redemption
pursuant to this Section 7.01(a). The City may direct the
Trustee to call Initial Certificates for optional redemption
when and only when sufficient prepaid Rents (from the State
and not from the Bond Insurer) have been deposited in the
Payment Fund to pay the principal, interest and redemption
premium, if any, on the Initial Certificates to be redeemed
and thereupon the Trustee shall promptly take or cause to be
taken all action necessary to cause the Initial Certificates
being called to cease to be Outstanding.
(b) The Initial Certificates maturing in 2000 are
subject to mandatory redemption in part by lot in each year
commencing on October 1, 1997, in each case at a redemption
price of 100% of their principal amount, together with
interest accrued to the redemption date, upon notice as
provided in Section 7.02. The Trustee shall credit to
Sinking Fund Payments the principal amount of Initial Certi-
ficates due on October 1, 2000 redeemed under paragraph (a)
of this section, such crediting to be in such amounts and to
such years as the City with the approval of the State shall
direct. Subject to such crediting there shall be due and
the Trustee shall pay on October 1 of the years set forth in
the following table the amount set opposite such year in
said table for the retirement of the Certificates due on
October 1, 2000.
Year
Amount
1997
1998
1999
2000
$1,875,000
2,055,000
2,250,000
2,460,000
(c) The Initial Certificates maturing in 2007 are
subject to mandatory redemption in part by lot in each year
commencing on October 1, 2001, in each case at a redemption
price of 100% of their principal amount, together with
interest accrued to the redemption date, upon notice as
provided in Section 7.02. The Trustee shall credit to
Sinking Fund Payments the principal amount of Initial Certi-
ficates due on October 1, 2007 redeemed under paragraph (a)
of this section, such crediting to be in such amounts and to
such years as the City with the approval of the State shall
direct. Subject to such crediting there shall be due and
the Trustee shall pay on October 1 of the years set forth in
the following table the amount set opposite such year in
said table for the retirement of the Certificates due on
October 1, 2007.
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Yen~ Amount
. 2001 S2,695,000
2002 2,955,000
2003 3,245,000
2004 3,560,000
2005 3,905,000
2006 4,280,000
2007 4,700,000
(d) The City with the npp~ovnl of the Slale mnY al any
lime direct the T~~stee lo call all of the Initial Ce~lifi-
cntes for ~edemrtion nl n redemrtion price of 100% of lhei~
principnl amounl, logether with inte~est nccrued lo the
Redemrtion Dnte, uron the deposit of sufficient prepaid Rent
(from the Stnle nnd not from the Rond Insurer) in the Pay-
ment Fund to ~ay the princirnl and interest on the initial
CertifiCntes to be redeemed nnd notice as provided in Sec-
tion 7.02, upon the occur~ence of nny of the following
evenls:
.
(i) Unreasonahle hu~dens or excessive liahilities
shall hnve been imposed ~ron the City o~ the State with
respect to the Project or the oreration thereof,
including without limitntion Federal, state or other ad
vnlorem property, income o~ other laxes not heing
imposed on the dnte of this Indenture or nctions of
qovernmentnl agencies with resrect to the Project or
the pnyments to he mnde pursuant to this Indentu~e;
(ii) Allor n suhstnntinl part of the Project or
other rroperty in connection with which the Project is
used shnll have been damaged or destroyed so as to
render the Project unsntisfactory in the judgment of
the State for its intended use;
(iii) All o~ a suhstantial part of the Project or
other property of the State in connection with which
the Project is ~sed is condemned, o~ the use or control
of the Project or other property of the State in con-
nection with which the Project is used is taken by
eminent domain so as to render the Project unsatisfac-
tory in the judgment of the State for its intended use;
or
.
(iv) Changes in the economic availability of
materials, lahor, supplies, equipment or other pro-
perly, facilities or things necessary for the effi-
cient operation of the Project for the purposes
srecified in the Lease have occurred, or such techno-
logical or other changes have occurred which, in the
State's judgment, ~ender the Project uneconomic for
such rurposes.
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(e) If less than all of any Certificate is to be
redeemed, the Trustee shall issue a new Certificate or
Certificates for the portion remaining outstanding.
Section 7.02. Notice of Redemption. When required to
redeem Certificates under any provision of this Indenture, the
Trustee shall cause notice of the redemption to be mailed by
certified mail to all registered owners of Certificates to be
redeemed at their registered address not less than 30 days prior
to the redemption date. In addition, the Trustee shall at all
reasonable times make available to any interested party complete
information as to Certificates which have been redeemed or called
for redemption. Any such notice shall identify the Certificates
to be redeemed, shall specify the redemption date and the redemp-
tion price, and shall state that on the redemption date the
Certificates called for redemption will be payable at the princi-
pal corporate trust office of the Trustee and that from that date
interest will cease to accrue.
The Trustee may use "CUSIP" numbers on notices of
redemption as a convenience to Certificateowners provided that
such notice shall state that no representation is made as to the
correctness of such numbers either as printed on the Certificates
or as contained in any notice of redemption.
Section 7.03. Payment of Redemption Price. If notice
of redemption has been duly given, or duly waived by, the owners
of all Certificates called for redemption and the redemption
moneys have been duly deposited with the Trustee, then the Certi-
ficates called for redemption shall be payable on the redemption
date at the applicable redemption price. Payment of the redemp-
tion price together with accrued interest shall be made by the
Trustee to or upon the order of the owners of the Certificates
called for redemption upon surrender of such Certificates. The
redemption price in respect of Certificates, the expenses of
giving notice and any other expenses of redemption (except
accrued interest) shall be paid out of the fund from which
redemption is to be made or from other moneys which are made
available to the Trustee for such purpose. Accrued interest
shall be paid out of the Payment Fund.
ARTICLE VIII
COVENANTS AND CONTINUING OBLIGATIONS OF THE CITY
Section 8.01. Continuing Obligations of the City
(a) The City specifically agrees that all of the
obligations imposed upon it under the Lease with respect to
the acquisition, and construction of the Project are not
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assigned to the Trustee. Such obligations shall be per-
formed by the City in accordance with the Lease whether the
obligation of performance arises either before or after the
completion of the assignment of the City's interest in the
Project and the assignment of the Lease to the Trustee.
(b) The City agrees to indemnify and hold the Trustee
harmless from and against any and all expenses, losses or
damages suffered or incurred by the Trustee as a result of
the failure of the City to perform any of its obligations
under the Lease, including, but not limited to, all reason-
able expenses and legal fees incurred in answering or
defending any claim or action against the City or the
Trustee relating to the acquisition, design or contruction
of the Project in accordance with the Lease.
(c) In the event of a default by the State under the
Lease, the City agrees to cooperate fully with the Trustee
or its assigns in the exercise of the rights of the Lessor
under the Lease.
(d)
provided
its best
the State
Lease.
In the event of a termination of the Lease as
in Section 3.10 of the Lease, the City shall use
efforts to enter into a new lease of the Project to
under terms substantially similar to those in the
(e) The City agrees to provide or cause to be provided
insurance as required by Section 3.04(a) of the Lease and to
acquire or cause to be acquired the bonds referred to in
Section 3.04(b) of the Lease and shall furnish annually
evidence of such insurance and of such bonds to the Trustee.
Section 8.02. Warranties and Covenants of the City.
The City hereby represents, warrants and covenants to and with
the Trustee for the benefit of the Trustee, the Certificate
owners and the Bond Insurer, that as of the date of this Inden-
ture the following statements are or will be true and correct:
(a) The City is a Home Rule Charter Municipality of
the State of Alaska and is duly organized, validly existing
and in good standing under the Constitution and laws of the
State of Alaska, with corporate powers and authority to own
and lease property and carryon its business as now being
conducted.
(b) The City has full power, authority and legal right
to enter into and perform its obligations under this Inden-
ture and the Lease, and the execution, delivery and perfor-
mance of all such documents and any other documents herein
referred to have been duly authorized by all necessary
corporate action on the part of the City.
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Page 21.
(c) The execution, delivery and performance of this
Indenture and the Lease by the City does not contravene any
law, governmental rule, regulation, order or ordinance of
any governmental entity having jurisdiction.
(d) The execution, delivery and performance of this
Indenture and of the Lease and any other documents herein
referred to do not contravene any provisions of the Charter
or Code of Ordinances of the City and do not and will not
result in any breach of or constitute a default under any
indenture, mortgage, contract, agreement or instrument to
which the City is a party or by which it or its property is
bound.
(e) The City has complied with and will comply with
and duly and promptly perform all of its obligations under
the Lease, this Indenture and all related documents and
instruments.
Section 8.03. Compliance with Laws. The City shall
use its best efforts to maintain and renew all its rights,
powers, privileges and franchises and shall comply with all valid
and applicable laws, acts, rules, regulations, permits, orders,
requirements and directions of any legislative, executive, admin-
istrative or judicial body pertaining to the Project or the
Certificates.
