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HomeMy WebLinkAbout2002-214 Loan Agrmt-Winburn Bld Page 1 of 20 Interim Financing Loan Agreement BETWEEN STATE OF OREGON acting by and through its ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT AND CITY OF ASHLAND Program Development\004175 Page 2 of 20 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION 1.01. De:finitions... ................................................................... ...................... ........... ...................4 SECTION 1.02. Ge1t1eral Rules ...................................................................................... ................... ......... ...6 ARTICLE II LOAN TO BORROWER SECTION 2.01. Loan Amount; Loan Tenns; Disbursements; Use of Proceeds ..........................................6 SECTION 2.02. Loan Payment....................................... ................................. ........... ..................................6 SECTION 2.03. Unconditional Obligations.................................. ....................................... ........... ...... .......6 SECTION 2.04. Lo:an Prepayments ............................. ............. ...... ................... ..... ............. ............... .......... 7 SECTION 2.05. Unexpended Loan Proceeds....... ........ ........ ....... ....... ........ .......... .... ........... ................ .........7 SECTION 2.06. Sources of Payment of Borrower's Obligations .................................................................7 SECTION 2.07. Disclaimer of Warranties; Limitation of Liability; Indemnification ..................................8 SECTION 2.08. Maintenance of Records by the State .................................................................................8 ARTICLE III :REPRESENT A TIONS, WARRANTIES AND COVENANTS OF BORROWER SECTION 3.01. Representations and Warranties of Borrower ....................................................................9 SECTION 3.02. Particular Covenants of the Borrower ...................... ........................................................12 ARTICLE IV CONDITIONS PRECEDENT SECTION 4.01. Loan Closing................................... ........ ....... ..... ..................... ....... ..... ............ ..... ...........16 SECTION 4.02. Conditions to Disbursements ...........................................................................................16 ARTICLE V ASSIGNMENT SECTION 5.01. Assignment and Transfer by the State.............................................................................. 17 SECTION 5.02. Assignment by Borrower................. ............... .......... .................................... ...... ............. .17 ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01. Event of Default ........................... ..... ........... ..................... .......... ........................ ............ .17 SECTION 6.02. Nc.tice of Default.............................. ..... .... ............... ...................... .... .... ........ ........ ........ ..18 SECTION 6.03. Remedies on Default................... ....... .................. ............................. ........ ..................... ..18 SECTION 6.04. Attorney' s Fees and Other Expenses.............................................................................. ..18 SECTION 6.05. Ar)plication of Moneys...... ...... .................. .................. ..... .......... ........ ....... .............. ........ .18 SECTION 6.06. No Remedy Exclusive; Waiver; Notice ...........................................................................18 SECTION 6.07. Retention of State's Rights............................................................................................. ..19 SECTION 6.08. De:fault by the State................... ...................................................................................... .19 Program DeveIopment\004175 Page 3 of 20 ARTICLE VII MISCELLANEOUS SECTION 7.0 1. Notices......................................................... ................................................................... ..19 SECTION 7.02. Birlding Effect................. ................. .... ...... .... ....... ......... ....... ........... .................. ...... ...... ..19 SECTION 7.03. Se'/erability............................... ................... ......... ............................... .......................... ...19 SECTION 7.04. An1endments, Supplements and Modifications................................................................19 SECTION 7.05. EXlecution in Counterparts.......................... .................................................................... ..19 SECTION 7.06. No Construction against Drafter ......... ... ............................ ..................... ....... ........ .... ......19 SECTION 7.07. Applicable Law.............................................................................................................. ..20 SECTION 7.08. Consents and Approvals.............................. ..... ..... ..................... ............... ................. ......20 SECTION 7.09. Me:rger; No Waiver........................... .......... .............. ............. ............ ............................. .20 EXHIBITS Exhibit A Special Conditions of A ward Exhibit B Project Description Exhibit C Project BudgetExhibit D Description of the Interim Financing Loan Exhibit E Form of Requisition Exhibit F Form of Promissory Note Exhibit G Form of Opinion of Borrower's Counsel Program Development\004175 Page 4 of 20 THIS INTERIN[ FINANCING LOAN AGREEMENT, made and entered into as of the date of the last signature hereto, by and between the STATE OF OREGON, ACTING BY AND THROUGH ITS ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT (the "State"), and the Borrower (as defined below). Capitalized terms not otherwise defined herein shall have the meanings assigned to them in Section 1.01 hereof: WITNESSETH THAT: WHEREAS, the State is authorized by ORS 285B.41 0 through 285B.482 to loan money in the Special Public Works Fund to Oregon municipalities to finance infrastructure projects; and WHEREAS, thje Borrower has applied to State for a loan to finance all or a portion of the Costs of the Project (as defined below); and WHEREAS, the State has reviewed the Borrower's application and determined that the Project (as defined below) is eligible for loan financing from the Special Public Works Fund and is feasible and merits funding; and WHEREAS, the Sate is willing to loan Borrower the amount set forth in Exhibit D, attached hereto and by this reference made a part hereof, to provide interim financing for a portion of the Costs of the Project; and WHEREAS, Borrower wishes to borrow and accept from State a loan in the amount set forth in Exhibit D for the interim financing of a portion of the Costs of the Project. NOW, THEREFORE, for and in consideration of the award of the Loan by the State, the Borrower agrees to perform its obligation under this Loan Agreement in accordance with the conditions, covenants and procedures set forth herein. ARTICLE I DEFINITIONS SECTION 1.01. Definitions. The following terms as used in this Loan Agreement shall, unless the context clearly requires otherwise, have the meanings assigned to them below: "Act" means ORS 285B.410 through 285B.482, as amended. "Authorized Officer" means, in the case of the Borrower, the person whose name is set forth in Exhibit D hereto or such oth(~r person or persons authorized pursuant to a resolution or ordinance of the governing body of the Borro'iVer to act as an authorized officer of the Borrower to perform any act or execute any document relating 1tO the Loan or this Loan Agreement and whose name is furnished in writing to the State. "Bond Counse]l" means a law firm having knowledge and expertise in the field of municipal law and whose opinions ar(~ generally accepted by purchasers of municipal bonds. "Borrower" me:ans the Municipality that is a party to this Loan Agreement and is described on Exhibit D hereto, and its suc(~essors and assigns. "Business Dai' means any day other than (a) a Saturday, Sunday or legal holiday or a day on which banking institutions in Salem, Oregon or in the city in which the principal office of the Trustee is located are closed, or (b) a day on which the New York Stock Exchange is closed. Program Devet0pment\004175 Page 5 of 20 "Code" means the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, including any regulations promulgated thereunder and any administrative or judicial interpretations then~of. "Contract" means the Financing Assistance Award Contract For Interim Financing between the State and the Borrower dated as of the date hereof. "Costs of the Project" means those costs of Borrower that are (a) reasonable, necessary and directly related to the Projeet, including any financing costs properly allocable to the Project and preliminary costs such as engineering and architectural reports, studies, surveys, soil tests, designs, plans, working drawings and specifications that are necessary for the construction of the Project, and (b) permitted by generally accepted accounting principles to be costs of such Project. The term "Costs of the Project" does not include (i) the purchase of e:quipment and other property not directly related to the Project, (ii) construction or repair of facilities owned or operated by private parties, (Hi) costs incurred prior to the date of the Loan, except as provided in Section 3.02(a), or (iv) costs that do not comply with the requirements of the General Certificate executed by the Borrower in connection with the closing of the Loan. "Counsel" means an attorney at law or firm of attorneys at law (who may be, without limitation, of counsel to, or an ernployee 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 provide interim financing for a portion of the Costs of the Project pursuant to this Loan Agreement. "Loan Agreem4ent" means this interim financing loan agreement, including any exhibits, schedules or attachments hereto, as it inay be supplemented, modified or amended from time to time in accordance with the terms hereof. "Loan Closing Date" means the date on which the Loan proceeds are credited to the Loan account in the Special Public Works Fund in accordance with Section 2.01(a) hereof. "Loan Closing Deadline" means the date, as set forth in Exhibit D hereto, by which all conditions set forth in Section 4.01 must be satisfied in order for the State to make the Loan. "Loan Docume:nts" means the Loan Agreement, Note and any agreements, instrument and certificates required to be executed and delivered hereunder. "Maturity Date:" means the date by which the Loan must be repaid, as set forth in Exhibit D hereto or otherwise designated by the State in writing pursuant to Section 7.04 of this Loan Agreement. "Municipality'~' means any entity described in ORS 285B.41 0(1). "Note" means the promissory note of the Borrower substantially in the form of Exhibit F attached hereto and by this reference made a part hereof. "Project" means the infrastructure project of the Borrower described in Exhibit B attached hereto and by this reference made a part hereof. Program Development\004175 Page 6 of 20 "Project CompJletion 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 the Special Conditions of A ward attached hereto as Exhibit A as a source of repayment for the Loan "Special Public: Works Fund" means the fund created by ORS 285B.455(1). "State" means 1the State of Oregon acting by and through its Economic and Community Development Department. "State Bonds" means the series of bonds, if any, issued by the State, acting by and through its State Treasurer, under the Act. "System" means the utility system or systems, if any, of the Borrower which includes the Project or components of the Project, as such system or systems may be modified or expanded from time to time. References in this Loan Agreement to the Borrower's "System" shall be ignored to the extent that the Project is not a component of a utility system or systems. 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 Amo\mt. Subject to the terms and conditions hereof, in particular Section 4.01 and 4.02 hereof, the State hereby agrees to loan and disburse to the Borrower, and the Borrower agrees to borrow and accept from the State, the Loan in an amount equal to the principal amount of loan set forth in Exhibit D hereto. Upon satisfaction of the conditions set forth in Section 4.01 hereof, the State shall credit the Loan proceeds to a Loan account in the Special Public Works Fund pending disbursement to Borrower as described below. (b) Disbursements. Subject to Section 4.02 hereof, the proceeds of the Loan shall be disbursed to the Borrower upon reeeipt by the State of a requisition executed by the Borrower in substantially the form attached hereto as ,Exhibit E which is by this reference incorporated herein. (c) Use of Proceeds. The Borrower shall use the proceeds of the Loan strictly in accordance with Section 3.02(a) hereof. SECTION 2.02., Loan Payment. The Borrower hereby covenants and agrees to repay the Loan in accordance with the terms hereof and of the Note on or before the Maturity Date. SECTION 2.03. Unconditional Obligations. The provisions of this Loan Agreement shall constitute a contract with the State and shall be enforceable by the State. Payments required under the Loan Documents are payable from the sources of repayment described in Section 2.06 hereof, and the obligation of the Borrower to make all 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 Program Development\OO4175 Page 7 of 20 Documents shall not be abated, rebated, set-off, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner or to any extent whatsoever, or any payments under this Loan Agreement or Note remain unpaid, regardless of any contingency, act of God, event or cause whatsoever, including (without limitation) any acts or circumstances that may constitute failure of considerations, evietion or constructive eviction, the taking by eminent domain or destruction of or damage to the Project or tbe 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 or 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. SECTION 2.04. Loan Prepayments. (a) Mandatory Prepayment. The Borrower shall prepay the outstanding balance of the Loan upon the occurrence of the following events: (i) destruction of all or a substantial portion of the Project; or (H) the issuance of any subsequent short or long term financing for the Project, including State Bonds issued in part for the financing and/or refinancing of the Project. (b) Optional Prepayment prior to the Maturity Date. The Borrower may prepay all or any portion of the outstanding principal of and interest on the Loan on any Business Day upon five (5) Business Day's notice to the State. PrepaYInents by the Borrower shall be applied first to pay accrued interest, and second to prepay principal on the Loan. SECTION 2.05. Unexpended Loan Proceeds. Any proceeds of the Loan held by the State on the Project Completion Date shall be applied, together with any interest earnings thereon, as follows: first to pay any arbitrage rebate due with respect to the Loan pursuant to Section 148(t) of the Code, second to pay \mpaid interest accrued to the Project Completion Date, and third to prepay principal on the Loan. The State shall determine, in its sole discretion, the method by which any payments on the Loan pursuant to this Section 2.05 shall be applied to the outstanding balance of the Loan. If any proceeds of the Loan remain after the payment of the entire outstanding principal balance of the Loan, such amounts shall be the property of the State, and the Borrower shall have no claim to such amounts. SECTION 2.06. 