Res 1675 - Water Loan Agrmt
COUNCIL BILL NO. 2382
RESOLUTION NO. 1675
A RESOLUTION ENTERING INTO A WATERlWASTEWATER FINANCING PROGRAM
FINANCIAL ASSISTANCE AWARD CONTRACT, LOAN AGREEMENT AND
PROMISSARY NOTE WITH THE STATE OF OREGON AND AUTHORIZING THE
MAYOR TO SIGN SUCH AGREEMENT.
WHEREAS, the City of Woodburn has determined that the city's water supply
should be treated to remove iron and manganese to improve the aesthetic water quality
and also to reduce arsenic levels to meet state and federal water quality standards, and
WHEREAS, the City has developed a master plan for a water treatment process that
will meet the identified needs and which has been reviewed by and commented on by the
public, and
WHEREAS, the State of Oregon acting through the Economic and Community
Development Department is authorized to enter into Water/Wastewater Financing Program
assistance contracts and loan agreements and disburse funds pursuant to ORS 285B.560
through 2858.569 and 285B.572 through 285B.599, and
WHEREAS, the City has applied for loan funding assistance for completion of the
city's water treatment project from the Water/Wastewater Financing Program, and
WHEREAS, the State of Oregon, Economic and Community Development
Department, has reviewed the city's application and determined that the city's water
treatment project is feasible and merits funding, and
WHEREAS, the State of Oregon, Economic and Community Development
Department, is willing to provide a loan of $4,000,000 to the City of Woodburn to be used
for the city's water treatment project, NOW THEREFORE;
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COUNCIL BILL NO. 2382
RESOLUTION NO. 1675
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THE CITY OF WOODBURN RESOLVES AS FOLLOWS:
Section 1. That the City of Woodburn enter into a WaterlWastewater Financing
Program Financial Assistance Award Contract which is affixed as Attachment "A", a Loan
Agreement which is affixed as Attachment "B" and a Promissary Note which is affixed as
Attachment "C" and are by this reference incorporated herein, with the State of Oregon
acting by and through its Economic and Community Development Department to secure
loan financing for the purpose of completing the city's water treatment project.
Section 2. That the Mayor of the City of Woodburn is authorized to sign a
WaterlWastewater Financing Program Financial Assistance Award Contract, a Loan
Agreement and a Promissary Note on behalf of the City.
Section 3. That the City Administrator is hereby authorized to enter into any
agreements and to execute any documents or certificates which may be required to obtain
financial assistance from the Economic and Community Development Department for the
city's water treatment project subsequent to the Financial Assistance Award and the Loan
Agreement.
Section 4. That the City Attorney is hereby authorized and directed to render an
opinion letter related to the WaterlWastewater Financing Program Financial Assistance
Award Contract, the Loan Agreement and the Promissary Note in the form prescribed by
the State of Oregon Economic and Community Development Department.
Approved as to form:
COl.~fdU
'1- Lf~ 200Z.
City Attorney
Date
APPROVED:
Richard Jenning
Passed by the Council April 8, 2002
Submitted to the Mayor April 9, 2002
Approved by the Mayor April 9, 2002
Filed in the Office of the Recorder Apri 1 9, 2002
ATTEST: ~V~~
Mary T ant, Recorder
City of Woodburn, Oregon
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COUNCIL BILL NO. 2382
RESOLUTION NO. 1675
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STATE OF OREGON
W A TERIW ASTEW A TER FINANCING PROGRAM
FINANCIAL ASSISTANCE A WARD CONTRACT
Recipient Copy
This Contract is' made and entered into by and between the STATE OF OREGON, ACTING BY
AND THROUGH ITS ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT ("State")
and the City of Woodburn ("Borrower"). The reference number of this Contract is Y02007.
RECITALS
WHEREAS, the award of financial assistance which is the subject of this Contract is authorized by
ORS 285B.560 through 285B.569; and 285B.572 through 285B.599; and
WHEREAS, a reasonable estimate of the Costs of the Project, as hereinafter defined, is nineteen
million, three hundred thousand dollars ($19,300,000); and
WHEREAS, the Borrower has committed to provide $15,300,000 in public and/or private resources
as matching funds for the Project; and
WHEREAS, the State has reviewed the Borrower's application and determined the Project, as
hereinafter defined, is feasible and merits funding; and
WHEREAS, the State is willing to provide a Loan of $4,000,000 and a Grant of $0 to the Borrower
on the terms and conditions of this Contract.
NOW, THEREFORE, the parties agree as follows:
SECTION 1
CERTAIN DEFINITIONS
As used in this Contract, the following terms shall have the following meanings:
"Act" shall mean ORS 285B.560 through 285B.599, as amended.
"A ward" shall mean written notification from the State offering a Loan and/or Grant to the
Borrower.
"Contract" means this contract between the State and the Borrower, including any exhibits,
schedules and attachments thereto, as amended from time to time.
"Costs of the Proiect" shall mean all costs of acquiring and constructing the Project, including any
financing costs properly allocable to the Project, as set out in the approved Project Budget in Exhibit B
to the Loan Agreement.
"Default" shall mean an event which with notice or lapse of time or both would become an Event of
Default as set out in Section 7 hereof.
"Event of Default" shall mean any of the events described paragraphs A through E of Section 7 of
this Contract.
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"Grant" shall have the meaning ascribed thereto in Section 2(B) of this Contract.
"Loan" shall have the meaning ascribed thereto in Section 2(A) of this Contract.
"Loan Account" shall mean the Loan Account created by the State for the Borrower in the Water
Fund.
"Loan Aweement" shall mean that certain loan agreement, substantially in the form of Exhibit 1
attached hereto and by this reference made a part hereof, entered into between the State and the
Borrower on the date hereof, as such agreement may from time to time be amended and/or restated.
"Note" shall mean that certain promissory note, substantially in the form of Exhibit F to the Loan
Agreement, executed by the Borrower in favor of the State, as it may from time to time be amended,
extended, renewed or restated.
"Project" shall have the meaning ascribed thereto in the Loan Agreement and described in Exhibit A
of the Loan Agreement.
"Project Area" shall mean all properties that will be directly benefitted and served by construction of
the Project.
"Project Close-Out Date" shall mean the date on which the State sends the Borrower written
confirmation that the Project has been properly constructed.
"Project Completion Date" shall mean the date on which the Borrower has in fact completed the
construction of the Project, as described in Section 3.02(d) of the Loan Agreement.
"State Bonds" shall mean the bonds or other obligations issued by the State of Oregon, acting by and
through its State Treasurer, to fund, refund or refinance the Loan.
"Water Fund" shall mean the fund created by ORS 285B.563(1).
SECTION 2
FINANCIAL AWARD
A. Amount of Loan. Subject to the terms and conditions of this Contract and the Loan Agreement, the
State agrees to make a loan to Borrower in the principal amount of four million dollars ($4,000,000) (the
"Loan").
B. Amount of Grant. Subject to the terms and conditions of this Contract, the State agrees to provide
funds to the Borrower in the amount of zero dollars ($0) (the "Grant").
C. A vailabilitv of Funds. The amounts set out in Sections 2(A) and (B) above are subject to the
availability of moneys in the Water Fund.
D. Change in the Act. The State shall not be obligated to provide the Loan and/or Grant if, on or prior
to the time the Borrower satisfies all conditions for disbursement of the Loan and/or Grant, there has
been a change in the Act so that the Project is no longer eligible for the financial assistance authorized
by this Contract.
E. Drawdowns. The Borrower must submit drawdown requests for the Loan and/or Grant on a State-
approved cash request form.
F. Participation Rate. The Borrower shall finance no more than twenty-one percent (21 %) of the Costs
of the Project from the Grant and Loan ("Participation Rate"), and the Borrower agrees that
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notwithstanding any other provision of this Contract, the aggregate drawdowns on the Loan and Grant
shall not exceed the Participation Rate times the Costs ofthe Project.
SECTION 3
USE OF AWARD
A. Eligible Activities. The use of the Grant and/or Loan is expressly limited to the Project activities
described in Exhibit A of the Loan Agreement. The use of these funds is also expressly subject to
the Special Conditions set out in Exhibit 2 attached hereto and by this reference incorporated herein.
B. Ineligible Activities. No part of the Loan or Grant shall be used for:
1. Administrative costs;
2. Costs incurred prior to award of funds to the Borrower except in the case of preliminary and final
engineering, surveying, and other support activities necessary to the construction of the Project;
3. Assistance to facilities which are or will be privately owned;
4. Purchase of equipment, such as motor vehicles, not directly appurtenant to the Project;
5. Purchase of off-site property for project-related purposes such as wetland mitigation or other
uses not directly related to the Project;
6. Operation and maintenance expenses; or
7. Improvements to be constructed or improved which are owned and operated by another eligible
municipality.
C. Unexpended Funds. Any portion of the Grant remaining after this Contract is terminated or ninety
(90) days after the Project Completion Date shall be returned to the Water Fund. Unexpended Loan
proceeds shall be applied in accordance with Section 2.06 ofthe Loan Agreement.
SECTION 4
REPRESENTATIONS OF THE STATE
The State certifies that at the time this Contract is signed, sufficient funds are available and
authorized for this Contract.
SECTION 5
REPRESENTA TIONS OF THE BORROWER
The Borrower represents and warrants to the State that:
A. Costs of the Proiect. A reasonable estimate of the Costs of the Project is nineteen million, three
hundred thousand dollars ($19,300,000).
B. Matching Funds. As of the date hereof, matching funds of$15,300,000 are available and committed
to the Project. Before any disbursement of the Loan or Grant, the Borrower shall demonstrate, to the
satisfaction of the State, that it has obtained matching funds in an amount sufficient, when added to the
amount of the Loan and Grant, to pay for the Costs of the Project.
C. Binding Obligation. This Contract has been duly authorized, executed and delivered by the
Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
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SECTION 6
COVENANTS OF BORROWER
The Borrower covenants as follows and understands that the requirements of the covenants may only
be waived or amended by a written instrument executed by the State:
A. Compliance with Laws. The Borrower will comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority that relate to the construction of the Project
and the operation of any utility system of which the Project is a component. In particular, but without
limitation, the Borrower shall comply with:
I. State procurement regulations found in ORS Chapter 279.
2. State labor standards and wage rates found in ORS Chapter 279.
3. State municipal finance and audit regulations found in ORS Chapter 297.
4. State regulations regarding industrial accident protection found in ORS Chapter 656.
5. State conflict of interest requirements for public contracts.
6. State environmental laws or regulations enacted by agencies listed in Exhibit 3 hereto.
7. Oregon Administrative Rules, chapter 123, Division 43, as amended from time to time at the
discretion of the State.
8. State municipal bonding requirements found in the Act and in ORS Chapters 280, 284, 286, 287
and 288.
9. WaterIWastewater Financing Program Applicant's Handbook, March 1994.
The State's performance under this Contract is conditioned upon the Borrower's compliance with the
provisions of ORS 279.312, 279.314, 279.316, 279.320, and 279.555, as amended from time to time,
which are incorporated by reference herein.
B. Disbursement of Grant Drawdowns. The amount of time between receipt of Grant funds by the
Borrower and disbursement shall be kept as brief as is administratively possible.
C. Drawings. The Borrower shall obtain as-built drawings for all facilities constructed with the
proceeds of the Loan and/or Grant. The Borrower shall obtain certification of completion per the as-
built drawings from the Project engineer.
D. Operation and Maintenance of the Proiect. By the Project Completion Date, the Borrower will have
a program, documented to the satisfaction of the State, for the on-going maintenance, operation and
replacement, at its sole expense, of the public works service system, if any, of which the Project is a
part. This program should include a plan for generating revenues sufficient to assure the operation,
maintenance and replacement of the facility during the service life of the Project.
E. Signs and Notifications. The Borrower shall display a sign, provided by the State, near the Project
construction site stating that the Project is being funded by Lottery proceeds. The Borrower shall
include the following statement, prominently placed, on all plans, reports, bid documents and
advertisements relating to the Project:
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"This Project was funded in part with a financial award from the Water/Wastewater Financing
Program, funded by the Oregon State Lottery and administered by the State of Oregon, Economic
and Community Development Department."
F. Creation of Construction Account. In case of any Loan that is not funded in whole or in part with
the proceeds of State Bonds, the Borrower shall establish and maintain a segregated construction
account.
The Loan proceeds and Grant amount (as and when the Loan proceeds or Grant amounts are
disbursed by the State to the Borrower) and matching funds shall be deposited in this account. Earnings
on this account shall be credited to this account. Moneys in this account shall only be used to pay the
Costs of the Project.
G. Insurance. Except as may be provided in the Special Conditions of Award, in the event the Project,
or any portion thereof, is destroyed and the Project is insured, any insurance proceeds shall be paid to
the State and shall be applied to the outstanding balance of the Loan in such manner as the State in its
sole discretion shall determine unless the State agrees in writing that the insurance proceeds shall be
used to rebuild the Project.