Section 8.04. Further Assurances. The City hereby
covenants and represents that this Indenture creates for the
benefit of Certificateowners a first and prior right to the Rev-
enues. Except to the extent otherwise provided in this Inden-
ture, the City shall not enter into any contract or take any
action by which the rights of the Trustee or the Certificate-
owners may be impaired and shall, from time to time, execute and
deliver such further instruments and take such further action as
may be required to carry out the purposes of this Indenture.
Section 8.05. Certificates Not to Become Arbitrage
Bonds. The City covenants with the owners of the Certificates
that, notwithstanding any other provision of this Indenture or
any other instrument, it will cause to be made no investment or
other use of the proceeds of the Certificates which would cause
the Certificates to be arbitrage bonds under Section 103(c) of
the Code and the regulations thereunder, and it further covenants
that it will comply with the requirements of such Section and
regulations. The foregoing covenants shall extend throughout the
term of the Certificates, to all funds created under this Inden-
ture and all moneys on deposit to the credit of any such fund,
and to any other amounts which are Certificate proceeds for pur-
poses of Section 103(c) of the Code and the regulations there-
under.
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Section 8.06. Recording. The City shall cause this
Indenture to be recorded, in such manner and at such places as
may be required by law fully to protect the security of the
owners of the Certificates and the right, title and interest of
the Trustee in and to the rights and interests assigned to the
Trustee under this Indenture. The City shall execute or cause to
be executed any and all further instruments as may be required by
law or as shall reasonably be requested by the Trustee for such
protection of the interests of the Trustee and the Certificate-
owners, and shall furnish satisfactory evidence to the Trustee of
recording of such instruments and of every additional instrument
which shall be necessary to preserve the rights and interests
assigned to the Trustee under this Indenture until the principal
of and interest on the Certificates issued hereunder shall have
been paid. The Trus~ee shall execute or join in the execution of
any such further or additional instruments and record such
further or additional instruments or join in the recording
thereof at such time or times and in such place or places as it
may be advised by an opinion of Counsel will preserve the rights
and interests assigned to the Trustee under this Indenture until
the aforesaid principal and interest shall have been paid.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.01. Events of Default Defined. Each of the
following shall be an "Event of Default" hereunder:
A. If payment of the principal represented by any
Certificate or the redemption price thereof is not made when
it becomes due and payable whether as an installment, at
maturity or upon call for redemption; or
B. If payment of any installment of interest repre-
sented by any Certificate is not made when it becomes due
and payable; or
C. An event of default under the Lease.
Section 9.02. Remedies. If any Event of Default
occurs and is continuing, subject to Section 9.05 and 9.08 here-
of, the Trustee may enforce each and every right or remedy
granted to the City or the Trustee under the Lease or the Inden-
ture or any supplements or amendments thereof, and shall do so at
the direction of the Bond Insurer if the Bond Insurer has not
been reimbursed for payment under the Financial Guaranty Bond.
In exercising such rights and the rights given the Trustee under
this Article IX, the Trustee shall take such action as in the
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Page 23.
judgement of the Trustee, applying the standards described in
Section 10.05 hereof, would best serve the interests of the
Certificateowners.
Section 9.03. Legal Proceedings by Trustee. If any
Event of Default has occurred and is continuing, the Trustee in
its discretion may, and upon the written request of the owners of
25% in principal amount of the Certificates then Outstanding and
receipt of indemnity to its satisfaction shall, in its own name:
A. By mandamus, or other suit, action or proceeding at
law or in equity, enforce all rights of the Certificate-
owners and require the City to carry out provisions of this
Indenture for the benefit of the Certificateowners;
B. Bring'suit upon the Lease;
C. By action or suit in equity enjoin any acts or
things which may be unlawful or in violation of the rights
of the Certificateowners.
Section 9.04. Discontinuance of Proceedings by
Trustee. If any proceeding taken by the Trustee on account of
any Event of Default is discontinued or is determined adversely
to the Trustee, then the City, the State, the Trustee and the
Certificateowners shall be restored to their former positions and
rights hereunder as though no such proceeding had been taken, but
subject to the limitations of any such adverse determination.
Section 9.05.
edings. The owners of a
Certificates Outstanding
the method of conducting
hereunder.
Certificateowners May Direct Proce-
majority in principal amount of the
hereunder shall have the right to direct
all remedial proceedings by the Trustee
Section 9.06. Limitations on Actions By Certificate-
owners. No Certificateowner shall have any right to pursue any
remedy hereunder or under the Lease unless:
(a) the Trustee shall have been given written notice
of an Event of Default;
(b) the owners of at least 25% in principal amount of
the Certificates then Outstanding respecting which there has
been an Event of Default shall have requested the Trustee,
in writing, to exercise the powers hereinabove granted to it
or pursue such remedy in its or their name or names;
(c) the Trustee shall have been offered indemnity
satisfactory to it against costs, expenses and liabilities;
and
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(d) the Trustee shall have failed to comply with such
request within a reasonable time.
Section 9.07. Trustee May Enforce Rights Without Poss-
ession of Certificates. All rights under this Indenture and the
Certificates may be enforced by the Trustee without the posses-
sion of any Certificates or the production thereof at the trial
or other proceedings relative thereto, and any proceeding insti-
tuted by the Trustee shall be brought in its name for the ratable
benefit of the owners of the Certificates.
Section 9.08. Delays and Omissions Not to Impair
Rights. No delay or omission in respect of exercising any right
or power accruing upon any Event of Default shall impair such
right or power or be a waiver of such Event of Default and every
remedy given in this' Article may be exercised from time to time
and as often as may be deemed expedient.
Default.
IX shall
Section 9.09. Application of Moneys in Event of
Any moneys received by the Trustee under this Article
be applied:
FIRST: To the payment of expenses of the Trustee
including reasonable counsel fees, any disbursements of the
Trustee with interest thereon and its reasonable compensa-
tion;
SECOND: To the payment of principal or redemption
price (as the case may be) and interest then owing on the
Certificates, including any interest on overdue interest,
and in case such moneys shall be insufficient to pay the
same in full, then to the payment of principal or redemption
price and interest ratably, without preference or priority
of one over another or of any installment of interest over
any other installment of interest; and
THIRD: To the payment of expenses of the City, includ-
ing reasonable counsel fees, actually incurred in connection
with the financing of the Project and remaining unpaid.
The surplus, if any, shall be paid to the State or the
person lawfully entitled to receive the same as a court of compe-
tent jurisdiction may direct.
Section 9.10. Trustee's Right to Receiver. The
Trustee shall be entitled as of right to the appointment of a
receiver; and the Trustee, the Certificateowners and any receiver
so appointed shall have such rights and powers and be subject to
such limitations and restrictions as permitted under the laws of
the State of Alaska.
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Section 9.11. Trustee and Certificateowners Entitled
to Remedies; Remedies Not Exclusive. It is the purpose of this
Article to provide to the Trustee and Certificateowners all
rights and remedies as may be lawfully granted under the provi-
sions of the laws of the State of Alaska; but should any remedy
herein granted be held unlawful, th~ Trustee and the Certificate-
owners shall nevertheless be entitled to every remedy permitted
by the laws of the State of Alaska. It is further intended that,
insofar as lawfully possible, the provisions of this Article
shall apply to and be binding upon any trustee or receiver
appointed under the laws of the State of Alaska.
Section 9.12. Waiver of Events of Default. The
Trustee may at its discretion waive any Event of Default here-
under, and shall do so upon written request of the owners of (1)
more than 66-2/3 percent in principal amount of all the Certifi-
cates then Outstanding in respect of which default in the payment
of principal or interest, or both, exists, or (2) more than fifty
percent in principal amount of all Certificates then Outstanding
in the case of any other default; provided, however, that there
shall not be waived (a) any Event of Default in the payment of
the principal of any Outstanding Certificates at the date of
maturity specified therein or (b) any default in the payment when
due of the interest represented by such Certificates unless prior
to such waiver, all arrears of interest or payments of principal,
as the case may be, with interest thereon (to the extent per-
mitted by law) from the date upon with such payment was due at
the rate of interest borne by such Certificates, and all expenses
of the Trustee in connection with such default, shall have been
paid or provided for, and in case of any such waiver, or in case
any proceeding taken by the Trustee on account of any such
default shall have been discontinued or abandoned or determined
adversely, then in every such case the City, the State, the
Trustee and the Certificateowners shall be restored to their
former positions and rights hereunder, respectively, but no such
waiver shall extend to any subsequent or other default, or impair
any right consequent thereon.
Section 9.13. Financial Guaranty Bond. The Trustee
agrees to take all action necessary to enforce rights to payment
on behalf of Certificateowners under the Financial Guaranty Bond.
ARTICLE X
THE TRUSTEE
Section 10.01. No Responsibility for Recitals, etc.
The recitals, statements and representations in the Indenture and
in the Certificates have been made by the City and not by the
Trustee and the Trustee shall be under no responsibility for the
correctness thereof.
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Section 10.02. Trustee May Act Through Agents; Answer-
able Only for Willful Misconduct or Gross Negligence. The
Trustee may exercise any powers hereunder and perform all duties
required of it through attorneys, agents, officers or employees,
and shall be entitled to rely upon advice of Counsel concerning
all questions hereunder. The Trustee shall not be answerable for
the exercise of any discretion or power under this Indenture nor
for anything whatsoever in connection with the trust hereunder,
except only its own willful misconduct or gross negligence or
that of its agents, officers and employees.