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, 2.07 and 6.04 hereof, are payable from the sources of repayment described in paragraph (b) of this Section 2.06; provided, however that nothing herein shall be deemed to prevent the Borro'Ner from paying the amounts payable under this Loan Agreement and the other Loan Documents from any other legally available source. Program Development\OO4175 Page 8 of 20 (b) The amounts payable by the Borrower under this Loan Agreement and the other Loan Documents are payable from the R4evenues, the proceeds of any subsequent short or long-tenn financing to refund the Loan or to finance the Project, and other sources identified in the Special Conditions of A ward attached hereto as Exhibit A. The plc~dges made by the Borrower in these Special Conditions of A ward shall be valid and binding from the date of this Loan Agreement pursuant to ORS 288.594. The amounts so pledged and hereafter received by the Borrower shall immediately be subject to the lien of the pledge without physical delivery or further act and except as may be stated in the Special Conditions of A ward, shall be superior to all other claims andlliens whatsoever to the fullest extent permitted by ORS 288.594. The amounts payable by the Borrower under this Loan Agreement and the other Loan Documents are also payable from all legally available general fimds in the Borrower's general fund. (c) The Borro~ler expressly acknowledges that if the Borrower defaults on payments due under this Loan Agreement or any of the other Loan Documents, the State of Oregon, pursuant to ORS 285B.449, may withhold all or a portion of any amounts otherwise due to the Borrower and apply said amounts to payments due under this Loan Agreement and the other Loan Documents to the fullest extent permitted by law; provided however 1that the provisions of the Loan Agreement and the Note are not to be construed in a way that would cause the obligations of the Borrower thereunder to constitute debt which violates Section 10, Article XI of the Oregon Constitution or ORS 287.053. SECTION 2.07. Disclaimer of Warranties: Limitation of Liability: Indemnification. The Borrower acknowledges and agrees that: (a) the State rn,akes no 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 its respective agents be liable or responsible for any direct, indirect, incidental, special or consequential damages in connection with or arising out of this Loan Agreement, any of the other Loan I)ocuments 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 terrns 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 daJmages provided for under and pursuant to Chapter 30 of the Oregon Revised Statutes or under the laws of the United States or other laws of the State of Oregon. SECTION 2.08. Maintenance of Records by the State. The State shall maintain records of all amounts held in the Loan alccount within the Special Public Works Fund to which the Loan proceeds are initially credited on the Loan Closing Date. All earnings derived from the investment of such amounts shall be retained in and credited to such account and shall be available for disbursement to the Borrower pursuant to Section 2.01 hereof. The State shall provide the Borrower a copy of records relating to such account at least twice each year so long as the State is making disbursements from such account. Program DeveIopment\004175 Page 9 of 20 ARTICLE III IlEPRESENT 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 BOlTower ,is a Municipality as defined in the Act. (ii) The BOITower 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 Proje:ct which the Borrower expects to receive in the ordinary course of business, to carry on its activities r.elating thereto, to execute and deliver this Loan Agreement, to undertake and complete the Project, and to cany out and consummate all transactions contemplated by this Loan Agreement and the other Loan Docum~ents. (iii) The Project is a project which the Borrower may undertake pursuant to Oregon law and for which the Borrower is authorized by law to borrow money. (iv)The proceedings of the Borrower's governing members and voters, if necessary, approving this Loan Agreement and the other Loan Documents and authorizing the execution and delivery of this Loan Agreement and other Loan Documents on behalf of the Borrower, and authorizing the Borrower to undertake and complete the Project have been duly and lawfully adopted in accordance with the laws of Oregon, and the actions of such proceedings were duly approved and published, if necessary, in accordance with applicable Oregon law, at a meeting or meetings which were duly called pursuant to necessary public notice and held in accordance with applicable Oregon law, and at which quorums were present and acting throughout. ' (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 authorize:d, 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 Band C hereto and in Sections 2,3,4 and 8 of Exhibit D hereto is true and accurate in all respects. (vi) Borro\ver' s Contract and the Loan Agreement have been authorized by an ordinance or resolution of the Borrower which was adopted in accordance with ORS 285B.443(3) after proper publication at least fourteen (14) days prior notice published at least once in a newspaper of general circulation within the Borrower's jurisdktion and was adopted in accordance with applicable law and the Borrower's requirements for filing public notices and holding public meetings. (vii) Borro\ver may pledge its full faith and credit and taxing power within the limitations of Oregon law, including but not limited to Sections 11 and 11 b of Article XI of the Oregon Constitution, and any and all of Borrower's legally available funds, to make the payments due under the Loan Agreement and Loan Documents. (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, Program 0eveI0pment\004175 Page 10 of 20 prospects or condition (financial or otherwise) of the Borrower, the Project or the Borrower's System, or the ability of the Borro\ver to make all Loan payments 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 Docum(~nts 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, activitie:s, prospects or condition (financial or otherwise) of the Borrower or its System, or the ability of the Borro'wer to make all Loan payments 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 th4e 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 of1he Project will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or asset of the Borrower pursuant to, any existing ordinance or resolution, trust agreement, indenture, mortgage, deed of trust, loan agreement or other instrument (other than any lien and charge of this Loan Agreement or any of the documents related hereto or to the Bond Indenture) to which the Borrower is a party or by which the Borrower, its System or any of its property or assets may be bound, nor will such action result in any violation of the provisions of the charter or other document pursuant to which the Borrower was established or any laws, ordinances, resolutions, governmental rules, regulations or court orders to which th(~ 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 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, activiti4es, prospects or condition (financial or otherwise) of the Borrower or its System or the ability of the Borrower to make all Loan payments or otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents. (t) Governmental Consent. The Borrower has obtained or will obtain all permits and approvals required to date by any governmental body or officer for the making, observance and performance by the Borrower of its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents or for the undertaking or completion of the Project and the financing or refinancing thereof; and the Borrower has comlplied or will comply with all applicable provisions of law requiring any notification, declaration, filing or registration with any governmental body or officer in connection with the making, observance and performance by the Borrower of its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents or with the undertaking or completion of the Project and the financing or refinancing thereof. No consent, approval or authorization of, or filing, registration or Program Development\OO4175 Page 11 of 20 qualification with, ~my 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) Complianc(: with Law. The Borrower (i) is in cont1pliance with all laws, ordinances, and governmental rules and regulations 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 perfonnance under this Loan Agreement is conditioned upon the Borrower's compliance with the provisions of tORS 279.312, 279.314, 279.316, 279.320, and 279.555, which are incorporated by reference herein. (h) The Pr01ec1:. (i) The Prcdect is feasible, and there will be adequate funds available to complete the Project and repay the Loan. (ii) The Borrower has been provided with a copy of the rules adopted by the State under ORS 285B.419(1), and the Project is in compliance with such rules. (iii)The tenn of the Loan is not in excess of the useful life of the Project. (iv)The Borrower has adequate financial resources to ensure the project's success. (v) The Project will benefit a broad cross-section of the community. (vi)To the (~xtent shown in the Special Conditions of Award, the Borrower has provided, as part of the security for repayment of the Loan, provisions for payments from any owners of property specially benefited by the Project which are sufficient when considered with other security to assure repayment of the Loan. (vii)The Project is situated in a city or county with a comprehensive land use plan that allows industrial and commercial development of a type and scale that is sufficient to produce revenues to repay the costs of the Project. (viii)The Project satisfies the criteria set forth in ORS 285B.410 through 285B.482 , and OAR Chapter 123, division 42. (i) Costs of the Proiect. The Borrower certifies that the Costs of the Project, as listed in Exhibits C and D hereto, (i) are a reasonable and accurate estimation and based upon an engineer's feasibility report and engineer's estimat'e stamped by a registered professional engineer or an architect's feasibility report and architect's estimate stamped by a licensed architect, as applicable, a copy of which shall be promptly provided to the State upon request, (ii) exceeds the maximum principal amount of the Loan shown on Program Development\004175 Page 12 of 20 Exhibit D, and (iii) are not less than the sum of the proceeds of the Loan and the investment earnings projected to be derived from the investment of such proceeds. G) ContinuinJ2~ Representations. The representations of the Borrower contained herein shall be true on 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 (i) to finance all or a portion of the Costs of the Project; and (ii) where applicable and with prior written approval of the State, to reimburse the Borrower for a portion of the Costs of the Project, which portion was paid or incurred in anticipation of reimbursement by the State; provided however that all such reimbursements shall satisfy the requirements of Section 1.150-2 of the Code. None of the proceeds of the Loan shall be used for ineligible activities as specified in Section 3.B. of the Contract. (b) Source ofRepavrnent. The Loan shall be paid from such sources of repayment described in Section 2.06 of this Loan A.greement and in the Special Conditions of A ward attached hereto as Exhibit A. Funds from such sources shall be applied to the punctual payment of the principal of and the interest on the Loan and all other am01mts due under this Loan Agreement and the other Loan Documents according to their respective terms. (c) Performani(~e 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 th(~ 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 Agret:ment and the other Loan Documents. (d) Completion of Proiect and Provision of Monevs Therefor. The Borrower covenants and agrees to provide the State vvith 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 D; (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. F or 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 its sole expense, of the Project. The program shall include a plan for generating revenues sufficient to assure the operation, maintenance and replacement of the Project during the useful life of the Project. Borrower shall provide such documentation to the State on or before the Project Completion Date. (e) Disposition 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 othef\\rise dispose of all or substantially all or any substantial portion of the Project or its System or any other systeln which provides revenues for payment of amounts due under this Loan Agreement and Program Developmet 1t\OO4175 Page 13 of 20 the Loan Documents, except if the State consents thereto in writing upon ninety (90) days' prior written notice to the State. The State shall not consent to any such sale, lease, exchange, abandonment or other disposition unless the State shall have received an opinion of Bond Counsel to the effect that such sale, lease, exchange, abandonment or other disposition complies with the Act and will not adversely affect the exclusion of interest on the Loan from gross income for purposes of federal income taxation under Section 1 03( a) of the Code. Proceeds of any such transfer not used to replace property that is part of the Project shall be applied to the payment or prepayment of the outstanding principal of and interest in the Loan, as provided in Section 2.04 of this Agreernent. (f) Exclusion of Interest from Federal Gross Income and Compliance with Code. (i) The Borrower covenants and agrees that it shall not take any action or omit to take any action which action or on1ission would result in the loss of the exclusion of the interest on the Loan from gross income for purposes of federal income taxation as that status is governed by Section 1 03 (a) of the Code. (ii) The Borrower shall not take any action or omit to take any action, which action or omission would cause the Loan to be "private activity bonds" within the meaning of Section 141(a) of the Code. Accordingly, unless the Borrower receives the prior written approval of the State, the Borrower shall neither (A) permit in exce:ss of 10 percent of either (1) the proceeds of the Loan or (2) the Project financed or refinanced with the proceeds of the Loan, to be used directly or indirectly in any manner that would constitute "private business use" within the meaning of Section 141 (b )(6) of the Code, nor (8) use directly or indirectly any of the proceeds of the Loan, to make or finance loans to persons other than governmental units as such term is used in Section 141 (c) of the Code; provided further, that at least one half of the private business use permitted by clause (A) shall be neither disproportionate related business use, nor private business use not re:lated to the government use of such proceeds of the Loan. (iii) The Borrower shall not directly or indirectly use or permit the use of any of the "gross proceeds" (within the meaning of Section 148 of the Code) of the Loan or any other funds or take any action or omit to take any action, which use or action or omission would cause the Loan to be an "arbitrage bond" within the meaning of Section 148(a) of the Code. (iv) The Borrower shall not use directly or indirectly the proceeds of the Loan in any manner that would constitute an "advance refunding" within the meaning of Section 149(d)(5) of the Code and shall not prepay the Loan or any part of the Loan without the prior written approval of the State and as provided in this Loan Agreement. (v) The Borrower will not cause the Loan to be treated as a "federally guaranteed" obligation for purposes of Section 149(b) of the Code, as may be modified in any applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the State of the Treasury or the Internal Revenue Service with respect to "federally guaranteed" obligations described in Section 149(b) of the Code. For purposes of this paragraph, the Loan shall be treated as "federally guaranteed" if: (A) all or any portion of the principal or interest is or will be guaranteed directly or indirectly by the United States of America or any agency or instrumentality thereof, or (B) five percent (50/0) or more of the proceeds of the Loan will be (1) used in making loans, the payment of principal or interest with respect to which is guaranteed in whole or in part by the United States of America or any agency or instrumentality thereof, or (2) invested directly or indirectly in federally insured deposits or accounts, and (C) none of the exceptions described in Section 149(b )(3) of the Code apply. Program Development\OO4175 Page 14 of 20 (vi)The Borrower agrees to assist the State to ensure that all amounts required to be rebated to the United States of AInerica pursuant to Section 148(f) of the Code are rebated to the United States of America. The Borrower agr~ees to provide all amounts necessary to satisfy the requirements of Section 148(f) applicable to the Loan. The Borrower further agrees to reimburse the State for the portion of any eXPenses incurred by them that relate to the Loan and are necessary to satisfy the requirements of Section 148(f) of the Code. (vii) In furtherance of the foregoing, the Borrower covenants that it will comply with the provisions of this Loan Agree:ment and with the provisions of any certificate executed by the Borrower relating to compliance with the provisions of Sections 103 and 141 through 150 of the Code executed by the Borrower or the State with respect to the Loan and will furnish to the State in writing, upon reasonable request, information regarding investments and use of proceeds of the Loan and of any facilities financed or refinanced therewith. (viii) The Borrower shall not enter into any management agreement for the operation of the Project that would cause the Loan to be or become a "private activity bond" within the meaning of Section 141(a) of the Code. (ix)Notwithstanding anything to the contrary, so long as is necessary to maintain the exclusion from gross income for purposes of federal income taxation of interest on the Loan, the covenants contained in this subsection (f) shall survive the payment of the Loan, and the interest thereon, including any payment pursuant to Section 2.04 of this Loan Agreement. (g) Operation and Maintenance of System. The Borrower covenants and agrees that it shall, in accordance with pnldent 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 th4erewith 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 requiting 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 2.06(b), and provided further that nothing herein shall be construed as preventing the Borrower from doing so. (h) Records: Accounts. The Borrower shall keep accurate records and accounts for the revenues and funds that are the source of repayment of the Loan, including but not limited to the Revenues (the "Repayment Revenue Records"), separate and distinct from its other records and accounts (the "General Records"). Such Repayment Revenue Records shall be maintained in accordance