H. Indemnity. To the extent permitted by Article XI, Section 10 of the Oregon Constitution, the
Oregon Tort Claims Act, the Borrower's charter, and relevant Oregon statutes, the Borrower shall
indemnify the State and its officers, employees and agents against any liability for damage to life or
property arising from the actions of Borrower or its subcontractors, agents or employees.
I. Sales, Leases and Encumbrances. Borrower may not sell, lease, exchange, transfer or otherwise
dispose of any property constituting a part of the Project or any interest therein unless (1) it is worn out, .
obsolete or, in the reasonable business judgement of the Borrower, no longer useful in the operation of
the Project, and (2) such transaction will not adversely affect the exclusion from gross income for
federal income tax purposes of the interest on the note pursuant to Section 103(a) of the Code. Except
as may be provided in the Special Conditions of Award, proceeds of such sale, lease, exchange, transfer
or other disposition which are not used to replace the property up to the amount of such proceeds times
the Participation Rate shall be deposited in the Loan Account and shall be applied to the outstanding
balance of the Loan.
J. Condemnation Proceeds. Except as may be provided in the Special Conditions of Award, in the
event the Project, or any portion thereof is condemned, any condemnation proceeds shall be deposited in
the Loan Account and shall be applied to the outstanding balance of the Loan.
SECTION 7
DEFAULT
If any of the following Events of Default occurs and is continuing, namely:
A. The Borrower fails to proceed expeditiously with, or to complete, the Project or any segment or
phase of the Project in accordance with the plans and schedules approved by the State; or
B. Any representation with respect to current or historical information made to the State herein or in
any other pertinent documents, certificates and reports relied upon by the State in gauging the progress
of the Project, compliance with the requirements of the Act or compliance with the requirements of
Section 103 and Sections 141 through 150 of the Code and performance of duties by the Borrower is
untrue in any material respect; or
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C. The Borrower fails to perform or observe any of its covenants or agreements contained herein and
fails to correct such deficiencies within thirty (30) days of notice from the State of such deficiencies, or
such longer period as the State may authorize in its sole discretion; or
D. If, within six (6) months from the date of this Contract, the Borrower has not entered into binding
legal agreements with all private parties necessary to complete the Project; or
E. The occurrence of an Event of Default under the Loan Agreement;
thereupon, and in each such case, the State, upon notice to the Borrower, may terminate the whole or
any part of this Contract.
SECTION 8
REMEDIES
Upon the occurrence of an Event of Default under this Contract, the State may pursue any or all of
the remedies set forth herein or in the Loan Agreement or Note and any other remedies available at law
or in equity. Such remedies may include, but are not limited to, termination of the Contract and/or Loan
Agreement, acceleration of the Loan, return of the Grant, payment of amounts earned from the
investment of the proceeds of the Loan and the Grant, declaration of the Borrower's ineligibility to
receive future lottery funded awards and the withholding pursuant to ORS 285B.599 of other State funds
due the Borrower.
SECTION 9
MISCELLANEOUS
A. No Implied Waiver, Cumulative Remedies. No failure on the part of the State to exercise, and no
delay in exercising, any right, power, or privilege under this Contract shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power, or privilege under this Contract preclude any
other or further exercise thereof or the exercise of any other such right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies provided by law.
B. Notices. All notices, requests, demands, and other communications to or upon the parties hereto
shall be in writing and shall be deemed to have been duly given or made when deposited in the mails,
postage prepaid, addressed to the party to which such notice, request, demand, or other communication
is requested or permitted to be given or made at the addresses set forth below or at such other address of
which such party shall have notified in writing the other party hereto.
If to the Borrower:
Manager, Valley/Mid-Coast Team
Economic and Community Development Department
775 Summer Street NE, Suite 200
Salem, OR 97301-1280
City Administrator
City of Wood bum
270 Montgomery Street
Woodburn, OR 97071
If to the State:
C. Amendments. The terms of this Contract, including timeframes for Project completion, will not be
waived, altered, modified, supplemented, or amended in any manner except by written instrument
signed by the parties.
D. Attorney Fees. The prevailing party in any dispute arising from this Contract shall be entitled to
recover from the other its reasonable attorney's fees at trial and on appeal.
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E. Severability. If any term or condition of this Contract is declared by a court of competent
jurisdiction to be illegal or in conflict with any law, the validity of the remaining terms and conditions
shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if
the Contract did not contain the particular term or condition held to be invalid.
F. Merger. This Contract constitutes the entire agreement between the parties on the subject matter
hereof. There are no understandings, agreements or representations, oral or written, not specified herein
regarding this Contract. The Borrower, by the signature below of its authorized representative, hereby
acknowledges that it has read this Contract, understands it, and agrees to be bound by its terms and
conditions.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed as of the
last date set forth below the signatures of their respective representatives.
F
STATE OF OREGON
acting by and through its Economic and
Community Development Department
CITY OF WOODBURN
(Borrower)
By:
BY:~/
( igna~
Title:
Mayor
Date:
'3ft5f()!/
Date:
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Exhibit 1
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Loan Agreement
BETWEEN
STATE OF OREGON
acting by and through its
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
AND
CITY OF WOODBURN
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Exhibit 1
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................. .............. ............................. .................................................. ...........4
SECTION 1.02. General Rules... ......... .............................. ............. ........... ............ ........................ ..... ..........6
SECTION 1.03. Loan Agreement Not Assigned to Trustee .........................................................................6
ARTICLE II
LOAN TO BORROWER
SECTION 2.01. Loan Amount; Loan Terms; Disbursements; Use ofProceeds..........................................7
SECTION 2.02. Loan Payment....... ................. .......... ........ .......... ......... ..... .......... ............. ............................7
SECTION 2.03. Unconditional Obligations................ .......... ............ ....... ..... ........ .............. ................ .........7
SECTION 2.04. Loan Agreement to Survive Bond Indenture and State Bonds ..........................................8
SECTION 2.05. Loan Prepayments. ............... ...... ...... .... ....... .......... ... ...... ... ... ... ..... ... .... ...... .... ...... ............ ...8
SECTION 2.06. Unexpended Loan Proceeds ........... ............ .............. .......... ..... ..... ............... ............ ...........9
SECTION 2.07. Sources of Payment of Borrower's Obligations.................................................................9
SECTION 2.08. Disclaimer of Warranties; Limitation of Liability; Indemnification..................................9
SECTION 2.09. Maintenance of Records by the State ...............................................................................1 0
ARTICLE III
REPRESENTA TlONS, WARRANTIES AND COVENANTS OF BORROWER
SECTION 3.01. Representations and Warranties of Borrower ..................................................................1 0
SECTION 3.02. Particular Covenants of the Borrower ..............................................................................13
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Loan Closing. ...... ...... ............... .......... .................. .............. ......... ..... ........ ........................18
SECTION 4.02. Conditions to Disbursements ....... .............. .................... ........ .............. ....................... .....18
ARTICLE V
ASSIGNMENT
SECTION 5.01. Assignment and Transfer by the State .............................................................................19
SECTION 5.02. Assignment by Borrower .............. ...... ..... ........ .................... ...... .......... .... ........... ..... ........20
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Event of Default ............... ..... ...... ...... ..... ......................... ................... .... ................. .........20
SECTION 6.02. Notice of Default .......................... ..... .................... ............ ...... ......... ..... ...................... .....21
SECTION 6.03. Remedies on Default ............ ............. .......... ...................... ........ ... ..... ........... ....................21
SECTION 6.04. Attorney's Fees and Other Expenses ...............................................................................21
SECTION 6.05. Application of Moneys.... ................ .... .................. ....... ....... ............... ................ ..............21
SECTION 6.06. No Remedy Exclusive; Waiver; Notice ...........................................................................22
SECTION 6.07. Retention of State's Rights.................. ........... ............................. ................... ..................22
SECTION 6.08. Default by the State ............. ..... ......... ........................... ... ........ ........... ..............................22
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Exhibit 1
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices...... ............ .................. ............ .................. ........................................................ ....22
SECTION 7.02. Binding Effect ........... ............ .......... ........... ......... .......... ...... ............................... ..... ..... ... .23
SECTION 7.03. Severability........ ....................... .............. .... ........ ......... ................... ................. ........... ... ..23
SECTION 7.04. Amendments, Supplements and Modifications............. ...... ......... ...... ........... ........ ...........23
SECTION 7.0S. Execution in Counterparts.. ...... ............ ...... ................... ....... ........ ......................... ...... .....23
SECTION 7.06. No Construction against Drafter.. ...... ............... ...... ............... ........................... ........... ....23
SECTION 7.07. Applicable Law.... ..... ............... .................. ....... ............... ... .............................. .... ..... ......23
SECTION 7.08. Consents and Approvals..... ............... .................................... ............ .............. ....... ........ ..23
SECTION 7.09. Merger; No Waiver .............. .............. ............. .......... ......... .......... ....................... ........... ..23
EXHIBITS
Exhibit A - Project Description
Exhibit B - Project Budget
Exhibit C - Description of the Loan
Exhibit D - Repayment Schedule
Exhibit E - Form of Requisition
Exhibit F - Form of Promissory Note
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Exhibit 1
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THIS LOAN AGREEMENT, made and entered into as of the Loan Closing Date (as defined below),
by and between the STATE OF OREGON, ACTING BY AND THROUGH ITS ECONOMIC AND
COMMUNITY DEVELOPMENT DEPARTMENT (the "State"), and the Borrower (as defined below).
Capitalized terms not otherwise defined herein shall have the meanings assigned to them in Section 1.01
hereof.
WITNESSETH THAT:
WHEREAS, the State, in accordance with the Act, the Contract and the Bond Indenture, will provide
funds in the Water Fund and/or will issue State Bonds for the purpose of making loans to Municipalities,
including the Borrower, to finance a portion of the cost of water projects within the meaning of
ORS 285B.560(6); and
WHEREAS, the Borrower has made timely application to the State for a Loan to finance all or a
portion of the Costs of the Project, and the State has approved the Borrower's application for a water or
wastewater Loan in an amount not to exceed the Loan amount set forth in Exhibit C attached hereto and
by this reference made a part hereof to finance a portion of the Costs ofthe Project; and
WHEREAS, the Borrower agrees under this Loan Agreement to make payments sufficient to pay
when due the principal of, premium, if any, and interest on the Loan from the State pursuant to the
repayment schedule set forth in Exhibit D attached hereto and by this reference made a part hereof; and
WHEREAS, the Borrower's obligations under this Loan Agreement and the other Loan Documents
may be assigned to the Trustee under the Bond Indenture, to provide for the payment of and security for
State Bonds issued by the State of Oregon;
NOW, THEREFORE, for and in consideration of the award of the Loan by the State, the Borrower
agrees to perform its obligation under this Loan Agreement in accordance with the conditions, covenants
and procedures set forth herein.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms as used in this Loan Agreement shall, unless the
context clearly requires otherwise, have the meanings assigned to them below:
"Act" means ORS 285B.560 through 285B.599, as amended.
"Authorized Officer" means, in the case of the Borrower, the person whose name is set forth in
Exhibit C hereto or such other person or persons authorized pursuant to a resolution or ordinance of the
governing body of the Borrower to act as an authorized officer of the Borrower to perform any act or
execute any document relating to the Loan or this Loan Agreement and whose name is furnished in
writing to the State.
"Bond Closing Date" means the Bond Closing Date set forth in Exhibit C hereto.
"Bond Counsel" means a law firm having knowledge and expertise in the field of municipal law and
whose opinions are generally accepted by purchasers of municipal bonds.
"Bond Indenture" means the Indenture of Trust dated as of July 1, 1993, between the State, the
Issuer, and the Trustee, pursuant to which the State Bonds are issued, and all amendments and
supplements thereto adopted in accordance with the provisions thereof.
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"Borrower" means the Municipality that is a party to this Loan Agreement and is described on
Exhibit C hereto, and its successors and assigns.
"Business Day" means any day other than (a) a Saturday, Sunday or legal holiday or a day on which
banking institutions in Salem, Oregon or in the city in which the principal office of the Trustee is located
are closed, or (b) a day on which the New York Stock Exchange is closed.
"Code" means the Internal Revenue Code of 1986, as the same may be amended or supplemented
from time to time, including any regulations promulgated thereunder and any administrative or judicial
interpretations thereof.
"Completion Date" means the earlier of (a) the date on which all of the proceeds of the Loan,
including any investment earnings derived from the investment of such proceeds, have been spent, or (b)
the second anniversary of the Loan Closing Date.
"Contract" means the Contract to which this Loan Agreement is attached as Exhibit 1.
"Costs of the Project" means those costs that are (a) reasonable, necessary and directly related to a
''water project" within the meaning of ORS 285B.560(6), including any financing costs properly
allocable to the Project and preliminary costs such as engineering and architectural reports, studies,
surveys, soil tests, designs, plans, working drawings and specifications that are necessary for the
construction of the Project, and (b) permitted by generally accepted accounting principles to be costs of
such Project. The term "Costs of the Project" does not include (i) costs in excess of one-hundred
percent (100%) of the total cost of the Project, (ii) the purchase of equipment and other property not
directly related to the Project, (iii) construction or repair of facilities owned or operated by private
parties, (iv) costs incurred prior to the date of the Loan, except as provided in Section 3.02(a), (v)
administrative expenses of the Borrower or (vi) costs that do not comply with the requirements of the
General Certificate executed by the Borrower in connection with the closing of the Loan.