Section 10.03. Compensation and Indemnity. The
Trustee shall be paid reasonable compensation for its services
hereunder, and also all its reasonable expenses and disburse-
ments, and the City shall indemnify the Trustee against any liab-
ilities incurred in good faith and without negligence in the
exercise and performance of its powers and duties hereunder.
Section 10.04 Notice of Default; Right to Investi-
gate. The Trustee shall, within 30 days after the occurrence
thereof, give written notice by first class mail to registered
owners of Certificates of all defaults known to the Trustee and
send a copy of such notice to the City and the State, unless such
defaults have been remedied (the term "defaults" for purposes of
this Section and Section 10.06 hereof being defined to include
the events specified in Clauses A through C of Section 9.01,
hereof, not including any notice or periods of grace provided for
herein); provided, however, that the Trustee may withhold such
notice so long as it in good faith determines that such with-
holding is in the interest of the Certificateowners. The Trustee
shall not be deemed to have notice of any default under Clause C
of Section 9.01 hereof unless it has actual knowledge thereof or
has been noti.fied in writing of such default by the Owners of at
least 25% in principal amount of the Certificates then Outstand-
ing. The Trustee may, however, at any time require of the City
full information as to the performance of any covenant hereunder;
and, if information satisfactory to it is not forthcoming, the
Trustee may make or cause to be made an investigation into the
affairs of the City related to this Indenture.
Section 10.05. Obligation to Act on Defaults. If any
Event of Default shall have occurred and be continuing, the
Trustee shall exercise such of the rights and remedies vested in
it by this Indenture and shall use the same degree of care in
their exercise as a prudent person would exercise or use in the
circumstances in the conduct of hisjher own affairs, provided
that, if in the opinion of the Trustee such action may tend to
involve expense or liability, it shall not be obligated to take
such action unless it is furnished with indemnity satisfactory to
it.
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Section 10.06. Reliance on Requisition, etc. The
Trustee may act on any requisition, resolution, notice, telegram,
request, consent, waiver, _certificate, statement, affidavit,
voucher, bond, or other paper or document which it in good faith
believes to be genuine and to have been passed or signed by the
proper persons or to have been prepared and furnished pursuant to
any of the provisions of the Indenture; and-the Trustee shall be
under no duty to make any investigation as to any statement con-
tained in any such instrument, but may accept the same as conclu-
sive evidence of the accuracy of such statement.
Section 10.07. Trustee May Own Certificates. The
Trustee may in good faith buy, sell, own and hold any of the
Certificates and may join in any action which any Certificate-
owners may be entitled to take with like effect as if the Trustee
were not a party to'the Indenture. The Trustee may also engage
in or be interested in any financial or other transaction with
the City; provided, that if the Trustee determines that any such
relation is in conflict with its duties under this Indenture, it
shall eliminate the conflict or resign as Trustee.
Section 10.08. Construction of Ambiguous Provisions.
The Trustee may construe any ambiguous or inconsistent provisions
of this Indenture, and any such construction by the Trustee shall
be binding upon the Certificateowners.
Section 10.09. Resignation of Trustee. The Trustee
may resign and be discharged of the trusts created by this Inden-
ture by written resignation filed with the City not less than 30
days before the date when it is to take effect; provided notice
of such resignation is mailed to Certificateowners at their
registered addresses. Such resignation shall take effect only
upon the appointment of a successor Trustee.
Section 10.10. Removal of Trustee. Any Trustee here-
under may be removed at any time by an instrument appointing a
successor to the Trustee so removed, executed by the owners of a
majority in principal amount of the Certificates then Outstand-
ing, filed with the Trustee and the City.
Section 10.11. Appointment of Successor Trustee. If
the Trustee or any successor trustee resigns or is removed
(other than pursuant to Section 10.10 hereof) or dissolved, or if
its property or business is taken under the control of any state
or federal court or administrative body, a vacancy shall forth-
with exist in the office of the Trustee, and the City shall ap-
point a successor with the consent of the State if the State is
not in default under the Lease and shall mail notice of such
appointment to Certificateowners at their registered addresses.
If the City fails to make such appointment within 4S days after
the date notice of resignation is filed, the owners of a majority
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in principal amount of the Certificates then Outstanding may do
so, but if such majority Owners do not appoint a successor within
45 daysafter the notice of resignation is filed, the Trustee may
petition a court of competent jurisdiction for appointment of a
successor Trustee.
Section 10.12. Qualification of Successor. A succes-
sor Trustee shall be a national bank with trust powers or a bank
and trust company or a trust company, in each case having capital
and surplus of at least $50,000,000 if there be one able and
willing to accept the trust on reasonable and customary terms.
Section 10.13. Instruments of Succession. Any succes-
sor trustee shall execute, acknowledge and deliver to the City an
instrument accepting such appointment hereunder; and thereupon
such successor trust~e, without any further act, deed or convey-
ance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor
in the trust hereunder, with like effect as if originally named
Trustee herein. The Trustee ceasing to act hereunder shall pay
over to the successor trustee all moneys held by it hereunder;
and, upon request of the successor trustee, the Trustee ceasing
to act and the City shall execute and deliver an instrument
transferring to the successor trustee all the estates, proper-
ties, rights, powers and trust hereunder of the Trustee ceasing
to act. The City shall be provided with a copy of each instru-
ment mentioned herein.
Section 10.14. Merger of Trustee. Any corporation
into which any Trustee hereunder may be merged or with which it
may be consolidated, or any corporation resulting from any merger
or consolidation to which any Trustee hereunder shall be a party,
shall be the successor trustee under this Indenture, without the
execution or filing of any paper or any further act on the part
of the parties hereto, anything herein to the contrary notwith-
standing.
Section 10.15. Appointment of Co-Trustee. It is the
purpose of this Indenture that there shall be no violation of any
law of any jurisdiction (including particularly the laws of the
State of Alaska) denying or restricting the right of banking
corporations or associations to transact business as Trustee in
such jurisdiction. It is recognized that in case of litigation
under this Indenture or the Lease, and in particular in case of
the enforcement of either in default, or in case the Trustee
deems that by reason of any present or future law of any juris-
diction it may not exercise any of the powers, rights or remedies
herein granted to the Trustee or hold title to the properties in
trust, as herein granted, or take any other action which may be
desirable or necessary in connection therewith, it may be neces-
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sary that the Trustee appoint an additional individual or insti-
tution as a separate or co-trustee. The following provisions of
this Section are adopted to these ends.
The Trustee may appoint an additional individual or
institution as a separate or co-trustee, the identity of which
shall be subject to approval by the City and the State except in
the case of an Event of Default hereunder, in which event every
remedy, power, right, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended by this
Indenture to be exercised by or vested in or conveyed to the
Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to
enable such separate or co-trustee to exercise such powers,
rights and remedies, and every covenant and obligation necessary
to the exercise thereof by such separate or co-trustee shall run
to and be enforceable by either of them.
Should any deed, conveyance or instrument in writing
from the City be required by the separate or co-trustee so
appointed by the Trustee for more fully and certainly vesting in
and confirming to him/her or it such properties, rights, powers,
trusts, duties and obligations, any and all such deeds, convey-
ances and instruments in writing shall, on request, be executed,
acknowledged and delivered by the City. In case any separate or
co-trustee, or a successor to either, shall resign or be removed,
all the estates, properties, rights, powers, trusts, duties and
obligations of such separate or co-trustee, so far as permitted
by law, shall vest in and be exercised by the Trustee until the
appointment of a new Trustee or successor to such separate or co-
trustee.
ARTICLE XI
ACTS OF CERTIFICATEOWNERS;
EVIDENCE OF OWNERSHIP OF CERTIFICATES
Section 11.01 Acts of Certificateowners; Evidence of
Ownership. Any action to be taken by Certificateowners may be
evidenced by one or more concurrent written instruments of simi-
lar tenor signed or executed by such Certificateowners in person
or by agent appointed in writing. The fact and date of the exe-
cution by any person of any such instrument may be proved by
acknowledgment before a notary public or other officer empowered
to take acknowledgments or by an affidavit of a witness to such
execution. Any action by the owner of any Certificate shall bind
all future owners of the same Certificate in respect of anything
done or suffered by the City or the Trustee in pursuance thereof.
