Res 1690 - Loan Agrmt & Note
COUNCIL BILL NO. 2406
RESOLUTION NO. 1690
A RESOLUTION ENTERING INTO A SAFE DRINKING WATER REVOLVING LOAN
FUND FINANCIAL ASSISTANCE AWARD CONTRACT, LOAN AGREEMENT AND
PROMISSORY NOTE WITH THE STATE OF OREGON AND AUTHORIZING THE CITY
ADMINISTRATOR TO SIGN SUCH AGREEMENT.
WHEREAS, the City of Woodburn has determined that the city's community 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 is needed by and in the public interest of the City
and has been reviewed by and commented on by the public, and
WHEREAS, the Safe Drinking Water Act Amendments of 1996, Pub.L. 104-82, as
amended, authorize any community water system to file an application with the Oregon
Economic and Community Development Department to obtain financial assistance from
the Safe Drinking Water Revolving Loan Fund, and
WHEREAS, the City has filed an application with the Oregon Economic and
Community Development Department for financial assistance for completion of the city's
water treatment project from the Safe Drinking Water Revolving Loan Fund, and
WHEREAS, the State of Oregon, Economic and Community Development
Department, has reviewed the city's application and approved the City's application for
financial assistance, and
WHEREAS, the State of Oregon acting through the Economic and Community
Development Department is authorized to enter into Safe Drinking Water Revolving Loan
Fund assistance contracts and loan agreements and disburse funds pursuant to ORS
285A.213, and
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COUNCIL BILL NO. 2406
RESOLUTION NO. 1690
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WHEREAS, the State of Oregon, Economic and Community Development
Department, is willing to provide a Safe Drinking Water Revolving Loan Fund loan of
$4,000,000 to the City of Woodburn to be used for the city's water treatment project, NOW
THEREFORE;
THE CITY OF WOODBURN RESOLVES AS FOLLOWS:
Section 1. That the City of Woodburn enter into a Safe Drinking Water Revolving
Loan Fund Financial Assistance Award Contract which is affixed as Attachment "A", a
Loan Agreement which is affixed as Attachment "8" and a Promissory 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 City Administrator of the City of Woodburn is authorized to sign
a Safe Drinking Water Revolving Loan Fund Financial Assistance Award Contract, a Loan
Agreement and a Promissory 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 Safe Drinking Water Revolving Loan Fund Financial Assistance
Award Contract, the Loan Agreement and the Promissory Note in the form prescribed by
the State of Oregon Economic and Community Development Department.
Approved as to form:
City Attorney
Date
Passed by the Council
Submitted to the Mayor
APPROVED:
Richard Jennings,
July 8, 2002
July 9, 2002
Approved by the Mayor
Filed in the Office of the Recorder
ATTEST: /% ~
Mary ~ant, Recorder
City of Woodburn, Oregon
July 9, 2002
July 9, 2002
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COUNCIL BILL NO. 2406
RESOLUTION NO. 1690
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RECIPIENT COpy
STATE OF OREGON
SAFE DRINKING WATER REVOLVING LOAN FUND
fiNANCIAL ASSISTANCE AWARD CONTRACT
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 W oodbum ("Borrower"). The reference number of this Contract is S020 1 O.
RECITALS
WHEREAS, Congress enacted the Safe Drinking Water Act Amendments of 1996, Pub.L. 104-182, as
amended (the "Act"), which included authorization for capitalization grants to state drinking water revolving
loan funds, and the Environmental Protection Agency ("EP A") issued the Orinking Water State Revolving
Fund Program Guidelines ("Guidelines") in February 1997;
WHEREAS, the revolving loan fund in Oregon is called the Safe Drinking Water Revolving Loan fund
("fund");
WHEREAS, the purpose of the Fund is to provide financing to community and non-profit non-
community water systems to plan, design, and construct drinking water facilities needed to achieve or
maintain compliance with the requirements of the Safe Drinking Water Act, Pub.L. 93-523, as amended
("SDW A"), and to protect public health objectives of the SDW A and the Oregon Drinking Water Quality
Act, ORS 448 et seq. ("ODWQA");
WHEREAS, the award of financial assistance which is the subject of this Contract is authorized by
ORS 285A.213;
WHEREAS, a reasonable estimate of the Costs of the Project, as hereinafter defined, is nineteen million
three hundred thousand dollars ($19,300,000);
WHEREAS, the State has reviewed the Borrower's application and determined the Project, as
hereinafter defined, is feasible and merits funding;
WHEREAS, the State is willing to provide a Loan of four million dollars ($4,000,000) 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 Safe Drinking Water Act Amendments of 1996, Public Law 104-182, as amended.
"Award" shall mean written notification from the State offering a Loan to the Borrower. An "Award"
shall also be a binding commitment according to the Environmental Protection Agency guidelines.
"Borrower" shall have the meaning ascribed thereto iil the Loan Agreement.
"Contract" means this contract between the State and the Borrower, including any exhibits, schedules
and attachments thereto, as amended from time to time.
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"Costs of the Proiect" shall mean all costs of acquiring and constructing the Project, including any
financing costs properly allocable to the Project, as further described in the Loan Agreement and 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 in paragraphs A through E of Section 7 of this
Contract.
"Fund" shall mean the Safe Drinking Water Fund as defined herein.
"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 Safe Drinking
Water Revolving Loan Fund.
"Loan Agreement" 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. .
"Maturity Schedule" shall mean the schedule of principal payments required to be made by the
Borrower, substantially in the form of Exhibit E to the Loan Agreement, as it may from time to time be
amended, extended, renewed or restated.
"Note" shall mean that certain promissory note, substantially in the form of Exhibit H 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.
"Proiect" shall have the meaning ascribed thereto in the Loan Agreement and described in Exhibit A of
the Loan Agreement.
"Proiect Area" shall mean all properties that will be directly benefited and served by construction of the
Project.
"Proiect Close-Out Date" shall mean the date on which the State sends the Borrower written
confirmation that the Project has been properly constructed.
"Proiect 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.
"Safe Drinking Water Fund" shall mean the Safe Drinking Water Revolving Loan Fund created pursuant
to oRS 285A.213 and managed by the State in accordance to OAR 123-049-0005 through 123-049-0050.
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. Change in the Act. The State shall not be obligated to provide the Loan if, on or prior to the time the
Borrower satisfies all conditions for disbursement of the Loan, there has been a change in the Act so that the
Project is no longer eligible for the financial assistance authorized by this Contract.
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C. Drawdowns. The Borrower must submit drawdown requests for the Loan on a State-approved cash
request form.
D. Participation Rate. The Borrower shall finance no more than twenty and seventy three hundredths
percent (20.73%) of the Costs of the Project from the Loan ("Participation Rate"), and the Borrower agrees
that notwithstanding any other provision of this Contract, the aggregate drawdowns on the Loan shall not
exceed the Participation Rate times the Costs of the Project.
SECTION 3
USE OF AWARD
A. Eligible Activities. The use of the 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 D of the Loan Agreement attached hereto and by this reference incorporated herein.
B. Ineligible Activities. No part of the Loan shall be used for:
1. Dams or rehabilitation of dams;
2. Purchase of water rights, except if the water rights are owned by a system that is being purchased
through a consolidation;
3. Reservoirs, except for finished water reservoirs and those reservoirs that are part of the treatment
process;
4. Laboratory fees for monitoring;
5. Administrative costs;
6. Costs incurred prior to official award offunds by the Department unless prior approval is obtained;
7. Purchase of equipment, such as motor vehicles, not directly appurtenant to the project;
8. Purchase of off-site property for project-related purposes such as wetland mitigation or other uses
not directly related to the project;
9. Operation and maintenance expenses; or
10. Improvements made to any part of a system that is or will be owned and operated by an ineligible
water system.
C. Unexpended Funds. Any portion of the Loan remaining after this Contract is terminated or ninety (90)
days after the Project Completion Date shall be returned to the Fund. Unexpended Loan proceeds shall be
applied to pay unpaid interest accrued to the date of payment, then to reduce the principal amount of the
Loan.
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.
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SECTION 5
REPRESENTATIONS 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 fifteen million three hundred thousand dollars
($15,300,000) are available and committed to the Project. Before any disbursement of the Loan, 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, 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.
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:
1. 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 2 hereto.
7. Oregon Administrative Rules, Chapter 123, Division 49, 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. Federal Cross Cutters listed in Exhibit 3 hereto.
10. Safe Drinking Water Revolving Loan Fund: Program Guidelines & Applicant's Handbook, July
2000.
The State's performance under this Contract is conditioned upon the Borrower's compliance with the
provisions ofORS 279.3] 2,279.314,279.316,279.320, and 279.555, as amended from time to time, which
are incorporated by reference herein.
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B. Affirmative Steps to Recruit Minority and Women Business Enterprises (MBE/WBE) and Small
Businesses in Rural Areas (SBRA). The Borrower and prime contractor must engage in outreach,
recruitment or other race/gender-neutral activities as a part of their good faith efforts to achieve a fair share
of contracts by minority and women owned businesses as well as small businesses in rural areas. The
Borrower and prime contractor may select various outreach, recruitment or other race/gender neutral
activities for a particular contract but, at a minimum, the Borrower or prime contractor must take six steps.