"Counsel" means an attorney at law or firm of attorneys at law (who may be, without limitation, of
counsel to, or an employee of, the State, the Issuer, the Trustee or the Borrower) duly admitted to
practice law before the highest court of any state.
"Event of Default" means any occurrence or event specified in Section 6.01 hereof.
"Issuer" means the State of Oregon acting by and through the State Treasurer of the State of Oregon.
"Loan" means the loan made by the State to the Borrower to finance or refinance a portion of the
Costs of the Project pursuant to this Loan Agreement. The Loan may be funded by the State from the
proceeds of the State Bonds or from other amounts held in the Water Fund.
"Loan Agreement" means this loan agreement, including any exhibits, schedules or attachments
hereto, as it may be supplemented, modified or amended from time to time in accordance with the terms
hereof.
"Loan Closing Date" means the date on which the Loan closes, as set forth in Exhibit C hereto.
"Loan Documents" means the Loan Agreement, Note and any agreements, instrument and
certificates required to be executed and delivered hereunder.
"Loan Prepayment" means any amount paid by the Borrower that are in excess of the amount
required to be paid as a Loan Repayment.
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"Loan Repayment" means the scheduled payments of principal and interest required to be made by
the Borrower pursuant to Exhibit D hereto.
"Loan Term" means the term of the Loan as set forth in Exhibit D hereto.
"Municipality" means any entity described in ORS 285B.4 I O( 1) that has entered into a Contract with
the State pursuant to which such entity will borrow money from the Water Fund.
"Note" means the promissory note of the Borrower substantially in the form of Exhibit F attached
hereto and by this reference made a part hereof.
"Optional Loan Prepayment Date" means the Optional Loan Prepayment Date described in Exhibit
C hereto.
"Project" means a "water project", within the meaning of ORS 285B.560(6), of the Borrower
described in Exhibit A attached hereto and by this reference made a part hereof, all or a portion of which
is financed or refinanced by the State pursuant to this Loan Agreement.
"Project Completion Date" means the earlier of (a) the date on which all of the proceeds of the Loan,
including any investment earnings derived from the investment of such proceeds, have been spent; or (b)
the date on which the Borrower completes construction of the Project.
"Revenues" means the revenues identified in Exhibit 2 to Borrower's Contract as a source of
repayment for the Loan.
"State" means the State of Oregon acting by and through its Economic and Community
Development Department.
"State Bonds" means the series of bonds, if any, authorized by the Bond Indenture and the Act,
together with any refunding bonds authenticated and delivered pursuant to the Bond Indenture, in each
case to finance or refinance the Project through the initial funding or refinancing of all or a portion of
the Loan.
"System" means the utility system or systems, if any, of the Borrower which includes the Project or
components of the Project, as such system or systems may be modified or expanded from time to time.
References in this Loan Agreement to the Borrower's "System" shall be ignored to the extent that the
Project is not a component of a utility system or systems.
"Trustee" means the Trustee pursuant to the Bond Indenture, or its successor or successors, and any
other corporation which may at any time be substituted in its place as Trustee pursuant to the Bond
Indenture.
"Water Fund" means the fund created by ORS 285B.563(1).
"Underwriter" means the broker, dealer or municipal securities dealer acting as an underwriter in the
primary offering of the State Bonds.
SECTION 1.02. General Rules. Except where the context otherwise requires, words importing the
singular number shall include the plural number and vice versa, and words importing persons shall
include firms, associations, corporations, partnerships, agencies and districts. Words importing one
gender shall include any other gender.
SECTION 1.03. Loan Agreement Not Assigned to Trustee. DURING ANY PERIOD OF TIME IN- WHICH
TI-IIS LOAN AGREEMENT HAS NOT BEEN ASSIGNED TO TI-IE TRUSTEE, ALL REFERENCES IN THIS LOAN
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AGREEMENT TO ''TRUSTEE,'' "BOND INDENTURE," "STATE BONDS," "UNDERWRITER" AND "ISSUER" AND
THE PROVISIONS OF THIS LOAN AGREEMENT PERTAINING THERETO SHALL BE VOID AND OF NO FORCE OR
EFFECT EXCEPT FOR PURPOSES OF DETERMINING THE APPLICABLE REQUIREMENTS OF THE BOND INDENTURE
OR DETERMINING ANY REQUIREMENTS OF THIS LOAN AGREEMENT THAT REFER TO PROVISIONS OF THE
BOND INDENTURE.
ARTICLE II
LOAN TO BORROWER
SECTION 2.01. Loan Amount~ Loan Terms~ Disbursements~ Use of Proceeds.
(a) Loan Amount. Subject to the terms and conditions hereof, in particular Section 4.01 and 4.02
hereof, the State hereby agrees to loan and disburse to the Borrower, and the Borrower agrees to borrow
and accept from the State, the Loan which in the aggregate shall not exceed the lesser of (i) the
maximum principal amount of the Loan set forth in Exhibit C hereof together with all earnings derived
by the State from the investment of the proceeds of the Loan held in the Water Fund and (ii) the Costs of
the Project.
(b) Loan Terms. The terms of the Loan are set forth in Exhibit F hereto.
(c) Disbursements. Subject to Section 4.02 hereof, the proceeds of the Loan shall be disbursed to the
Borrower upon receipt by the State of a requisition executed by the Borrower in substantially the form
attached hereto as Exhibit E which is by this reference incorporated herein.
(d) Use of Proceeds. The Borrower shall use the proceeds of the Loan strictly in accordance with
Section 3.02(a) hereof.
SECTION 2.02. Loan Payment.
(a) Payment. The Borrower hereby covenants and agrees to repay the Loan in accordance with the
terms hereof and of the Note.
(b) Payments if Assignment. In the event that the Borrower receives written notification from the
State, the Issuer or the Trustee that payments made pursuant to this Loan Agreement and Note have been
assigned by the State to the Trustee under the Bond Indenture, all payments pursuant to this Loan
Agreement and the Note shall be made directly to the Trustee for the account of the State pursuant to
such assignment. The Borrower acknowledges that payment or defeasance of the State Bonds by the
State or the Issuer does not constitute payment of the amounts due under this Loan Agreement or the
Note.
SECTION 2.03. Unconditional Obligations. Loan Repayments and all other payments required under
the Loan Documents are payable solely from the sources of repayment described in Section 2.07 hereof,
and the obligation of the Borrower to make the Loan Repayments and all other payments required under
the Loan Documents and the obligation to perfonn and observe the other duties, covenants, obligations
and agreements on its part to be performed or observed contained therein shall be absolute and
unconditional. Payments hereunder and under any of the other Loan Documents shall not be abated,
rebated, set-off, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in
any manner or to any extent whatsoever, or any payments under this Loan Agreement or Note remain
unpaid, regardless of any contingency, act of God, event or cause whatsoever, including (without
limitation) any acts or circumstances that may constitute failure of considerations, eviction or
constructive eviction, the taking by eminent domain or destruction of or damage to the Project or the
System, commercial frustration of the purpose, any change in the laws of the United States of America
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or of the State of Oregon or any political subdivision of either or in the rules or regulations of any
governmental authority, any failure of the State, the Issuer or the Trustee to perform and observe any
agreement, whether express or implied, or any duty, liability, or obligation arising out of or connected
with the Project, this Loan Agreement or the Bond Indenture or any rights of set off, recoupment,
abatement or counterclaim that the Borrower might otherwise have against the State, the Issuer, the
Trustee or any other party or parties; provided, however, that payments hereunder shall not constitute a
waiver of any such rights. The Borrower shall not be obligated to make any payments required to be
made by any other Municipality under any separate loan agreement or the Bond Indenture.
SECTION 2.04. Loan A~eement to Survive Bond Indenture and State Bonds. The Borrower
acknowledges that its duties, covenants, obligations and agreements hereunder shall survive the
discharge of the Bond Indenture applicable to the State Bonds and payment of the principal of,
redemption premium, if any, and interest on the State Bonds.
SECTION 2.05. Loan Prepayments.
(a) Mandatory Prepayment. The Borrower shall prepay the outstanding balance of the Loan upon
the destruction of all or a substantial portion of the Project.
(b) Optional Prepayment on or after the Optional Loan Prepayment Date. Subject to the following
terms and conditions, the Borrower may make Loan Prepayments upon not less than ninety (90) days
prior written notice to the State and the Trustee; provided, however, that
(i) no Loan Prepayment shall be made prior to the Optional Loan Prepayment Date or, if later, the
date on which the State Bonds are first subject to optional redemption;
(ii) each Loan Prepayment shall include (A) payment of the accrued interest on the amount prepaid
and (B) the prepayment premium, if any, applicable to such Loan Prepayment as determined in
accordance with Exhibit C hereof, and (C) the payment of any expenses of the Trustee, Counsel to the
State or Bond Counsel associated with such prepayment; and
(iii) No Loan Prepayment shall be made without the prior written approval of the State.
(c) Optional Prepayment prior to the Optional Loan Prepayment Date. Loan Prepayments may be
made prior to the Optional Loan Prepayment Date if (i) the Borrower obtains the prior written approval
of the State, (ii) an opinion is obtained from the State's Bond Counsel to the effect that such a Loan
Prepayment will not adversely affect the exclusion from gross income for federal and state income tax
purposes of the interest on the State Bonds and the Loan, (iii) an escrow fund is established with the
State or with an escrow agent acceptable to the State, and a deposit shall have been made to such escrow
fund of cash and/or United States Treasury obligations which are not subject to redemption or
prepayment and maturing as to principal and interest in such amounts and at such times as will, in the
opinion of an independent certified public accountant delivered to the State, provide sufficient moneys,
without reinvestment of any matured amounts, to make all payments of principal and interest on the
Loan or portion to the Loan to be prepaid to and including the Optional Loan Prepayment Date together
with any applicable prepayment premium, and (iv) the investment of amounts held in the escrow fund
satisfies the requirements of Section 148 of the Code.
(d) General. Loan Prepayments shall be applied first to any expenses of the Trustee, then to accrued
interest on the portion of the Loan prepaid, and finally to principal payment(s) on the Loan (including
premium, if any). In the case of a Loan Prepayment that does not prepay all of the principal of the Loan,
the State shall determine, in its sole discretion, the method by which such Loan Prepayment shall be
applied to the outstanding principal payments. In the case of any Loan Prepayment prior to the Optional
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Loan Prepayment Date, Loan Prepayments shall be applied to the expenses of establishing an escrow
fund and paying any expenses of the Counsel to the State, Bond Counsel and any independent certified
public accountant required in connection with the actions required pursuant to paragraph (c) above,
before such Loan Prepayments are applied to the payment of interest, principal or any redemption
premium on the Loan.
SECTION 2.06. Unexpended Loan Proceeds. Any proceeds of the Loan held by the State on the
Project Completion Date shall be applied, together with any interest earnings thereon, on the Optional
Loan Prepayment Date specified in Exhibit C hereof:
First, to pay any arbitrage rebate due with respect to the Loan pursuant to Section 148(f) of the Code,
Second, to pay unpaid interest accrued to the Optional Loan Prepayment Date, and
Third, to prepay principal on the Loan and any prepayment premium specified on Exhibit C hereof
associated with such prepayment.
The State shall determine, in its sole discretion, the method by which any payments on the Loan
pursuant to this Section 2.06 shall be applied to the outstanding balance of the Loan. If any proceeds of
the Loan remain after the payment of the entire outstanding principal balance of the Loan and the
prepayment of the entire outstanding principal balance of the Loan and the prepayment premium
specified in Exhibit C, such amounts shall be the property of the State, and the Borrower shall have no
claim to such amounts.
SECTION 2.07. Sources of Payment of Borrower's Obligations.
(a) The State and the Borrower agree that the amounts payable by the Borrower under this Loan
Agreement and any of the other Loan Documents, including, without limitation, the amounts payable by
the Borrower pursuant to Sections 2.02, 2.05, 2.08 and 6.04 hereof, are payable from the sources of
repayment described in paragraph (b) of this Section 2.07; provided however that nothing herein shall be
deemed to prevent the Borrower from paying the amounts payable under this Loan Agreement and the
other Loan Documents from any other legally available source.
(b) The amounts payable by the Borrower under this Loan Agreement and the other Loan
Documents are payable from the Revenues, the Borrower's general fund and other sources identified on
Exhibit 2 to the Borrower's Contract.
(c) The Borrower expressly acknowledges that if the Borrower defaults on payments due under this
Loan Agreement or any of the other Loan Documents, the State of Oregon, pursuant to ORS 285B.599,
may withhold all or a portion of any amounts otherwise due to the Borrower and apply said amounts to
payments due under this Loan Agreement and the other Loan Documents to the fullest extent permitted
by law; provided however that the provisions of the Loan Agreement and the Note are not to be
construed in a way that would cause the obligations of the Borrower thereunder to constitute debt which
violates Section 10, Article XI of the Oregon Constitution.