with generally accepted accounting principles as established by the Government Accounting Standards Board as in effect from time to time and shall b€~ 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 any reasonable time, and a copy of such annual audit(s) therefor, including all written comments and recommendations of such accountant, shall be furnished to the State within 210 days of the close of the fiscal year being so audited. (i) 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, ifany, constituting the Project, and to inspect and make copies of any accounts, books and records, including, without limitation, its records Program Development\OO4175 Page 15 of 20 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 doc:uments and any official statements or other forms of offering prospectus relating to any other bonds, notes or other indebtedness of the Borrower that are issued after the Loan Closing Date and are secured by the Revenues. G) 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 of the Borrower's System, including liability coverage, all to the extent available at reasonable cost. Nothing herein shall be deemed to preclude the Borrower from exerting against any party, other than the State, a defense which may be available to the Borrower, including without limitation a defense of immunity. In the event the Project or any portion thereof is destroyed, any insurance proceeds shall be paid to the State and shall be applied to the principal of and interest on the: Loan, unless the State agrees in writing that the insurance proceeds shall be used to rebuild the Project. (k) Condemnation. In the event the Project or any portion thereof is condemned, any condemnation proceeds shall be used to prepay the outstanding balance on the Loan. (I) Notice of ~~aterial Adverse Change. The Borrower shall promptly notify the State of any material adverse change in 1he 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 DocUInents. (m)Financial Statements: RepOrts. The Borrower shall deliver to the State in form and detail satisfactory to the State: (i) As soon as reasonably possible and in any event within ninety (90) days after the close of each fiscal year of the Borrower, unaudited statements of revenues, expenditures, cash flows, and changes in retained earnings ji>r 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. (n) Contract Covenants. The Borrower covenants and agrees to comply with the terms of the Contract including the cove:nants of the Borrower in Section 5 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, assigning and confirming the rights, security interests and agreements granted or intended to be granted by this Loan Agreement. Program Development\OO4175 Page 16 of 20 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, as set forth in Exhibit D hereto, or such later date as State may authorize in writing in State's sole and absolute discretion: (a) the Borrow(~r has caused to be executed and delivered to the State the following items, each in form and substance satisfactory to State: (i) the Note duly executed and delivered by an Authorized Officer of the Borrower; (ii) the Contract duly executed and delivered by an Authorized Officer of the Borrower; (iii) copy of the ordinance or resolution of the governing body of the Borrower authorizing the execution and delivery of this Loan Agreement, the other Loan Documents, and the Borrower's Contract, certified by an Authorized Officer of the Borrower; (iv)an opinion of the Borrower's Counsel substantially in the form set forth in Exhibit G hereto (such opinion or portions of such opinion may be given by one or more Counsel); provided, however, that the State and its Counselor Bond Counsel may permit variances in the form of such opinion; and (v) such other certificates, documents, opinions and information as the State may reasonably require. (b) there is money available in the Special Public Works 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 Projiect is no longer eligible for financial assistance authorized by this Loan Agreement. SECTION 4.02. Conditions to Disbursements. Notwithstanding anything in this Loan Agreement or any of the Loan Documents to the contrary, the State shall have no obligation to make the Loan or any disbursement of Loan proceeds 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 an event, omission or failure of a condition which would constitute an Event of Default as defined in this Lo<Jl11 Agreement or any of the Loan Documents after notice or lapse of time or both, has occurred and is continuing; (b) any representations and warranties of the Borrower made in this Loan Agreement are untrue and incorrect on the proposed Loan Closing Date or the date of disbursement with the same effect as if made on such date; or (c) failure by the State to receive (i) a requisition executed by the Borrower in substantially the form of Exhibit E attached hereto and by this reference made a part hereof and (ii) any other written evidence of materials and labor furnished to or performed upon the Project, itemized receipts or invoices for the payment of the same, and releases, satisfactions and other signed statements and forms as the State may require as a condition for making disbursement of the Loan. The State may, at its option, make advance payment for construction and other costs to Borrower provided the State has agreed to this method of disbursement in writing and subje'ct to such terms, conditions and reports from Borrower as the State may require. 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. Program Development\004175 Page 17 of 20 (d) In addition 1to the above conditions, State shall have no obligation to disburse the final one million dollars ($1,000,000) to Borrower if the results of the due diligence study indicate that the sale is not feasible, fails the due diligence review, or as a result of the due diligence review the sale may not be completed. Further, the State shall have no obligation to make any disbursement to the Borrower if, on or before the time for disbursemlent, there has been a change in the Act so that the Project is no longer eligible for financial assistance: authorized by this Loan Agreement. ARTICLE V ASSIGNMENT SECTION 5.01. Assignment and Transfer by the State. The Borrower hereby approves and consents to any assignment, sale or transfer of this Loan Agreement and the Loan Documents that the State deems to be necessary . SECTION 5.02. 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 Bond Counselor 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 make, or cause to be made, any required payments of principal and interest on the Note when due, as provided in the note and this Loan Agreement; or (b) Any repres1entation 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 respe4:;t; or (c) 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 (d) The occurrence of any event of default under Section 6 of the Contract; or (e) Failure by the Borrower to observe and perform any duty, covenant, obligation or agreement (including that described in subsection (f) below) on its part to be observed or performed under this Loan Agreement or any other Loan Documents, other than as referred to in subsections (a) through (d) of this Section, which failure shall continue for a period of thirty (30) calendar days after written notice, specifying Program Development\OO4175 Page 18 of 20 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 \vntten 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 (t) The Borrower fails to proceed expeditiously with, or to complete, the Project or any segment or phase of the Project in ac(~ordance 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 6.01(c) 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 en~Jrce the performance and observance of any duty, covenant, obligation or agreement of the Borrower hereunder, including without limitation, (a) declaring all principal and interest and all other amounts due hereunder and under the other Loan Documents to be immediately due and payable, and upon notice to the Borrower the same shall become due and payable without further notice or demand, (b) appointment of a receiver of the System, (c) refusal to disburse any Loan proceeds, (d) barring the Borrower from applying for fiJture Special Public Works Fund assistance, or (e) withholding amounts otherwise due to the Borrower to apply to the payment of amounts due under this Loan Agreement as provided in ORS 285B.449. SECTION 6.04. Attorney's Fees and Other Expenses. To the fullest extent permitted by law, 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, Bond Counselor any other Counsel appointed by the State and legal staff) incurred by either of the State in the collection of Loan payments 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 agre'ements 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 Program Development\004175 Page 19 of 20 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, de(~m necessary to enforc~ the obligations of the Borrower to the State pursuant to Sections 2.02, 2.04, 2.07, and 6.04 hereof. SECTION 6.08. Default bv 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. 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 BOJTower at the address specified on Exhibit D hereof and to the State at the following address: Economic and Community Development Department Attention: Manager, Southwest Team 775 Summ<~r Street NE Salem, Oregon 97301-1280 Any of the foregoing parties may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent, by notice in writing given to the others. SECTION 7.02. Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the State and the Borrower and their respective successors and assigns. SECTION 7.03. Severability. In the event any provision of this Loan Agreement shall be held illegal, invalid or unenfof(~eable 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 mlay 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 Program Development\OO4175 Page 20 of 20 transactions contemlplated hereby and have read and understand the terms of this Loan Agreement. The terms of this Loan l\.greement 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, "Clairn") 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 1the Circuit Court of Marion County for the State of Oregon; provided, however, if a Claim must be brought in a federal forum, then it shall be brought and conducted solely and exclusively within the United States District Court for the District of Oregon. SECTION 7.08. ~Consents and Approvals. Whenever the written consent or approval of the State shall be required under the provisions of this Loan Agreement, such consent or approval may only be given by the State unless otherwise provided by law or by rules, regulations or resolutions of the State. SECTION 7.09. Merger: No Waiver. This Loan Agreement and attached exhibits constitute the entire agreement between the parties on the subject matter hereof. There are no understandings, agreements, or representations, oral or written, not specified herein regarding this Loan Agreement. No waiver of any provision of this Loan Agreement or consent shall bind either party 'unless in writing and signed by both parties and all necessary State approvals have been obtained. Such waiver or consent, if made, shall be effective only in the: specific instance and for the specific purpose given. The failure of the State to enforce any provision of this Loan Agreement shall not constitute a waiver by the State of that or any other provision. IN WITNESS VVHEREOF, the State and the Borrower have caused this Loan Agreement to be executed and delivered, effe(:tive as of the latest date of the signatories below. ~ -~~. . . . STATE OF OREGON acting by and through its Economic and Community I)evelopment Department ~ By: ~~~/ Southwest Team CITY OF ASHLAND (Borrower) By: ~~ (Slg e) Title: ~I ANIIt1c..E 1J11'lk.-m1't.. Date: L.. h,/ h..2, Date: t./z".-0 Z- APPR~~GAL SUFFICIENCY IN ACCORDANCE WITH ORS 291.047: Is/Lynn T. Nagasako (as per email dated 6/20/02) Lynn T. Nagasako, Assistant Attorney General Date: June 20, 2002 Program Development\004175 Interim Financing Loan Agreement Exhibit A, Page 1 of 1 SPECIAL CONDITIONS OF AWARD INTERIM FINANCING LOAN The following Special Condition shall apply to the interim financing Loan: The principal of and interest on the Loan shall be payable from the proceeds of any subsequent short- or long-term financing issued to refund the Loan or to finance the Project (the "Refunding Proceeds"). The Borrower hereby grants to the State a security interest in and irrevocably pledges the Refunding Proceeds 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 Refunding Proceeds hereby made by the Borrower shall be valid and binding from the date of this Loan Agreement. PERMANENT LOAN The following Spe(~ial Conditions shall apply to any permanent Loan made by State to Borrower from the Refunding Proceeds (for the purposes of this section, the "Loan"): The Loan shall be payable from the general fund of the Borrower and shall be a full faith and credit obligation of the Borrower which is payable from any taxes which the Borrower may levy within the limitations of Article XI of the Oregon Constitution. Program Development\OO4175 Interim Financing Loan Agreement Exhibit B, Page 1 of 1 PROJECT DESCRIPTION COMMUNITY DEVELOPMENT AND ENGINEERING SERVICES BUILDING Borrower will remodel and expand an existing structure, located at 151 Winburn Way in Ashland, Oregon, to provide approximately 11,000 square feet of new office space for employees of the Borrower's community development and engineering departments. Borrower will also develop a recycling and trash receptacle area, public restrooms and off-street parking. 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Cb.Q .~ c - 0) 0 0><<30) E 0> - -c c- en O>.~ c"<<1o CD ;: - .L: ._ _ C C- O> 0> m en _00> Q5Ci)0> >< - 0> ;: c <<3C-c 0>._ 0) W en en <<3 >. 0> -c - :J <<3 0 c.~.~ en ~ en c ..... 13CaE .5> E E 16 <<3 - <<3 E .~ ~O>O> c -c 0 - 0> :!::: -c EOa: W<3:0 0> 16 ca c - <<3 J5 0 L: ~ ~ <<3 - cci.ci 0 cci.ci :J 0 cci.ci cci.ci ..... cci.ci 0 cci.ri en cci.ci en a: a.. cci.ci I~ 0 0 0 ~I . ~ r--.: ex:) -- C\I ('t) 1.0 10 ,.... , J ~ ~ Cl. Interim Financing Loan Agreement Project Number K02007 Exhibit D, Page 1 of 1 DESCRIPTION OF THE INTERIM FINANCING LOAN 1. Loan Closing Deadline: June 26,2002 2. Name and Address of Borrower: City of Ashland 20 E. Main Street Ashland, Oregon 97520-1849 3. Cost of the Project: $1,993,000 4. Estimated Project Completion Date: June 30, 2004 5. Principal Amount of Loan: $1,500,000 6. Interest Rate: The interest rate, including any adjustments to such rate, as described in the Note. \ 7. Maturity Date:: December 31, 2004 8. Authorized Officers of Borrower: City Administrator Finance Director Program Development\004175 J I i s [ a C E J II) E E ~ 01 - 0 en .. GJ 0- n. :;, CPe CT 01 GJ Co c" ex:: 'Cu. u; J::. G .. ;u. en Eo!! ... O-~ .Ec 0 ~~ u... ~o G U GJ-I >< _Ot II) c: ~.E Co GJ > >-en Ciio =:en ... > cf ~~ U. ::JOt -I Eo GJ ... ex:: EO: _GJ 3: ...- 0" 3:'" c Oc: .3: (f) -c" "Ot 0 c1;; c c: ::1- ... u.,x (,)::1 c: _CT CIt"t: e. ~c o ex:: o. cJ::. 3:'; ~ oen u(f) (,) .. =... WO .co 0 c ::I D. 0 -; t.: 01 0 f u .... 0 GI .!! u. a. (f) ... 3: en GI a. ::I (f) CT GI 0 ex:: ! Loan Agreement Exhibit E Page 1 of 2 1 Go of -II: ! t Go ,...- . u c: . .. CD :i . 2 :I 0 '" 1 - c: >- CD o CD -E ..01 .0. 0." !.2 0.:1 Z"CD <CD cx::~ -; .cO . u ..- . uE it 0 c: CD 0 .. :I U .gZ" ILl >- a..CX:: C ~ 0 - . CD .c:l :i ucx:: x It) II) It) c ~ c CIt CD 1j CD C E cv e E CD CD u. :;, CD E > 1.3 > e a: K CD CD . CIt > a. a: CIt :=: ~ c e .E B e CD .E a. " ~ "> E .E CD c: ~ c: It) ~ CD ~ CI .. 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Also discuss any problems or delays encountered (change clrders, schedule revisions, etc.). Attach additional sheets if necessary. Proposed Accompnshmen~J Results Achieved 1. 2. 3. ... 