If the Borrower is a local government or Indian Tribe, the six affirmative steps are to:
I. Include qualified MBEs, WBEs and SBRAs on solicitation lists;
2. Assure that MBEs, WBEs and SBRAs are solicited whenever they are potential sources;
3. Divide total requirements, when economically feasible, into small tasks or quantities to permit
maximum participation of MBEs, WBEs and SBRAs;
4. Establish delivery schedules, where the requirements of the work permit, which will encourage
participation by MBEs, WBEs and SBRAs;
5. Use the services and assistance of the Small Business Administration and the Minority Business
Development Agency, U.S. Department of Commerce, as appropriate; and
6. If the prime contractor awards subcontracts/procurement, require the contractor to take the
affirmative steps in numbers 1-5 above.
C. Drawings. The Borrower shall obtain as-built drawings for all facilities constructed with the proceeds of
the Loan. The Borrower shall obtain certification of completion per the as-built drawings from the Project
engmeer.
D. Operation and Maintenance ofthe 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 Borrower's 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 federal and state funds. The Borrower shall
include the following statement, prominently placed, on all plans, reports, bid documents and advertisements
relating to the Project:
"This Project was funded in part with a financial award from the Safe Drinking Water Revolving Loan
Fund, funded by the Environmental Protection Agency and the State of Oregon, Economic and
Community Development Department."
F. Creation of Construction Account. The Borrower shall establish and maintain a segregated construction
account.
The Loan proceeds (as and when the Loan proceeds 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
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shall determine unless the State agrees in writing that the insurance proceeds shall be used to rebuild the
Project.
H. Indemnity. The Borrower shall (subject to oRS chapter 180) defend, save, hold harmless and indemnifY
the State and its officers, employees and agents from and against all claims, suits, actions, losses, damages,
liabilities, costs and expenses of any nature resulting from or arising out of, or relating to the activities of
Borrower or its officers, employees, contractors or agents under this Agreement or with respect to the
Project.
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 it is worn out, obsolete or, in
the reasonable business judgement of the Borrower, no longer useful in the operation of the Project. Except
as may be provided in the Special Conditions of A ward, 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 thereofis condemned, any condemnation proceeds shall be deposited in the Loan
Account and shall be applied to the o'utstanding balance of the Loan.
K. Planning and Preliminary Engineering Loan. In the case of a planning and preliminary engineering
Loan, the Borrower shall obtain a review and comments of draft reports and documents by the Oregon
Health Division before the Borrower accepts a final report, and if such a Loan is for a water system master
plan or pilot study for water treatment or corrosion control study, the draft report must be accepted by the
Health Division.
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, or compliance with the requirements of the Act and performance of duties by the Borrower is untrue
in any material respect; or
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 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 pursue any remedy legally
available, including but not limited to the remedies set forth in Section 8.
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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, payment of amounts earned from the investment of the proceeds of the
Loan, declaration of the Borrower's ineligibility to receive future awards and the withholding pursuant to
OAR 123-049-0040 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 State:
Manager, Valley/Mid-Coast Team
Economic and Community Development Department
775 Summer Street N.E., Suite 200
Salem, OR 97301-1280
If to the Borrower:
City Administrator
City of Woodburn
270 Montgomery Street
Woodburn, OR 97071
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. To the extent permitted by Article XI, Section 7 of the Oregon Constitution, 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, subject to the limitations of the Oregon constitution, and
other applicable state statutes.
E. Severability. Ifany 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.
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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.
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By:
STATE OF OREGON
acting by and through its Economic and
Community Development Department
7/~.Jd/~)--
Betty Pongracz, Manager
Valley/Mid-Coast Team
CITY OF WOODBURN
(Borrower)
~tIK!:6
--------
John C. Brown, City Administrator
Date: ra // J/cf:2-- Date: 7-- ? ~ oZ-
/
ApPROVED AS TO LEGAL SUFFICIENCY IN ACCORDANCE WITH ORS 291.047:
/s/Lynn T. Nagasako (as per email dated 617/02)
Lynn Nagasako, Assistant Attorney General
Date:
June 7,2002
Exhibit 1 - Form of Loan Agreement
Exhibit 2 - Environmental and Natural Resources Agencies
Exhibit 3 - Federal Cross-Cutters
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Exhibit 1
Page 1 of 18
Loan Agreement
BETWEEN
STATE OF OREGON
acting by and through its
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
AND
CITY OF WOODBURN
Program Deve1opmenl\OO4121. DOJ Exemption Statement
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Exhibit 1
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.0 I. Definitions............... ......... ........ ............ ........... ..................... .................................... ..........4
SECTION 1.02. General Rules.. .................. ... ..... ..... ...... ...... ...... ... ....... .............. ......... ........... ......... ........... ..6
ARTICLE II
LOAN TO BORROWER
SECTION 2.01. Loan Amount; Loan Terms; Disbursements; Use ofProceeds..........................................6
SECTION 2.02. Loan Payment... ...... ....... ....... .... ......... ...... ... ......... .... ...... ........ ..... ... ....... ....... ..... .... .... ..... .....6
SECTION 2.03. Unconditional Obligations........ ......... .... ....... ........... ....... .... ............. ... ........ ......... ..... ....... ..6
SECTION 2.04. Loan Prepayments.. ........ ...... .............. ...... ..... ............................... ...... ......... ......... .... ..... ..... 7
SECTION 2.05. Sources of Payment of Borrower's Obligations................................................................. 7
SECTION 2.06. Disclaimer of Warranties; Limitation of Liability; Indemnification..................................7
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANT~ OF BORROWER
SECTION 3.01. Representations and Warranties of Borrower ....................................................................8
SECTION 3.02. Particular Covenants of the Borrower ..............................................................................10
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Loan Closing ....................................................................................................................13
SECTION 4.02. Conditions to Disbursements ................................................................. ..........................14
ARTICLE V
ASSIGNMENT
SECTION 5.01. Assignment by Borrower ................................................................ ...................... ...........14
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Event of Default .............. ..................... ......................... .................. .................................14
SECTION 6.02. Notice of Default ............. ................... .................. .......... ...................... ................ ............15
SECTION 6.03. Remedies on Default ............ .... ......... ............................................................ ......... ..........15
SECTION 6.04. Attorney's Fees and Other Expenses ...............................................................................16
SECTION 6.05. Application of Moneys...... ........ .... ..... ........ ............... ......................... ................ ..............16
SECTION 6.06. No Remedy Exclusive; Waiver; Notice ...........................................................................16
SECTION 6.07. Retention of State's Rights...................................... ....... ............... ....... ................ ............16
SECTION 6.08. Default by the State ..........................................................................................................16
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Exhibit 1
Page 3 of 18
ARTICLE VII
MISCELLANEOUS
SECTION 7.0 1. Notices....... .... ............. ................. .............. ............... ..... ..... ............. ..................... ............17
SECTION 7.02. Binding Effect ............................... ...................................................................................17
SECTION 7.03. Severability.. .......................... ................ ............... ........................... ................................17
SECTION 7.04. Amendments, Supplements and Modifications................................................................17
SECTION 7.05. Execution in Counterparts ......... .............. ......................... ...... ............. ........ .....................17
SECTION 7.06. No Construction against Drafter ......................................................................................17
SECTION 7.07. Applicable Law ...................................................................... ..................... .....................17
SECTION 7.08. Consents and Approvals....... ................ .......................................... .... ..... .... .....................17
SECTION 7.09. Merger; No Waiver.. ................. .... .......... ........ ............ ........... .............. ..................... ..... ..17
EXHIBITS
Exhibit A - Project Description
Exhibit B - Project Budget
Exhibit C - Description of the Loan
Exhibit D - Special Conditions
Exhibit E - Maturity Schedule
Exhibit F - Form of Requisition
Exhibit G - Form of Opinion of Counsel
Exhibit H - Form of Promissory Note
Program 0evel0pment\004121. DOJ Exemption Statement
,
Exhibit 1
Page 4 of 18
THIS LOAN AGREEMENT, made and entered into as of XXX XXX XXX XXX XXX, 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 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 safe drinking water
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 of the Project;
WHEREAS, the State is willing to provide a Loan to Borrower on the terms and conditions of this Loan
Agreement;
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 in accordance with the
Maturity Schedule set forth in Exhibit E and the Note set forth in Exhibit H, and the terms herein;
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:
"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, ordinance, or other
authorizing document of the governing body of the Borrower under Borrower's organizational documents 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.
"Borrower" shall mean the community water system or nonprofit non-community water system as
described in the Act and OAR 123-049-0005 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 are closed, or (b) a day on which the New York Stock Exchange is
closed.
"Contract" means the Contract to which this Loan Agreement is attached as Exhibit I.
"Costs of the Project" means those costs that are (a) reasonable, necessary and directly related to a "safe
drinking water project" within the meaning ofoRS 285A.2l3, and OAR 123-049-0010 through 123-049-
0020, 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 any
ineligible activities listed in Section 3.B. of the Contract.
Program Development\004121, DOJ Exemption Statement
1
Exhibit I
Page 5 of 18
"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 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 6.0 I hereof.