SECTION 2.08. Disclaimer of Warranties; Limitation of Liability; Indemnification. The Borrower
acknowledges and agrees that:
(a) neither the Issuer, the State nor the Trustee makes any warranty or representation, either express
or implied, as to the value, design, condition, merchantability or fitness for particular purpose or fitness
for any use of the System or the Project or any portions thereof or any other warranty or representation
with respect thereto;
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(b) in no event shall the State, the Issuer or the Trustee or their respective agents be liable or
responsible for any direct, indirect, incidental, special or consequential damages in connection with or
arising out of this Loan Agreement, any of the other Loan Documents or the Project or the existence,
furnishing, functioning or use of the System or the Project or any item or products or services provided
for in this Loan Agreement; and
(c) to the extent authorized by law, the Borrower shall indemnify, save and hold harmless the Issuer
and the State against any and all claims, damages, liability and court awards including costs, expenses,
and attorney fees incurred as a result of any act or omission by the Borrower, or its employees, agents or
subcontractors pursuant to the terms of this Loan Agreement or any of the other Loan Documents,
provided, however, that the provisions of this paragraph (c) are not intended to and shall not be
construed as a waiver of any defense or limitation on damages provided for under and pursuant to
Chapter 30 of the Oregon Revised Statutes or under the laws of the United States or other laws of the
State of Oregon.
SECTION 2.09. Maintenance of Records by the State. The State shall maintain records of all
amounts held in the account within the Water Fund allocable to the Loan. All earnings derived from the
investment of such amounts shall be retained in and credited to such account and shall be available for
disbursement to the Borrower pursuant to Section 2.01 hereof. The State shall provide the Borrower a
copy of records relating to such account at least twice each year so long as the State is making
disbursements from such account.
ARTICLE III
REPRESENTA TIONS, WARRANTIES AND COVENANTS OF BORROWER
SECTION 3.01. Representations and Warranties of Borrower. The Borrower represents and warrants
for the benefit of the State and the holders of the State Bonds, if any, as follows:
(a) Organization and Authority.
(i) The Borrower is a Municipality as defined in the Act.
(ii) The Borrower has full legal right and authority and all necessary licenses and permits
required as of the date hereof to own, operate and maintain the Project and its System, other than
licenses and permits relating to the Project which the Borrower expects to receive in the ordinary
course of business, to carry on its activities relating thereto, to execute and deliver this Loan
Agreement, to undertake and complete the Project, and to carry out and consummate all transactions
contemplated by this Loan Agreement and the other Loan Documents.
(iii) The Project is a project which the Borrower may undertake pursuant to Oregon law and for
which the Borrower is authorized by law to borrow money.
(iv) The proceedings of the Borrower's governing members and voters, if necessary, approving
this Loan Agreement and the other Loan Documents and authorizing the execution and delivery of
this Loan Agreement and other Loan Documents on behalf of the Borrower, and authorizing the
Borrower to undertake and complete the Project have been duly and lawfully adopted in accordance
with the laws of Oregon, and the actions of such proceedings were duly approved and published, if
necessary, in accordance with applicable Oregon law, at a meeting or meetings which were duly
called pursuant to necessary public notice and held in accordance with applicable Oregon law, and at
which quorums were present and acting throughout.
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(v) This Loan Agreement and all other Loan Documents required hereunder to be executed by
Borrower have been duly authorized and executed and delivered by an Authorized Officer of the
Borrower; and, assuming that the State has all the requisite power and authority to authorize, execute
and deliver, and has duly authorized, executed and delivered, this Loan Agreement and the Loan
Documents required hereunder to be executed by the State, this Loan Agreement and other Loan
Documents required hereunder to be executed by the Borrower constitute the legal, valid and
binding obligation of the Borrower in accordance with their terms, and the information contained in
Exhibits A and B hereto and in Sections 3, 4, 9 and 1 I of Exhibit C hereto is true and accurate in all
respects.
(vi) Borrower's Contract and the Loan Agreement have been authorized by an ordinance or
resolution of the Borrower which was adopted in accordance with ORS 285B.581(4) after proper
publication at least fourteen (I4) days prior notice published at least once in a newspaper of general
circulation within the Borrower's jurisdiction and was adopted in accordance with applicable law
and the Borrower's requirements for filing public notices and holding public meetings.
(b) Full Disclosure. There is no fact that the Borrower has not disclosed to the State in,writing on
the Borrower's application for the Loan or otherwise that materially adversely affects the properties,
activities, prospects or condition (financial or otherwise) of the Borrower, the Project or the Borrower's
System, or the ability of the Borrower to make all Loan Repayments and otherwise observe and perform
its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan
Documents. Neither the Borrower's application for the Loan or the Borrower's representations in this
Loan Agreement or any of the other Loan Documents contain any untrue statement of a material fact or
omits any statement or information which is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Pending Litigation. There are no proceedings pending, or, to the knowledge of the Borrower
threatened, against or affecting the Borrower, in any court or before any governmental authority or
arbitration board or tribunal that, if adversely determined, would materially adversely affect the Project,
properties, activities, prospects or condition (financial or otherwise) of the Borrower or its System, or
the ability of the Borrower to make all Loan Repayments and otherwise observe and perform its duties,
covenants, obligations and agreements under this Loan Agreement and the other Loan Documents, that
have not been disclosed in writing to the State in the Borrower's application for the Loan or otherwise.
(d) Compliance with Existing Agreements, Etc. The authorization, execution and delivery of this
Loan Agreement and the other Loan Documents by the Borrower, the observation and performance by
the Borrower of its duties, covenants, obligations and agreements thereunder and the consummation of
the transactions provided for in this Loan Agreement and the other Loan Documents, the compliance by
the Borrower with the provisions of this Loan Agreement and the other Loan Documents and the
undertaking and completion of the Project will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or asset of the Borrower pursuant to, any existing ordinance or
resolution, trust agreement, indenture, mortgage, deed of trust, loan agreement or other instrument (other
than any lien and charge of this Loan Agreement or any of the documents related hereto or to the Bond
Indenture) to which the Borrower is a party or by which the Borrower, its System or any of its property
or assets may be bound, nor will such action result in any violation of the provisions of the charter or
other document pursuant to which the Borrower was established or any laws, ordinances, resolutions,
governmental rules, regulations or court orders to which the Borrower, its System or its properties or
operations is subject.
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(e) No Defaults. No event has occurred and no condition exists that, upon authorization, execution
and delivery of this Loan Agreement or any of the Loan Documents or receipt of the amount of the
Loan, would constitute an Event of Default hereunder. The Borrower is not in violation of, and has not
received notice of any claimed violation of, any term of any agreement or other instrument to which it is
a party or by which it, its System or its property may be bound, which violation would materially
adversely affect the Project, properties, activities, prospects or condition (financial or otherwise) of the
Borrower or its System or the ability of the Borrower to make all Loan Repayments or otherwise
observe and perform its duties, covenants, obligations and agreements under this Loan Agreement and
the other Loan Documents.
(f) Governmental Consent. The Borrower has obtained or will obtain all permits and approvals
required to date by any governmental body or officer for the making, observance and performance by
the Borrower of its duties, covenants, obligations and agreements under this Loan Agreement and the
other Loan Documents or for the undertaking or completion of the Project and the financing or
refinancing thereof; and the Borrower has complied or will comply with all applicable provisions of law
requiring any notification, declaration, filing or registration with any governmental body or officer in
connection with the making, observance and performance by the Borrower of its duties, covenants,
obligations and agreements under this Loan Agreement and the other Loan Documents or with the
undertaking or completion of the Project and the financing or refinancing thereof. No consent, approval
or authorization of, or filing, registration or qualification with, any governmental body or officer that has
not been obtained is required on the part of the Borrower as a condition to the authorization, execution
and delivery of this Loan Agreement or any other Loan Document.
(g) Compliance with Law. The Borrower
(i) is in compliance with all laws, ordinances, and governmental rules and regulations (including
but not limited to the requirements set forth in the Water/Wastewater Financing Program Applicant's
Handbook, March 1994) to which it is subject, the failure to comply with which would materially
adversely affect the ability of the Borrower to conduct its activities or undertake or complete the
Project or the condition (financial or otherwise) of the Borrower or its System; and
(ii) has obtained or will obtain all licenses, permits, franchises or other governmental
authorizations presently necessary for the ownership of its property or for the conduct of its activities
which, if not obtained, would materially adversely affect the ability of the Borrower to conduct its
activities or undertake or complete the Project or the condition (financial or otherwise) of the
Borrower or its System.
The State's performance under this Loan Agreement is conditioned upon the Borrower's compliance
with the provisions of ORS 279.312, 279.314, 279.316, 279.320, and 279.555, which are incorporated
by reference herein.
(h) The Project.
(i) The Project is feasible, and there will be adequate funds available to complete the Project and
repay the Loan.
(ii) The Borrower has been provided with a copy of the rules adopted by the State under
ORS 285B.563(7), and the Project is in compliance with such rules.
(iii) The term ofthe Loan is not in excess of the useful life ofthe Project.
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(iv) The Borrower has provided, as part of the security for repayment of the Loan, provisions for
payments from any owners of property specially benefitted by the Project which are sufficient when
considered with other security to assure repayment ofthe Loan.
(i) Costs of the Proiect. The Borrower certifies that the Costs of the Project, as listed in Exhibits B
and C hereto, (i) are a reasonable and accurate estimation and based upon an engineer's feasibility report
and engineer's estimate stamped by a registered professional engineer, a copy of which shall be
promptly provided to the State upon request, (ii) exceeds the maximum principal amount of the Loan
shown on Exhibit C, and (iii) are not less than the sum of the proceeds of the Loan and the investment
earnings projected to be derived from the investment of such proceeds. The Borrower further certifies
that a professional engineer registered and in good standing in Oregon will be responsible for design and
construction of the Project.
U) Continuing Representations. The representations of the Borrower contained herein shall be true
at the time of the Loan Closing Date and at all times during the term of this Loan Agreement.
SECTION 3.02. Particular Covenants of the Borrower.
(a) Use of Proceeds. The Borrower will apply the proceeds ofthe Loan (i) to finance all or a portion
of the Costs of the Project; and (ii) where applicable and with prior written approval of the State, to
reimburse the Borrower for a portion of the Costs of the Project, which portion was paid or incurred in
anticipation of reimbursement by the State; provided however that all such reimbursements shall satisfy
the requirements of Section 1.150-2 of the Code. None of the proceeds of the Loan shall be used for
ineligible activities specified in Section 3.B. of the Contract.
(b) Source of Repayment. The Loan shall be paid from such sources of repayment described in
Section 2.07 of this Loan Agreement and in Exhibit 2 to the Contract. Funds from such sources shall be
applied to the punctual payment of the principal of and the interest on the Loan and all other amounts
due under this Loan Agreement and the other Loan Documents according to their respective terms.
(c) Performance Under Loan Documents. The Borrower covenants and agrees (i) to maintain the
Project and its System in good repair and operating condition; (ii) to cooperate with the State in the
observance and performance of the respective duties, covenants, obligations and agreements of the
Borrower and the State under this Loan Agreement and the other Loan Documents; and (iii) to comply
with the covenants described in this Loan Agreement and the other Loan Documents.
(d) Completion of Project and Provision of Moneys Therefor. The Borrower covenants and agrees
to provide the State with copies of all plans and specifications relating to the Project for review and
approval by the State, but in any event no later than ten days prior to the date on which bids are
advertised. The Borrower shall obtain as-built drawings for all facilities of the Project and obtain
certification of completion per as-built drawings from the Project engineer within ninety (90) days of the
Project Completion Date. The Borrower shall supply a copy of such drawings and certification to the
State upon request. The Borrower further covenants and agrees (i) to exercise its best efforts in
accordance with prudent practice to complete the Project and to so accomplish such completion on or
before the estimated Project Completion Date set forth in Exhibit C; (ii) to proceed expeditiously with,
and complete, the Project in accordance with plans reviewed and approved by the State and (iii) to
provide from its own fiscal resources all moneys, in excess of the total amount of Loan proceeds it
receives pursuant to this Loan Agreement, required to complete the Project. For purposes of (ii) of the
preceding sentence, if the State does not review the plans and specifications or suggests modifications
thereto within thirty (30) days of the receipt by the State of the plans and specifications, they shall be
deemed approved. The Borrower shall have a program, documented to the satisfaction of the State, for
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the on-going maintenance, operation and replacement, at its sole expense, of the Project. The program
shall include a plan for generating revenues sufficient to assure the operation, maintenance and
replacement of the Project during the useful life of the Project. Borrower shall provide such
documentation to the State on or before the Project Completion Date.