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ARTICLE XII
AMENDMENTS AND SUPPLEMENTS
Section 12.01. Amendments and Supplements Without
Certificateowners' Consent. This Indenture may be amended or
supplemented at any time and from time to time, without notice to
or the consent of the Certificateowners, by a supplemental inden-
ture filed with the Trustee for one or more of the following
purposes:
A. To add additional covenants of the City;
B. To cure any ambiguity or to cure, correct or
supplement any defective provision of this Indenture in such
manner as shal~ not be inconsistent with this Indenture and
shall not impair the security hereof or adversely affect the
Certificateowners;
C. To provide for the issuance, sale, and delivery
of Additional Certificates as provided in Article III
hereof, and, in connection therewith, to provide for (i) the
deposit and disbursement of the proceeds of such Additional
Certficates to pay the expenses of the issuance of such
Additional Certificates and the cost of all or any part of
the facilities to be financed by means of such Additional
Certificates or to refund another series of Certificates, as
the case may be, (ii) the payment of the principal of,
premium, if any, and interest on such Additional Certifi-
cates, and (iii) such other changes, none of which shall
adversely affect the rights of the holders of the Certifi-
cates then Outstanding, as may be necessary in connection
with the issuance of such Additional Certificates;
D. To provide for fully immobilized, non-certifi-
cated book-entry Certificates; or
E. To make any other changes which, in the judg-
ment of the Trustee acting in reliance upon an Opinion of
Counsel, is not in any respect adverse to the rights of the
Trustee or the owners of the Certificates.
Section 12.02. Amendments with Certificateowners' Con-
sent. With the consent of the Bond Insurer, this Indenture may
be amended from time to time, except with respect to (1) the
principal or interest payable upon any Certificate, (2) the dates
of maturity or redemption provisions of any Certificates, and (3)
this Article XII, by a supplemental indenture approved by the
owners of at least 66-2/3% in aggregate principal amount of the
Certificates then Outstanding; provided, that no amendment shall
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be made which affects the rights of some but less than all
Outstanding Certificates without the consent of the owners of
66-2/3% in aggregate principal amount of the Certificates so
affected.
Section 12.03. Amendment of Lease. With the consent
of the Bond Insurer, the State, the City and the Trustee may
amend the Lease, provided that, if such amendment would in the
opinion of the Trustee materially adversely affect the interests
of the Certificateowners, the Trustee shall notify Certificate-
owners of the proposed amendment and may amend the Lease only
with the consent of the Owners of at least 66-2/3% in aggregate
principal amount of the Certificates then Outstanding; provided,
that the Trustee shall not, without the unanimous consent of all
Owners of the Certificates then Outstanding, consent to any
amendment which would (1) decrease the amounts payable under the
Lease, (2) change the date of payment or prepayment provisions
under the Lease, or (3) change any provisions with respect to
amendment; and further provided, that no amendment shall be
consented to which affects the rights of some but less than all
the Outstanding Certificates without the consent of the Owners of
at least 66-2/3% in aggregate principal amount of the Certifi-
cates so affected.
In any event, the Trustee may, without the consent of,
or notice to, any of the owners of the Certificates appertaining
thereto or the Insurer, consent to any amendment, change, or
modification of the Lease, and the City and the State may then
enter into such amendment, change, or modification, when
expressly required or permitted by the provisions of the Lease or
permitted by this Indenture or for anyone or more of the
following purposes:
(a) to correct or amplify the description of the Proj-
ect referred to in the Lease or to modify the description of
the Project in accordance with the Lease or to include as a
part of the Project any additional facilities or to exclude
from the Project improvements which are removed or acquired
by the State pursuant to the applicable provisions of the
Lease;
(b) to provide for the issuance, sale, and delivery of
additional Certificates as provided in Article II hereof
and, in that connection, to provide for the deposit and
disbursement of the proceeds of the sale of such additional
Certificates, the payment of sufficient amounts to pay the
principal of, premium, if any, and interest on such addi-
tional Certificates, and, if such additional Certificates
are issued for one of the purposes specified in the first
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paragraph of Section 2.06 hereof, the acquisition, construc-
tion, or installation of the facilities the cost of which is
to be financed from the proceeds of such additional Certifi-
cates;
(c) to cure any ambiguity, formal defect, omission, or
inconsistent provision; or
(d) to add any provision or make any other change that
does not, in the judgement of the Trustee acting in reliance
on an Opinion of Counsel, in any respect adversely affect
the interests of the owners of the Certificates appertaining
thereto.
Section 12.04. Trustee Authorized to Join in Amend-
ments and Supplement~; Reliance on Counsel. The Trustee is
authorized to join with the City in the execution and delivery of
any supplemental indenture or amendment permitted by this Article
XII and in so doing shall be fully protected by an opinion of
Counsel that such supplemental indenture or amendment is so per-
mitted and has been duly authorized by the City and that all
things necessary to make it a valid and binding agreement have
been done.
ARTICLE XIII
DEFEASANCE
Section 13.01. Defeasance. When the principal and
interest on all Certificates issued hereunder have been paid, or
provision has been made for payment of the same, together with
all other sums payable hereunder by the City, the Trustee's
right, title and interest in the Lease and the moneys payable
thereunder shall thereupon cease and the Trustee shall release
this Indenture and the Lease in respect thereto and shall execute
such documents to evidence such release as may be reasonably
required by the City and shall turn over to the State or its
assigns all balances then held by it hereunder not required for
the payment of the Certificates and such other sums.
If such payment or provision therefor has been made
with respect to all the Certificates, the interest of the Trustee
in the Lease shall cease, and the Trustee shall take similar
action for the release of this Indenture and reassign the Lease
to the City. Without limiting the generality of the foregoing,
provisions for the payment of Certificates shall be deemed to
have been made upon the delivery to the Trustee of (i) cash in an
amount sufficient to make all payments specified above, or (ii)
non-callable obligations issued or guaranteed by the United
States of America, maturing on or before the date or dates when
the payments specified above shall become due, the principal
TRUST INDENTURE
Page 33.
amount of which and the interest thereon, when due, is or will
be, in the aggregate, sufficient without reinvestment to make all
such payments, or (iii) any combination of cash and such obliga-
tions. Neither the obligations nor moneys deposited with the
Trustee pursuant to this Section shall be withdrawn or used for
any purpose other than, and shall be segregated and held in trust
for, the payment of the principal, redemption price (if any) and
interest represented by said Certificates. In the event that
such moneys or obligations are to be applied to the payment of
principal or redemption price of any Certificates more than 90
days following the deposit thereof with the Trustee, the Trustee
shall send to all Certificateowners at their registered addresses
a notice stating that such moneys or obligations have been
deposited and identifying the Certificates for the payment of
which such moneys or obligations are being held.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.01. No Recourse. No recourse shall be had
for any claim based on the Indenture or the Certificates, includ-
ing but not limited to the payment of the principal, redemption
price (if any) or interest represented by the Certificates,
against any officer, agent or employee, past, present or future,
of the State or the City or any successor body, under any consti-
tutional provision, statute or rule of law or by the enforcement
of any assessment or penalty or by any legal or equitable pro-
ceeding or otherwise, nor in the case of the payment of the
principal, redemption premium (if any) or interest represented by
the Certificates, against the City.
Section 14.02. Deposit of Funds for Payment of Certif-
icates. If the City deposits with the Trustee funds sufficient
to pay the principal or redemption price of any Certificates
becoming due, either at maturity or by call for redemption or
otherwise, together with all interest accruing thereon to the due
date, all interest on such Certificates shall cease to accrue on
the due date and all liability with respect to such Certificates
shall likewise cease, except as hereinafter provided. Thereafter
the owners of such Certificates shall be restricted exclusively
to the funds so deposited for any claim of whatsoever nature with
respect to such Certificates, and the Trustee shall hold such
funds in trust for such owners.
Moneys so deposited with the Trustee which remain
unclaimed six years after the date payment thereof becomes due
shall, if the City is not at the time to the knowledge of the
Trustee in default with respect to any covenant in the Indenture
or the Certificates contained, be paid to the State upon receipt
by the Trustee of indemnity satisfactory to it; provided,
TRUST INDENTURE
Page 34.
.
.
.
however, that the Trustee, before making payments to the State,
shall cause notice to be mailed to Certificateowners at their
registered addresses stating that the moneys remaining unclaimed
will be returned to the State after a specified date.
Section 14.03. No Rights Conferred On Others. Nothing
herein contained shall confer any right upon any person other
than the parties hereto and the owners of the Certificates.
Section 14.04. Illegal, etc. Provisions Disregarded.
In case any provision in this Indenture or the Certificates shall
for any reason be held invalid, illegal or unenforceable in any
respect, this Indenture shall be construed as if such provision
had never been contained herein.
Section 1~.05. Notices to Trustee, City and the
State. All notices required to be given or authorized to be
given by any party pursuant to this Indenture shall be in writing
and shall be served personally or sent by registered mail as
follows:
City of Seward
Attention: City Manager
Post Office Box 167
Seward, Alaska 99664-0167
Rainier National Bank
Corporate Trust Department
1301 5th Avenue (T17-1)
Post Office Box 3966
Seattle, Washington 98124
State of Alaska
Department of Administration
Office of the Co~~issioner
Pouch K
Juneau, Alaska 99811
United States Fidelity and Guaranty Company
601 Montgomery Street, Suite 1410
San Francisco, California 94111
Each of the above addressees may, by written notice
given hereunder to the others, designate any further or different
addresses to which subsequent notices shall be sent. In addi-
tion, the parties hereto may agree to any other means by which
subsequent notices may be sent.