"Loan" means the loan made by the State to the Borrower to finance a portion of the Costs of the Project
pursuant to this Loan Agreement.
"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 of the first disbursement of Loan proceeds in accordance with
Section 2.0 1 (c) hereof.
"Loan Closing Deadline" means the date by which all conditions precedent Loan Closing must be
satisfied, as set out in Exhibit C attached hereto.
"Loan Documents" means the Loan Agreement, Note, Maturity Schedule, 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.
"Loan Repayment" means the scheduled payments of principal and interest required to be made by the
Borrower pursuant to the Note and the Maturity Schedule attached hereto.
"Loan Term" means the term of the Loan as set forth in the Note.
"Maturity Schedule" shall mean the schedule of principal payments required to be made by the Borrower
pursuant to the schedule set forth in Exhibit E to the Loan Agreement, as it may from time to time be
amended, extended, renewed or restated.
"Municipality" means any entity described in oRS 285B.4l O( 1) that has entered into a Contract with the
State.
"Note" means the promissory note of the Borrower substantially in the form of Exhibit H attached hereto
and by this reference made a part hereof.
"Project" means the project described in Exhibit A, attached hereto and by this reference made a part
hereof.
"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 D of the Loan Agreement to Borrower's Contract
as a source of repayment for the Loan.
"Safe Drinking Water Fund" means the Safe Drinking Water Revolving Loan Fund established by oRS
285A.2l3 and managed by the State in accordance to OAR 123-049-0005 through 123-049-0050.
"State" means the State of Oregon acting by and through its Economic and Community Development
Department.
Progrem Developmenl1OO4121, OOJ Exemption Statement
v T
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Exhibit I
Page 6 of 18
"System" means the water 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.
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.
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 Sections 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 the Loan from the State, which Loan shall not exceed the lesser of (i) the maximum amount of the
Loan set forth on Exhibit C hereof or (ii) the Costs of the Project multiplied by the Participation Rate.
(b) Loan Terms. The terms of the Loan are set forth in Exhibit H hereto.
(c) Disbursements. Subject to Sections 4.01 and 4.02 hereof, the proceeds of the Loan shall be disbursed
to the Borrower on an expense reimbursement or costs incurred basis upon receipt by the State of a
requisition executed by the Borrower in substantially the form attached hereto as Exhibit F 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 and subject to and in compliance with the Special Conditions, attached hereto as
Exhibit D and by this reference incorporated herein.
SECTION 2.02. Loan Payment. The Borrower hereby covenants and agrees to repay the Loan in
accordance with the terms hereof and of the Note and the Maturity Schedule, both attached hereto and by
this reference incorporated herein.
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 2.05 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 perform 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, Note, or Maturity Schedule 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 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 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 any rights of set off, recoupment,
abatement or counterclaim that the Borrower might otherwise have against the State, or any other party or
parties; provided, however, that payments hereunder shall not constitute a waiver of any such rights.
Program Deve1opment\OO4121, OOJ Exemption Statement
1
Exhibit I
Page 7 of 18
SECTION 2.04. 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. 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; provided, however, that
each Loan Prepayment shall include payment of the accrued interest on the amount prepaid and no Loan
Prepayment shall be made without the prior written approval of the State.
(c) General. Loan Prepayments shall be applied first to accrued interest on the portion of the Loan
prepaid, and finally to principal payment(s) on the Loan. 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.
SECTION 2.05. 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 2.02,2.04,2.06 and 6.04 hereof, are payable from the sources of repayment
described in paragraph (b) of this Section 2.05; 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 Borrower's general fund and other sources identified on Exhibit D of the Loan Agreement
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 OAR 123-049-0040, 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.
SECTION 2.06. Disclaimer of Warranties; Limitation of Liability; Indemnification. The Borrower
acknowledges and agrees that:
(a) the State does not make 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;
(b) in no event shall the State or any of its 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 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.
Progr8l1l Developmenl\OO4121, DOJ Exemption Statemenl
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Exhibit 1
Page 8 of 18
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER
SECTION 3.01. Representations and Warranties of Borrower. The Borrower represents and warrants for
the benefit of the State as follows:
(a) Organization and Authority.
(i) The Borrower is a municipality duly organized and validly existing under the laws of the State of
Oregon, and is a community water system or a non-profit non-community water system as defined in the
Act and OAR 123-049-0005. Borrower has full power and authority to transact the business in which it
is engaged, and full power, authority, and legal right to make this Agreement and the Note and to incur
and perform its obligations hereunder.
(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 the Act,
including but not limited to 42 U.S.C. S 300j-12(a)(3), 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.
(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,
Band C hereto.
(vi) Borrower's Contract and the Loan Agreement have been authorized by an ordinance, resolution,
or other authorizing document of the Borrower as appropriate under Borrower's organizational
documents which was adopted in accordance with applicable state and local law, including but not
limited to publication, public hearings and prior notice, if required.
(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
Program Oevelopmenl1OO4121, DOJ Exemption Statemenl
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Exhibit]
Page 9 of 18
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 oftrust, loan agreement or other instrument (other than any lien and charge of this
Loan Agreement or any of the documents related hereto) 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.
(e) No Defaults. No event has occurred and no condition exists that, upon authorization, execution and
delivery of this Loan Agreement or any ofthe Loan Documents or receipt ofthe 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.
(0 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 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 thereof. No consent, approval or authorization of, or filing, registration or qualification with, any
Program Development1OO4121, OOJ Exemption Slatemenl
'Vf'
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Exhibit]
Page 10 of 18
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 federal cross-cutters listed in Exhibit 3 to the Contract and the requirements set forth in
the Safe Drinking Water Revolving Loan Fund, Program Guidelines & Applicant's Handbook, July
2000) 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 ofORS 279.312, 279.314, 279.316, 279.320, and 279.555, which are incorporated by
reference herein.
(h) The Proiect.
(i) The Project is feasible, and there will be adequate funds available to complete the Project and to
repay the Loan.
(ii) The Borrower has been provided with a copy of the rules adopted by the State under
ORS 285A.075 and 285A.2l3, and the Project is in compliance with such rules.
(iii) The term of the Loan is not in excess of the useful life of the Project.
(i) Costs of the Proiect. The Borrower certifies that the Costs of the Project, as listed in Exhibits B and C
hereto, 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. 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.
(j) Continuing Representations. The representations ofthe 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 of the Loan to finance all or a portion of the Costs of the Project.
Borrower will apply the proceeds strictly in accordance with the Act and Oregon law.
(b) 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.
Program DevetopmenllOO4121, DOJ Exemption Statement
,.
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Exhibit 1
Page II of 18
(c) Completion ofProiect and Provision of Moneys Therefore. 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 the on-going maintenance, operation and replacement, at Borrower's 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.
(d) Disposition ofProiect 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 if the State consents thereto in writing upon ninety (90) days'
prior written notice to the State. .
( e) 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
2.05(a), and provided further that nothing herein shall be construed as preventing the Borrower from doing
so.
(f) 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 of the 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 at any reasonable time, and a copy of such annual audit(s)
therefore, including all written comments and recommendations of such accountant, shall be furnished to the
State within 210 days ofthe close of the fiscal year being so audited. The Borrower's financial management
systems must conform with the generally accepted accounting principles for state and municipal
Program ~121. DOJ Exemption Statement
v.,
,
Exhibit 1
Page 12 of 18
corporations established by the National Committee on Governmental Accounting as in effect from time to
time.
(g) Inspections; Information. The Borrower shall permit the State and any party designated by the State
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 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
bonds, notes or other indebtedness of the Borrower that are issued after the Loan Closing Date and are
secured by the Revenues.
(h) 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 units
constructing, operating and maintaining system facilities of the nature ofthe 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.
(i) 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.
(j) Notice of Material Adverse Change. The Borrower shall promptly notify the State 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.
(k) 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, audited financial statements, when and ifprepared and available, prepared in
accordance with generally accepted accounting principles as established by the Government Accounting
Standards Board as in effect from time to time; provided, however, that if audited financial statements
are not available, 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 ofthe 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.
(1) Meters. Prior to final disbursement of the Loan,
Program Development\OO4121 , DOJ Exemption Statement
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Exhibit 1
Page 13 of 18
(i) In the case of construction projects, the Borrower shall install necessary source meter(s) and
service meter( s) on all connections throughout the drinking water system. The Borrower shall also have
an acceptable operations program that includes regular reading and maintaining of all system meters.
(ii) In the case of planning, preliminary engineering and final design and specification projects, the
Borrower must adopt a plan for the installation of necessary source meter(s) and service meter( s) on all
connections throughout the drinking water system.
(m) Environmental Review. Prior to any work on the Project, whether construction or non-construction
related, an environmental review in accordance with the State Environmental Review Process and consistent
with state and federal environmental laws must be completed
(n) 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.
(0) 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, 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 satisfaction of the
following conditions precedent on or prior to the Loan Closing Deadline or such later date as the State may
authorize in the State's sole and absolute discretion:
(a) the Borrower will cause to be duly executed and delivered to the State the following items, each in
form and substance satisfactory to State and its Counsel:
(i) this Loan Agreement duly executed and delivered by an Authorized Officer ofthe 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, resolution, or other authorizing document of the governing body of the
Borrower as appropriate under Borrower's organizational documents 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, acceptable to State, substantially in the form of Exhibit G
attached hereto and by this reference made a part hereof; and
(vi) such other certificates, documents, opinions and information as the State may reasonably
reqUIre.