(e) Disposition of Proiect or System. Unless worn out, obsolete, or in the reasonable business
judgement of the Borrower, no longer useful in the operation of the Project, the Borrower shall not sell,
lease, exchange, abandon or otherwise dispose of all or substantially all or any substantial portion of the
Project or its System or any other system which provides revenues for payment of amounts due under
this Loan Agreement and the Loan Documents, except (i) if the State consents thereto in writing upon
ninety (90) days' prior written notice to the State and (ii) either:
(i) The Borrower assigns this Loan Agreement and the other Loan Documents pursuant to
Section 5.02 hereof,
(ii) The Borrower demonstrates to the satisfaction of the Trustee that such sale, lease,
abandonment or other disposition will not adversely affect the rating of the State Bonds,
(iii) A rating of the Loan is obtained which (a) addresses such sale, lease, exchange,
abandonment or other disposition, (b) is no lower than the rating of the State Bonds and ( c) shall be
in one of the three highest rating categories (without regard to any refinement or gradation of rating
category by numerical modifier or otherwise) by Moody's Investors Service or Fitch Investors
Service, Inc., or
(iv) The State certifies to the Borrower that this Loan Agreement has not been assigned to the
Trustee and provides a copy of such certification to the Trustee.
The State shall not consent to any such sale, lease, exchange, abandonment or other disposition
unless the State shall have received an opinion of Bond Counsel to the effect that such sale, lease,
exchange, abandonment or other disposition complies with the Act and will not adversely affect the
exclusion of interest on the Loan and on the State Bonds from gross income for purposes of federal
income taxation under Section 103(a) of the Code. Proceeds of any such transfer not used to replace
property that is part of the Project shall be applied to the payment of the outstanding principal of and
interest in the Loan as a Loan Prepayment subject to a prepayment premium, if any, as provided in
Section 2.05 of this Agreement.
(f) Exclusion of Interest from Federal Gross Income and Compliance with Code.
(i) The Borrower covenants and agrees that it shall not take any action or omit to take any action
which action or omission would result in the loss of the exclusion of the interest on the Loan from
gross income for purposes of federal income taxation as that status is governed by Section l03(a) of
the Code.
(ii) The Borrower shall not take any action or omit to take any action, which action or omission
would cause the Loan to be "private activity bonds" within the meaning of Section 141(a) of the
Code. Accordingly, unless the Borrower receives the prior written approval of the State, the
Borrower shall neither (A) permit in excess of 10 percent of either (1) the proceeds of the Loan or
(2) the Project financed or refinanced with the proceeds of the Loan, to be used directly or indirectly
in any manner that would constitute "private business use" within the meaning of Section 141 (b)( 6)
of the Code, nor (B) use directly or indirectly any of the proceeds of the Loan, to make or finance
loans to persons other than governmental units as such term is used in Section 141 ( c) of the Code;
provided further, that at least one half of the private business use permitted by clause (A) shall be
Program DevelopmentlO03902
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neither disproportionate related business use, nor private business use not related to the government
use of such proceeds of the Loan.
(iii) The Borrower shall not directly or indirectly use or permit the use of any of the "gross
proceeds" (within the meaning of Section 148 of the Code) of the Loan or any other funds or take
any action or omit to take any action, which use or action or omission would cause the Loan to be an
"arbitrage bond" within the meaning of Section 148(a) of the Code.
(iv) The Borrower shall not use directly or indirectly the proceeds ofthe Loan in any manner that
would constitute an "advance refunding" within the meaning of Section 149(d)(5) of the Code and
shall not prepay the Loan or any part of the Loan without the prior written approval of the State and
as provided in this Loan Agreement.
(v) The Borrower will not cause the Loan to be treated as a "federally guaranteed" obligation for
purposes of Section I 49(b) of the Code, as may be modified in any applicable rules, rulings, policies,
procedures, regulations or other official statements promulgated or proposed by the Department of
the Treasury or the Internal Revenue Service with respect to "federally guaranteed" obligations
described in Section 149(b) of the Code. For purposes of this paragraph, the Loan shall be treated as
"federally guaranteed" if: (A) all or any portion of the principal or interest is or will be guaranteed
directly or indirectly by the United States of America or any agency or instrumentality thereof, or
(B) five percent (5%) or more of the proceeds of the Loan will be (1) used in making loans, the
payment of principal or interest with respect to which is guaranteed in whole or in part by the United
States of America or any agency or instrumentality thereof, or (2) invested directly or indirectly in
federally insured deposits or accounts, and (C) none ofthe exceptions described in Section 149(b)(3)
ofthe Code apply.
(vi) The Borrower agrees to assist the State, the Issuer and the Trustee to ensure that all amounts
required to be rebated to the United States of America pursuant to Section 148(f) of the Code are
rebated to the United States of America. The Borrower agrees to provide all amounts necessary to
satisfY the requirements of Section 148(f) applicable to the Loan and, to pay to the State, the Issuer,
or the Trustee such amounts as may be directed by the State, the Issuer, or the Trustee and at such
times as the Borrower may be so directed to satisfY the requirements of Section 148(f) of the Code
applicable to the portion of the proceeds of any State Bonds, including any proceeds or other
amounts held in a reserve fund, applied to fund or refinance the Loan. The Borrower further agrees
to reimburse the State, the Issuer or the Trustee for the portion of any expenses incurred by them that
relate to the Loan and are necessary to satisfY the requirements of Section 148(f) of the Code.
(vii) In furtherance of the foregoing, the Borrower covenants that it will comply with the
provisions of this Loan Agreement and with the provisions of any certificate executed by the
Borrower relating to compliance with the provisions of Sections 103 and 141 through 150 of the
Code executed by the Borrower, the State or the Issuer with respect to the Loan and will furnish to
the State, the Issuer, or the Trustee in writing, upon reasonable request, information regarding
investments and use of proceeds of the Loan and of any facilities financed or refinanced therewith.
(viii) The Borrower shall not enter into any management agreement for the operation of the
Project that would cause the Loan to be or become a "private activity bond" within the meaning of
Section 141(a) of the Code.
(ix) Notwithstanding anything to the contrary, so long as is necessary to maintain the exclusion
from gross income for purposes of federal income taxation of interest on the Loan, the covenants
contained in this subsection (f) shall survive the payment of the Loan and the State Bonds, and the
Program DevelopmentlO03902
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interest thereon, including any payment pursuant to Section 2.05 of this Loan Agreement. The
Borrower acknowledges that the Loan may be funded in whole or in part with the proceeds of the
State Bonds and that failure to comply with the requirements of this subsection (f) could adversely
affect any exclusion of the interest on the State Bonds from gross income for federal income tax
purposes.
(x) Neither the Borrower nor any related party to the Borrower, within the meaning of
Section I. I 50- I (b) of the federal income tax regulations shall, purchase State Bonds in an amount
related to the amount of the Loan.
(g) Operation and Maintenance of System. The Borrower covenants and agrees that it shall, in
accordance with prudent utility practice, (i) at all times operate the properties of its System and any
business in connection therewith in an efficient manner, (ii) maintain its System in good repair, working
order and operating condition, (iii) from time to time make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements with respect to its System so that at all times the
business carried on in connection therewith shall be properly and advantageously conducted and (iv) not
provide free service to any customer served by the System except in an emergency; provided, however,
this covenant shall not be construed as requiring the Borrower to expend any funds which are derived
from sources other than the operation of its System or other receipts of such System which are not
sources of repayment under Section 2.07(a), and provided further that nothing herein shall be construed
as preventing the Borrower from doing so.
(h) Records; Accounts. The Borrower shall keep accurate records and accounts for the revenues and
funds that are the source of repayment of the Loan, including but not limited to the Revenues (the
"Repayment Revenue Records"), separate and distinct from its other records and accounts (the "General
Records"). Such Repayment Revenue Records shall be maintained in accordance with generally
accepted accounting principles as established by the Government Accounting Standards Board as in
effect from time to time and shall be audited annually by an independent accountant, which audit may be
part ofthe annual audit of the General Records of the Borrower. Such Repayment Revenue Records and
General Records shall be made available for inspection by the State, the Issuer or the Trustee at any
reasonable time, and a copy of such annual audit(s) therefor, including all written comments and
recommendations of such accountant, shall be furnished to the State within 210 days of the close of the
fiscal year being so audited. The Borrower's financial management system must conform with the
generally accepted accounting principles for state and municipal corporations established by the
National Committee on Governmental Accounting as in effect from time to time.
(i) Inspections; Information. The Borrower shall permit the State and the Trustee and any party
designated by any of such parties to examine, visit and inspect, at any and all reasonable time, the
property, if any, constituting the Project, and to inspect and make copies of any accounts, books and
records, including, without limitation, its records regarding receipts, disbursements, contracts,
investments and any other matters relating thereto and to its financial standing, and shall supply such
reports and information as the State and the Trustee may reasonably require in connection therewith. In
addition, the Borrower shall provide the State with copies of loan documents or other financing
documents and any official statements or other forms of offering prospectus relating to any other bonds,
notes or other indebtedness of the Borrower that are issued after the Loan Closing Date and are secured
by the Revenues.
CD Insurance. The Borrower shall maintain or cause to be maintained insurance policies with
responsible insurers or self insurance programs providing against risk of direct physical loss, damage or
destruction of its System, at least to the extent that similar insurance is usually carried by governmental
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units constructing, operating and maintaining system facilities of the nature of the Borrower's System,
including liability coverage, all to the extent available at reasonable cost. Nothing herein shall be
deemed to preclude the Borrower from exerting against any party, other than the State, a defense which
may be available to the Borrower, including without limitation a defense of immunity. In the event the
Project or any portion thereof is destroyed, any insurance proceeds shall be paid to the State and shall be
applied to the principal of and interest on the Loan, unless the State agrees in writing that the insurance
proceeds shall be used to rebuild the Project. Any application of insurance proceeds to prepay the
outstanding principal of the Loan shall not be subject to the prepayment premium, if any, as provided in
Section 2.05(b).
(k) Condemnation. In the event the Project or any portion thereof is condemned, any condemnation
proceeds shall be used to prepay the outstanding balance on the Loan and shall not be subject to the
prepayment premium, if any, as provided in Section 2.05(b).
(1) Notice of Material Adverse Change. The Borrower shall promptly notify the State and the Trustee
of any material adverse change in the activities, prospects or condition (financial or otherwise) of the
Borrower, the Project, or the Borrower's System, or in the ability of the Borrower to make all Loan
Repayments and otherwise observe and perform its duties, covenants, obligations and agreements under
this Loan Agreement and the other Loan Documents.
(m) Continuing Disclosure Requirements. The Borrower shall provide the State with any
information needed to comply with paragraph (b)(5) of the Securities and Exchange Commission Rule
15c2-12, 17 C.F.R. S 240.l5c2-12 (the "SEC Rule"), with respect to State Bonds. In addition, if the
Borrower becomes an "obligated person" within the meaning of the SEC Rule or an "Obligated
Borrower" (as such term is defined by the State or the State Treasurer of the State of Oregon) for the
State Bonds, the Borrower shall, in addition to the requirements of paragraphs (h) and (i) of Section 3.02
of this Loan Agreement, provide the following to the State upon request:
(i) any and all financial information or operating data that may reasonably be requested by the
State to comply with the SEC Rule, and
(ii) audited financial statements, when and if prepared and available, prepared in accordance with
generally accepted accounting principles as established by the Govenunent Accounting Standards
Board as in effect from time to time; provided, however, that if audited financial statements are not
available, unaudited financial statements will be provided with audited financial statements to follow
when and if available.
(n) Financial Statements; Reports. The Borrower shall deliver to the State in form and detail
satisfactory to the State:
(i) As soon as reasonably possible and in any event within ninety (90) days after the close of
each fiscal year of the Borrower, unaudited statements of revenues, expenditures, cash flows, and
changes in retained earnings for each of the funds constituting the Revenues for such period, all in
comparative form and all in reasonable detail and certified by the chief financial officer of the
Borrower, subject to year-end audit adjustments.
(ii) Such other statement or statements or reports as to the Borrower as the State may reasonably
request (including but not limited to periodic reports on the economic benefits ofthe Project).
(0) Contract Covenants. The Borrower covenants and agrees to comply with the terms of the
Contract including the covenants of the Borrower in Section 6 of the Contract.
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(p) Further Assurances. The Borrower shall, at the request of the State, authorize, execute,
acknowledge and deliver such further resolutions, conveyances, transfers, assurances, financing
statements and other instruments as may be necessary or desirable for better assuring, conveying,
granting, assigning and confirming the rights, security interests and agreements granted or intended to be
granted by this Loan Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Loan Closing. The State's obligations hereunder are subject to the condition that on
or prior to the Loan Closing Date,
(a) the Borrower will cause to be duly executed and delivered to the State (regardless of whether the
Loan Agreement is assigned to the Trustee) the following items, each in form and substance satisfactory
to State, its Counsel and Bond Counsel:
(i) this Loan Agreement duly executed and delivered by an Authorized Officer of the Borrower;
(ii) the Note duly executed and delivered by an Authorized Officer of the Borrower;
(iii) the Contract duly executed and delivered by an Authorized Officer of the Borrower;
(iv) copy of the ordinance or resolution of the governing body of the Borrower authorizing the
execution and delivery of this Loan Agreement, the other Loan Documents, and the Borrower's
Contract, certified by an Authorized Officer of the Borrower;
(v) an opinion of the Borrower's Counsel substantially in the form set forth in Section 6.3 (a) of
the Bond Indenture (such opinion or portions of such opinion may be given by one or more
Counsel); provided, however, that the State and its Counselor Bond Counsel may permit variances
in the form of such opinion, if such variances are not to the material detriment of the interests of the
holders of the State Bonds;
(vi) the documents required by Section 6.3 (a), (c), (d) and (f) (if applicable) of the Bond
Indenture (regardless of whether the Loan Agreement is assigned to the Trustee) to the State; and
(vii) such other certificates, documents, opinions and information as the State, the Issuer, the
Trustee, the Bond Counsel, or the Underwriter may reasonably require.