Section 14.06. Successors and Assigns. All the coven-
ants, promises and agreements in this Indenture contained by or
on behalf of the City, or by or on behalf of the Trustee, shall
TRUST INDENTURE
Page 35.
bind and inure to the benefit of their respective successors and
assigns, whether so expressed or not.
Section 14.07. Headings for Convenience Only. The
descriptive headings in this Indenture are inserted for conve-
nience only and shall not control or affect the meaning or con-
struction of any of the provisions hereof.
Section 14.08. Counterparts. This Indenture may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original; but such counter-
parts shall together constitute but one and the same instrument.
Section 14.09. Acceptance of Trust. The Trustee
hereby accepts the trust in this Indenture declared and provided,
upon the terms and conditions hereinabove set forth.
Section 14.10. Approvals by the State. Whenever in
this Indenture approval of the State (other than of the Project
Manager) is a requirement for a transaction or an event to occur,
the procedure for such approval shall be as follows. Notice of
the proposed transaction or event shall be given to an Authorized
State Officer in writing (which may be by telecopy or by other
means as may be agreed to by the State and the City) at least
7 days (or such other period as may be agreed by the State and
the City) before the proposed transaction or event. Approvals
shall be given or denied in writing by the Authorized State
Officer at least 24 hours (or such other period as may be agreed
by the State and the City) before the proposed transaction or
event; provided that failure of the State to timely notify the
City of approval or disapproval shall be deemed a disapproval.
The requirements of the State's approval in this Inden-
ture are not intended to substitute the State as a party to the
Indenture or to substitute the State's discretion for that of the
City under the Indenture. Therefore in determining whether or
not to approve an event or transaction under this Indenture which
is subject to its approval, the State shall consider whether the
event or transaction appears to be a reasonable exercise of the
City's discretion, not whether the State would so act were it
substituted for the City as a party to the Indenture.
Section 14.11. Payments Due on Saturdays, Sundays and
Holidays. In any case where the date of maturity of interest on
or principal of the Certificates or the date fixed for redemption
of any Certificates shall be a Saturday or Sunday or a legal hol-
iday or a day on which banking institutions in the city of pay-
ment are authorized by law to close, then payment of interest or
principal or redemption price need not be made on such date but
TRUST INDENTURE
Page 36.
.
.
.
may be made on the next succeeding business day with the same
force and effect as if made on the date of maturity or the date
fixed for redemption, and no interest on such payment shall
accrue for the period after such date.
Section 14.12. Applicable Law. This Indenture shall
be governed by and construed in accordance with the laws of the
State of Alaska and, as to the Trustee, under the laws of the
United States of America governing national banking associations
exercising fiduciary powers.
Section 14.13. Nonwaiver. No failure or delay on the
part of the Trustee in exercising any right, power or remedy
which the Trustee may have hereunder or under the Lease shall
operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by the Trustee
of any such right, power or remedy preclude any other or further
exercise of any other right, power or remedy. No modification or
waiver of any provision hereof or of the Lease and no consent to
any departure therefrom shall in any event be effective unless
the same shall be in writing and signed by the Trustee in the
specific instances, for the purposes for which given and to the
extent therein specified.
TRUST INDENTURE
Page 37.
IN WITNESS WHEREOF, the City of Seward, Alaska has
caused this Indenture to be executed by its C ~ H~ I,v ; and Rainier
National Bank has caused this Indenture to be xecuted by one of
its authorized officers attested by one of its duly authorized
officers, all as of the day and year first above written.
CITY OF SEWARD
BY~
RAINIER ~AT 0 BANK
~/
1/
By /// (//2t:0
futh6rized:- Officer
, -
A T T EST:
APPROVED AS TO FORM:
@9.e~
Authorized Officer
HUGHES, THORSNESS, GANTZ, POWELL
AND BRUNDIN, Attorneys for the City
of Seward, Alaska
~~ f21~
Fred B. Arvidson
City Attorney
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was a~OWledged before me
this n day of ec...'l'oa..... ,1985, by fiAt-a) ~. 6-AA.~, <:'/7")"
~#t~l\'e-r-... of the City of Seward, Alaska, on behalf of the Cit.y.
ALASKA
TRUST INDENTURE
Page 38.
.
.
.
STATE OF ALASKA
ss.
THIRD JUDICIAL DISTRICT
The foregoing instrument was acknowledged before me
this /7 day of ocT ,1985, byJ'Jo<-,o v~rJL{;(.{(/G,y,
Authorized Officer of RAINIER NATIONAL BANK, on behalf of ~he
banking association.
ALASKl'.
A P PRO V E D:
APPROVED AS TO FORM:
~f A4d~~
Comm~ss~oner 0 m~n~strat~on
General
TRUST INDENTURE
Page 39.
.
.
.
~
AGREEMENT OF LEASE
BETWEEN THE CITY OF SEWARD, ALASKA AND
THE STATE OF ALASKA
THIS AGREEMENT OF LEASE made and entered into as of
October 1, 1985, by and between the City of Seward, Alaska,
(hereinafter called "City"), as Lessor, and the State of Alaska
acting through the Department of Administration of the State of
Alaska (hereinafter called "State"), as Lessee;
WHEREAS, the City is the owner of certain premises as
described in Exhibit A attached hereto and made a part hereof
which it desires to lease to the State of Alaska so that the
State can use, operate and maintain a correctional facility on
said premises;
WHEREAS, the acquisition, construction and financing of
a correctional facility on said premises is an essential govern-
mental function;
WHEREAS, the State and City have entered into agree-
ments relating to the construction of such facility and bids for
the said construction have been received by the City;
WHEREAS, the City is legally authorized to enter this
Lease as Lessor and the State is legally authorized to enter this
Lease as Lessee and the Alaska Legislature has stated its present
intention to appropriate lease payments for the lease of the
facility when constructed, under various enactments of the First
Session of the Fourteenth Alaska Legislature (Ch 96, SLA 1985,
Ch 98, SLA 1985); and
WHEREAS, the parties agree that the Project is now
ready to be financed and have determined that in order to enable
the City to finance part of the Cost of the Project, the Project
should be leased for the period and under the terms and condi-
tions hereinafter set forth,
WIT N E SSE T H:
In consideration of the premises and of the mutual
covenants herein set forth, the parties hereto agree and covenant
as follows:
ARTICLE I
Definitions and General Provisions
1.01. Definitions. The following terms shall, for
all purposes of this Agreement, have the following meanings,
unless the context shall clearly indicate or require some other
meanings:
"Additional Certificates" shall mean additional Certif-
icates of Participation issued under Article II of the Indenture.
"Advance Rent" means Rent so designated in Exhibit B
hereof.
"Bond Insurer" shall mean USF&G Financial Security
Company, issuer of the the Financial Guaranty Bond.
"Agreement" shall mean this Agreement of Lease.
AGREEMENT OF LEASE
Page 2
.
.
.
"Certificate of Participation" or "Certificate" shall
mean an evidence of interest in the right to receive Rent issued
pursuant to the Indenture to provide funds~o pay part of the
Cost of the Project.
"Construction Contract" shall mean the Contract for
Construction of the Project to be awarded October~, 1985.
"Contract Documents" shall mean the Transfer of Respon-
sibilities Agreement between the State of Alaska, Department of
,
Transportation and Public Facilities and the City of Seward,
Alaska dated October", 1985, the Project Management Services
Agreement between said parties dated October/~, 1985 and the
Construction Contract.
"Cost" or "Cost of the Project" shall have the meaning
set forth in Section 2.02 hereof.
"Financial Guaranty Bond" means that certain insurance
policy insuring the payment of the principal and interest on the
Initial Certificates.
"Fiscal Year" shall mean the fiscal year of the State
of Alaska used for purposes of budgeting and appropriations,
which presently is the period beginning on July 1 and ending June
30 of the following calendar year.
"Indenture" shall mean the Trust Indenture and Assign-
ment of Lease securing the rights of holders of Certificates
entered into by and between the City and Rainier National Bank,
dated as of October 1, 1985.
AGREEMENT OF LEASE
Page 3
"Initial Certificates" shall mean the $ 45,440,000
aggregate principal of Spring Creek Correctional Center Lease
Certificates of Participation in Rent 1985 Series A initially
issued under the Indenture.
"Lease Term" shall mean the term of the State's lease
of the Project as set forth in Exhibit B hereof.
"Project" shall mean the state correctional facilities
and premises described in Exhibit A hereof.
,
"Rent" shall mean the rent fixed as provided in Sec-
tion 4.01 hereof due and payable by the State to the City with
respect to the Project.
"Substantial Completion" means delivery of a certifi-
cate of substantial completion of the work under section 13.10 of
the general conditions of the Construction Contract, by the City
to the general contractor for construction of the Project.
"Trustee" shall mean Rainier National Bank with its
principal office in Seattle, Washington or any successor Trustee
under the Indenture.
1.02. Duration of Agreement. This Agreement shall
take effect on the issuance and delivery of the Initial Certifi-
cates under the Indenture and shall remain in full force and
effect with respect to the Project, and may not be amended in
any respect except in the manner, and subject to the conditions,
set forth in the Indenture, until the earlier of (i) the date of
payment to the City in full of all Rents due and payable with
AGREEMENT OF LEASE
Page 4
.