(b) there is money available in the Safe Drinking Water Fund for the Project;
provided, however, the State shall be under no obligation to make this Loan ifthere has been a change in the
Act so that the Project is no longer eligible for financial assistance authorized by this Loan Agreement.
Program Developmenl\OO4121, DOJ ExempClon Statement
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Exhibit I
Page 14 of 18
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 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 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 after notice or lapse of time or both;
(b) the representations and warranties of the Borrower made in this Loan Agreement are not true and
correct on the date of disbursement with the same effect as if made on such date;
(c) State has not received (i) a requisition executed by the Borrower in substantially the form of
Exhibit F 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 ofthe 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 of the Project; or
(d) money is not available in the Safe Drinking Water Loan Fund to fund the disbursement.
ARTICLE V
ASSIGNMENT
SECTION 5.01. Assignment 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 in-house Counsel.
ARTICLE VI
DEFAULTS 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
Program DevelopmenlIOO4121. DOJ Exemption Statemenl
T
I
Exhibit I
Page] 5 of 18
(b) Failure by the Borrower to make, or cause to be made, any required payments of principal 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, 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 t~ 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
(g) Failure by the Borrower to observe and perform any duty, covenant, obligation or agreement (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, unless the State 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 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 prompt telephonic notice of the
occurrence of any Event of Default referred to in Section 6.0l(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 any action permitted or required
pursuant to the Loan Agreement or any other Loan Document 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 to be immediately due and payable, and upon
Program Devek>pmenl\004121. DOJ Exemption Statement
~
I
Exhibit I
Page 16 of 18
notice to the Borrower the same shall become due and payable without further notice or demand, (b)
appointment ofa receiver of the System, (c) refusal to disburse any Loan proceeds, (d) barring the Borrower
from applying for future state assistance, or (e) withholding amounts otherwise due to the Borrower to apply
to the payment of amounts due under this Loan Agreement.
SECTION 6.04. Attorney's Fees and Other Expenses. The Borrower shall, on demand, pay to the State
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, or any other Counsel
appointed by the State and legal staff) incurred by the State 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 pursuant to Section 6.03
hereof shall be applied (a) first, to pay any attorney's fees or other fees and expenses owed by the Borrower
hereunder, (b) second, to pay interest due and payable on the Loan, (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 orreserved to
the State 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 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 Rights. Notwithstanding any assignment or transfer of this Loan
Agreement and the Loan Documents pursuant to the provisions hereof 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, 2.06, 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.
Program DeveIopmenI\OO4121 , DOJ Exemption Statement
Exhibit I
Page 17 of 18
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 at the following
address:
Economic and Community Development Department
Attention: Manager, Valley/Mid-Coast Team
775 Summer Street N.E., Suite 200
Salem, OR 97301-1280
The State may designate any further or different address to which subsequent notices, certificates or
other communications shall be sent, by notice in writing.
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.
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.
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 forthe 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.
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
Program 0evel0pmenl\004121 , OOJ Exemption S1alemenl
r
Exhibit 1
Page 18 of 18
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.
IN WITNESS WHEREOF, the State and the Borrower have caused this Loan Agreement to be executed
and delivered, effective as of the latest date of the signatories below.
~:.:l......<'.\.. ...
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WOODB'URN
-..----'il.-.....-n - ... _
1~.~rr~'~t~J I~~~
STATE OF OREGON
acting by and through its Economic and
Community Development Department
CITY OF WOODBURN
(Borrower)
By: XXXXXXXXXXXXXXXXXXXX
Betty Pongracz, Manager
ValleylMid-Coast Team
By:
XXXXXXXXXXXXXXXXXXXX
John C. Brown, City Administrator
Date: XXXXXXXXXXXXXXXXXXXX
Date:
XXXXXXXXXXXXXXXXXXXX
ApPROVED AS TO LEGAL SUFFICIENCY IN ACCORDANCE WITH ORS 291.047:
XXXXXXXXXXXXXXXXXXXX
Lynn Nagasako, Assistant Attorney General
Date: XXXXXXXXXXXXXXXXXXXX
Program D<Mt~121, OOJ Exemption Statement
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Loan Agreement Exhibit A
Page I of 1
PROJECT DESCRIPTION
The following items provide an outline of the major water system improvements that are planned to be
completed as part of the City's proposed Project. The Project also includes the cost for engineering services.
I. National Way Treatment Facility - Construct a 2.7 million gallon per day treatment plant, a 2.2 million
gallon storage tank and pump station, and a raw water transmission line to 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, a 2.2 million gallon storage tank and pump station, drill two wells, and construct
a raw water transmission line to treatment site from new wells.
3. Country Club Road Facility - Construct a 2.7 million gallon per day treatment plant and a raw water
transmission line to treatment plant from Astor Way well.
Program Development\OO4121, OOJ Exemption Statement
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Loan Agreement Exhibit C
Project Number S02010
DESCRIPTION OF THE LOAN
I. Loan Closing Date:
2. Name and Address of Borrower:
3. Cost of the Project:
4. Estimated Completion Date of Project:
5. Maximum Principal Amount of Loan:
6. Interest Rate:
7. Authorized Officers of Borrower:
8. Loan Closing Deadline:
Progr,,", DevelopmentlOO4121. DOJ Exemption Statemenl
The date of the first disbursement of Loan proceeds in
accordance with Section 2.01 ( c)
City of Woodburn
270 Montgomery Street
Woodburn, OR 97071
$19,300,000
March I, 2005
$4,000,000
The interest rate as described in the Note (Exhibit H).
Mayor
Council President
Finance Director
Public Works Director
May 31,2002
'W'..-
,
Loan Agreement Exhibit D
Page 1 of 1
SPECIAL CONDITIONS
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
the Department a certificate demonstrating that the requirements of this paragraph are satisfied.
3. 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.
4. 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 unless 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.
5. 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.
6. 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 Oevelopment\OO4121
I'
MATURITY SCHEDULE
Woodburn SDWRLF Loan
Contract #
Gross Principal Amount
Principal Forgiveness
Net Principal Amount
INTEREST RATE:
LOAN TERM IN YEARS:
CLOSING DATE:
S02010
$4,000,000
o
$4,000,000
4.21%
20
31-May-02
YEAR
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total
PAYMENT
DATE
o 1-Dec-02
o 1-Dec-03
o 1-Dec-04
01-Dec-05
o 1-Dec-06
01-Dec-07
01-Dec-08
o 1-Dec-09
01-Dec-10
01.-Dec-11
01-Dec-12
01-Dec-13
01-Dec-14
01-Dec-15
01-Dec-16
01-Dec-17
01-Dec-18
01-Dec-19
01-Dec-20
01-Dec-21
Program Development\OO4121, DOJ Exemption Statement
PRINCIPAL
131,426
136,959
142,725
148,734
154,995
161,521
168,321
175,407
182,792
190,487
198,507
206,864
215,573
224,649
234,106
243,962
254,233
264,936
276,090
287,713
4,000,00
Loan Agreement Exhibit E
Page I of I
R ..
t
Loan Agreement Exhibit F
Page 1 of 2
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Progress on Activities
Loan Agreement Exhibit F
Page 2 of 2
-
-.........
10
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R~ P....
A. Projed 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.). A"ach additional sheets if necessary.
Proposed Accomplishments
Results Achieved
1.
2.
3.
4.
s.
B. Construction Employment (Special Public Wor1<.s Fund only)
In the space below, show the cumulative total number of hours construction employees worked on Ihe Infrastructure
project. Also show cumulative construction man hours worked on any private business projects served by the
Infrastructure project.
Business Projects
Infrastructure Projects
1. Firm Name
Hours Wor1ted
Hours Worked
2. Firm Name
Hours Worked
Hours Worked
C. Permanent Jobs (Special Public Wor1<.s 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 work week.
FmI Name
Firm Name
Fnn Name
Jobs
New
ReIalned
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)
For State of Oregon Use
T__~
Proi-d c-_ 0-
Amount 0escriplI0n Fund CDStCenl.-
$ -
$ -
$ -
$ -
$ -
$ -
FlocoI C-_ DooIe
"'"'- 00Ie
-... s~.rr..
o..te
_...~
DooIe
~-
--
Send Wire Transfers To:
Name of Payee:
Name of Recelvlna Bank:
location or Branch Name of Bank:
Bank Address:
Bank Account Number:
Bank ABA Routing Number:
~~WPO
Page 2 of 2
"1f 1"
"
Loan Agreement Exhibit G
Page I of I
Form of Opinion of Counsel
It is the opinion ofXXXXXXXXXXXXXXXXXXXX, counsel for City of Woodburn, 270 Montgomery
Street, Woodburn, OR 97071 ("Borrower"), that:
(a) Borrower is a municipality duly organized and validly existing under the laws of Oregon and
Borrower has the requisite power and authority to own its properties and conduct its business as now
conducted. Borrower is either a community or non-profit noncommunity water system, eligible to receive
funds as defined under the Act and Oregon law.