(b) there is money available in the Water Fund for the Project;
provided, however, the State shall be under no obligation to make this Loan if there has been a change in
the Act so that the Project is no longer eligible for financial assistance authorized by this Loan
Agreement.
SECTION 4.02. Conditions to Disbursements. Notwithstanding anything in this Loan Agreement or
any of the Loan Documents to the contrary, the State shall have no obligation to make the Loan or any
disbursement to the Borrower hereunder if:
(a) an Event of Default has occurred and is continuing under this Loan Agreement or any of the
Loan Documents or the Bond Indenture or event, omission or failure of a condition which would
constitute an Event of Default as defined in this Loan Agreement or any of the Loan Documents or the
Bond Indenture after notice or lapse of time or both;
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(b) All representations and warranties of the Borrower made in this Loan Agreement shall be true
and correct on the date of disbursement with the same effect as if made on such date;
(c) Receipt by the State of (i) a requisition executed by the Borrower in substantially the form of
Exhibit E attached hereto and by this reference made a part hereof and (ii) any other written evidence of
materials and labor furnished to or performed upon the Project, itemized receipts or invoices for the
payment of the same, and releases, satisfactions and other signed statements and forms as the State may
require as a condition for making disbursement of the Loan. The State may, at its option, from time to
time, either reimburse the Borrower for construction costs paid or may make direct payment for
construction costs to suppliers, subcontractors and others for sums due them in connection with
construction of the Project. Nothing herein contained shall require the State to pay any amounts for
labor or materials unless satisfied that such claims are reasonable and that such labor and materials were
actually expended and used in the construction of the Project. The State, at its option, from time to time,
may also require that the Borrower have a contractor or subcontractor execute and/or deliver a surety
bond or indemnification in form and substance acceptable to the State for the faithful performance of the
construction contract or subcontract and payment of all liens and lienable expenses in connection
therewith in a sum equal to the contract or subcontract price. Disbursements for the Costs of the Project
shall be subject to a retainage at the rate of five percent (5%) which will be released upon satisfactory
completion ofthe Project.
Further, the State shall have no obligation to make any disbursement to the Borrower if, on or before
the time for disbursement, there has been a change in the Act so that the Project is no longer eligible for
financial assistance authorized by this Loan Agreement.
ARTICLE V
ASSIGNMENT
SECTION 5.01. Assignment and Transfer by the State.
(a) The Borrower expressly acknowledges that, other than the right, title and interest of the State
under Sections 2.08 and 6.04, all right, title and interest of the State in, to and under this Loan
Agreement and the other Loan Documents either has been or may, at the sole discretion of the State, be
assigned to the Trustee as security for the State Bonds as provided in the Bond Indenture, and that if any
Event of Default shall occur and if this Loan Agreement and other Loan Documents have been assigned
to the Trustee, the Trustee, pursuant to the Bond Indenture, shall be entitled to act hereunder in the place
and stead of the State. The Borrower hereby consents to assignment of this Loan Agreement and the
other Loan Documents to the Trustee for the State Bonds. The State acknowledges that the Borrower is
not a party to the Bond Indenture and has no obligation to perform any of the State's covenants,
agreements or obligations under the Bond Indenture or the State Bonds, and that the Borrower is only
required to observe and perform its covenants, agreements and obligations under this Loan Agreement,
the other Loan Documents, and the Contract and, if and when requested by the State, to cooperate with
the State in order to enable the State to comply with the State's covenants, agreements or obligations
under the Bond Indenture. This Loan Agreement and the other Loan Documents, including, without
limitation, the right to receive payments required to be made by the Borrower hereunder and under the
other Loan Documents and to compel or otherwise enforce observance and performance by the
Borrower of its other duties, covenants, obligations and agreements hereunder and under the other Loan
Documents, may be sold by the State to a third party or may be further transferred, assigned and
reassigned in whole or in part to one or more assignees or subassignees by the Trustee at any time
without the necessity of obtaining the consent of, but after giving prior written notice to, the Borrower.
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In the event of the assignment of this Loan Agreement and the other Loan Documents to the Trustee,
the State shall retain the right to compel or otherwise enforce observance and performance by the
Borrower of its duties, covenants, obligations and agreements under Sections 3.01(f) and 3.02(d);
provided, however, that in no event shall the State have the right to accelerate the outstanding balance
payable pursuant to this Loan Agreement in connection with the enforcement of Sections 3.01(f) and
3.02(d).
(b) The Borrower hereby approves and consents to any assignment, sale or transfer of this Loan
Agreement and the Loan Documents that the State deems to be necessary, including any assignment,
sale or transfer in connection with any refunding of the State Bonds or the issuance of additional bonds
under the Bond Indenture or otherwise in connection with any pooled loan program of the State.
SECTION 5.02. Assi~ent by Borrower. This Loan Agreement and the other Loan Documents may
not be assigned by the Borrower without the prior written consent of the State. The State may grant or
withhold such consent in its sole discretion. In the event of an assignment of this Loan Agreement and
the other Loan Documents by Borrower and assumption of the obligations hereunder, Borrower shall
pay, or cause to be paid, to the State any fees or costs incurred by the State as the result of such
assignment, including but not limited to, attorney fees of Bond Counselor in-house Counsel.
ARTICLE VI
DEF AUL TS AND REMEDIES
SECTION 6.01. Event of Default. If any of the following events occurs, it is hereby defined as and
declared to be and to constitute an "Event of Default":
(a) Failure by the Borrower to pay, or cause to be paid, on December 1 of any year any Loan
Repayment required to be paid hereunder on such due date, except if the Borrower is a county and such
failure is the result of nonappropriation of funds; or
(b) Failure by the Borrower to make, or cause to be made, any required payments of principal,
redemption premium, if any, and interest on any bonds, notes or other obligations of the Borrower for
borrowed money (other than the Loan), after giving effect to the applicable grace period; or
( c) Any representation made by or on behalf of the Borrower contained in this Loan Agreement or
any other Loan Document, or in any agreement, instrument, certificate or document furnished in
compliance with or with reference to this Loan Agreement, any other Loan Document or the Loan or in
connection with the State Bonds, is false or misleading in any material respect; or
(d) A petition is filed by or against the Borrower under any federal or state bankruptcy or insolvency
law or other similar law in effect on the date of this Loan Agreement or thereafter enacted, unless in the
case of any such petition filed against the Borrower, such petition shall be dismissed within twenty (20)
calendar days after such filing, and such dismissal shall be final and not subject to appeal; or the
Borrower shall become insolvent or bankrupt or make an assignment for the benefit of its creditors; or a
custodian (including, without limitation, a receiver, liquidator or trustee of the Borrower or any of its
property) shall be appointed by court order or take possession of the Borrower or its property or assets if
such order remains in effect or such possession continues for more than thirty (30) calendar days; or
(e) Failure of the Borrower's governing body to appropriate sufficient funds to fully fund all of the
Borrower's obligations to make Loan Repayments hereunder for any future fiscal period, except if the
Borrower is a county and such failure is the result of nonappropriation of funds; or
(f) The occurrence of any event of default under Section 7 of the Contract; or
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(g) Failure by the Borrower to observe and perform any duty, covenant, obligation or agreement
(including that described in subsection (h) (below) on its part to be observed or performed under this
Loan Agreement or any other Loan Documents, other than as referred to in subsections (a) through (f) of
this Section, which failure shall continue for a period of thirty (30) calendar days after written notice,
specifying such failure and requesting that it be remedied, is given to the Borrower by the State or the
Trustee, unless the State or the Trustee shall agree in writing to an extension of such time prior to its
expiration; provided, however, that if the failure stated in such notice is correctable but cannot be
corrected within the applicable period, the State or the Trustee may not unreasonably withhold their
consent to an extension of such time up to one hundred twenty (120) days from the delivery of the
written notice referred to above if corrective action is instituted by the Borrower within the applicable
period and diligently pursued until the Event of Default is corrected; or
(h) The Borrower fails to proceed expeditiously with, or to complete, the Project or any segment or
phase of the Project in accordance with the plans and schedules approved by the State.
SECTION 6.02. Notice of Default. The Borrower shall give the State and the Trustee (if this Loan
Agreement and the other Loan Documents have been assigned to the Trustee) prompt telephonic notice
of the occurrence of any Event of Default referred to in Section 6.01 (d) hereof, and of the occurrence of
any other event or condition that constitutes an Event of Default at such time as any senior
administrative or financial officer of the Borrower becomes aware of the existence thereof. Any
telephone notice pursuant to this Section 6.02 shall be confirmed in writing as soon as practicable by the
Borrower.
SECTION 6.03. Remedies on Default. Whenever an Event of Default referred to in Section 6.01
hereof shall have occurred and be continuing, the State shall have the right to take, or to direct the
Trustee to take, any action permitted or required pursuant to the Loan Agreement or any other Loan
Document or the Bond Indenture and to take whatever other action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to
enforce the performance and observance of any duty, covenant, obligation or agreement of the Borrower
hereunder, including without limitation, (a) declaring all Loan Repayments and all other amounts due
hereunder and under the other Loan Documents (including, but not limited to the state's cost of
defeasance of the portion of any State Bonds allocable to the Loan, if all or a portion of the principal of
and interest on the Bonds has been accelerated pursuant to the Bond Indenture) to be immediately due
and payable, and upon notice to the Borrower the same shall become due and payable without further
notice or demand, (b) appointment of a receiver of the System, ( c) refusal to disburse any Loan
proceeds, (d) barring the Borrower from applying for future Water/Wastewater Financing Program
assistance, or (e) withholding amounts otherwise due to the Borrower to apply to the payment of
amounts due under this Loan Agreement as provided in ORS 285B.599.
SECTION 6.04. Attorney's Fees and Other Expenses. The Borrower shall, on demand, pay to the
State, the Issuer or the Trustee the reasonable fees and expenses of attorneys, whether at trial or on
appeal, and other reasonable expenses (including without limitation the reasonable allocated costs of the
State's Counsel, Bond Counselor any other Counsel appointed by the State and legal staff) incurred by
either of the State, the Issuer or the Trustee in the collection of Loan Repayments or any other sum due
hereunder or under any of the Loan Documents in the enforcement of performance or observation of any
other duties, covenants, obligations or agreements of the Borrower.
SECTION 6.05. Application of Moneys. Any moneys collected by the State or the Trustee pursuant
to Section 6.03 hereof shall be applied (a) first, to pay any attorney's fees, Trustee's fees, or other fees
and expenses owed by the Borrower hereunder, (b) second, to pay interest due and payable on the Loan,
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(c) third, to pay principal due and payable on the Loan, and (d) fourth, to pay any other amounts due and
payable under this Loan Agreement or any of the Loan Documents.
SECTION 6.06. No Remedy Exclusive; Waiver; Notice. No remedy herein conferred upon or
reserved to the State or the Trustee is intended to be exclusive, and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Loan Agreement or any of
the Loan Documents or now or hereafter existing at law or in equity. No delay or omission to exercise
any right, remedy or power accruing upon any Event of Default shall impair any such right, remedy or
power or shall be construed to be a waiver thereof, but any such right, remedy or power may be
exercised from time to time and as often as may be deemed expedient. To entitle the State or the
Trustee to exercise any remedy reserved to it in this Article VI, it shall not be necessary to give any
notice, other than such notice as may be required in this Article VI.
SECTION 6.07. Retention of State's Ri~hts. Notwithstanding any assignment or transfer of this Loan
Agreement and the Loan Documents pursuant to the provisions hereof or of the Bond Indenture, or
anything else to the contrary contained herein, the State shall have the right upon the occurrence of an
Event of Default to take any action, including (without limitation) bringing an action against the
Borrower at law or in equity, as the State may, in its discretion, deem necessary to enforce the
obligations of the Borrower to the State pursuant to Sections 2.02,2.08, and 6.04 hereof.
SECTION 6.08. Default by the State. In the event of any default by the State under any covenant,
agreement or obligation of this Loan Agreement, the Borrower's remedy for such default shall be
limited to injunction, special action, action for specific performance or any other available equitable
remedy designed to enforce the performance or observance of any duty, covenant, obligation or
agreement of the State hereunder as may be necessary or appropriate. The State shall on demand pay to
the Borrower the reasonable fees and expenses of attorneys and other reasonable expenses in the
enforcement of such performance or observation.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when hand delivered or mailed by registered or certified
mail, postage prepaid, to the Borrower at the address specified on Exhibit C hereof and to the State, the
Issuer and the Trustee at the following addresses:
(a) State: Economic and Community Development Department
Attention: Manager, Valley/Mid-Coast Team
775 Summer Street NE, Suite 200
Salem, OR 97301- I 280
(b) Issuer: State Treasurer
Attention: Manager, Debt Management Division
100 Labor & Industries Building
Salem, OR 97301
(c) Trustee: BNY Western Trust Company
Attention: Corporate Trust Department
Two Union Square
601 Union Street, Suite 525
Seattle, W A 9810 I
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Exhibit I
Page 23 of 24
Any of the foregoing parties may designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent, by notice in writing given to the others.