5. B. Construction Employment (SpecIal Public WorXs Fund only) In the space below, show the ,cumulative total number of hours construction employees worited on the Infrastructure project. Also show cumulativ~, construction man hours worited on any private business projects served by the Infrastructure project. Business Projects Infrastructure Projects 1. Finn Name Hours Worked Hours Worited 2. Ann Name Hours Worited Hours Worited c. Pennanent Jobs (Special PtJlblic WorXs Fund only) In the space below, show the cumulative number of new or retained permanent jobs in private businesses served by the Infrastructure project. Sh~)W all jobs as fuJI-time equivalents based on a standard 4O-hour worit week. FmI NMte firm Name Finn Name Jobe New -- R.tIiIned Jobe New Retained Jobe New Retained Certification: We certify thalt the data is COfTect and that the amount of any grant requ~~ is not in excess of current needs. (TWO SIGNATURES REQUIRED) AuItIortz.cf SlgnelurelTllle DIlle /' """ For State of Oregon Use Total AmouM Approwd Projec:C CoordinaIar Da&e Amount DescrtptIon Fund Cost Center S - S - S - S - S - S - fi8c8I Coordinator Del. M8Mger Date "- ~ o.a. A&IIhaftzed SIgnMuNIT1de '"'- Number c-.. Per-. Send Wire Transfers To: Name of Payee: Name of Receiving Bank: Location or Branch Name of Bank Bank Address: Bank Account Number: Bank ABA Routing Number: '~R\CASHREQWPO Page 2 of 2 Interim Financing Loan Agreement Exhibit F, Page 1 of2 PROMISSORY NOTE ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT STATE OF OREGON $1,500,000 (Dated) XXXXXXXXXXXXXX, XXXX Ashland, Oregon FOR VALUE RECEIVED, the City of Ashland (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 Sumn1er Street NE, Suite 200, Salem, OR 97301-1280 (hereinafter "State"), the principal sum of one million fivje hundred thousand dollars ($1,500,000), plus interest at the rate of two and fifteen hundredths percent (2.15%) per annum from the date of the first disbursement under the Loan Agreement. Interest shall be computed on the basis of a 360-day year, consisting of twelve (12) thirty-day (30-day) months. All principal and interest on this Note are due and payable on the Maturity Date. Capitalized tenms not otherwise defined in this Note shall have the meanings assigned to them by that certain loan agreernent dated XXXXXXXXXXXXXX, XXXX, between the State and the Borrower (as amended from tim,e to time the "Loan Agreement"). This Note is payable prior to its Maturity Date as provided for in Sections 2.04 and 2.05 of the Loan Agreement. Each payment ]made by the Borrower hereunder shall be applied first to interest then due and payable on the Loan, then to the principal of the Loan. If any Event of Default occurs, the outstanding balance of the Note, including principal, interest and other charges, if allY, 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 or sums due hereunder, or under any documents or instruments relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof, or the taking or release of collateral securing this Note. The liability of all parties on this Note shall not be discharged by any action consented to abovje taken by any holder of this Note. If this Note is placed in the hands of an attorney for collection, the Borrower shall, to the fullest extent permitted by law and 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 costs of the State's Counsel, Bond Counsel and legal staff) incurred by either of the State in the collection of principal and interest due under this Note 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. Program Development\OO4175 Interim Financing Loan Agreement Exhibit F, Page 2 of 2 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 XXXXXXXXXX)(XXX, xxxx. CITY OF ASHLAND By: xxxxxxxxxxxxx Title: xxxxxxxxxxxxx Program Development\004175 Interim Financing Loan Agreement Exhibit G, Page 1 of 2 SAMPLE OPINION OF MUNICIPALITY COUNSEL [LETTERHEAD OF COUNSEL TO MUNICIPALITY] [D A TED Oregon Economic and Community Development Department 755 Summer Street NE, Suite 200 Salem, OR 97301-1280 Ladies and Gentlenr1en: [Insert "f' or "Vile"] have acted as counsel to of Municipality] of the State of Oregon (the "Municipality"), which hereinafter defined) with the Oregon Economic and Commu "Department") pursuant to Sections 285B.410 through 285B.482 of and have acted as such in connection with the authorization, uti its Contract (as hereinafter defined). , [insert specific legal identity ntere a Loan Agreement (as D t Department (the Statutes (the "Act"), the Municipality of a e State of Oregon and the d originals, or copies certified or owing: , 200_ by and between the Note dated , 200_, in the nicipality (collectively, the "Loan Agreement"). ward Contract for Interim Financing number _ (the "Contract") by and the Municipality; C. Pf .s of the governing body of the Municipality relating to the approval of the Contract and the Loan Agreement and the execution, issuance and delivery thereof on behalf of the Municipality, and the authorization of the undertaking and completion of the Project (as defined in the Loan Agreement); D. All outstanding instruments relating to bonds, notes or other indebtedness of or relating to the Municipality. [insert "f' or "We"] have also examined and relied upon originals, or copies certified or otherwise authenticated to [insert "my" or "our"] satisfaction, of such other records, documents, certificates and other instruments, and nlade such investigation of law as in [insert "my" or "our"] judgment [insert "f' or "we"] have deemed necessary or appropriate to enable [insert "me" or "us"] to render the opinions expressed below. Based upon the foregoing, [insert "I am" or "Weare"] of the opinion that: 1. The Municipality is a duly formed and operating [insert specific nature of Municipality] described in ORS 285B.410(l), with the legal right to own and operate the Project. 2. The Municipality has full legal right and authority to execute and deliver the Contract and the Loan Agreement and to observe and perform its duties, covenants, obligations and agreements thereunder and to undertake and con1plete the Project; subject, however, to the effect of, restrictions and limitations imposed by or resulting frolm, bankruptcy, insolvency, moratorium, reorganization, debt adjustment or other similar laws affecting creditors' rights generally ("Creditor's Rights Limitations") heretofore or hereafter enacted. Program D8ve1opment\Q04175 Interim Financing Loan Agreement Exhibit G, Page 2 of 2 3. Amounts due to the Department pursuant to the Contract and the Promissory Note are payable from the sources described in Section 2.06 of the Loan Agreement. 4. The Ordinance (the "Ordinance") of the Municipality approving the Contract and the Loan Agreement and authorizing their execution, issuance and delivery on behalf of the Municipality, and authorizing the Municipality to undertake and complete the Project has duly an lawfully adopted and authorized in accordance with the Municipality's Charter, if any, the do 'cable Oregon law, and the Ordinance was adopted at a meeting or meetings which were d II less than 14 days' prior public notice and held in accordance with the Municipalit ' Ch pplicable Oregon law, and at which quorums were present and acting throu and delivered by the and Inding obligation of the u ct, however, to the effect of, and to ights Limitations or other laws, judicial of contractual obligations generally. 6. To t ledge, a uch investigation as [insert "f' or "we"] have deemed app n, cution and delivery of the Contract and the Loan Agreement by the Municip 1 , performance by the Municipality of its duties, covenants, obligations and agreem... tl, d the consummation of the transactions contemplated therein and the undertakin .., . I etion of Project do not and will not contravene any existing law or any existing order, injunction, j,.. ,nt, decree, rule or regulation of any court or governmental or administrative agency, authority or person having jurisdiction over the Municipality or its property or assets or result in a breach or violation of any of the terms and provisions of, or constitute a default under, any existing bond ordinance, resolution, trust agreement, indenture, mortgage, deed of trust or other agreement to which the Municipality is a party or by which it, the Project, or its property or assets is bound. 7. To the best of [insert "my" or "our"] knowledge, after such investigation as [insert "f' or "we"] have deemed appropriate, all approvals, consents or authorizations of, or registr tions of or filings with, any governmental or public agency, authority or person required' to date 0 part Municipality in connection with the authorization, execution, delivery and perfonnan t t and the Loan Agreement and the undertaking and completion of the Project have bee f' or "we"] have ny court or other io ization or existence or the Loan Agreement or the of Oregon, including the Act, as enacted pinion as to any matter not set forth in the Program Development\OO4175 STATE OF OREGON SPECIAL PUBLIC WORKS FUND - COMMUNITY FACILITIES FINANCIAL ASSISTANCE A WARD CONTRACT FOR INTERIM FINANCING This Contract is made and entered into by and between the STATE 9F OREGON, ACTING BY AND THROUGH ITS ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT ("State") and the City of Ashland ("Borrower"). The reference number of this Contract is K02007. RECIT ALS WHEREAS, thj~ State is authorized by ORS 285B.41 0 through 285B.482 to provide fmancial assistance from the Special Public Works Fund (as defined below) to Oregon municipalities for infrastructure projects; and WHEREAS, the Borrower has applied to State for financial assistance from the Special Public Works Fund for the Project (as defined below); and WHEREAS, the Borrower has committed to provide four hundred ninety-three thousand dollars ($493,000) in other public and/or private resources as matching funds for the Project; and WHEREAS, th4e State has reviewed the Borrower's application and determined that the Project is eligible for financial assistance from the Special Public Works Fund and is feasible and merits funding; and WHEREAS, the State is willing to provide a Loan of one million five hundred thousand dollars ($1,500,000) to the: Borrower for the Project on the terms and conditions of this Contract and Borrower wishes to borrow and accept the Loan from State 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 me,m ORS 285B.410 through 285B.482, as amended. "A ward" shall tnean written notification from the State offering a Loan to the Borrower. "Code" shall have the meaning ascribed thereto in 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. "Costs of the Proiect" shall mean all eligible costs of acquiring and constructing the Project, including any financing costs properly allocable to the Project, as set out in the approved Project Budget in Exhibit C to the Loan Agreen1ent, which is attached hereto and by this reference incorporated herein. "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 6 hereof. Program Development\OO4173 Page 1 of 7 "Event of Default" shall mean any of the events described paragraphs A through E of Section 6 of this Contract. "Loan" shall have the meaning ascribed thereto in Section 2(A) of this Contract. "Loan Account''' shall mean the Loan Account created by the State for the Borrower in the Special Public Works Fund. "Loan Agreem(~nt" shall mean that certain interim financing 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 dated as of the Loan Closing Date, as such agreement may from time to time be amended and/or restated. "Note" shall m(~an that certain interim financing promissory note, substantially in the form of Exhibit F to the Loan AgreeJnent, 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 B of the Loan Agreement. "Proiect Area" shall mean all properties that will be directly benefited and served by construction of the Project. "Proiect Comoletion 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. "Special Public: Works Fund" shall mean the Special Public Works Fund created by ORS 285B.455(1). "State Bonds" shall mean the bonds or other obligations issued by the State of Oregon, acting by and through its State Treasurer, under the Act. 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 loan to Borrower, and Borrower agrees to borrow and accept from State, a loan in the principal amount of one minion five hundred thousand dollars ($1,500,000) (the "Loan"). B. Availability of Funds. The Loan set out in Section 2(A) above is subject to the availability of moneys in the Special Public Works Fund. C. Change in the ,A,ct. 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. D. Drawdowns. The Borrower must submit drawdown requests for the Loan on a State-approved cash request form. E. Participation Rate. The Borrower shall finance no more than seventy-five and twenty-six one hundredths percent (75.260/0) 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. Program Development\OO4173 Page 2 of 7 SECTION 3 USE OF AWARD A. Eligible Activities. The use of the Loan is expressly limited to the Project activities described in Exhibit B of the Loan Agreement. The use of these funds is also expressly subject to the special conditions set out in the Spedal Conditions of A ward attached as Exhibit A to the Loan Agreement and by this reference incorporated herein. B. Ineligible Activities. No part of the Loan shall be used for: 1. Costs incurred prior to award of funds to the Borrower except in the case of preliminary and final engineering, surveying, architectural reports and other support activities necessary to the construction of the Project; 2. Assistance to facilities that are or will be privately owned; 3. Purchase of equipment, such as motor vehicles, not directly appurtenant to the Project; 4. Purchase of off.,.site property for proj ect -related purposes such as wetland mitigation or other uses not directly related to the Project; 5. Operation ~md maintenance expenses; C. Unexpended Funds. Unexpended Loan proceeds shall be applied in accordance with Section 2.05 of the Loan Agreement. SECTION 4 REPRESENT A TIONS OF THE BORROWER The Borrower represents and warrants to the State that: A. Costs of the Pr01ect. A reasonable estimate of the Costs of the Project is one million nine hundred ninety-three thous~md dollars ($1,993,000). B. Matching Funds. As of the date hereof, matching funds of four hundred ninety-three thousand dollars ($493,000) 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 5 COVENANTS OF BORROWER The Borrower c~ovenants 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 cOlnply with: Progrwn Development\004173 Page 3 of 7 1. State procurement regulations found in ORS Chapter 279. 2. State labor standards and wage rates found in ORS Chapter 279. 3. State munic:ipal finance and audit regulations found in ORS Chapter 297. 4. State regulations regarding industrial accident protection found in ORS Chapter 656. 5. State confli'ct 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 42 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. The State's perfon:nance under this Contract is conditioned upon the Borrower's compliance with the provision~ ofORS 279.312,279.314,279.316,279.320, and 279.555, as amended from time to time, which are incorporated by reference herein. B. Drawings. The Borrower shall obtain as-built drawings for all facilities constructed with the proceeds of the Loan. The Bonrower shall obtain certification of completion per the as-built drawings from the Project engineer or archite1ct, as applicable. C. Operation and ]Maintenance of the Proiect. By the Project Completion Date, the Borrower will have a program, documented to the satisfaction of the State, for the on-going maintenance, operation and replacement, at its sole expense, of the public works service system, if any, of which the Project is a part. This program should include a plan for generating revenues sufficient to assure the operation, maintenance and replacement of the facility during the service life of the Project. D. Signs and Notifications. If construction is undertaken with Loan proceeds, the Borrower shall display a sign, provided by the State, near the Project construction site stating that the Project is being funded by Lottery proceeds. The Borrower shall include the following statement, prominently placed, on all plans, reports, bid documents and advertisements relating to the Project: "This Project ",as funded in part with a financial award from the Special Public Works Fund, funded by the Oregon State Lottery and administered by the State of Oregon, Economic and Community Development Department." E. Creation of Construction Account. The Loan proceeds (as and when the Loan proceeds are disbursed by the State to the Borrower) and matching funds (if any) shall be deposited in a segregated construction 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. F. Insurance. Ex(~ept as may be provided in the Special Conditions of Award, in the event the Project, or any portion there01~ is destroyed and the Project is insured, any insurance proceeds shall be paid to the State and shall be applied to the outstanding balance of the Loan in such manner as the State in its sole discretion shall determine unless the State agrees in writing that the insurance proceeds shall be used to rebuild the Proj ect. G. Indemnity. To the fullest extent permitted by law, the Borrower shall indemnify the State and its officers, employees and agents from and against all claims, suits, actions, losses, damages, liabilities, costs Program Development\OO4173 Page 4 of 7 and expenses of any nature whatsoever resulting from, arising out of, or relating to the activities of Borrower or its officers, employees, contractors, or agents under or related to this Contract or the Project. H. Sales. Leases and Encumbrances. Borrower may not sell, lease, exchange, transfer or otherwise dispose of any property constituting a part of the Project orany interest therein unless (1) it is worn out, obsolete or, in the reasonable business judgement of the Borrower, no longer useful in the operation of the Project, and (2) such transaction will not adversely affect the exclusion from gross income for federal income tax purposes of the int~erest on the note pursuant to Section 1 03(a) of the Code. 