(b) Borrower has the requisite power and authority to execute, deliver, and perform the Loan Documents
and the Contract. The Loan Documents and the Contract have been duly and validly authorized by
Borrower, have been executed and delivered by an authorized officer of Borrower and constitute the legal,
valid, and binding obligations of Borrower. Subject to bankruptcy and other laws of general application
affecting the rights and remedies of creditors, the Loan Documents and the Contract are enforceable
according to their terms, except that no opinion need be given as to the availability of equitable remedies.
( c) Borrower is not in violation or default of any material agreement to which it is a party or by which it
is bound, which affects or relates to Borrower's performance under the Loan Documents or the Contract.
Borrower's execution, delivery, performance, and compliance with the terms of the Loan Documents and the
Contract do not violate any material provision of any applicable federal, state, or local law, rule or regulation
binding on Borrower or of any judgment, writ, decree, or order known to such counsel to be binding on
Borrower, or any provision of Borrower' s organizational documents and do not conflict with or constitute a
material default under the provisions of any material agreement to which Borrower is a party or by which it
is bound.
(d) All consents, approvals, orders, or authorizations of, and all qualifications, registrations,
designations, declarations, or filings with any federal or state governmental authority on the part of
Borrower required for the consummation of the transactions contemplated by the Loan Documents and the
Contract have been obtained and are effective as of the date hereof, and such counsel is not aware of any
proceedings, or threat thereof, which question the validity thereof.
(e) There is no action, suit, proceeding, or investigation pending or threatened against Borrower which
would, if adversely determined, have a material adverse effect on the financial condition or business of
Borrower or on the ability of Borrower to perform its obligations under the Loan Documents or the Contract.
(t) The State has acquired a legally valid and perfected security interest in and lien on the Net Revenues
to secure Borrower's repayment of the Loan and performance of Borrower's other obligations under the
Loan Documents.
Program Oevelopment1OO4121, DOJ Exemption Statement
Loan Agreement Exhibit H
Page I of 2
PROMISSORY NOTE
Economic and Community Development Department
State of Oregon
US $4,000,000
(Dated) XXXXXXXXXXXXX, XXXX
Woodburn, Oregon
FOR VALUE RECEIVED, 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, OR 97301-1280 (hereinafter "State"), the principal sum
of Four Million Dollars ($4,000,000) or so much thereof as is disbursed pursuant to the Loan Agreement,
plus interest on each disbursement at the rate offour and twenty-one hundredths percent (4.21 %) per annum,
from the disbursement date until paid. Interest shall be computed on the basis of a 360-day year, consisting
of twelve (12) thirty-day (30) months.
Capitalized terms not otherwise defined in this Note shall have the meanings assigned to them by the
certain loan agreement dated XXXXXXXXXXXXX, XXXX, between the State and the Borrower (as
amended from time to time the "Loan Agreement").
Unless earlier repayment is received hereunder or under the terms of the Loan Agreement, principal and
interest shall be payable as follows:
(a) The Borrower shall pay all interest accrued on disbursed Loan funds on December 1 of each year
beginning December 1, 2002, and continue until the earlier of December 1, 2021, or the first date that all
Loan principal disbursed has been repaid, on which date all remaining unpaid accrued interest shall be due
and payable.
(b) The Borrower shall pay the principal of this Note at the times and in the amounts specified on the
Maturity Schedule set forth in Exhibit H to the Loan Agreement.
(c) This Note is payable prior to its maturity as provided for in Sections 2.05 and 2.06 of the Loan
Agreement.
Each payment made by the Borrower hereunder shall be applied first to unpaid accrued interest on the
Loan, then to the principal of the Loan.
This Note is given to avoid the execution by Borrower of an individual note for each disbursement of
Loan proceeds by State to Borrower in accordance with Section 2.01 of the Loan Agreement. In
consideration thereof, Borrower authorizes State to record in State's files the date and amount of each such
disbursement, the date and amount of each payment and prepayment by Borrower hereunder and the amount
of interest accrued and paid. Borrower further agrees that absent manifest error, such notations shall be
conclusive evidence of borrowing, payments and interest under this Note; provided, however, that failure to
make any such notations shall not affect the obligations of Borrower hereunder or under any of the Loan
Documents.
Program Developmenl\OO4121, DOJ Exemption Statement
Loan Agreement Exhibit H
Page 2 of 2
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.
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 ofthe time for or the terms of payment of any sum of
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 of this Note shall not be discharged by any action
consented to above taken by any holder of this Note.
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
XXXXXXXXX, XXXx.
CITY OF WOODBURN
By:
xxxxxxxxxxxxxxxxxxxx
Title:
xxxxxxxxxxxxxxxxxxxx
Notice to Borrower
Do not sign this note before you read it.
Program DevelopmentlOO4121, DOJ exemption Statement
.... '"
,
Exhibit 2
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
EilVironmental 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 OevelopmentlOO4121, DOJ Exemption Statement
Exhibit 3
FEDERAL CROSS-CUTTERS
Environmental Authorities
· Archeological and Historic Preservation Act of 1974, Pub. L. 86-523, as amended
· Clean Air Act, Pub. L. 84-159, as amended
· Coastal Barrier Resources Act, Pub. L. 97-348
· Coastal Zone Management Act, Pub. L. 92-583, as amended
· Endangered Species Act, Pub. L. 93-205, as amended
· Environmental Justice, Executive Order 12898
· Floodplain Management, Executive Order 11988 as amended by Executive Order 12148
· Protection of Wetlands, Executive Order 11990
· Farmland Protection Policy Act, Pub. L. 97-98
· Fish and Wildlife Coordination Act, Pub. L. 85-624, as amended
· National Historic Preservation Act of 1966, PL 89-665, as amended
· Safe Drinking Water Act, Pub. L. 93-523, as amended
· Wild and Scenic Rivers Act, Pub. L. 90-542, as amended
Economic and Miscellaneous Authorities
· Demonstration Cities and Metropolitan Development Act of 1966, Pub. L. 89-754, as amended,
Executive Order 12372
· Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 ofthe Clean
Water Act, including Executive Order 11738, Administration of the Clean Air Act and the Federal
Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans
· Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as amended
· Debarment and Suspension, Executive Order 12549
Social Policy Authorities
· Age Discrimination Act of 1975, Pub. L. 94-135
· Title VI of the Civil Rights Act of 1964, Pub. L. 88-352 and related anti-discrimination statutes
· Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Pub. L. 92-500 (the
Clean Water Act)
· Section 504 of the Rehabilitation Act of 1973, Pub. L. 93-112 (including Executive Orders 11914
and 11250)
· Equal Employment Opportunity, Executive Order 11246
· Women's and Minority Business Enterprise, Executive Orders 11625, 12138 and 12432
· Section 129 of the Small Business Administration Reauthorization and Amendment Act of 1988,
Pub. L. 100-590
Program 0eve1opment\OO4121 , DOJ Exemption Statement
RECIPIENT COpy
Page 1 of 18
Loan Agreement
BETWEEN
STATE OF OREGON
acting by and through its
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
AND
CITY OF WOODBURN
Program DeveloprnenOOO4123
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Page 2 of 18
T ABLE OF CONTENTS
Page
ARTICLE I
DEFINITJONS
SECTION 1.0 I. Definitions .......... ... ............ ...... ................... .... ........ ...... ... .......... ............... ..... .... ........ ....... ..4
SECTION 1.02. General Rules ..... ......... ..... ...... .................... ....... ................. .......... ........... .......... .............. ...6
ARTICLE II
LOAN TO BORROWER
SECTJON 2.01. Loan Amount; Loan Terms; Disbursements; Use ofProceeds..........................................6
SECTION 2.02. Loan Payment..... ......... ......... .................... .... ........ .... ...... ....... ........ ........ ...... ..... .......... ........6
SECTION 2.03. Unconditional Obligations.. ................................... ..... ................ ..... ...... ..... ........ ............ ...6
SECTION 2.04. Loan Prepayments .......... .............. ........... ..................... ......... ......... ... .............. ....... ............ 7
SECTION 2.05. Sources of Payment of Borrower's Obligations.................................................................7
SECTION 2.06. Disclaimer of Warranties; Limitation of Liability; Indemnification..................................7
ARTICLE III
REPRESENT A T10NS, WARRANTIES AND COVENANTS OF BORROWER
SECTION 3.0 I. Representations and Warranties of Borrower ....................................................................8
SECTION 3.02. Particular Covenants of the Borrower ..............................................................................10
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Loan Closing .... ................... ... ........ ..... ............... ......... ..... ................ ...... ... ... ... ......... ..... ...13
SECTION 4.02. Conditions to Disbursements .......... ...... ......................... ......... .......... ................... ..... .......14
ARTICLE V
ASSIGNMENT
SECTION 5.0 I. Assignment by Borrower .................................................................................................14
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Event of Default ........................ ............ ................... ........................... .............................14
SECTION 6.02. Notice of Default ............ ......... ........ .......... ........................................... ............................15
SECTION 6.03. Remedies on Default ........................................................................................................15
SECTION 6.04. Attorney's Fees and Other Expenses ...............................................................................16
SECTION 6.05. Application of Moneys ................ ..... ................................... ...... ..... ..................................16
SECTION 6.06. No Remedy Exclusive; Waiver; Notice ...........................................................................16
SECTION 6.07. Retention of State's Rights........................... .......................................... ..... .....................16
SECTION 6.08. Default by the State ............................. ......................................... ........ ....... .................... .16
Progrlllll Development\OO4123
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Page 3 of 18
ARTICLE VII
MISCELLANEOUS
SECTION 7.0 I. Notices.. .............. ......... .... .......... ......... .......... ............ ...... ... ................. ............... ...... ..... ....17
SECTION 7.02. Binding Effect.... ..... ............... ........ .... ........... ...... ......... ..... ............... ...... ......... ............ .".. ..17
SECTION 7.03. Severability........ .... ............. ................................. ......... ... ............ ...... ....... .... ......... ... ..... ..17
SECTION 7.04. Amendments, Supplements and Modifications................................................................17
SECTION 7.05. Execution in Counterparts ................................................................................................17
SECTION 7.06. No Construction against Drafter ......................................................................................17
SECTION 7.07. Applicable Law.............. ........... .... ......... .... ........... ......... ...... ............ ..... ....... ... ....... ..........17
SECTION 7.08. Consents and Approvals.......................... .........................................................................17
SECTION 7.09. Merger; No Waiver .......... ................................................................................................17
EXHIBITS
Exhibit A - Project Description
Exhibit B - Project Budget
Exhibit C - Description of the Loan
Exhibit D - Spe'cial Conditions
Exhibit E - Maturity Schedule
Exhibit F - Form of Requisition
Exhibit G - Form of Opinion of Counsel
Exhibit H - Form of Promissory Note
Program OevelopmentlOO4123
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Page 4 of 18
THIS LOAN AGREEMENT, made and entered into as of :rIAl i&: 9'} .;:La 0 d- , by and between
the STATE OF OREGON, ACTING BY AND THROUGH ITS ONOMIC 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 Borrower has made timely application to the State for a Loan to finance all or a portion
ofthe Costs of the Project, and the State has approved the Borrower's application for a safe drinking water
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 of the Project;
WHEREAS, the State is willing to provide a Loan to Borrower on the terms and conditions of this Loan
Agreement;
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 in accordance with the
Maturity Schedule set forth in Exhibit E and the Note set forth in Exhibit H. and the terms herein;
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:
"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, ordinance, or other
authorizing document of the governing body of the Borrower under Borrower's organizational documents to
act as an authorized officer ofthe 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.