.
.
respect to the Project, and all sums for interest due and to
become due thereon, in accordance with the provisions of Section
4.01 or 6.03 hereof, and all other sums due under this Agreement,
and (ii) the Termination Date as provided in Section 3.10 hereof.
1.03. Obligations of City and State Limited to Certain
Resources. Notwithstanding any other provision of this Agree-
ment, the City's liability to pay the Cost of the Project shall
be limited to costs payable from the proceeds of the Certifi-
cates.
The obligation to make payment of Rent for periods
shown in Exhibit B hereof until April 1, 1988, is in consid-
eration of the undertaking by parties other than the State to
finance part of the Cost of the Project through the execution of
the Indenture and the fulfillment of the other conditions prece-
dent to the issuance of the Initial Certificates, and shall be
discharged solely by payment by the Trustee from the Payment Fund
under the Indenture of Advance Rent as provided in Exhibit B
hereof.
Except as provided above with respect to Advance Rent
payable from the Payment Fund under the Indenture, the liability
of the State for payment of each installment of Rent as it
becomes due, and each payment of Rent, is subject to the Sub-
stantial Completion of the Project, and shall be in consideration
of the right of the State, whether or not exercised, to occupy
and use the Project for the related period set forth in Exhibit B
AGREEMENT OF LEASE
Page 5
hereof. The State's obligation to pay each installment of Rent
and to perform and observe all other covenants and agreements of
the State contained herein shall be absolute and uncondition-
al,subject to the provisions of Section 3.10 hereof; and each
installment of Rent due and payable hereunder shall be made
without notice or demand and without set-off, counterclaim,
abatement, deduction or defense.
The State will, prior to the commencement of each
Fiscal Year during which Rent payments are designated in Exhibit
B hereof to be made from legally available State appropriations,
include such Rent in its annual budget request to the Legis-
lature. The State agrees to use any appropriation legally avail-
able for the Rent in such fiscal Year (unless prohibited by the
enactment of legislation as provided in Section 3.10) and to
immediately encumber available appropriations for such payments
prior to allocating or encumbering funds for projects or costs
for which no legal obligation to pay exists.
l.04.
Interest of Certificate Owners. The City
acknowledges that Certificates of Participation in Rent payable
under this Agreement will be issued to provide funds to pay part
of the Cost of the Project
Accordingly all of the covenants
and agreements of the City and the State set forth in this Agree-
ment are hereby declared to be for the benefit of the registered
owners from time to time of the Certificates. The City, in the
Indenture, pledges, assigns and transfers its rights under this
AGREEMENT OF LEASE
Page 6
.
.
.
Agreement, together with its rights to enforce this Agreement,
and after such pledge, assignment, and transfer, this Agreement
shall not be terminated, modified or changed by the State or the
City, except in the manner and subject to the conditions per-
mitted by this Agreement and the Indenture.
1.05 Additional Certificates. The State agrees to
cooperate from time to time to amend this Agreement as necessary
to permit the issuance of Additional Certificates for the pur-
poses set forth in Section 2.06 of the Indenture, provided that
prior to the issuance of the Additional Certificates the terms
thereof shall have been approved by the State and the conditions
specified in the Indenture with respect thereto have been satis-
fied.
ARTICLE II
Construction of Project
2.01. Construction of Project. The City and the State
each covenant and agree to cause the Project to be acquired and
constructed with all reasonable speed and dispatch, in accordance
with the Contract Documents and the plans and specifications
approved or to be approved by the parties to this Agreement. The
City agrees to deliver possession of the Project to the State,
and the State agrees to accept possession of the Project, upon
Substantial Completion, provided that the State is not required
to accept possession of the Project before October 1, 1987. The
obligation to acquire and construct the Project is defined and
limited by the Contract Documents.
AGREEMENT OF LEASE
Page 7
No change shall be made in such plans and specifica-
tions during acquisition or construction of the Project which
shall cause the Cost of the Project to exceed $ 48J "'2'".009, or if
such change would delay Substantial Completion of the Project
beyond October 1, 1987, unless funds from additional appro- pria-
tions or the proceeds of the sale of Additional Certificates:
(1) sufficient to pay such excess Costs are deposited in the
Construction Fund; and (2) sufficient to pay any additional pay-
ments due on the Certificates prior to Substantial Completion are
deposited in the Payment Fund under the Indenture.
Neither the City nor the State shall be deemed to be in
default under the aforesaid covenants or otherwise under this
Agreement if the construction of the Project shall be delayed or
made impossible by inability to secure needed labor or materials,
or by strikes, labor disputes, lockouts or like trouble among
mechanics or laborers which delay construction of the Project, or
by acts of God, or by acts or neglect of either party or agents
or employees of either of them, or by regulations or restrictions
imposed by any governmental agency or authority not within the
control of the party, or by flood, fire, epidemic, quarantine
restrictions, freight embargoes, unusally severe weather, or
other similar delay beyond the control of the party, its agents
or contractors, or in the event of the inability to issue Certi-
ficates under the Indenture to finance a necessary Cost of the
AGREEMENT OF LEASE
Page 8
.
.
.
Proj~ct. The City agrees to use its best efforts to cause the
issuance of any Additional Certificates necessary to complete the
Project.
The Project shall, upon final completion, be free and
clear of all liens and encumbrances of every kind and character
which may arise in connection with work of any character per-
formed in connection with the Project, including mechanics' ,
laborers' and materialmens' liens and other liens of a similar
nature.
2.02.
Cost of Project.
For the purposes of this
Agreement "Cost" or "Cost of the Project" may include, together
with any other proper item of cost not specifically mentioned
herein, the cost of construction and acquisition of the Project
and the financing thereof, including interest on the Certificates
issued to finance the Project during such period as may be fixed
pursuant to the Indenture, the cost, whether incurred by the City
or another, of field surveys and advance planning undertaken in
connection with 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 to be used in connection
therewith, the cost of any indemnity and surety bonds and pre-
miums on insurance (whether bond, casualty or other insurance),
all related direct administrative and inspection expenses whether
incurred by the City or by another, and allocable portions of
AGREEMENT OF LEASE
Page 9
direct costs of the City, reserves, legal fees, fees and expenses
of trustees, depositories and paying agents for the Certificates,
cost of issuance of the Certificates and financing charges and
fees and expenses of financial advisors and consultants in con-
nection therewith, credit enhancement fees, cost of audits, the
cost of all machinery, apparatus and equipment, cost of engine-
ering, architectual services, design, plans, specifications and
surveys, estimates of cost, the reimbursement of all monies
,
advanced or applied by the State (except monies appropriated for
the Project under Chapter 107 SLA 1983 and Chapter 171 SLA 1984),
or any agency, instrumentality or officer thereof, whether to or
by the City, the State or others, from whatever source provided,
for the payment of any item or items of cost of the Project, and
all other expenses necessary or incident to the construction and
acquisition of the Project, the financing thereof and the placing
of the same in use and operation.
2.03. Construction Fund. Except as the Indenture
provides otherwise, all proceeds of Certificates shall be imme-
diately deposited by the Trustee in a special fund created under
the Indenture (herein and therein called the "Construction
Fund") .
All of the funds deposited in the Construction Fund,
from whatever source, shall be used for and applied to the pay-
ment of the Cost of the Project as provided in the Indenture,
AGREEMENT OF LEASE
Page 10
.
.
.
and, pending their application, may be assigned or pledged for
the benefit of the owners of the Certificates as provided in the
Indenture.
All monies held in the Construction Fund shall, as
nearly as may be practicable, be invested and reinvested or
deposited as may be fixed and determined by, and subject to, the
Indenture.
ARTICLE III
Lease, Occupancy and Maintenance
of Project
3.01. Lease of Project. The City hereby leases to the
State for the use of the State or an agency of the State, and the
State hereby takes and hires from the City, the Project for the
Lease Term.
3.02. Operation and Maintenance of Project. The State
during the Lease Term shall at its own cost and expense put, keep
and maintain the Project in good order and safe condition and
shall pay all cost and expense of operating and maintaining the
Project, including (but without limiting the generality of the
foregoing) all electric, water, heating, power, steam, sewerage
or other utility charges, and to keep in force all maintenance
contracts necessary for any warranty of the Project or any
fixture or equipment therein to be effective, all taxes, assess-
ments or governmental charges of whatever kind or nature assessed
or imposed by any taxing authority (Federal, State, City, Borough
AGREEMENT OF LEASE
Page 11
or other) upon or with respect to the Project or the City's
interest therein or revenues or receipts therefrom, all premiums
and charges incidental thereto payable in respect of the
insurance coverage maintained or to be maintained by the State
pursuant to Section 3.04 hereof or any other insurance related to
the Project, and every item of expense (if any) which the City
during the Lease Term may incur or pay for in connection with
maintaining or repairing the Project. The City agrees that it
,
will not levy any discriminatory charges, taxes or assessments on
or with respect to the State's interest in the Project. After
Substantial Completion of construction in accordance with the
plans and specifications prepared and approved as provided in
Section 2.01 hereof, the City shall not be obligated or be under
any duty to operate or maintain the Project or to make any
repairs thereto, whether major, minor, structural or other, or
any renewals, replacements or reconstruction, provided, that
after final completion of construction the City shall assign any
and all rights under the Construction Contract to the State.