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. I. Condemnation Proceeds. Except as may be provided in the Special Conditions of A ward, in the event the Project, or any portion thereof is condemned, any condemnation proceeds shall be deposited in the Loan Account and shall be applied to the outstanding balance of the Loan. J. Economic Benefit Reports. The Borrower shall submit reports on the economic development benefits of the Project for the period from the date hereof until two (2) years after the Project Completion Date, or such longer period as State may reasonably request in order to evaluate the general economic benefits of the Project to the COITununity, at such intervals and in such form as the State shall specify. Reports shall document temporary constructionjobs associated with the Project and any new direct permanent or retained jobs resulting froml the Project. The reports shall document the general economic benefits of the Project to the community and provide other information necessary to evaluate the success of the Project. K. Registered En~dneer or Licensed Architect. A registered professional engineer or a licensed architect in lieu of a registered professional engineer if use of a licensed architect has been approved by the State will be responsible for design and construction of the Project. The Borrower will check with the Oregon Board of Engineering Examiners or the Oregon Board of Architect Examiners, as applicable, to verify an engineer's or architect's registration and complaint history prior to contracting with the engineer or architect. SECTION 6 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 doeuments, certificates and reports relied upon by the State in gauging the progress of the Project, complian(~e with the requirements of the Act or compliance with the requirements of Section 103 and Sections 141 through 150 of the Code and performance of duties by the Borrower is untrue in any material respect; or C. The Borrower fails to perform or observe any of its covenants or agreements contained herein and fails to correct such deficiencies within thirty (30) days of notice from the State of such deficiencies, or such longer period as the State: may authorize in its sole discretion; or D. If, within six (6) months from the date of this Contract, the Borrower has not entered into binding legal agreements with all private parties necessary to complete the Project; or E. The occurrence of an Event of Default under the Loan Agreement; Program Development\OO4173 Page 5 of 7 thereupon, and in €~ach such case, the State, upon notice to the Borrower, may exercise any or all of the remedies set forth in Section 7. SECTION 7 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 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 lottery funded awards and the withholding pursuant to ORS 285B.449 of other State funds due the Borrower. SECTION 8 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 the:reof 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 shan. 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, Southwest Team Economic and Community Development Department 775 Summer Street NE, Suite 200 Salem, Oregon 97301-1280 If to the Borro\ver: Finance Director City of Ashland 20 E. Main Street Ashland, Oregon 97520-1849 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. Attornev Fees. To the extent permitted by applicable law, 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. 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 tenns 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 Program Development\004173 Page 6 of 7 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. G. Execution in Counterparts. This Contract 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. IN WITNESS '~HEREOF, the parties hereto have caused this Contract to be duly executed as of the last date set forth belov~ the signatures of their respective representatives. :;4f1t STA TE OF OREGON acting by and through its Economic and Community I)evelopment Department By: c28~d/ ~ By: CITY OF ASHLAND (Borrower) Southwest Tc~am .&,{ ~ (Si ure) Title: JC"1'lfA-NCE- (J I~LTd~ Date:~;0 :2- Date: ~/~k,- / ApPROVED AS TO LEGAL SUFFICIENCY IN ACCORDANCE WITH ORS 291.047: /s/Lynn T. Nagasako (as per email dated 6/20/02) Lynn T. Nagasako, Assistant Attorney General Date: June 20, 2002 Exhibit 1 - Loan A.greement Exhibit 2 - Environmental and Natural Resource Agencies Program Development\004173 Page 7 of 7 Exhibit 1 Page 1 of 20 Interim Financing Loan Agreement BETWEEN STATE OF OREGON acting by and through its ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT AND CITY OF ASHLAND Program Development\OO4173 Exhibit 1 Page 2 of 20 T ABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION 1.01. Definitions... ................... ................. ...................................................................................4 SECTION 1.02. General Rules............ ................ .........................................................................................6 Page ARTICLE II LOAN TO BORROWER SECTION 2.01. Lo;an Amount; Loan Terms; Disbursements; Use of Proceeds ..........................................6 SECTION 2.02. Lo;an Payment............... ............ ........ ..................................................................................6 SECTION 2.03. Unconditional Obligations. ....... ................ .........................................................................6 SECTION 2.04. Lo;an Prepayments.. .................. ...... ........... .............. ....... ....................................................7 SECTION 2.05. Un.expended Loan Proceeds ... ......... .... .... ..... ...................................................................... 7 SECTION 2.06. Sources of Payment of Borrower's Obligations .................................................................7 SECTION 2.07. Disclaimer of Warranties; Limitation of Liability; Indemnification ..................................8 SECTION 2.08. Maintenance of Records by the State .................................................................................8 ARTICLE III EffipRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER SECTION 3..01. Representations and Warranties of Borrower ....................................................................9 SECTION 3.02. Paliicular Covenants of the Borrower ....... ......... ..................... .......................... ..... ..........12 ARTICLE IV CONDITIONS PRECEDENT SECTION 4.01. Loa.n Closing ......................... .......................................................................................... .16 SECTION 4.02. Conditions to Disbursements .... ............... ........................................... ....... ................. .....16 ARTICLE V ASSIGNMENT SECTION 5.01. Assignment and Transfer by the State..........................~...................................................17 SECTION 5.02. Assignment by Borrower........................ ......................................................................... .17 ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01. EV4ent of Default.. ............................... .............................................................. ................1 7 SECTION 6.02. Notice of Default ............. ................................................................................................ .18 SECTION 6.03. ReJmedies on Default.............. ............... .......................................................................... .18 SECTION 6.04. Attorney's Fees and Other Expenses................................................................................18 SECTION 6.05. Application of Moneys .......... ..................... ............... ...... ........ .... .... ................ ............ ......18 SECTION 6.06. No Remedy Exclusive; Waiver; Notice ...........................................................................18 SECTION 6.07. Retention of State's Rights............... ................ ..... ........... ............... ............. ...... ........ ......19 SECTION 6.08. Default by the State......................................................................................................... .19 Program Development\004173 Exhibit 1 Page 3 of 20 ARTICLE VII MISCELLANEOUS SECTION 7.01. Notices............................................................................................................................. .19 SECTION 7.02. Birlding Effect... ...... ..... ........................................ ............ ..... ..................... ....... ........... ....19 SECTION 7.03. Se'/erability....................................... ................................ .............................................. ..19 SECTION 7.04. An1endments, Supplements and Modifications................................................................19 SECTION 7.05. EXfecution in Counterparts.... .:....... .......... ......... ... ............... ...................... .................. ......19 SECTION 7.06. No Construction against Drafter ......................................................................................19 SECTION 7.07. Applicable Law. ............... ............................................. ........... ..... .............. ....... ............ ..20 SECTION 7.08. Consents and Approvals........................................................... ...................................... ..20 SECTION 7.09. Me:rger; No Waiver ............ .............. ....... .............. ............ ......................... .... ...... ........ ....20 EXHIBITS Exhibit A Special Conditions of Award Exhibit B Project Description Exhibit C Project Budget Exhibit D Description of the Interim Financing Loan Exhibit E Form of Requisition Exhibit F Form of Promissory Note Exhibit G Form of Opinion of Borrower's Counsel Program Developmeot\004173 Exhibit 1 Page 4 of 20 THIS INTERHv1 FINANCING LOAN AGREEMENT, made and entered into as of the date of the last signature hereto, by and between the STATE OF OREGON, ACTING BY AND THROUGH ITS ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT (the "State"), and the Borrower (as defined below). Capitalized terms not otherwise defined herein shall have the meanings assigned to them in Section 1.01 hereof. WITNESSETH THAT: WHEREAS, the State is authorized by ORS 285B.41 0 through 285B.482 to loan money in the Special Public Works Fund to Oregon municipalities to finance infrastructure projects; and WHEREAS, the Borrower has applied to State for a loan to finance all or a portion of the Costs of the Project (as defined below); and WHEREAS, the State has reviewed the Borrower's application and determined that the Project (as defined below) is eligible for loan financing from the Special Public Works Fund and is feasible and merits funding; and WHEREAS, the Sate is willing to loan Borrower the amount set forth in Exhibit D, attached hereto and by this reference Inade a part hereof, to provide interim financing for a portion of the Costs of the Project; and WHEREAS, Borrower wishes to borrow and accept from State a loan in the amount set forth in Exhibit D for the interim financing of a portion of the Costs of the Project. NOW, THEREFORE, for and in consideration of the award of the Loan by the State, the Borrower agrees to perform its obligation under this Loan Agreement in accordance with the conditions, covenants and procedures set forth herein. ARTICLE I DEFINITIONS SECTION 1.01. Definitions. The following terms as used in this Loan Agreement shall, unless the context clearly requires otherwise, have the meanings assigned to them below: "Act" means ORS 285B.41 0 through 285B.482, as amended. "Authorized Officer" means, in the case of the Borrower, the person whose name is set forth in Exhibit D hereto or such oth4~r person or persons authorized pursuant to a resolution or ordinance of the governing body of the Borro\ver to act as an authorized officer of the Borrower to perform any act or execute any document relating to the Loan or this Loan Agreement and whose name is furnished in writing to the State. "Bond Counsel" means a law firm having knowledge and expertise in the field of municipal law and whose opinions are generally accepted by purchasers of municipal bonds. "Borrower" mt~ans the Municipality that is a party to this Loan Agreement and is described on Exhibit D hereto, and its successors and assigns. "Business Day" means any day other than (a) a Saturday, Sunday or legal holiday or a day on which banking institutions in Salem, Oregon or in the city in which the principal office of the Trustee is located are closed, or (b) a day on which the New York Stock Exchange is closed. Program Development\OO4173 Exhibit I Page 5 of 20 "Code" means the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, incJluding any regulations promulgated thereunder and any administrative or judicial interpretations thereof. "Contract" means the Financing Assistance A ward Contract For Interim Financing between the State and the Borrower dated as of the date hereof. "Costs of the Project" means those costs of Borrower that are (a) reasonable, necessary and directly related to the Project, including any financing costs properly allocable to the Project and preliminary costs such as engineering and architectural reports, studies, surveys, soil tests, designs, plans, working drawings and specifications that are necessary for the construction of the Project, and (b) permitted by generally accepted accounting principles to be costs of such Project. The term "Costs of the Project" does not include (i) the purchase of ~~quipment and other property not directly related to the Project, (ii) construction or repair of facilities owned or operated by private parties, (iii) costs incurred prior to the date of the Loan, except as provided in Section 3.02(a), or (iv) costs that do not comply with the requirements of the General Certificate executed by the Borrower in connection with the closing of the Loan. "Counsel" me(UlS an attorney at law or firm of attorneys at law (who may be, without limitation, of counsel to, or an e:mployee 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 provide interim financing for a portion of the Costs of the Project pursuant to this Loan Agreement. "Loan Agreement" means this interim financing loan agreement, including any exhibits, schedules or attachments hereto, as it may be supplemented, modified or amended from time to time in accordance with the terms hereof. "Loan Closing Date" means the date on which the Loan proceeds are credited to the Loan account in the Special Public Works Fund in accordance with Section 2.01(a) hereof. "Loan Closing Deadline" means the date, as set forth in Exhibit D hereto, by which all conditions set forth in Section 4.01 must be satisfied in order for the State to make the Loan. "Loan Documents" means the Loan Agreement, Note and any agreements, instrument and certificates required to be exeeuted and delivered hereunder. "Maturity Date" means the date by which the Loan must be repaid, as set forth in Exhibit D hereto or otherwise designated by the State in writing pursuant to Section 7.04 of this Loan Agreement. "Municipality" means any entity described in ORS 285B.41 0(1). "Note" means the promissory note of the Borrower substantially in the form of Exhibit F attached hereto and by this reference made a part hereof. "Project" means the infrastructure project of the Borrower described in Exhibit B attached hereto and by this reference made a part hereof. Program Development\OO4173 Exhibit 1 Page 6 of 20 HProject CompJletion Date" means the earlier of (a) the date on which all of the proceeds of the Loan, including any irivestment 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 the Special Conditions of A ward attached hereto as Exhibit A as a source of repayment for the Loan HSpecial Public Works Fund" means the fund created by ORS 285B.455(1). "State" means the State of Oregon acting by and through its Economic and Community Development Department. "State Bonds" Jmeans the series of bonds, if any, issued by the State, acting by and through its State Treasurer, under the Act. "System" means the utility system or systems, if any, of the Borrower which includes the Project or components of the Project, as such system or systems may be modified or expanded from time to time. References in this Loan Agreement to the Borrower's "System" shall be ignored to the extent that the Project is not a component of a utility system or systems. 