"Borrower" shall mean the community water system or nonprofit non-community water system as
described in the Act and OAR 123-049-0005 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 are closed, or (b) a day on which the New York Stock Exchange is
closed.
"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 "safe
drinking water project" within the meaning ofORS 285A.2l3, and OAR 123-049-0010 through 123-049-
0020, 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 any
ineligible activities listed in Section 3.B. of the Contract.
Program 0eve1opmenl\OO4123
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Page 5 of 18
"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 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.
"Loan" means the loan made by the State to the Borrower to finance a portion of the Costs of the Project
pursuant to this Loan Agreement.
"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 of the first disbursement of Loan proceeds in accordance with
Section 2.01(c) hereof.
"Loan Closing Deadline" means the date by which all conditions precedent Loan Closing must be
satisfied, as set out in Exhibit C attached hereto.
"Loan Documents" means the Loan Agreement, Note, Maturity Schedule, 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.
"Loan Repayment" means the scheduled payments of principal and interest required to be made by the
Borrower pursuant to the Note and the Maturity Schedule attached hereto.
"Loan Term" means the term of the Loan as set forth in the Note.
"Maturity Schedule" shall mean the schedule of principal payments required to be made by the Borrower
pursuant to the schedule set forth in Exhibit E to the Loan Agreement, as it may from time to time be
amended, extended,.renewed or restated.
"Municipality" means any entity described in ORS 285B.4l O( 1) that has entered into a Contract with the
State.
"Note" means the promissory note of the Borrower substantially in the form of Exhibit H attached hereto
and by this reference made a part hereof.
"Project" means the project described in Exhibit A, attached hereto and by this reference made a part
hereof.
"Project Completion Date" means the earlier of (a) the date on which all of the proceeds of the Loan,
incl uding 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 D ofthe Loan Agreement to Borrower's Contract
as a source of repayment for the Loan.
"Safe Drinking Water Fund" means the Safe Drinking Water Revolving Loan Fund established by ORS
285A.213 and managed by the State in accordance to OAR 123-049-0005 through 123-049-0050.
"State" means the State of Oregon acting by and through its Economic and Community Development
Department.
Program OevetopmentlOO4123
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Page 6 of 18
"System" means the water 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.
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.
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 Sections 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 the Loan from the State, which Loan shall not exceed the lesser of (i) the maximum amount of the
Loan set forth on Exhibit C hereof or (ii) the Costs of the Project multiplied by the Participation Rate.
(b) Loan Terms. The terms of the Loan are set forth in Exhibit H hereto.
(c) Disbursements. Subject to Sections 4.01 and 4.02 hereof, the proceeds of the Loan shall be disbursed
to the Borrower on an expense reimbursement or costs incurred basis upon receipt by the State of a
requisition executed by the Borrower in substantially the form attached hereto as Exhibit F 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 and subject to and in compliance With the Special Conditions, attached hereto as
Exhibit D aDd by this reference incorporated herein.
SECTION 2.02. Loan Payment. The Borrower hereby covenants and agrees to repay the Loan in
accordance with the terms hereof and of the Note and the Maturity Schedule, both attached hereto and by
this reference incorporated herein.
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 2.05 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 perform 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, Note, or Maturity Schedule 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 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 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 any rights of set off, recoupment,
abatement or counterclaim that the Borrower might otherwise have against the State, or any other party or
parties; provided, however, that payments hereunder shall not constitute a waiver of any such rights.
Progr8111 DevelopmenllOO4123
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Page 7 of 18
SECTION 2.04. 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. 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; provided, however, that
each Loan Prepayment shall include payment of the accrued interest on the amount prepaid and no Loan
Prepayment shall be made without the prior written approval of the State.
(c) General. Loan Prepayments shall be applied first to accrued interest on the portion of the Loan
prepaid, and finally to principal payment(s) on the Loan. 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.
SECTION 2.05. 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, 2.04, 2.06 and 6.04 hereof, are payable from the sources of repayment
described in paragraph (b) of this Section 2.05; 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 Borrower's general fund and other sources identified on Exhibit D of the Loan Agreement
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 OAR 123-049-0040, 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.
SECTION 2.06. Disclaimer of Warranties; Limitation of Liability; Indemnification. The Borrower
acknowledges and agrees that:
(a) the State does not make 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;
(b) in no event shall the State or any of its 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 ofthe 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 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.
Program Developmenl\OCl4123
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Page 8 of 18
ARTICLE III
REPRESENT A 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 as follows:
(a) Organization and Authority.
(i) The Borrower is a municipality duly organized and validly existing under the laws of the State of
Oregon, and is a community water system or a non-profit non-community water system as defined in the
Act and OAR 123-049-0005. Borrower has full power and authority to transact the business in which it
is engaged, and full power, authority, and legal right to make this Agreement and the Note and to incur
and perform its obligations hereunder.
(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 the Act,
including but not limited to 42 U.S.C. ~ 300j-12(a)(3), and for which the Borrower is authorized by law
to borrow money.
(iv) The proceedings ofthe 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.
(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,
B and C hereto.
(vi) Borrower's Contract and the Loan Agreement have been authorized by an ordinance, resolution,
or other authorizing document of the Borrower as appropriate under Borrower's organizational
documents which was adopted in accordance with applicable state and local law, including but not
limited to publication, public hearings and prior notice, if required.
(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
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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 ofthis
Loan Agreement or any of the documents related hereto) 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.
(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 ofthe'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 perfonn 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 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 thereof No consent, approval or authorization of, or filing, registration or qualification with, any
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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 federal cross-cutters listed in Exhibit 3 to the Contract and the requirements set forth in
the Safe Drinking Water Revolving Loan Fund, Program Guidelines & Applicant's Handbook, July
2000) 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 ofORS 279.312, 279.314, 279.316, 279.320, and 279.555, which are incorporated by
reference herein.
(h) The Proiect.
(i) The Project is feasible, and there will be adequate funds available to complete the Project and to
repay the Loan.
(ii) The Borrower has been provided with a copy of the rules adopted by the State under
ORS 285A.075 and 285A.2l3, and the Project is in compliance with such rules.
(iii) The term of the Loan is not in excess of the useful life of the Project.
(i) Costs ofthe Proiect. The Borrower certifies that the Costs of the Project, as listed in Exhibits B and C
hereto, 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. 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.
(j) 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 of the Loan to finance all or a portion of the Costs of the Project.
Borrower will apply the proceeds strictly in accordance with the Act and Oregon law.
(b) 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.