3.03. Alterations and Improvements. During the Lease
Term, at its own cost and expense, the State may make altera-
tions, changes, additions and improvements to the Project,
provided said alterations, changes, additions, or improvements
(i) do not diminish the rental value of the Project by more than
twenty percent or (ii) are made with the prior consent of the
Bond Insurer. Any additions or improvements made, installed or
AGREEMENT OF LEASE
Page 12
.
.
.
affixed to the Project by the State, or fixtures installed or
affixed ~n such manner as not to be removable without material
injury to the Project, shall be and become the property of the
City and become part of the Project. All other fixtures instal-
led or affixed to the Project by the state, and all machinery,
furnishings and equipment installed by the State, shall be and
remain the property of the State and may be removed thereby at
any time during the Lease Term or at the termination thereof.
3.04.
(a) The City and the State shall
Insurance.
maintain or cause to be maintained with responsible insurers the
kinds and amounts of insurance with respect to the Project,
required under the Construction Contract. To the extent, how-
ever, that any part of said insurance is carried by others for
the benefit of the City, neither the City nor the State shall be
obligated hereunder to procure or maintain such part of said
insurance.
(b) Prior to commencement of construction of each
portion of the Project, the City shall require each contractor to
obtain, and thereafter to keep in effect, a performance bond and
a payment bond of the descriptions thereof set forth in AlaSka
Statutes Section 36.25.010, provided, that each said performance
bond and payment bond shall respectively be in a sum at least
equal to 100% of the sums payable by the terms of each construc-
tion contract.
AGREEMENT OF LEASE
Page 13
(c) Immediately upon Substantial Completion, and
thereafter during the Lease Term, the State shall maintain com-
prehensive general liability insurance insuring all of the
State's operations at the project including its obligations to
the City under the indemnity clause in Section 3.04(g) of this
Agreement.
(d) Unless otherwise provided by or pursuant to the
Indenture, immediately upon Substantial Completion, and there-
after during the Lease Term, the State shall obtain and maintain
all risk replacement cost property insurance including the loss
of rental income on the Project.
Subject to State's right to
self-insure under Paragraph (e) of this section, such insurance
shall include the perils of earthquake and flood.
In case of damage, loss or destruction of the Project,
or any part thereof, the proceeds of any such insurance which
pertain to the Project shall be used and applied by the State as
promptly as possible to repair, restore, rebuild or replace the
same as nearly as possible to the condition existing prior to
such damage, loss or destruction; provided, however, "that in the
event of total or substantial destruction of the Project, the
State may elect not to repair, restore, rebuild or replace the
same if it shall pay over to the City from the proceeds of
insurance or other available funds, monies sufficient in amount
to pay and retire, in accordance with their terms, the
Certificates than outstanding issued to finance the Cost of the
AGREEMENT OF LEASE
Page 14
I.
.
.
Pro~ect, and, provided, further, that any such repair, restora-
tion, rebuilding or replacement of the Project may be in accor-
dance with such different design, plans and specifications as
will or may provide a Project of the same or different nature or
use, so long as any such change therein or thereof shall not
reduce or otherwise adversely affect the value of the Project or
the rental value thereof.
(e) The State may establish a special fund or funds
,
for the purpose of partial self-insurance and in each and every
such case insurance required to be maintained by the foregoing
provisions of this Section 3.04 may contain loss deductible pro-
visions to the extent of the amount of the applicable special
fund established and maintained by the State; provided, however,
that each such special fund so established and maintained by the
State when added to the applicable policy of insurance maintained
by the State shall be in an amount sufficient to prevent the City
from becoming a co-insurer under the terms of the applicable
policy, except to the extent of such special fund.
(f) All insurance policies obtained by the State under
this Agreement shall be open to inspection by the City and the
Trustee. A complete description of all such policies or a
certificate of compliance with the insurance requirements of this
Agreement, shall be furnished at least annually on or before J~~~I
by the State to the City and the Trustee, and, if any
change shall be made in any such insurance, a description and
AGREEMENT OF LEASE
Page 15
notice of such change, or a revision of such certificate of
compliance, shall be furnished to the City and the Trustee at the
time of such change.
(g) Immediately upon Substantial Completion, and
thereafter during the Lease Term, the State shall indemnify and
save harmless the City and its agents against and from any and
all liability and damages, and against and from any and all
actions, claims and demands of every kind and nature (including
,
counsel fees) by or on behalf of any person, association or cor-
poration arising out of or in the course of or pertaining in any
way to the ownership, operation or maintenance of the Project, or
any accident, injury or damage, however occurring, which shall or
may happen in, on or about the Project or in or about the
streets, sidewalks, curbs or yards in front of or adjacent to the
the Project or arising out of any failure of the State to comply
with the terms of this Agreement.
Neither the City nor any of its agents shall be
indemnified hereunder for any liability, damages, actions, claims
or demands resulting from its sole negligence or willful
misconduct.
(h) Unless otherwise provided by or pursuant to the
Indenture, in the event of failure of the State to pay any pre-
mium or other charge with respect to insurance which it is obli-
gated to procure and maintain pursuant to this section, the City
or the Trustee may pay such premium and secure and maintain such
AGREEMENT OF LEASE
Page 16
.
.
.
policy and the amount of any such prem~um shall become additional
Rent payable under this Agreement. The Trustee under the Inden-
ture shall be a namecl insured on all policies of insurance.
3.05. Compliance with Laws and Regulations. The State
covenants and agrees that, upon Substantial Completion and there-
after during the Lease Term, it will promptly comply with, or
cause to be complied with, all laws and ordinances, rules,
regulations and requirements of all federal, state and local
,
governments and agencies and departments thereof which are
applicable to the State and the Project and material to the per-
formance by the State of its obligations under this Agreement and
the Indenture, whether or not the same require structural repairs
or alterations. The State will also observe and comply with the
requirements of all policies and arrangements of insurance at any
time in force with respect to the Project.
3.06. Covenant Against Waste. The State covenants not
to do or suffer or permit any waste or damage, disfigurement or
injury (other than normal wear and tear) to, or public or private
nuisance upon, the Project.
3.07. Right of Inspection. The State covenants and
agrees to permit the Trustee, the Bond Insurer, the City, and
their authorized agents and representatives to enter the project
at all times during usual business hours for the purpose of
inspecting the same.
AGREEMENT OF LEASE
Page 17
3.08. Condition of Premises. Prior to Substantial
Completion, the State shall become thoroughly familiar with the
physical condition of the Project. The City makes no representa-
tions whatever in connection with the condition of the Project,
and shall assign its rights under the Construction Contract to
the State under Section 3.02 hereof. The City shall not be
liable for any latent or patent defects in the Project.
,
of the Project, provided that this provision shall not prevent a
contract for the management of the Project.
3.10. Termination of Lease. This Agreement shall
terminate in whole, but not in part, at the end of any Fiscal
Year, in the event of enactment of legislation specifically
prohibiting the State from using any monies to pay Rent due under
this Agreement for a designated Fiscal Year.
In such event, the
date of termination of this Agreement (the "Termination Date")
shall be the last day of the last Fiscal Year for which suffi-
cient monies have been appropriated to pay Rent under this Agree-
rnent. In the event of such termination, the State shall deliver
possession of the Project to the City on the Termination Date.
Upon such termination, the State shall not be responsible for the
payment of any additional Rent coming due after the Termination
Date, but if the State has not delivered possession of the Proj-
ect to the City in accordance with this section on the Termina-
tion Date, the termination shall nevertheless be effective but
AGREEMENT OF LEASE
Page 18
.
.
.
the State shall be responsible for the payment of damages in an
amount equal to the Rent thereafter coming due under Section 4.01
which is attributable to the number of days after the Termination
Date during which the State fails to deliver pos- session and for
any other loss suffered by the City as a result of the State's
failure to deliver possession as required.
3.11. New Lease.
In the event of termination of this
Agreement the parties will use their best efforts to enter into a
,
new lease of the Project on the same terms and conditions, and
providing for the payment of rent at the same times and in the
same amounts, as this Agreement.
Immediately upon the execution
of the new lease the State agrees to reoccupy the Project and the
City agrees to assign the new lease to the Trustee for the bene-
fit of the owners of the Certificates.
ARTICLE IV
Rents and Source of Funds Therefor
4.01. Payment of Rents. The State shall pay Rent to
the City as provided in Section 1.03, without any setoff or
deduction, on the dates, in the amounts and for the periods shown
on Exhibit B hereof. Any installment of Rent which is not paid
by the State on or before the due date thereof shall, from and
after said due date, bear interest at the rate of ELEV~
percent (~%) per annum until paid, time being of the absolute
essence of this obligation.