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 glender. ARTICLE II LOAN TO BORROWER SECTION 2.01. Loan Amount: Loan Terms: Disbursements: Use of Proceeds. (a) Loan Amount. Subject to the terms and conditions hereof, in particular Section 4.01 and 4.02 hereof, the State hereby agrees to loan and disburse to the Borrower, and the Borrower agrees to borrow and accept from the State, the Loan in an amount equal to the principal amount of loan set forth in Exhibit D hereto. Upon satisfaction of the conditions set forth in Section 4.01 hereof, the State shall credit the Loan proceeds to a Loan account in the Special Public Works Fund pending disbursement to Borrower as described below. (b) Disbursements. Subject to Section 4.02 hereof, the proceeds of the Loan shall be disbursed to the Borrower upon rec1eipt by the State of a requisition executed by the Borrower in substantially the form attached hereto as Exhibit E which is by this reference incorporated herein. (c) Use of Pro(:eeds. The Borrower shall use the proceeds of the Loan strictly in accordance with Section 3.02(a) hereof. SECTION 2.02. Loan Payment. The Borrower hereby covenants and agrees to repay the Loan in accordance with th(~ terms hereof and of the Note on or before the Maturity Date. SECTION 2.03. Unconditional Obligations. The provisions of this Loan Agreement shall constitute a contract with the State and shall be enforceable by the State. Payments required under the Loan Documents are payable from the sources of repayment described in Section 2.06 hereof, and the obligation of the Borrower to make all 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 Program Development'OO4173 Exhibit 1 Page 7 of 20 Documents shall not be abated, rebated, set-off, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner or to any extent whatsoever, or any payments under this Loan Agreement or Note remain unpaid, regardless of any contingency, act of God, event or cause whatsoever, including (without limitation) any acts or circumstances that may constitute failure of considerations, evi,ction 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 or 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 stich rights. SECTION 2.04. Loan Prepayments. (a) Mandatory Prepayment. The Borrower shall prepay the outstanding balance of the Loan upon the occurrence of the following events: (i) destruction of all or a substantial portion of the Project; or (ii) the issuance of any subsequent short or long term financing for the Project, including State Bonds issued in part for the financing and/or refinancing of the Project. (b) Optional Prepayment prior to the Maturity Date. The Borrower may prepay all or any portion of the outstanding principal of and interest on the Loan on any Business Day upon five (5) Business Day's notice to the State. Prepayn1ents by the Borrower shall be applied first to pay accrued interest, and second to prepay principal on the Loan. SECTION 2.05. Unexpended Loan Proceeds. Any proceeds of the Loan held by the State on the Project Completion Date shall be applied, together with any interest earnings thereon, as follows: first to pay any arbitrage rebate due with respect to the Loan pursuant to Section 148(f) of the Code, second to pay unpaid interest accrued to the Project Completion Date, and third to prepay principal on the Loan. The State shall determine, in its sole discretion, the method by which any payments on the Loan pursuant to this Section 2.05 shall be applied to the outstanding balance of the Loan. If any proceeds of the Loan remain after the payment of the entire outstanding principal balance of the Loan, such amounts shall be the property of the State, and the Borrower shall have no claim to such amounts. SECTION 2.06.. 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, 2.07 and 6.04 hereof, are payable from the sources of repayment described in paragraph (b) of this Section 2.06; provided, however that nothing herein shall be deemed to prevent the Borro'wer from paying the amounts payable under this Loan Agreement and the other Loan Documents from any other legally available source. Program Development\OO4173 Exhibit 1 Page 8 of 20 (b) The amounts payable by the Borrower under this Loan Agreement and the other Loan Documents are payable from the Revenues, the proceeds of any subsequent short or long-term financing to refund the Loan or to finance the Project, and other sources identified in the Special Conditions of Award attached hereto as Exhibit A. The pledges made by the Borrower in these Special Conditions of Award shall be valid and binding from the date of this Loan Agreement pursuant to ORS 288.594. The amounts so pledged and hereafter received by the Borrower shall immediately be subject to the lien of the pledge without physical delivery or further act and except as may be stated in the Special Conditions of Award, shall be superior to all other claims and liens whatsoever to the fullest extent permitted by ORS 288.594. The amounts payable by the Borrower under this Loan Agreement and the other Loan Documents are also payable from all legally available general funds in the Borrower's general fund. (c) The Borro~ver expressly acknowledges that if the Borrower defaults on payments due under this Loan Agreement or any of the other Loan Documents, the State of Oregon, pursuant to ORS 285B.449, may withhold all or a portion of any amounts otherwise due to the Borrower and apply said amounts to payments due under this Lo:an Agreement and the other Loan Documents to the fullest extent permitted by law; provided however that the provisions of the Loan Agreement and the Note are not to be construed in a way that would cause the obligations of the Borrower thereunder to constitute debt which violates Section 10, Article XI of the Oregon Constitution or ORS 287.053. SECTION 2.07.. Disclaimer of Warranties: Limitation of Liability; Indemnification. The Borrower acknowledges and agrees that: (a) the State nlakes no 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 the:reof or any other warranty or representation with respect thereto; (b) in no even1t shall the State or its respective agents be liable or responsible for any direct, indirect, incidental, special or consequential damages in connection with or arising out of this Loan Agreement, any of the other Loan Documents or the Project or the existence, furnishing, functioning or use of the System or the Project or any item or products or services provided for in this Loan Agreement; and (c) to the extent authorized by law, the Borrower shall indemnify, save and hold harmless the 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 tenns of this Loan Agreement or any of the other Loan Documents, provided, however, that the provisions of this paragraph (c) are not intended to and shall not be construed as a waiver of any defense or limitation on damages provided for under and pursuant to Chapter 30 of the Oregon Revised Statutes or under the laws of the United States or other laws of the State of Oregon. SECTION 2.08., Maintenance of Records bv the State. The State shall maintain records of all amounts held in the Loan a.ccount within the Special Public Works Fund to which the Loan proceeds are initially credited on the Loan Closing Date. All earnings derived from the investment of such amounts shall be retained in and credited to such account and shall be available for disbursement to the Borrower pursuant to Section 2.01 hereof. The State shall provide the Borrower a copy of records relating to such account at least twice each year so long as the State is making disbursements from such account. Program Development\OO4173 Exhibit 1 Page 9 of 20 ARTICLE III IlEPRESENT 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 as defined in the Act. (ii) The BOJTower 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 Proj(~ct 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 can)' out and consummate all transactions contemplated by this Loan Agreement and the other Loan Docum'ents. (iii) The Project is a project which the Borrower may undertake pursuant to Oregon law and for which the Borrower is authorized by law to borrow money. (iv)The proceedings of the Borrower's governing members and voters, if necessary, approving this Loan Agreement and the other Loan Documents and authorizing the execution and delivery of this Loan Agreement and othler 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 Jlaw, 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 exe:cuted 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 B and C hereto and in Sections 2,3,4 and 8 of Exhibit D hereto is true and accurate in all respects. (vi) Borrowler' s Contract and the Loan Agreement have been authorized by an ordinance or resolution of the Borrower which was adopted in accordance with ORS 285B.443(3) after proper publication at least fourteen (14) days prior notice published at least once in a newspaper of general circulation within the Borrower's jurisdic:tion and was adopted in accordance with applicable law and the Borrower's requirements for filing public notices and holding public meetings. (vii) Borrovver may pledge its full faith and credit and taxing power within the limitations of Oregon law, including but not limited to Sections 11 and 11 b of Article XI of the Oregon Constitution, and any and all of Borrower' s h~gally available funds, to make the payments due under the Loan Agreement and Loan Documents. (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, Program Development\OO4173 Exhibit 1 Page 10 of 20 prospects or condition (financial or otherwise) of the Borrower, the Project or the Borrower's System, or the ability of the Borrower to make all Loan payments 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, activiti4~s, prospects or condition (financial or otherwise) of the Borrower or its System, or the ability of the Borrower to make all Loan payments and otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents, that have not been disclosed in writing to the State in the Borrower's application for the Loan or otherwise. (d) Compliance with Existing Agreements~ Etc. The authorization, execution and delivery of this Loan Agreement and the other Loan Documents by the Borrower, the observation and performance by the Borrower of its duties, covenants, obligations and agreements thereunder and the consummation of the transactions provided for in this Loan Agreement and the other Loan Documents, the compliance by the Borrower with the provisions of this Loan Agreement and the other Loan Documents and the undertaking and completion of the Project will not result in any breach of any of the terms, conditions or provisions of: or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or asset of the Borrower pursuant to, any existing ordinance or resolution, trust agreement, indenture, mortgage, deed of trust, loan agreement or other instrument (other than any lien and charge of this Loan Agreement or any of the documents related hereto or to the Bond Indenture) to which the Borrower is a party or by which the Borrower, its System or any of its property or assets may be bound, nor will such action result in any violation of the provisions of the charter or other document pursuant to which the Borrower was established or any laws, ordinances, resolutions, governmental rules, regulations or court orders to which th(~ Borrower, its System or its properties or operations is subject. (e) No Default~. No event has occurred and no condition exists that, upon authorization, execution and delivery of this Loan Agreement or any of the Loan Documents or receipt of the amount of the Loan, would constitute an Event of Default hereunder. The Borrower is not in violation of, and has not received notice of any claimed violation of, any term of any agreement or other instrument to which it is a party or by which it, its System or its property may be bound, which violation would materially adversely affect the Project, properties, activitic~s, prospects or condition (financial or otherwise) of the Borrower or its System or the ability of the Borrower to make all Loan payments or otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents. (f) Governmental Consent. The Borrower has obtained or will obtain all permits and approvals required to date by any governmental body or officer for the making, observance and performance by the Borrower of its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents or for the undertaking or completion of the Project and the financing or refinancing thereof; and the Borrower has complied or will comply with all applicable provisions of law requiring any notification, declaration, filing or registration with any governmental body or officer in connection with the making, observance and performance by the Borrower of its duties, covenants, obligations and agreements under this Loan Agreement and the other Loan Documents or with the undertaking or completion of the Project and the financing or refinancing thereof. No consent, approval or authorization of, or filing, registration or Program Development\OO4173 Exhibit 1 Page 11 of 20 qualification with, any governmental body or officer that has not been obtained is required on the part of the Borrower as a condition to the authorization, execution and delivery of this Loan Agreement or any other Loan Document. (g) Compliancle with Law. The Borrower (i) is in cOInpliance with all laws, ordinances, and governmental rules and regulations 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 perfonnance under this Loan Agreement is conditioned upon the Borrower's compliance with the provisions of ORS 279.312, 279.314, 279.316, 279.320, and 279.555, which are incorporated by reference herein. (h) The Proiecl. (i) The Project is feasible, and there will be adequate funds available to complete the Project and repay the Loan. (ii) The Borrower has been provided with a copy of the rules adopted by the State under ORS 285B.419(1), and 1the Project is in compliance with such rules. (iii)The term of the Loan is not in excess of the useful life of the Project. (iv)The Borrower has adequate financial resources to ensure the project's success. (v) The Project will benefit a broad cross-section of the community. (vi)To the ,extent shown in the Special Conditions of Award, the Borrower has provided, as part of the security for repayment of the Loan, provisions for payments from any owners of property specially benefited by the Project which are sufficient when considered with other security to assure repayment of the Loan. (vii)The Project is situated in a city or county with a comprehensive land use plan that allows industrial and commercial development of a type and scale that is sufficient to produce revenues to repay the costs of the Project. (viii)The Project satisfies the criteria set forth in ORS 285B.410 through 285B.482 , and OAR Chapter 123, division 42. (i) Costs of the Proiect. The Borrower certifies that the Costs of the Project, as listed in Exhibits C and D hereto, (i) are a reasonable and accurate estimation and based upon an engineer's feasibility report and engineer's estimate stamped by a registered professional engineer or an architect's feasibility report and architect's estimate stamped by a licensed architect, as applicable, a copy of which shall be promptly provided to the State upon request, (ii) exceeds the maximum principal amount of the Loan shown on Program Development\OO4173 Exhibit I Page 12 of 20 Exhibit D, and (iii) are not less than the sum of the proceeds of the Loan and the investment earnings projected to be derived from the investment of such proceeds. (j) Continuing Representations. The representations of the Borrower contained herein shall be true on 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 (i) to finance all or a portion of the Costs of the Project; and (ii) where applicable and with prior written approval of the State, to reimburse the Borrower for a portion of the Costs of the Project, which portion was paid or incurred in anticipation of reimbursement by the State; provided however that all such reimbursements shall satisfy the requirements of Section 1.150-2 of the Code. None of the proceeds of the Loan shall be used for ineligible activities as specified in Section 3.8. of the Contract. (b) Source of Repayment. The Loan shall be paid from such sources of repayment described in Section 2.06 of this Loan ,A,greement and in the Special Conditions of Award attached hereto as Exhibit A. Funds from such sources shall be applied to the punctual payment of the principal of and the interest on the Loan and all other amounts due under this Loan Agreement and the other Loan Documents according to their respective terms. (c) Performan(~e 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 Agree:ment and the other Loan Documents. (d) Completion of Project and Provision of Moneys Therefor. The Borrower covenants and agrees to provide the State with copies of all plans and specifications relating to the Project for review and approval by the State, but in any event no later than ten days prior to the date on which bids are advertised. The Borrower shall obtain as-built drawings for all facilities of the Project and obtain certification of completion per as-built drawings from the Project engineer within ninety (90) days of the Project Completion Date. The Borrower shall supply a copy of such drawings and certification to the State upon request. The Borrower further covenants and agrees (i) to exercise its best efforts in accordance with prudent practice to complete the Project and to so accomplish such completion on or before the estimated Project Completion Date set forth in Exhibit D; (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 its sole expense, of the Project. The program shall include a plan for generating revenues sufficient to assure the operation, maintenance and f(~placement of the Project during the useful life of the Project. Borrower shall provide such documentation to the State on or before the Project Completion Date. (e) Disposition of Project 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 othe~ise dispose of all or substantially all or any substantial portion of the Project or its System or any other systeml which provides revenues for payment of amounts due under this Loan Agreement and Program Development\OO4173 Exhibit 1 Page 13 of 20 the Loan Documents, except if the State consents thereto in writing upon ninety (90) days' prior written notice to the State. The State shall not consent to any such sale, lease, exchange, abandonment or other disposition unless the State shall have received an opinion of Bond Counsel to the effect that such sale, lease, exchange, abandonment or other disposition complies with the Act and will not adversely affect the exclusion of interest on the Loan from gross income for purposes offederal income taxation under Section 1 03(a) of the Code. Proceeds of any such transfer not used to replace property that is part of the Project shall be applied to the payment or prepayment of the outstanding principal of and interest in the Loan, as provided in Section 2.04 of this