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(c) Completion of Project and Provision of Moneys Therefore. 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 the on-going maintenance, operation and replacement, at Borrower's sole
expense, of the Project. The program shall include a plan for generating revenues sufficient to assure the
operation, maintenance and replacement ofthe Project during the useful life of the Project. Borrower shall
provide such documentation to the State on or before the Project Completion Date.
(d) Disposition ofProiect 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 ifthe State consents thereto in writing upon ninety (90) days'
prior written notice to the State.
(e) 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
2.05(a), and provided further that nothing herein shall be construed as preventing the Borrower from doing
so.
(0 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 of the 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 at any reasonable time, and a copy of such annual audit(s)
therefore, 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 fmancial management
systems must conform with the generally accepted accounting principles for state and municipal
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corporations established by the National Committee on Governmental Accounting as in effect from time to
time.
(g) Inspections~ Information. The Borrower shall permit the State and any party designated by the State
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 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
bonds, notes or other indebtedness of the Borrower that are issued after the Loan Closing Date and are
secured by the Revenues.
(h) 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 units
constructing, operating and maintaining system facilities of the nature ofthe 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
thereofis 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.
(i) 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.
0) Notice of Material Adverse Change. The Borrower shall promptly notify the State of any material
adverse change in the activities, prospects or condition (financial or otherwise) ofthe 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.
(k) 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, audited financial statements, when and if prepared and available, prepared in
accordance with generally accepted accounting principles as established by the Government Accounting
Standards Board as in effect from time to time; provided, however, that if audited financial statements
are not available, 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.
(1) Meters. Prior to final disbursement of the Loan,
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(i) In the case of construction projects, the Borrower shall install necessary source meter(s) and
service meter(s) on all connections throughout the drinking water system. The Borrower shall also have
an acceptable operations program that includes regular reading and maintaining of all system meters.
(ii) In the case of planning, preliminary engineering and final design and specification projects, the
Borrower must adopt a plan for the installation of necessary source meter(s) and service meter(s) on all
connections throughout the drinking water system.
(m) Environmental Review. Prior to any work on the Project, whether construction or non-construction
related, an environmental review in accordance with the State Environmental Review Process and consistent
with state and federal environmental laws must be completed
(n) 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.
(0) 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, 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 satisfaction of the
following conditions precedent on or prior to the Loan Closing Deadline or such later date as the State may
authorize in the State's sole and absolute discretion:
(a) the Borrower will cause to be duly executed and delivered to the State the following items, each in
form and substance satisfactory to State and its 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, resolution, or other authorizing document of the governing body of the
Borrower as appropriate under Borrower's organizational documents 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' Borrow er's Counsel, acceptable to State, substantially in the form of Exhibit G
attached hereto and by this reference made a part hereof; and
(vi) such other certificates, documents, opinions and information as the State may reasonably
reqUIre.
(b) there is money available in the Safe Drinking 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.
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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 any disbursement to the
Borrower hereunder if:
(a) an Event of Default has occurred and is continuing under this Loan Agreement or any ofthe Loan
Documents 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 after notice or lapse of time or both;
(b) the representations and warranties of the Borrower made in this Loan Agreement are not true and
correct on the date of disbursement with the same effect as if made on such date;
(c) State has not received (i) a requisition executed by the Borrower in substantially the form of
Exhibit F 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 sa~isfactory completion of the Project; or
(d) money is not available in the Safe Drinking Water Loan Fund to fund the disbursement.
ARTICLE V
ASSIGNMENT
SECTION 5.01. Assignment 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 in-house Counsel.
ARTICLE VI
DEFAULTS 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
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(b) Failure by the Borrower to make, or cause to be made, any required payments of principal 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, 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
(g) Failure by the Borrower to observe and perform any duty, covenant, obligation or agreement (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, unless the State 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 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 prompt telephonic notice of the
occurrence of any Event of Default referred to in Section 6.0l(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 any action permitted or required
pursuant to the Loan Agreement or any other Loan Document 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 to be immediately due and payable, and upon
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notice to the Borrower the same shall become due and payable without further notice or demand, (b)
appointment ofa receiver of the System, (c) refusal to disburse any Loan proceeds, (d) barring the Borrower
from applying for future state assistance, or (e) withholding amounts otherwise due to the Borrower to apply
to the payment of amounts due under this Loan Agreement.
SECTION 6.04. Attorney's Fees and Other Expenses. The Borrower shall, on demand, pay to the State
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, or any other Counsel
appointed by the State and legal staff) incurred by the State 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 pursuant to Section 6.03
hereof shall be applied (a) first, to pay any attorney's fees or other fees and expenses owed by the Borrower
hereunder, (b) second, to pay interest due and payable on the Loan, (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 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 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 Rights. Notwithstanding any assignment or transfer of this Loan
Agreement and the Loan Documents pursuant to the provisions hereof 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, 2.06, 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.
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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 at the following
address:
Economic and Community Development Department
Attention: Manager, Valley/Mid-Coast Team
775 Summer Street N.E., Suite 200
Salem, OR 97301-1280
The State may designate any further or different address to which subsequent notices, certificates or
other communications shall be sent, by notice in writing.
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.
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.
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 ofthis 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.
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
Program Developmenl\OO4123
1 T'
T
Page 18 of 18
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.
IN WITNESS WHEREOF, the State and the Borrower have caused this Loan Agreement to be executed
and delivered, effective as of the latest date of the signatories below.
,.",
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STATE OF OREGON
acting by and through its Economic and
Community Development Department
By: B~&1l
Valley/Mid-Coast Team
CITY OF WOODBURN
(Borrower)
B~~
John C. Brown, Administrator
Date: & /; ]/d A
( /
ApPROVED AS TO LEGAL SUFFICIENCY IN ACCORDANCE WITH ORS 291.047:
Date:
7-1-2:)2-
/s/Lynn T. Nagasako (as per email dated 6/7/02)
Lynn Nagasako, Assistant Attorney General
Date:
June 7, 2002
Program Developmenl\OO4123
"
Loan Agreement Exhibit A
Page 1 of I
PROJECT DESCRIPTION
The following items provide an outline of the major water system improvements that are planned to be
completed as part of the City's proposed Project. The Project also includes the cost for engineering services.
1. National Way Treatment Facility - Construct a 2.7 million gallon per day treatment plant, a 2.2 million
gallon storage tank and pump station, and a raw water transmission line to 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, a 2.2 million gallon storage tank and pump station, drill two wells, and construct
a raw water transmission line to treatment site from new wells.
3. Country Club Road Facility - Construct a 2.7 million gallon per day treatment plant and a raw water
transmission line to treatment plant from Astor Way well.
Progrlll1l Deve1opmentlOO4123
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Loan Agreement Exhibit C
Project Number S0201 0
I. Loan Closing Date:
DESCRIPTION OF THE LOAN
2. Name and Address of Borrower:
3. Cost of the Project:
4. Estimated Completion Date of Project:
5. Maximum Principal Amount of Loan:
6. Interest Rate:
7. Authorized Officers of Borrower:
8. Loan Closing Deadline:
Program 0eveI0prnenNl04123
The date of the first disbursement of Loan proceeds in
accordance with Section 2.01 (c)
City of Woodburn
270 Montgomery Street
Woodburn, OR 97071
$19,300,000
March 1, 2005
$4,000,000
The interest rate as described in the Note (Exhibit H).
Mayor
Council President
Finance Director
Public Works Director
May 31, 2002
T
Loan Agreement Exhibit D
Page 1 of]
SPECIAL CONDITIONS
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
the Department a certificate demonstrating that the requirements of this paragraph are satisfied.
3. 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.
4. 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 unless 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.
5. 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.
6. 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.
Progrem Development\OO4123
,
Loan Agreement Exhibit E
Page I of I
MATURITY SCHEDULE
Woodburn SDWRLF Loan
Contract #
Gross Principal Amount
Principal Forgiveness
Net Principal Amount
INTEREST RATE:
LOAN TERM IN YEARS:
CLOSING DATE:
S02010
$4,000,000
o
$4,000,000
4.21%
20
31-May-02
PAYMENT
YEAR DATE
2002 01-Dec-02
2003 01-Dec-03
2004 01-Dec-04
2005 01-Dec-05
2006 01-Dec-06
2007 01-Dec-07
2008 01-Dec-08
2009 01-Dec-09
2010 01-Dec-10
2011 01-Dec-11
2012 01-Dec-12
2013 01-Dec-13
2014 01-Dec-14
2015 01-Dec-15
2016 01-Dec-16
2017 01-Dec-17
2018 01-Dec-18
2019 01-Dec-19
2020 01-Dec-20
2021 01-Dec-21
Total _
ProgrlIm DeYelopmenI\OO4123
..
PRINCIPAL
131,426
136,959
142,725
148,734
154,995
161,521
168,321
175,407
182,792
190,487
198,507
206,864
215,573
224,649
234,106
243,962
254,233
264,936
276,090
287,713
4,000,0001
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Loan Agreement Exhibit F
Page 1 of 2
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Progress on Activities
Loan Agreement Exhibit F
Page 2 of 2
R......