SECTION 7.02. Binding Effect. This Loan Agreement shall inure to the benefit of and shall be
binding upon the State and the Borrower and their respective successors and assigns. In addition, the
Trustee shall be considered as a beneficial party to this Loan Agreement, with all attendant rights to
enforce the duties, obligations, covenants and agreements of the Borrower set forth herein, to the same
extent as if the Trustee was a party hereto.
SECTION 7.03. Severability. In the event any provision of this Loan Agreement shall be held illegal,
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
SECTION 7.04. Amendments. Supplements and Modifications. This Loan Agreement may not be
amended, supplemented or modified without the prior written consent of the State and the Borrower.
This Loan Agreement may not be amended, supplemented or modified in a manner that is not in
compliance with the Act and the Bond Indenture or so as to adversely affect the interest of the owners of
the State Bonds.
SECTION 7.05. Execution in Counterparts. This Loan Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
SECTION 7.06. No Construction against Drafter. Both parties acknowledge that they are each
represented by and have sought the advice of Counsel in connection with this Loan Agreement and the
transactions contemplated hereby and have read and understand the terms of this Loan Agreement. The
terms of this Loan Agreement shall not be construed against either party as the drafter hereof.
SECTION 7.07. Applicable Law. This Loan Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon, including the Act. Any claim, action, suit or
proceeding (collectively, "Claim") between the State (and/or any agency or department of the State of
Oregon) and the Borrower that arises from or relates to this Loan Agreement shall be brought and
conducted solely and exclusively within the Circuit Court of Marion County for the State of Oregon;
provided, however, if a Claim must be brought in a federal forum, then it shall be brought and conducted
solely and exclusively within the United States District Court for the District of Oregon.
SECTION 7.08. Consents and Approvals. Whenever the written consent or approval of the State shall
be required under the provisions of this Loan Agreement, such consent or approval may only be given
by the State unless otherwise provided by law or by rules, regulations or resolutions of the State or
unless expressly delegated to the Trustee.
SECTION 7.09. Merger~ No Waiver. This Loan Agreement and attached exhibits constitute the entire
agreement between the parties on the subject matter hereof. There are no understandings, agreements,
or representations, oral or written, not specified herein regarding this Loan Agreement. No waiver of
any provision of this Loan Agreement or consent shall bind either party unless in writing and signed by
both parties and all necessary State approvals have been obtained. Such waiver or consent, if made,
shall be effective only in the specific instance and for the specific purpose given. The failure of the
State to enforce any provision of this Loan Agreement" shall not constitute a waiver by the State of that
or any other provision.
Program Development\OO3902
DOJ Exempt August 4. 1998
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Exhibit 1
Page 24 of 24
IN WITNESS WHEREOF, the State and the Borrower have caused this Loan Agreement to be
executed and delivered, effective as of the Loan Closing Date set forth on Exhibit C hereto.
STATE OF OREGON
acting by and through its Economic and
Community Development Department
CITY OF WOODBURN
(Borrower)
By: XXXXXXXXXXXXX
Betty Pongracz, Manager
Valley/Mid-Coast Team
By:
XXXXXXXXXXXXX
(Signature)
Title:
xxxxxxxxxxxxx
Date:
xxxxxxxxxxxxx
Date:
xxxxxxxxxxxxx
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Loan Agreement Exhibit A
PROJECT DESCRIPTION
City of Woodburn
Borrower will ensure the completion of major water system improvements, which also includes the cost
for engineering services, outlined here as part of Borrower's proposed project:
1. National Way Treatment Facility - Construct a 2.7-million-gallon-per-day treatment plant,
construct a 2.2-million-gallon storage tank and pump station, and construct a raw water transmission
line to the treatment site from the Alexandra Street well.
2. Parr Road Treatment Facility - Construct a 2.7-million-gallon-per-day treatment plant with
sufficient space for expansion, construct a 2.2-million-gallon storage tank and pump station, drill
two wells, and construct a raw water transmission line to the treatment site from new well.
3. Country Club Road Facility - Construct a 2.7-million-gallon-per-day treatment plant and a raw
, water transmission line to the treatment plant from Astor Way well.
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W A TERIW ASTEW ATER PROGRAM
PROJECT BUDGET
Loan Agreement Exhibit B
Project Number Y02007
Borrower: City of Woodburn
Project Name: Woodburn Water System Improvement Project
W/W W/W Direct Safe Drinking W /W Bond
Activities Grant Loan Water Revolv- Loan Borrower Total
ing Loan Fund
1. Water System Improvements $ 0 $3,400,000 $3,200,000 $5,000,000 $ 0 $11,600,000
a.
b.
2. Sanitary Sewer Improvements.
a.
b.
3. Storm Sewer Improvements
a.
b.
4. Contractual Services
a.
b.
5. a. Engineering/Architectural $ 0 $600,000 $800,000 $ 0 $2,250,000 $3,650,000
b. Administration $ 0 $ 0 $ 0 $ 0 $350,000 $350,000
c. Contingencies $ 0 $ 0 $ 0 $3,400,000 $ 0 $3,400,000
6. Other
a. Legal $ 0 $ 0 $ 0 $ 0 $300,000 $300,000
b.
c.
7. Total all Expenses $ 0 $4,000,000 $4,000,000 $8,400,000 $2,900,000 $19,300,000
Program Developmentl003902
DOJ Exempt August 4. 1998
Loan Agreement Exhibit C
Y02007
6. Maximum Principal Amount of Loan:
DESCRIPTION OF THE LOAN
The date shown as the Loan Closing Date on Exhibit D
The Closing Date of the Series of Oregon Bond Bank
Bonds, if any, that is applied to fund the Loan
City of Woodburn
270 Montgomery Street
Woodburn, OR 97071
$19,300,000
March 1, 2005
$4,000,000
1. Loan Closing Date:
2. Bond Closing Date:
3. Name and Address of Borrower:
4. Cost of the Project:
5. Estimated Completion Date of Project:
7. Interest Rate:
The interest rate, including any adjustments to such
rate, as described in the Note.
December 1, 2013
8. Optional Loan Prepayment Date:
9. Prepayment Premium:
Redemption Dates Redemption Prices
December 1, 2013 through November 30,2014 102%
December 1, 2014 through November 30,2015 101%
December 1, 2015 and thereafter 100%
10. Unexpended Loan Proceeds Transfer Date: Not Applicable
11. Authorized Officers of Borrower: Mayor
Council President
Finance Director
Public Works Director
Program Development\003902
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LOAN AMORTIZATION SCHEDULE
WaterlWastewater Financing Program
"*"*'ANNUAL PAYMENT""'"
EXHIBIT D
.E NUMBER: Y02007 PRINCIPAL AMOUNT: $4,000,000
INTEREST RATE: 4.21% (estimate)
INICIPALlTY: Woodburn Direct Loan LOAN TERM IN YEARS: 20
CLOSING DATE: 1-Apr-02
lESS/PROJECT: Water System TRUE INTEREST COST (TIC): 2.00000%
NET INTEREST COST (NIC): #REF!
WEIGHTED AVERAGE MATURI 11.52249
PAYMENT CUMULATIVE CUMULATIVE UNPAID
YEAR DATE PAYMENT INTEREST PRINCIPAL INTEREST PRINCIPAL BALANCE PERIODS
2002 1-Dec-02 243,693 112,267 131,426 112,267 131,426 3,868,574 0.6667
2003 1-Dec-03 299,826 162,867 136,959 275,134 268,385 3,731,615 1.6667
2004 1-Dec-04 299,826 157,101 142,725 432,235 411,110 3,588,890 2.6667
2005 1-Dec-05 299,826 151,092 148,734 583,327 559,844 3,440,156 3.6667
2006 1-Dec-06 299,826 144,831 154,995 728,157 714,839 3,285,161 4.6667
2007 1-Dec-07 299,826 138,305 161,521 866,463 876,360 3,123,640 5.6667
2008 1-Dec-08 299,826 131,505 168,321 997,968 1,044,681 2,955,319 6.6667
2009 1-Dec-09 299,826 124,419 175,407 1,122,387 1,220,088 2,779,912 7.6667
2010 1-Dec-10 299,826 117,034 182,792 1,239,421 1,402,880 2,597,120 8.6667
2011 1-Dec-11 299,826 109,339 190,487 1,348,760 1,593,367 2,406,633 9.6667
2012 1-Dec-12 299,826 101,319 198,507 1,450,079 1,791,874 2,208,126 10.6667
2013 1-Dec-13 299,826 92,962 206,864 1,543,041 1,998,738 2,001,262 11.6667
2014 1-Dec-14 299,826 84,253 215,573 1 ,627,294 2,214,311 1,785,689 12.6667
2015 1-Dec-15 299,826 75,178 224,649 1,702,472 2,438,959 1,561,041 13.6667
2016 1-Dec-16 299,826 65,720 234,106 1,768,192 2,673,066 1,326,934 14.6667
2017 1-Dec-17 299,826 55,864 243,962 1,824,056 2,917,028 1,082,972 15.6667
2018 1-Dec-18 299,826 45,593 254,233 1,869,649 3,171,261 828,739 16.6667
2019 1-Dec-19 299,826 34,890 264,936 1,904,539 3,436,197 563,803 17.6667
2020 1-Dec-20 299,826 23,736 276,090 1,928,275 3,712,287 287,713 18.6667
2021 1-Dec-21 299,826 12,113 287,713 1,940,388 4,000,000 0 19.6667
4,000,000.00 Payments at TIC
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Oregon Economic and Community Development Department
Cash Request and Progress on Activities Form
Special Public Works Fund, WaterlWastewater Financing Program
or Safe Orinklng Water Revolving Loan Fund
Ptot~ Hum..
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Request is for:
0...
o SPWF
o SOWRLF
Cash Request #
to
Proe"" Atpol1lnv Penod
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I Total Project Expenditure Report (Including thl, Requnt) Activities Cash Request I
All the Project Funding Sourc.. Only Economic Development Source
A. B. C. D. E. F. Total to Date G. H. Cuh I. Prior J. Approved K.
Grant Loan Request Requests Budget Balance
1. Water Improvements
a.
b.
2. Sanitary Sewer Improvements
a.
b.
3. Storm Sewer Improvements
a.
b.
4, Road and Bridge Improvements
a.
b.
5. Public Trans. and R. R. Facilities
a.
b.
6. Contractual Services
a.
b.
7. a. Engineering/Architectural
b. Administration
c. Contingencies
a. Other
a.
b.
c.
9. Total
Cu/1 On Hind: I. PII... ohow tho omounl of fundi currenlly on hond (llQI prior moniol r..,livld mtnul tolollXpenditurll) $
2. If you MV' fund. on hind. IIttlCh InfOlll1lUon "'ppol1lng thl roqueot for Iddltlonll fundi.
FoIUSIlRICDSUPICONTlVoClllNl'RICASHRiQ. WPO
Maillhl. form to: Orogon Economic ond Community Devllopmont Dopartmont
775 Summer Stroot NE. S.I.m. OR 97310
Page 1 of 2
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Progress on Activities
Loan Agreement Exhibit E
Page 2 of 2
R_
Pro;oK:t NwnMt
to
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R-.port P.nod
A. Project Goals (report for every cash request)
List each project activity and describe progress on each activity since your last report. Also discuss any problems or
delays encountered (change orders. schedule revisions, etc.). AUach additional sheets if necessary.
Proposed Accomplishments
Results Achieved
1.
2.
3.
4.
5.
B. Construction Employment (Special Public Works Fund only)
In the space below, show the cumulative total number of hours construction employees woJl(ed on the Infrastructure
project. Also show cumulative construction man hours woJl(ed on any private business projects served by the
infrastructure project.
Business Projects
Infrastructure Projects
1. Firm Name
Hours WoJl(ed
Hours WoJl(ed
2. Firm Name
Hours WoJl(ed
Hours WoJl(ed
C. Pennanent Jobs (Special Public Worlts Fund only)
In the space below, show the cumulative number of new or retained permanent jobs in private businesses served by
the infrastructure project. Show all jobs as full-lime equivalents based on a standard 40-hour woJl( week.