AgreeInent. (f) Exclusion of Interest from Federal Gross Income and Compliance with Code. (i) The Borrower covenants and agrees that it shall not take any action or omit to take any action which action or ornission would result in the loss of the exclusion of the interest on the Loan from gross income for purpos1es of federal income taxation as that status is governed by Section 103(a) of the Code. (ii) The Borrower shall not take any action or omit to take any action, which action or omission would cause the Loan to be "private activity bonds" within the meaning of Section 141 (a) of the Code. Accordingly, unless the Borrower receives the prior written approval of the State, the Borrower shall neither (A) permit in excess of 10 percent of either (1) the proceeds of the Loan or (2) the Project financed or refinanced with the proceeds of the Loan, to be used directly or indirectly in any manner that would constitute "private business use" within the meaning of Section 141 (b)( 6) of the Code, nor (B) use directly or indirectly any of the proceeds of the Loan, to make or finance loans to persons other than governmental units as such term is uSled in Section 141 ( c) of the Code; provided further, that at least one half of the private business use pennitted by clause (A) shall be neither disproportionate related business use, nor private business use not n~lated to the government use of such proceeds of the Loan. (iii) The Borrower shall not directly or indirectly use or permit the use of any of the "gross proceeds" (within the meaning of Section 148 of the Code) of the Loan or any other funds or take any action or omit to take any action, which use or action or omission would cause the Loan to be an "arbitrage bond" within the meaning of Section 148(a) of the Code. (iv)The Borrower shall not use directly or indirectly the proceeds of the Loan in any manner that would constitute an "advance refunding" within the meaning of Section 149(d)(5) of the Code and shall not prepay the Loan or any part of the Loan without the prior written approval of the State and as provided in this Loan Agreem1ent. (v) The Borrower will not cause the Loan to be treated as a "federally guaranteed" obligation for purposes of Section 149(b) of the Code, as may be modified in any applicable rules, rulings, policies, procedures, regula.tions or other official statements promulgated or proposed by the State of the Treasury or the Internal Revenue Service with respect to "federally guaranteed" obligations described in Section 149(b) of the Code. For purposes of this paragraph, the Loan shall be treated as "federally guaranteed" if: (A) all or any portion of the principal or interest is or will be guaranteed directly or indirectly by the United States of America or any agency or instrumentality thereof, or (B) five percent (5%) or more of the proceeds of the Loan will be (1) used in making loans, the payment of principal or interest with respect to which is guaranteed in whole or in part by the United States of America or any agency or instrumentality thereof, or (2) invested directly or indirectly in federally insured deposits or accounts, and (C) none of the exceptions described in Section 149(b)(3) of the Code apply. Program Development\004173 Exhibit I Page 14 of 20 (vi)The Borrower agrees to assist the State to ensure that all amounts required to be rebated to the United States of AInerica pursuant to Section I 48(f) of the Code are rebated to the United States of America. The Borrower agrees to provide all amounts necessary to satisfy the requirements of Section 148(f) applicable to the Loan. The Borrower further agrees to reimburse the State for the portion of any expenses incurred by them that relate to the Loan and are necessary to satisfy the requirements of Section 148(f) of the Code. (vii) In furtherance of the foregoing, the Borrower covenants that it will comply with the provisions of this Loan Agreement and with the provisions of any certificate executed by the Borrower relating to compliance with the provisions of Sections 103 and 141 through 150 of the Code executed by the Borrower or the State with respect to the Loan and will furnish to the State in writing, upon reasonable request, information regarding investments and use of proceeds of the Loan and of any facilities financed or refinanced therewith. (viii) The Borrower shall not enter into any management agreement for the operation of the Project that would cause the Loan to be or become a "private activity bond" within the meaning of Section 141 (a) of the Code. (ix)Notwithstanding anything to the contrary, so long as is necessary to maintain the exclusion from gross income for purposes of federal income taxation of interest on the Loan, the covenants contained in this subsection (f) shall survive the payment of the Loan, and the interest thereon, including any payment pursuant to Section 2.04 of this Loan Agreement. (g) Operation and Maintenance of System. The Borrower covenants and agrees that it shall, in accordance with pIlldent utility practice, (i) at all times operate the properties of its System and any business in connection ther4ewith 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 fre~ 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 2.06(b), and provided further that nothing herein shall be construed as preventing the Borrower from doing so. (h) Records~ ,Accounts. The Borrower shall keep accurate records and accounts for the revenues and funds that are th<:~ 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 availabk for inspection by the State any reasonable time, and a copy of such annual audit(s) therefor, including all written comments and recommendations of such accountant, shall be furnished to the State within 210 days of the close of the fiscal year being so audited. (i) 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 Program Devet0pment\004173 Exhibit I Page 15 of 20 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 do(:uments and any official statements or other forms of offering prospectus relating to any other bonds, notes or other indebtedness of the Borrower that are issued after the Loan Closing Date and are secured by the Revenues. G) 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 of the Borrower's System, including liability coverage, all to the extent available at reasonable cost. Nothing herein shall be deemed to preclude the Borrower from exerting against any party, other than the State, a defense which may be available to the Borrower, including without limitation a defense of immunity. In the event the Project or any portion thereof is destroyed, any insurance proceeds shall be paid to the State and shall be applied to the principal of and interest on the Loan, unless the State agrees in writing that the insurance proceeds shall be used to rebuild the Project (k) Condemnation. In the event the Project or any portion thereof is condemned, any condemnation proceeds shall be used to prepay the outstanding balance on the Loan. (1) Notice of ~faterial 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. (m)Financial Statements: Reports. The Borrower shall deliver to the State in form and detail satisfactory to the State: (i) As soon as reasonably possible and in any event within ninety (90) days after the close of each fiscal year of the Borrower, unaudited statements of revenues, expenditures, cash flows, and changes in retained earnings ftor 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. (n) Contract Covenants. The Borrower covenants and agrees to comply with the terms of the Contract including the covenants of the Borrower in Section 5 of the Contract. (0) Further Assurances. The Borrower shall, at the request of the State, authorize, execute, acknowledge and deliver such fhrther resolutions, conveyances, transfers, assurances, financing statements and other instruments as may be necessary or desirable for better assuring, conveying, granting, assigning and confirming the rights, security interests and agreements granted or intended to be granted by this Loan Agreement. . Program Development\OO4173 Exhibit 1 Page 16 of 20 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, as set forth in Exhibit D hereto, or such later date as State may authorize in writing in State's sole and absolute discretion: (a) the Borrow~er has caused to be executed and delivered to the State the following items, each in form and substance satisfactory to State: (i) the Not(~ duly executed and delivered by an Authorized Officer of the Borrower; (ii) the Contract duly executed and delivered by an Authorized Officer of the Borrower; (iii) copy of the ordinance or resolution of the governing body of the Borrower authorizing the execution and delivery of this Loan Agreement, the other Loan Documents, and the Borrower's Contract, certified by an Authorized Officer of the Borrower; (iv)an opinion of the Borrower's Counsel substantially in the form set forth in Exhibit G hereto (such opinion or portions of such opinion may be given by one or more Counsel); provided, however, that the State and its Counselor Bond Counsel may permit variances in the form of such opinion; and (v) such other certificates, documents, opinions and information as the State may reasonably require. (b) there is money available in the Special Public Works Fund for the Project; provided, however, the State shall be under no obligation to make this Loan if there has been a change in the Act so that the Project is no longer eligible for financial assistance authorized by this Loan Agreement. SECTION 4.02. Conditions to Disbursements. Notwithstanding anything in this Loan Agreement or any of the Loan DocUJrnents to the contrary, the State shall have no obligation to make the Loan or any disbursement of Loan proceeds 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 an 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, has occurred and is continuing; (b) any representations and warranties of the Borrower made in this Loan Agreement are untrue and incorrect on the proposed Loan Closing Date or the date of disbursement with the same effect as if made on such date; or (c) failure by the State to receive (i) a requisition executed by the Borrower in substantially the form of Exhibit E attached hereto and by this reference made a part hereof and (ii) any other written evidence of materials and labor furnished to or performed upon the Project, itemized receipts or invoices for the payment of the same, and releases, satisfactions and other signed statements and forms as the State may require as a condition for making disbursement of the Loan. The State may, at its option, make advance payment for construction and other costs to Borrower provided the State has agreed to this method of disbursement in writing and subject to such terms, conditions and reports from Borrower as the State may require. 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. Program Development\OO4173 Exhibit 1 Page 1 7 of 20 (d) In addition to the above conditions, State shall have no obligation to disburse the final one million dollars ($1,000,000) to Borrower if the results of the due diligence study indicate that the sale is not feasible, fails the due diligence review, or as a result of the due diligence review the sale may not be completed. Further, the State shall have no obligation to make any disbursement to the Borrower if, on or before the time for disbursernent, there has been a change in the Act so that the Project is no longer eligible for financial assistanc(~ authorized by this Loan Agreement. ARTICLE V ASSIGNMENT SECTION 5.01. Assignment and Transfer by the State. The Borrower hereby approves and consents to any assignment, sa]le or transfer of this Loan Agreement and the Loan Documents that the State deems to be necessary . SECTION 5.02. 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 Bond Counselor 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 make, or cause to be made, any required payments of principal and interest on the Note when due, as provided in the note and this Loan Agreement; or (b) Any repres'entation 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 respeet; or (c) A petition is filed by or against the Borrower under any federal or state bankruptcy or insolvency law or other similar la~v 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 fiHng, 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 (d) The occurrence of any event of default under Section 6 of the Contract; or (e) Failure by the Borrower to observe and perform any duty, covenant, obligation or agreement (including that described in subsection (t) below) on its part to be observed or performed under this Loan Agreement or any other Loan Documents, other than as referred to in subsections (a) through (d) of this Section, which failure shall continue for a period of thirty (30) calendar days after written notice, specifying Program Development\004173 Exhibit 1 Page 18 of 20 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 fTom the delivery of the \vritten 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 (f) The Borro\\'er fails to proceed expeditiously with, or to complete, the Project or any segment or phase of the Project in aC1cordance 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 6.01(c) 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 en~)rce the performance and observance of any duty, covenant, obligation or agreement of the Borrower hereunder, including without limitation, (a) declaring all principal and interest and all other amounts due herew1der and under the other Loan Documents to be immediately due and payable, and upon notice to the Borrower the same shall become due and payable without further notice or demand, (b) appointment of a receiver of the System, ( c) refusal to disburse any Loan proceeds, (d) barring the Borrower from applying for future Special Public Works Fund assistance, or (e) withholding amounts otherwise due to the Borrower to apply to the payment of amounts due under this Loan Agreement as provided in ORS 285B.449. SECTION 6.04. Attorney's Fees and Other Expenses. To the fullest extent permitted by law, 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, Bond Counsel or any other Counsel appointed by the State and legal staff) incurred by either of the State in the collection of Loan payments 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 agre(~ments 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~ W aiver~ 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 Program DeveIopment\004173 Exhibit 1 Page 19 of 20 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, dee:m necessary to enforce the obligations of the Borrower to the State pursuant to Sections 2.02,2.04, 2.07, and 6.04 hereof. SECTION 6.08. Default bv 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. 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 BOJTower at the address specified on Exhibit D hereof and to the State at the following address: Economic amd Community Development Department Attention: Manager, Southwest Team 77 5 Summ(~r Street NE Salem, Oregon 97301-1280 Any of the foregoing parties may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent, by notice in writing given to the others. SECTION 7.02. Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the State and the Borrower and their respective successors and assigns. 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 mlay 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 Program Development\004173 Exhibit 1 Page 20 of 20 transactions conten1plated hereby and have read and understand the terms of this Loan Agreement. The terms of this Loan A~greement 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, "Clairn") between the State (and/or any agency or department of the State of Oregon) and the Borrower that arise:s from or relates to this Loan Agreement shall be brought and conducted solely and exclusively within the Circuit Court of Marion County for the State of Oregon; provided, however, if a Claim must be brought in a federal forum, then it shall be brought and conducted solely and exclusively within the United States District Court for the District of Oregon. SECTION 7.08. Consents and Approvals. Whenever the written consent or approval of the State shall be required under the provisions of this Loan Agreement, such consent or approval may only be given by the State unless othern'ise 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 provision of this Loan Agreement or consent shall bind either party unless in writing and signed by both parties and all nec(~ssary State approvals have been obtained. Such waiver or consent, if made, shall be effective only in th(~ 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 'VHEREOF, 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. STATE OF OREGON acting by and through its Economic and Community I)evelopment Department CITY OF ASHLAND (Borrower) By: XX)JOO(XXXXXXX Chris Claflin, Manager Southwest TI~am By: xxxxxxxxxxxxx (Signature) Title: xxxxxxxxxxxxx Date: XX)(XXXXXXXXXX Date: :xxxxxxxxxxxxx ApPROVED AS TO LEGAL SUFFICIENCY IN ACCORDANCE WITH ORS 291.047: XX)(XXXXXXXXXX Lynn T. Nagasako, Assistant Attorney General Date: ~OCXXXXXXXXXXX Program Development\OO4173 Interim Financing Loan Agreement Exhibit A, Page 1 of 1 SPECIAL CONDITIONS OF AWARD INTERIM FINANCING LOAN The following Special Condition shall apply to the interim financing Loan: The principal of and interest on the Loan shall be payable from the proceeds of any subsequent short- or long-term financing issued to refund the Loan or to finance the Project (the "Refunding Proceeds"). The Borrower hereby grants to the State a security interest in and irrevocably pledges the Refunding Proceeds to .payall of the obligations owed by the Borrower to the State under the Loan Agreement. Pursuant to ORS 288.594, the pledge of the Refunding Proceeds hereby made by the Borrower shall be valid and binding from the date of this Loan Agreement. PERMANENT LOAN The following Special Conditions shall apply to any pennanent Loan made by State to Borrower from the Refunding Proceeds (for the purposes of this section, the "Loan"): The Loan shall be payable from the general fund of the Borrower and shall be a full faith and credit obligation of the Borrower which is payable from any taxes which the Borrower may levy within the limitations of Article XI of the Oregon Constitution. Program Development\004173 Interim Financing Loan Agreement Exhibit B, Page 1 of 1 PROJECT DESCRIPTION COMMUNITY DEVELOPMENT AND ENGINEERING SERVICES BUILDING Borrower will remodel and expand an existing structure, located at 151 Winburn Way in Ashland, Oregon, to provide approximately 11,000 square feet of new office space for employees of the Borrower's community development and engineering departments. Borrower will also develop a recycling and trash receptacle area, public restrooms and off-street parking. Program Development\004173 ur--- .