AGREEMENT OF LEASE
Page 19
All Rents shall be payable in lawful money of the
United States of America, which shall be legal tender for public
and private debts under the laws of the United States at the time
of payment. Payment shall be made at such place or places as
shall be specified in the Indenture.
The State and the City have agreed and determined that
such Rent represents the fair rental value of the Project. In
making such determination, consideration has been given to the
,
cost of acquisition, construction and financing the Project, the
uses and purposes of which will accrue to the State and the City
and the general public by reason of the use and occupancy thereof
by the State and ownership by the City.
ARTICLE V
Default and Remedies
5.01. Default. The occurrence of any of the following
shall constitute an event of default:
(a) A default in the payment of Rent due and which has
been appropriated for a period of thirty (30) days after notice
in writing, or
(b) A default in the performance of any other covenant
or condition on the part of State or the City to be performed for
a period of thirty (30) days after service on the defaulting
party of a written notice specifying a particular default of this
Lease unless steps to cure the default have been commenced
promptly by State and in good faith State continues to prosecute
those steps to completion; provided, however, any failure to pay
AGREEMENT OF. LEASE
Page 20
.
.
.
Rent, as a result of specific legislative prohibition as described
~n Section 3.10 hereof shall not constitute an event of default.
5.02. City's Remedies. Upon the occurrence of an event
of default the City at its option may immediately declare the
State's rights under this Lease terminated, and reenter the
Project, and repossess itself thereof, as of its former estate.
The City's pursuit of the foregoing reentry remedy shall not
preclude its pursuit of any other remedies provided by law.
,
ARTICLE VI
Miscellaneous
6.01. Project to Vest in State.
In the event the
City's corporate existence shall be terminated by law at any time
after the City shall have paid and retired all of the Certifi-
cates, all of the City's right, title and interest in and to the
lands, improvements, buildings, fixtures, machinery and equipment
constituting the Project shall vest in and become the property of
the State.
6.02. Character of Lease.
It is agreed by the parties
hereto that this Agreement constitutes a triple net lease of the
Project and, notwithstanding any language herein to the contrary,
it is intended and the State expressly covenants and agrees that
all Rents herein required to be paid by the State to the City
shall be absolutely net payments to the City, meaning that during
AGREEMENT OF LEASE
Page 21
the Lease Term the City is not and shall not be required to
expend any money or do any acts or take any steps affecting or
with respect to the maintenance, preservation, repair, restora-
tion, reconstruction or protection of the Project or any part
thereof.
6.03. Option to Purchase.
The State shall have the
option during or at the end of the Lease Term:
(a) To purchase the Project upon prepayment of Rent to
,
the Trustee in an amount sufficient to payor redeem in accor-
dance with the terms thereof on (i) the next optional redemption
date under Section 7.01(a) of the Indenture, (ii) the date of a
redemption under Section 7.01(c) of the Indenture, or (iii) the
final payment date, all outstanding Certificates; or
(b) To prepay Rent in an amount which will allow the
Certificates to be paid or defeased and no longer outstanding
pursuant to the provisions of the Indenture.
6.04. Approval of Indenture. The Indenture shall not
be effective or be thereafter amended unless approved by the
Commissioner of Administration of the State of Alaska by endors-
ment thereon.
6.05. Certificate Redemption at Election of State.
The Indenture shall provide that the State, upon furnishing to
the Trustee sufficient prepaid Rent therefor, may require that
all action necessary be taken to cause all or any portion of the
Certificates to cease to be Outstanding under the Indenture.
AGREEMENT OF LEASE
Page 22
.
.
.
6.06.
State's Covenant as to Use. The State covenants
to use the Project during the Lease Term as a correctional
facility and not to take any action which might cause the rever-
sion in the deed to the Project to come into effect.
6.07. City's Covenant of Quiet Enjoyment.
(a) The
City covenants that it has full right and lawful authority to
enter into this Agreement of Lease for the full term hereof, and
that so long as the State shall pay the Rent and shall duly
observe all the covenants and agreements herein contained
obligatory upon it, the State shall have, hold and enjoy during
the term hereof, peaceful, quiet and undisputed possession of the
Project, and the City shall from time to time take all necessary
action to that end.
(b) In consideration of Bond Insurer's execution and
delivery of its Financial Guaranty Bond, the State of Alaska
hereby agrees to indemnify and hold harmless Bond Insurer for any
and all actual loss, cost or expenses or attorneys' fees arising
from alleged or actual defect in the State of Alaska's title to
the Project.
6.08. Cure of City's Default Under Indenture.
If any
event of default on the part of the City under the Indenture
occurs and is continuing, the State may cure that default.
6.09.
Financial Statements. The State and the City
shall furnish the Bond Insurer with copies of financial state-
ments for each fiscal year, as soon as they are reasonably
available.
AGREEMENT OF LEASE
Page 23
6.10. Parties of Interest. Nothing in this Agree-
ment expressed or implied is intended or shall be construed to
confer upon any person, firm or corporation, other than the
parties hereto, the Trustee and the owners of Certificates, any
right, remedy or claim, legal or equitable, under or by reason of
this Agreement, this Agreement being intended to be and being for
the sole and exclusive benefit of the parties hereto, the Trustee
and the owners from time to time of Certificates.
6.11. Notices. All notices required to be given or
authorized to be given by any party pursuant to this Agreement
shall be in writing and shall be served personally or sent by
registered mail as follows:
City of Seward
Attention: City Manager
Post Office Box 167
Seward, Alaska 99664-0167
State of Alaska
Department of Administration
Office of the Commissioner
Pouch K
Juneau, Alaska 99811
Corporate Trust Department
Rainier National Bank
Post Office Box 3966
1301 5th Avenue (T17-1)
Seattle, Washington 98124
United States Fidelity
and Guaranty Company
601 Montgomery Street, Suite 1410
San Francisco, California 94111
AGREEMENT OF LEASE
Page 24
.
.
.
Each of the above addressees may, by written notice
given hereunder to the others, designate any further or different
addresses to which subsequent notices shall be sent. In
addition, the parties hereto may agree to any other means by
which subsequent notices may be sent.
6.12.
Severability.
In case anyone or more of the
provisions of this Agreement shall for any reason be held to be
illegal or invalid, such illegality or invalidity shall not
affect any other provision of this Agreement but this Agreement
shall be construed and enforced as if such illegal or invalid
provision had not been contained herein.
6.13. Headings. The article and paragraph headings
contained herein are for covenience and reference and are not
intended to define or limit the scope of any provision of this
Agreement.
AGREEMENT OF LEASE
Page 25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first hereinabove set forth.
CITY OF SEWARD, ALASKA
~
By
City Manager
A T T EST:
~j).~
-
flc+ {.. ~
City Clerk
STATE OF ALASKA
BY~~_
omm~ss~one
Department of Administration
APPROVED AS TO FORM:
~~ /21~
City Attorney
City of Seward
STATE OF ALASKA
ss.
THIRD DISTRICT
On the ~ day Of~, 1985, before me
personally appeared Ron A. Garzini, City Manager, to me known to
be the City Manager of the City of Seward, Alaska, one of the
Parties described in and which executed the within and foregoing
instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said City from the uses and purposes
therein mentioned, and on oath stated that he is authorized to
execute said instrument. Given under my hand and official seal
this If day of O,'1:Jnn- , 1985.
(SEAL)
Alaska
.
Po/-''''J
.
.
STATE OF ALASKA
to' r 0 r Q .'rSJ I) / 11 c.), ~
ss.
THIRD DISTRICT
On the ~ day of , 1985, before me
personally appeared Lind~ e. r1~r~~ , City Clerk, to me known to
be the~City Clerk of the City of Seward, Alaska, one of the
Parties described in and which executed the within and foregoing
instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said City from the uses and purposes
therein mentioned, and on oath stated that he is authorized to
execute said instrument. Given under my hand and official seal
this (7 day of ~, 1985.
(SEAL)
Alaska
STATE OF ALASKA )
) ss.
THIRD DISTRICT )
On the 9t! day of ~~~ , 1985, before me
personally appeared ~:..&~ O-u AM "1-<1) ,to me known to
be the Commissioner of the Department of Administration, one of
the Parties described in and which executed the within and
foregoing instrument, and acknowledged said instrument to be the
free and voluntary act and deed of said City from the uses and
purposes therein mentioned, and on oath stated that he is
authorized to execute said instrument. Given under my hand and
official seal this ') t:A.. day of ~1:i-Iu.Ju, 1985.
(SEAL)
~1I.7Jte~
Notary Public in and for A aska
My Commission Expires: /2- :J.S"-K7.
Notes:
(a)
Payments
amounts
"Advance
pr ior to October l,
i.n the Payment Fund
Rent") .
1988 are to be made
under the Indenture
from
(the
(b) Payments on and after October l, 1988 are to
from legally available State appropriations and
occupancy period for the six months ending
preceding the stated payment dates.
be made
cover an
the day
(c) The payments referred to in paragraph (b) are to be made
by the State on or before the 20th day of the month pre-
ceding the stated payment dates.
EXHIBIT B
PAGE 2