Finn Name
Firm Name
Firm Name
Jobs
New
Retained
Jobs
New
Retained
Jobs
New
Retained
Certification: We certify that the data is correct and that
the amount of any grant request is not in excess of current
needs. (TWO SIGNATURES REQUIRED)
"""-'zoot SIgnelurw"TlIIe
For State of Oregon Use
ToIaIAmounl AppoO\'8d
Project eoor_ Dale
Amount Oescripllon Fund CoslCenler
$ -
$ -
S -
$ -
$ -
$ -
FIocaI CoonInolc< Dale
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Send Wire Transfers To:
Name of Payee:
Name of Receiving Bank:
Location or Branch Name of Bank:
Bank Address:
Bank Account Number:
Bank ABA Routing Number:
F~WPO
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Loan Agreement Exhibit F
Page 1 of2
PROMISSORY NOTE
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
STATE OF OREGON
$4,000,000
(Dated) XXXXXXXXXXXXXX, XXXX
Salem, Oregon
FOR VALUE RECENED, the City of Woodburn (hereinafter "Borrower"), promises to pay in
lawful money of the United States of America to the order of the STATE OF OREGON, ACTING BY
AND THROUGH ITS ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT, at its
principal office at 775 Summer Street NE, Suite 200, Salem, Oregon 97301-1280 (hereinafter "State"),
the principal sum of four million dollars ($4,000,000), plus interest at the rate of four and twenty-one
one hundredths percent (4.21 %) per annum from the date hereof until paid; provided however that on
the Bond Closing Date the interest rate shall be adjusted by the State (and such rate shall be retroactive
to the date of this Note) to equal the lowest rate (in one basis point increments) that will be sufficient to
ensure that the annual amounts paid by the Borrower pursuant to this Note shall be no less than the
Borrower's pro-rata portion of the maximum annual debt service on the State Bonds. Interest shall be
computed on the basis of a 360-day year, consisting of twelve (12) thirty-day (30-day) months.
Capitalized terms not otherwise defined in this Note shall have the meanings assigned to them by
that certain loan agreement dated XXXXXXXXXXXXXX, XXXX, between the State and the Borrower
(as amended from time to time the "Loan Agreement").
Principal and Interest shall be payable as follows:
(a) The Borrower shall pay the principal of this Note at the times and in the amounts specified on the
repayment schedule set forth in Exhibit D to the Loan Agreement.
(b) All payments required hereunder shall be paid by the Borrower no later than the first day of
December of each year.
(c) This note is not payable prior to its maturity except as provided for in Sections 2.05 and 2.06 of
the Loan Agreement.
(d) In the event that the Borrower receives written notification from the State, the Issuer or the
Trustee that this Note, the Loan Agreement and the other Loan Documents have been assigned to the
Trustee under the Bond Indenture, all payments hereunder shall be made directly to the Trustee for the
account of the State.
Each payment made by the Borrower hereunder shall be applied first to interest then due and payable
on the Loan, then to the principal of the Loan.
If any Event of Default occurs, the outstanding balance of the Note, including principal, interest and
other charges, if any, shall, at the option of the State, become immediately due and payable in
accordance with Section 6.03 of the Loan Agreement. Failure or delay of the holder of this Note to
exercise any option available to the State under the terms of this Note or the Loan Agreement shall not
constitute a waiver of the right to exercise the option in the event of any continuing or subsequent
default and shall not constitute a waiver of any subsequent breach of the same or of any other provision
of this Note or the Loan Agreement.
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Loan Agreement Exhibit F
Page 2 of2
All parties to this Note hereby waive presentment, dishonor, notice of dishonor, and protest. All
parties hereto hereby consent to, and the holder hereof is hereby expressly authorized to make, without
notice, any and all renewals, extensions, modifications or waivers of the time for or the terms of
payment of any sum or sums due hereunder, or under any documents or instruments relating to or
securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof,
or the taking or release of collateral securing this Note. The liability of all parties on this Note shall not
be discharged by any action consented to above taken by any holder of this Note.
If this Note is placed in the hands of an attorney for collection, the Borrower shall, on demand, pay
to the State, the Issuer or the Trustee the reasonable fees and expenses of attorneys, whether at trial or on
appeal, and other reasonable expenses (including without limitation the reasonable costs of the State's
Counsel, Bond Counsel and legal staff) incurred by either of the State, the Issuer or the Trustee in the
collection of Loan Repayments or any other sum due hereunder or under any of the Loan Documents in
the enforcement of performance or observation of any other duties, covenants, obligations or agreements
of the Borrower.
This Note is made with reference to, and is to be construed in accordance with, the laws of the State
of Oregon.
This Note is subject to, and is secured pursuant to, the terms and conditions of the Loan Agreement.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed this XX day of
XXXXXXXXXXXXXX, XXXX.
CITY OF WOODBURN
By:
XXXXXXXXXXXXXXXXXXXXX
Title:
XXXXXXXXXXXXXXXXXXXXX
NOTICE TO BORROWER
Do not sign this note before you read it. This note is not subject to full or partial prepayment
before the date provided for repayment in this note and in the loan agreement and a penalty for
any such prepayment may be charged and collected.
Program Development\OO3902
DOJ Exempt August 4. 1 998
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Exhibit 2
Page 1 of 1
SPECIAL CONDITIONS OF AWARD
City of Wood bum
1. The principal of and interest on the Loan shall be payable from the revenues of the Borrower's
Water System ("System") which remain after payment of operation and maintenance costs of the
System (the "Net Revenues"). The Borrower hereby grants to the State a security interest in and
irrevocably pledges its Net Revenues to pay all of the obligations owed by the Borrower to the State
under the Loan Agreement. Pursuant to ORS 288.594, the pledge of the Net Revenues hereby made
by the Borrower shall be valid and binding from the date of this Loan Agreement.
2. The Borrower shall not incur any obligation payable from or secured by a lien on and pledge of the
Net Revenues that is superior to or on a parity with the Loan unless the Net Revenues exceed one
hundred ten percent (110%) of the aggregate annual debt service on the Loan and all such senior lien
and parity obligations. Prior to the issuance of any senior lien or parity obligations, the Borrower
shall deliver to State a certificate demonstrating that the requirements of this paragraph are satisfied.
3. Notwithstanding the requirements of paragraph 2 above, loans previously made and loans made in
the future by State to the Borrower that are secured by the Net Revenues shall have a lien on such
Net Revenues on a parity with the Loan.
4. The Borrower shall charge rates and fees in connection with the operation of the System which,
when combined with other gross revenues, are adequate to generate Net Revenues each fiscal year at
least equal to one hundred ten percent (110%) of the annual debt service due in the fiscal year on the
Loan, any outstanding senior lien obligations and any additional obligations issued on a parity with
the Loan pursuant to paragraph 2 above. If in any fiscal year the Borrower fails to collect fees to
meet this requirement, the Borrower shall adjust its fees and assure future compliance.
5. The Borrower may establish a debt service reserve fund to secure repayment of the obligations that
are issued on a parity with the Loan pursuant to paragraph 2 above, provided that such debt service
reserve fund is not required to be pledged to the payment of the debt service on the Loan if the Net
Revenues of the System are deposited into such debt service reserve fund only after provision is
made for the payment of debt service on the Loan during the current fiscal year.
6. The Net Revenues pledged pursuant to paragraph 1 above and hereafter received by the Borrower
shall immediately be subject to the lien of such pledge without physical delivery or further act, and
the lien of the pledge shall be superior to all other claims and liens whatsoever, except as provided in
paragraph 2 above, to the fullest extent permitted by ORS 288.594. The Borrower hereby represents
and warrants that the pledge of Net Revenues hereby made by the Borrower complies with, and shall
be valid and binding from the date hereof pursuant to ORS 288.594.
7. The Loan shall be payable from the general fund of the Borrower and shall be a full faith and credit
obligation of the Borrower which is payable from any taxes which the Borrower may levy within the
limitations of Article XI of the Oregon Constitution.
Program Development\OO3902
DOJ Exempt Augusl4. 1998
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Exhibit 3
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ENVIRONMENTAL AND NATURAL RESOURCE AGENCIES
The following list is provided in compliance with ORS 279.318. The federal, state, and local agencies listed
have enacted ordinances or regulations relating to environmental pollution or the preservation of natural
resources that may affect the performance of construction contracts.
FEDERAL AGENCIES
Agriculture, Department of
Forest Service
Soil Conservation Service
Anny, Department of the
Corps of Engineers
Coast Guard
Energy, Department of
Environmental Protection Agency
Health & Human Services, Department of
Heritage Conservation and Recreation Service
Interior, Department of
Bureau of Indian Affairs
Bureau of Land Management
Fish and Wildlife Service
Office of Surface Mining, Reclamation and Enforcement
Bureau of Reclamation
Labor, Department of
Occupational Safety & Health Administration
Mine Safety & Health Administration
Transportation, Department of
Federal Highway Administration
STATE AGENCIES
Agriculture, Department of
Energy, Department of
Environmental Quality, Department of
Fish and Wildlife, Department of
Forestry, Department of
Geology and Mineral Industries, Department of
Human Resources, Department of
Land Conservation and Development Commission
State Lands, Division of
State Soil & Water Conservation Commission
Transportation, Department of
Water Resources Department
LOCAL AGENCIES
City Councils
County Courts
County Commissioners, Boards of
Planning Commissions
Special Districts: Ports, Water, Sewer, Roads
Program DevelopmentlOO3902
DOJ Exempt August 4, 1998
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SPECIAL CONDITIONS OF AWARD
City of Woodburn
Exhibit 2
Page 1 of 1
1. The principal of and interest on the Loan shall be payable from the revenues of the Borrower's
Water System ("System") which remain after payment of operation and maintenance costs of the
System (the "Net Revenues"). The Borrower hereby grants to the State a security interest in and
irrevocably pledges its Net Revenues to pay all of the obligations owed by the Borrower to the State
under the Loan Agreement. Pursuant to ORS 288.594, the pledge of the Net Revenues hereby made
by the Borrower shall be valid and binding from the date of this Loan Agreement.
2. The Borrower shall not incur any obligation payable from or secured by a lien on and pledge of the
Net Revenues that is superior to or on a parity with the Loan unless the Net Revenues exceed one
hundred ten percent (110%) ofthe aggregate annual debt service on the Loan and all such senior lien
and parity obligations. Prior to the issuance of any senior lien or parity obligations, the Borrower
shall deliver to State a certificate demonstrating that the requirements ofthis paragraph are satisfied.
3. Notwithstanding the requirements of paragraph 2 above, loans previously made and loans made in
the future by State to the Borrower that are secured by the Net Revenues shall have a lien on such
Net Revenues on a parity with the Loan.
4. The Borrower shall charge rates and fees in connection with the operation of the System which,
when combined with other gross revenues, are adequate to generate Net Revenues each fiscal year at
least equal to one hundred ten percent (110%) ofthe annual debt service due in the fiscal year on the
Loan, any outstanding senior lien obligations and any additional obligations issued on a parity with
the Loan pursuant to paragraph 2 above. If in any fiscal year the Borrower fails to collect fees to
meet this requirement, the Borrower shall adjust its fees and assure future compliance.
5. The Borrower may establish a debt service reserve fund to secure repayment of the obligations that
are issued on a parity with the Loan pursuant to paragraph 2 above, provided that such debt service
reserve fund is not required to be pledged to the payment of the debt service on the Loan if the Net
Revenues of the System are deposited into such debt service reserve fund only after provision is
made for the payment of debt service on the Loan during the current fiscal year.
6. The Net Revenues pledged pursuant to paragraph 1 above and hereafter received by the Borrower
shall immediately be subject to the lien of such pledge without physical delivery or further act, and
the lien ofthe pledge shall be superior to all other claims and liens whatsoever, except as provided in
paragraph 2 above, to the fullest extent permitted by ORS 288.594. The Borrower hereby represents
and warrants that the pledge of Net Revenues hereby made by the Borrower complies with, and shall
be valid and binding from the date hereof pursuant to ORS 288.594.
7. The Loan shall be payable from the general fund of the Borrower and shall be a full faith and credit
obligation of the Borrower which is payable from any taxes which the Borrower may levy within the
limitations of Article XI of the Oregon Constitution.
Program Development\OO3902
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Exhibit 3
Page I of I
ENVIRONMENTAL AND NATURAL RESOURCE AGENCIES
The following list is provided in compliance with ORS 279.318. The federal, state, and local agencies listed
have enacted ordinances or regulations relating to environmental pollution or the preservation of natural
resources that may affect the performance of construction contracts.
FEDERAL AGENCIES
Agriculture, Department of
Forest Service
Soil Conservation Service
Army, Department of the
Corps of Engineers
Coast Guard
Energy, Department of
Environmental Protection Agency
Health & Human Services, Department of
Heritage Conservation and Recreation Service
Interior, Department of
Bureau of Indian Affairs
Bureau of Land Management
Fish and Wildlife Service
Office of Surface Mining, Reclamation and Enforcement
Bureau of Reclamation
Labor, Department of
Occupational Safety & Health Administration
Mine Safety & Health Administration
Transportation, Department of
Federal Highway Administration
STATE AGENCIES
Agriculture, Department of
Energy, Department of
Environmental Quality, Department of
Fish and Wildlife, Department of
Forestry, Department of
Geology and Mineral Industries, Department of
Human Resources, Department of
Land Conservation and Development Commission
State Lands, Division of
State Soil & Water Conservation Commission
Transportation, Department of
Water Resources Department
LOCAL AGENCIES
City Councils
County Courts
County Commissioners, Boards of
Planning Commissions
Special Districts: Ports, Water, Sewer, Roads
Program Developmentl003902
DOJ Exempt August 4. 1998
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