~ 8 ..oN .- 0 ~~ ~ ~ ...-~ 5 s S :3 oz ~ ...- bl)U <.~ aJ: o .....:I bl.) c:::: .u a c:::: ti: S .C o ...- c:::: joooo4 bl.) c:::: .,",," ~ ...... .S ~ CI.) o u .~ o CI) bl.) c:::: .1:: o o c:::: .bb ~ ~ a ...- c:::: o S p.. o ...... o > o Q ~c a .2 :2 :3 < ~ ~ 0 Ou ~ .. .~ 0 u ~ tz ~ t) o 0 t= . 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E - cd.ri ~ .0 Cd u. -c Cd e .(ij a: ~ c o +:i Cd t o c.. en c ct1 ~ r- .2 :c :J a.. 11.0 cd.ri 00 0 00 0 00 q o 0 ('I) ,... 0 <X) ~ ~ ,... ,...~ ~ 00 0 00 0 1.0 0 ~ C\I- 0 0 ~LO ~ ~ ~ ~ 00 0 00 0 LOa ~ ~o C\I ~LO ~ ('I),... ~ 00 0 ~~ (h c: c: .Q 0 +-' .- :=1:) 0:J E ~ +-' en 0> en 0> 0 c: o 0 .- -c 0 2:C:-... 0> Cd 0) en O>.~ _00> CdC-c :J ct1 0 o<OE ~O>O> EOa: o o ,... ~ (ij ~ :J +-' o 0> +-' :c ~ <(cen --00> 0).- .- c~o ._ ~ c CD1i)O> 0>._ 0) c.~.~ .5> E E c -c 0 w<(O o o o ('I) 0) at ,.. 0- o o o ('I) 0) ~ 0- o o o o o Il't ,.. 0- o 0- en CI) en c CI) a. >< w (0) ,... ~ i J ~ ~ ~ Q.. "is CD "is .J::. ... +-' 0 cd.ri cd.ri cS 0 cd.ri cS t- <D r-..: ex) 0) Interim Financing Loan Agreement Project Number K02007 Exhibit D, Page 1 of 1 DESCRIPTION OF THE INTERIM FINANCING LOAN 1. Loan Closing Deadline: June 26, 2002 2. Name and Address of Borrower: City of Ashland 20 E. Main Street Ashland, Oregon 97520-1849 3. Cost of the Project: $1,993,000 4. Estimated ProJiect Completion Date: June 30, 2004 5. Principal Amount of Loan: $1,500,000 6. Interest Rate: The interest rate, including any adjustments to such rate, as described in the Note. 7. Maturity Date:: December 31, 2004 8. Authorized Officers of Borrower: Finance Director Program Development\OO4173 J . I Jt ~ C E J cP E e 1:: 01 .. III .. 0 G 0- n. ::J cPe C" Co 01 G c"C 0:: 'Cu. (;5 J:. I). ;11. III eo!! . O-~ .Ec 0 o~ 11.. -- ~o I) U CD...J >< 1G0I CJ c ~.E Co ~~ >.111 III 0 ~III . > C G ~~ II.. :20 ...J Eo G ... 0:: En. ..G ~ .- O"C ~111 C OC -~ (I) ". "CO! 0 c;; c c ::J- .. G 11.':': U :2 C _C" ~"t: E G ~C 00:: o G cJ:. ~':i ~ 0111 u(I) U II =~ WO LaO 0 C ::J 0.. 0 ii t.: a .2 f 'u 0 G .!! u. Q. (I) .. ~ III G) 0.. ::J (I) C" CD 0 0:: I Loan Agreement Exhibit E Page 1 of 2 I Q. of -a:: ! r Q. -- ., u c w Ci m ::.:: . 2 :J 0 (I) "i .. c >- ., o II -E ...01 "e. 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E 1:: . ~ o l~ E5 ~~ ~f 0'" ~w cZ .1$ I~ o D <) E w~ ti", ~II) of:: " - ~ ~ d w ; ...: Progress on Activities Loan Agreement Exhibit E Page 2 of 2 ItecIpienI PnIject Number PnIject NIIIne to R.poot Period A. Project Goals (report for every cash request) Ust each projed activity and describe progress on each adivlty since your last report. Also discuss any problems or delays encountered (change (Irders. schedule revisions, etc.). Attach additional sheets If necessary. Proposed Accomplishments Results Achieved 1. 2. 3. ... 5. B. Construction Employment (Special Public Works Fund only) In the space below, show the cumulative total number of hours construction employees worked on the Infrastrudure project. Also show cumulatlv~, construction man hours worked on any private business projects served by the Infrastrudure project. Business Projects Infrastructure Projects 1. Finn Name Hours Worked Hours Worked 2. Finn Name Hours Worked Hours Worked c. Pennanent Jobs (Special PlJlblic Works Fund only) In the space below, show the cumulative number of new or retained pennanent jobs In private businesses served by the Infrastrudure projed. Sh~)W all jobs as full-time equivalents based on a standard "O-hour work week. Fkm Name firm Name firm Name .leD New -- Retained Jot:. New Retained ~ New Retained Certification: We certify thail the data is corred and that the amount of any grant reqU4~ is not In excess of current needs. (TWO SIGNATURES REQUIRED) I" " D8Ie For State of Oregon Use AuItIocUd SIgneIurw1lIIe AuIhortzed SIgneIuIwIT1IIe DIlle roW Amount Approw.d Proiect CoordinaIor Dale ConIKt Pet.- ~ Number Amount S S S S S S DescrIptIon Fund Cost Center Send Wire Transfers To: Name of Payee: Name of Receiving Bank: Location or Branch Name of Bank Bank Address: Dale FIac:8I CoordinaIor Bank Account Number: Bank ABA Routing Number: MrIn8ger Dale '\.. ~ F~R'CASHReQ.WPO Page 2 of 2 Interim Financing Loan Agreement Exhibit F, Page 1 of 2 PROMISSORY NOTE ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT STATE OF OREGON $1,500,000 (Dated) XXXXXXXXXXXXXX, xxxx Ashland, Oregon FOR VALUE RECEIVED, the City of Ashland (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 Sumn1er Street NE, Suite 200, Salem, OR 97301-1280 (hereinafter "State"), the principal sum of one million fiv1e hundred thousand dollars ($1,500,000), plus interest at the rate of two and fifteen hundredths percent (2.15%) per annum from the date of the first disbursement under the Loan Agreement. Interest shall be computed on the basis of a 360-day year, consisting of twelve (12) thirty-day (30-day) months. All principal and interest on this Note are due and payable on the Maturity Date. Capitalized terms not otherwise defined in this Note shall have the meanings assigned to them by that certain loan agreeInent dated XXXXXXXXXXXXXX, XXXX, between the State and the Borrower (as amended from time to time the "Loan Agreement"). This Note is payable prior to its Maturity Date as provided for in Sections 2.04 and 2.05 of the Loan Agreement. Each payment ]made by the Borrower hereunder shall be applied first to interest then due and payable on the Loan, then to the principal of the Loan. If any Event of Default occurs, the outstanding balance of the Note, including principal, interest and other charges, if any, shall, at the option of the State, become immediately due and payable in accordance with Section 6.03 of the Loan Agreement. Failure or delay of the holder of this Note to exercise any option available to the State under the terms of this Note or the Loan Agreement shall not constitute a waiver of the right to exercise the option in the event of any continuing or subsequent default and shall not constitute a waiver of any subsequent breach of the same or of any other provision of this Note or the Loan Agreement. All parties to this Note hereby waive presentment, dishonor, notice of dishonor, and protest. All parties hereto hereby consent to, and the holder hereof is hereby expressly authorized to make, without notice, any and all renewals, extensions, modifications or waivers of the time for or the terms of payment of any sum or sums due hereunder, or under any documents or instruments relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof, or the taking or release of collateral securing this Note. The liability of all parties on this Note shall not be discharged by any action consented to abovle taken by any holder of this Note. If this Note is placed in the hands of an attorney for collection, the Borrower shall, to the fullest extent permitted by law and 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 costs of the State's Counsel, Bond Counsel and legal staff) incurred by either of the State in the collection of principal and interest due under this Note 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. Program Development\004173 Interim Financing Loan Agreement Exhibit F, Page 2 of 2 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 XXXXXXXXXX)DCXX, XXXX. CITY OF ASHLAND By: XXXXXXXXXXXXX Title: xxxxxxxxxxxxx Program Development\004173 Interim Financing Loan Agreement Exhibit G, Page 1 of 2 SAMPLE OPINION OF MUNICIPALITY COUNSEL [LETIERHEAD OF COUNSEL TO MUNICIPALITY] [D A TED Oregon Economic and Community Development Department 755 Summer Street NE, Suite 200 Salem, OR 97301..1280 Ladies and Gentlernen: [Insert "f' or "VVe"] have acted as counsel to of Municipality] of the State of Oregon (the "Municipality"), which hereinafter defined) with the Oregon Economic and Commu "Department") pur8uant to Sections 285B.410 through 285B.482 oft and have acted as such in connection with the authorization, uti its Contract (as hereinafter defined). , [insert sPecific legal identity ntere a Loan Agreement (as D t Department (the Statutes (the "Act"), the Municipality of e State of Oregon and the originals, or copies certified or owing: ,200_ by and between the Note dated , 200_, in the nicipality (collectively, the "Loan Agreement"). ward Contract for Interim Financing number _ (the "Contract") by and the Municipality; C. Pr s of the governing body of the Municipality relating to the approval of the Contract and the Loan Agreement and the execution, issuance and delivery thereof on behalf of the Municipality, and the authorization of the undertaking and completion of the Project (as defined in the Loan Agreement); D. All outstanding instruments relating to bonds, notes or other indebtedness of or relating to the Municipality. [insert "f' or HWe"] have also examined and relied upon originals, or copies certified or otherwise authenticated to [insert "my" or "our"] satisfaction, of such other records, documents, certificates and other instruments, and rnade such investigation of law as in [insert "my" or "our"] judgment [insert "r' or "we"] have deemed necessary or appropriate to enable [insert "me" or "us"] to render the opinions expressed below. Based upon the foregoing, [insert "I am" or "We are"] of the opinion that: 1. The Municipality is a duly formed and operating [insert specific nature of Municipality] described in ORS 285B.410(1}, with the legal right to own and operate the Project. 2. The Municipality has full legal right and authority to execute and deliver the Contract and the Loan Agreement and to observe and perform its duties, covenants, obligations and agreements thereunder and to undertake and cornplete the Project; subject, however, to the effect of, restrictions and limitations imposed by or resulting frorn, bankruptcy, insolvency, moratorium, reorganization, debt adjustment or other similar laws affecting creditors' rights generally ("Creditor's Rights Limitations") heretofore or hereafter enacted. Program Development\004173 Interim Financing Loan Agreement Exhibit G, Page 2 of 2 3. Amounts due to the Department pursuant to the Contract and the Promissory Note are payable from the sources describ~d in Section 2.06 of the Loan Agreement. 4. The Ordi1t1ance (the "Ordinance") of the Municipality approving the Contract and the Loan Agreement and authorizing their execution, issuance and delivery on behalf of the Municipality, and authorizing the Municipality to undertake and complete the Project has duly an lawfully adopted and authorized in accordance with the Municipality's Charter, if any, the do 'cable Oregon law, and the Ordinance '~as adopted at a meeting or meetings which were d II less than 14 days' prior public notice and held in accordance with the Municipalit ' Ch pplicable Oregon law, and at which quorums were present and acting throu and delivered by the and inding obligation of the u t, however, to the effect of, and to . ghts Limitations or other laws, judicial of contractual obligations generally. ledge, a uch investigation as [insert "f' or "we"] have n, ution and delivery of the Contract and the Loan Agreement by the Municipa 1 , performance by the Municipality of its duties, covenants, obligations and agreem... th d the consummation of the transactions contemplated therein and the undertakin ... .. etion of Project do not and will not contravene any existing law or any existing order, injunction, j ... ... ... :nt, decree, rule or regulation of any court or governmental or administrative agency, authority or person having jurisdiction over the Municipality or its property or assets or result in a breach or violation of any of the terms and provisions of, or constitute a default under, any existing bond ordinance, resolution, trust agreement, indenture, mortgage, deed of trust or other agreement to which the Municipality is a party or by whilch it, the Project, or its property or assets is bound. 7. To the best of [insert "my" or "our"] knowledge, after such investigation as [insert "f' or "we"] have deemed appropriate, all approvals, consents or authorizations of, or registr tions of or filings with, any governmental or public agency, authority or person required to date 0 part Municipality in connection with the authorization, execution, delivery and performan t t and the Loan Agreement and the: undertaking and completion of the Project have bee f' or "we"] have ny court or other io , ization or existence or the Loan Agreement or the of Oregon, including the Act, as enacted pinion as to any matter not set forth in the Program Development\004173 Exhibit 2 Page 1 of 1 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 perfc)rmance of construction contracts. FEDERAL AGENCIES Agriculture, De:partment 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 Conse:rvation and Recreation Service Interior, Depaf1tment of Bureau of Indian Affairs Bureau of Land Management Fish and \Vildlife Service Office of Surface Mining, Reclamation and Enforcement Bureau of Reclamation Labor, Departnrtent of Occupational Safety & Health Administration Mine Safety & Health Administration Transportation, Department of Federal Highway Administration STATE AGENCIES Agriculture, D~~partment of Energy, Depar1tment of Environmental Quality, Department of Fish and Wildlife, Department of Forestry, Department of Geology and ~1ineral Industries, Department of Human Services, Department of Land Conservation and Development Commission State Lands, Division of State Soil & \Vater 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 Devetopment\004173 Page 1 of2 $1,500,000 PROMISSORY NOTE ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT STATE OF OREGON (Dated) July 2 I 2002 Ashland, Oregon FOR VALUE RECEIVED, the City of Ashland (hereinafter "Borrower"), promises to pay in lawful money of the United States of An:1erica 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 one million five hundred thousand dollars ($1,500,000), plus interest at the rate of two and fifteen hundredths percent (2.150/0) per annum from the date of the first disbursement under the Loan Agreement. Interest shall be computed on the basis of a 360-day year, consisting of twelve (12) thirty-day (30-day) months. All principal and interest on this Note are due and payable on the Maturity Date. Capitalized terms not otherwise defined in this Note shall have the meanings assigned to them by that certain loan agreement dated June 21 , 2002, between the State and the Borrower (as amended from time to time the "Loan Agreement"). This Note is payable prior to its Maturity Date as provided for in Sections 2.04 and 2.05 of the Loan Agreement. Each payment made by the Borrower hereunder shall be applied first to interest then due and payable on the Loan, then to the principal of the Loan. If any Event of Default occurs, the outstanding balance of the Note, including principal, interest and other charges, if any, shall, at the option of the State, become immediately due and payable in accordance with Section 6.03 of the Loan Agn:~ement. 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 \vaive 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, modi:fications or waivers of the time for or the terms of payment of any sum or sums due hereunder, or under any documents or instruments relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof, or the taking or release of collateral securing this Note. The liability of all parties on this Note shall not be discharged by any action consented to above taken by any holder of this Note. If this Note is placed in the hands of an attorney for collection, the Borrower shall, to the fullest extent permitted by law and 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 costs of the State's Counsel, Bond Counsel and legal staff) incurred by either of the State in the collection of principal and interest due under this Note 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. Program Development\004175 Page 2 of2 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 2nd day of July , 2002. CITY OF ASHLAND By: Lee Tuneberq ~~ ~ r Title: Finance Director Program Development\004175