~Humbllf
10
--
R~ Perio4
A. Project Goals (report for every cash request)
Ust each projed adivity and describe progress on each adivity since your last report. Also discuss any problems or
delays encountered (change orders. schedule revisions, etc.). Attach additional sheels 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 constructlon employees worked on the lnfrastrudure
project. Also show cumulative constnK:tlon man hours worked on any.private business projeds served by Ihe
InfrastJucture projed.
Business Projects
Infrastructure Projects
1. Finn Name
Hours Worlled
Hours Worked
2. Finn Name
Hours Worked
Hours Worked
C. Pennanent Jobs (Special Public Works Fund only)
In the space below, show Ihe cumulative number of new or retained pennanent jobs in private businesses served by
the Infrastrudure project. Show all jobs as fuJI-lime equivalents based on a standard 40-hour work week.
FimName
Fim Name
Fnn Name
Joba
New
Retained
Joba
New
Retained
Jobs
New
Retained
Certification: We certify that the data is corred and that
the amount of any grant request is not in excess of current
needs. (TWO SIGNATURES REQUIRED)
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For State of Oregon Use
TobI_..,.,.......
Projod eoor_ Dale
AmounI 0escriplI0n Fund CostCenler
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$ -
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$ -
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Send Wire Transfers To:
Name of Payee:
Name of Recelvlng Bank:
location or Branch Name of Bank:
Bank Address:
Bank Account Number:
Bank ABA Routing Number:
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Page 2 of 2
v l'
1
Loan Agreement Exhibit G
Page ] of ]
Form of Opinion of Counsel
It is the opinion ofXXXXXXXXXXXXXXXXXXXX, counsel for City of Woodburn, 270 Montgomery
Street, Woodburn, OR 97071 ("Borrower"), that:
(a) Borrower is a municipality duly organized and validly existing under the laws of Oregon and
Borrower has the requisite power and authority to own its properties and conduct its business as now
conducted. Borrower is either a community or non-profit noncommunity water system, eligible to receive
funds as defined under the Act and Oregon law.
(b) Borrower has the requisite power and authority to execute, deliver, and perform the Loan Documents
and the Contract. The Loan Documents and the Contract have been duly and validly authorized by
Borrower, have been executed and delivered by an authorized officer of Borrower and constitute the legal,
valid, and binding obligations of Borrower. Subject to bankruptcy and other laws of general application
affecting the rights and remedies of creditors, the Loan Documents and the Contract are enforceable
according to their terms, except that no opinion need be given as to the availability of equitable remedies.
(c) Borrower is not in violation or default of any material agreement to which it is a party or by which it
is bound, which affects or relates to Borrower's performance under the Loan Documents or the Contract.
Borrower's execution, delivery, performance, and compliance with the terms of the Loan Documents and the
Contract do not violate any material provision of any applicable federal, state, or local law, rule or regulation
binding on Borrower or of any judgment, writ, decree, or order known to such counsel to be binding on
Borrower, or any provision of Borrower's organizational documents and do not conflict with or constitute a
material default under the provisions of any material agreement to which Borrower is a party or by which it
is bound.
(d) All consents, approvals, orders, or authorizations of, and all qualifications, registrations,
designations, declarations, or filings with any federal or state governmental authority on the part of
Borrower required for the consummation ofthe transactions contemplated by the Loan Documents and the
Contract have been obtained and are effective as of the date hereof, and such counsel is not aware of any
proceedings, or threat thereof, which question the validity thereof.
(e) There is no action, suit, proceeding, or investigation pending or threatened against Borrower which
would, if adversely determined, have a material adverse effect on the financial condition or business of
Borrower or on the ability of Borrower to perform its obligations under the Loan Documents or the Contract.
(f) The State has acquired a legally valid and perfected security interest in and lien on the Net Revenues
to secure Borrower's repayment of the Loan and performance of Borrower's other obligations under the
Loan Documents.
Program 0eveI0prnenI\00 123
T
Loan Agreement Exhibit H
Page 1 of 2
PROMISSORY NOTE
Economic and Community Development Department
State of Oregon
US $4,000,000
(Dated) XXXXXXXXXXXXX, xxxx
Woodburn, Oregon
FOR VALUE RECEIVED, 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, OR 97301-1280 (hereinafter "State"), the principal sum
of Four Million Dollars ($4,000,000) or so much thereof as is disbursed pursuant to the Loan Agreement,
plus interest on each disbursement at the rate of four and twenty-one hundredths percent (4.21 %) per annum,
from the disbursement date until paid. Interest shall be computed on the basis of a 360-day year, consisting
of twelve (12) thirty-day (30) months.
Capitalized terms not otherwise defined in this Note shall have the meanings assigned to them by the
certain loan agreement dated XXXXXXXXXXXXX, XXXX, between the State and the Borrower (as
amended from time to time the "Loan Agreement").
Unless earlier repayment is received hereunder or under the terms of the Loan Agreement, principal and
interest shall be payable as follows:
(a) The Borrower shall pay all interest accrued on disbursed Loan funds on December 1 of each year
beginning December 1, 2002, and continue until the earlier of December 1, 2021, or the first date that all
Loan principal disbursed has been repaid, on which date all remaining unpaid accrued interest shall be due
and payable.
(b) The Borrower shall pay the principal of this Note at the times and in the amounts specified on the
Maturity Schedule set forth in Exhibit H to the Loan Agreement.
(c) This Note is payable prior to its maturity as provided for in Sections 2.05 and 2.06 of the Loan
Agreement.
Each payment made by the Borrower hereunder shall be applied first to unpaid accrued interest on the
Loan, then to the principal of the Loan.
This Note is given to avoid the execution by Borrower of an individual note for each disbursement of
Loan proceeds by State to Borrower in accordance with Section 2.01 of the Loan Agreement. In
consideration thereof, Borrower authorizes State to record in State's files the date and amount of each such
disbursement, the date and amount of each payment and prepayment by Borrower hereunder and the amount
of interest accrued and paid. Borrower further agrees that absent manifest error, such notations shall be
conclusive evidence of borrowing, payments and interest under this Note; provided, however, that failure to
make any such notations shall not affect the obligations of Borrower hereunder or under any of the Loan
Documents.
Program DeYelopmenl\OO4123
r 11
,
Loan Agreement Exhibit H
Page 2 of 2
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.
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 of
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 of this Note shall not be discharged by any action
consented to above taken by any holder of this Note.
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
XXXXXXXXX, xxxx.
CITY OF WOODBURN
By:
xxxxx
Title:
xxxxxxxxxxxxxxxxxxxx
Notice to Borrower
Do not sign this note before you read it.
Progr8lll DeveklpmenIIOO4123
y
RECIPIENT COpy
Page 1 of 2
PROMISSORY NOTE
Economic and Community Development Department
State of Oregon
JvJ~ ~ ,~
Woodburn, Oregon
FOR VALUE RECEIVED, 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, OR 97301-1280 (hereinafter "State"), the principal sum
of Four Million Dollars ($4,000,000) or so much thereof as is disbursed pursuant to the Loan Agreement,
plus interest on each disbursement at the rate of four and twenty-one hundredths percent (4.21 %) per annum,
from the disbursement date until paid. Interest shall be computed on the basis of a 360-day year, consisting
of twelve (12) thirty-day (30) months.
US $4,000,000
(Dated)
Capitalized terms not otherwise defined in this Note shall have the meanings assigned to them by the
certain loan agreement dated :r l.A.1']: 9 , .;l DO&, between the State and the Borrower (as
amended from time to time the "Loan A:greement").
Unless earlier repayment is received hereunder or under the terms ofthe Loan Agreement, principal and
interest shall be payable as follows:
(a) The Borrower shall pay all interest accrued on disbursed Loan funds on December 1 of each year
beginning December 1, 2002, and continue until the earlier of December 1, 2021, or the first date that all
Loan principal disbursed has been repaid, on which date all remaining unpaid accrued interest shall be due
and payable.
(b) The Borrower shall pay the principal of this Note at the times and in the amounts specified on the
Maturity Schedule set forth in Exhibit H to the Loan Agreement.
( c) This Note is payable prior to its maturity as provided for in Sections 2.05 and 2.06 of the Loan
Agreement.
Each payment made by the Borrower hereunder shall be applied first to unpaid accrued interest on the
Loan, then to the principal of the Loan.
This Note is given to avoid the execution by Borrower of an individual note for each disbursement of
Loan proceeds by State to Borrower in accordance with Section 2.01 of the Loan Agreement. In
consideration thereof, Borrower authorizes State to record in State's files the date and amount of each such
disbursement, the date and amount of each payment and prepayment by Borrower hereunder and the amount
of interest accrued and paid. Borrower further agrees that absent manifest error, such notations shall be
conclusive evidence of borrowing, payments and interest under this Note; provided, however, that failure to
make any such notations shall not affect the obligations of Borrower hereunder or under any of the Loan
Documents.
Program 0eve1opmenl\OO4123
,..
Page 2 of 2
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 ofthe 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.
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 ofthe time for or the terms of payment of any sum of
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 of this Note shall not be discharged by any action
consented to above taken by any holder of this Note.
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 1- day of
::JtA J~ ,~
CITY OF WOODBURN
By: ~vII6!~
Title: City Administrator
Notice to Borrower
Do not sign this note before you read it.
Program DevelopmentlOO4123
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