04LOAN AGREEMENT
THJS AGREEMENT datedas ofthe lst day of June 2013 between theAlaska
Municipal BondBank the Bank body corporate and politic constituted asan
instrumentality of theState of Alaska the State exercisingpublic and essential
governmental functions created pursuant to the provisions of Chapter 85 Title 44
Alaska Statutes as amended the Act having its principal place of business at
Juneau Alaska and Kodiak Island Borough duly constituted and existing second
class borough of theState the Borough
WITNESSETH
WHEREAS pursuant to the Act the Bank is authorized to loan money the
Loan or Loans to governmental units and
WHEREAS the Borough is Governmental Unit asdefined in theGeneral Bond
Resolution ofthe Bank hereinafter mentioned and pursuant to theAct is authorized to
accept Loan from the Bank to be evidenced by its municipal bond and
WHEREAS the Borough desires to borrow money from the Bank in the amount
of not to exceed $20000000 andhas submitted an application to the Bank for Loan
in the amount of not to exceed $20000000 and the Borough has duly authorized the
issuance of its fully registered bond in the aggregate principal amount of $17110000
the Municipal Bond whichbond is to be purchased by the Bank as evidence ofthe
Loan in accordance with this Agreement and
WHEREAS the application of the Borough contains the information requested by
the Bank and
WHEREAS to provide for theissuance of bonds of the Bank in order toobtain
fromtime to time money with which to make Loans the Bankhas adopted the General
Obligation Bond Resolution on July 13 2005 as amended August 19 2009 the
General Bond Resolution and Series Resolution No 2013-03 approved on May
2013 together with the General Bond Resolution the Bond Resolution authorizing
the making of such Loan to the Borough and the purchase of the Municipal Bond
WHEREAS the Board approved certain modifications to theGeneral Bond
Resolution effective on thedate when all bonds issuedunder the terms ofthe General
Bond Resolution prior to February 19 2013 cease to be outstanding
NOW THEREFORE the parties agree
The Bank hereby makes the Loanand the Borough accepts the Loan in
the aggregate principal amount of $17110000 As evidence ofthe Loan made to the
Borough and such money borrowed from the Bank by the Borough the Borough hereby
selis to the Bank the Municipal Bond in the principal amount with the principal
installment payments and bearing interest from its date at the rate or rates per annum
stated in Exhibit appended heretoFor purposes of this Loan Agreement the interest
on tho Municipal Bond will be computed without regard to the provision in Section
hereof for the Borough to make funds available to theTrustee acting undertheGeneral
Bond Resolution for the payment of principal and interest due atleast seven
business days prior to each respective principal and interest payment date
The Borough represents that it has dulyadopted or will adopt ah
necessary ordinances or resolutions including Resolution No 2013-13 approved on
February 2013 the Borough Legislation andhas taken or will take ah proceedings
requiredby law to enable it to enter into this Loan Agreement and issue its Municipal
Bond to the Bank and that the Municipal Bond will constitute nonrecourse revenue
bond special and himited obligation ofthe Borough secured by security interest in
and lien and claim against thelease payments of ProvidenceHealth Services
Washington d/b/a Providence Health Services in Alaska Providence as described
in thatcertain lease agreement by andbetween the Borough and Providence and
entitled Long-Term Care Center Lease Agreement with an effective date of May
2013 the Lease
The Borough hereby represents the proceeds ofthe Loan will beused by the
Borough to financetheconstruction of long-term care facihity on property owned by
the Borough the Project Once completed the Project will be operated by
Providence pursuant to the terms of the Lease
The Borough represents that it has taken ah necessary action as required
by law to enable it to enter into the Lease and that the Lease hasbeen duly executed
and vahidly dehivered by boththe Borough and Providence
Subject to any apphicable legal himitations the amounts to be paid by the
Borough pursuant to this Loan Agreement representing interest due on its Municipal
Bond the Municipal Bond lnterest Payments shall be computed at the same rate or
rates of interest borne by the corresponding maturities of the bonds sold by the Bank in
order toobtain the money with which to make the Loan and to purchase the Municipal
Bond the Loan Obligations and shall be paidby the Borough at Ieast seven
business days beforethe interest payment datesoas to provide funds sufficientto pay
interest as the same becomes dueon the Loan Obhigation
Theamounts to be paidby the Borough pursuant to this Loan Agreement
representing principal due on its Municipal Bond the Municipal Bond Principal
Payments shahl be paid atleast seven business days beforethe payment date
stated in the Municipal Bond soas to provide funds sufficientto pay the principal of the
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Loan Obligations as the same matures based upon the maturity schedule stated in
Exhibit appended hereto
In theeventthe amounts referred to in Sections and hereof to be paid
by the Borough pursuant to this Loan Agreement are not made available at any time
specified herein the Borough agrees that any money payable to it by any department or
agency of theState may be withheld from it and paid over directly to the Trustee acting
under theGeneral Bond Resolution and this Loan Agreement shafl be fuil warrant
authority and direction to make such payment upon noticeto such department or
agency by the Bank with copy provided to the Borough asprovided in the Act
ln theevent Loan Obligations have been refunded and the interestrates
the Bank is required to pay on its refunding bonds in any year are less thanthe interest
rates payableby the Borough on the Municipal Bond for the corresponding year
pursuant to the terms of the Municipal Bond thenboththe Municipal Bond lnterest
Payments and the Municipal Bond Principal Payments will be adjusted in such
manner that the interest rate paidby the Borough on any principal installment ofthe
Municipal Bond is equal to the interest rate paid by the Bank on the corresponding
principal installment of the Banks refunding bonds and on present value basis the
sum of the adjusted Municipal Bond lnterest Payments and Municipal Bond Principal
Payments is equal toor less thanthe sum of the Municipal Bond lnterest Payments and
Municipal Bond Principal Payments due over the remaining term of the Municipal Bond
as previously established under this Loan Agreement In theevent of such refunding
of Loan Obligations the Bank shall present to the Borough for the Boroughs approval
revised schedule of principal nstallment amountsand interest ratos for the Municipal
Bond If approved by the Borough the revised schedule shall be attachedheretoas
Exhibit and incorporated herein in replacement of the previous Exhibit detailing said
principal installment amounts and interest rates
The Borough is obligated to pay to the Bank Feesand Charges Such
Feesand Charges actually collected from the Borough shall be in an amount sufficient
together with the Boroughs Allocable Proportion as defined below of other money
available therefor under the provisions of the Bond Resolution and other money
availabe therefor including any specific grants made by theUnited States of America
or anyagency or instrumentality thereof or by theState or anyagency or instrumentality
thereof and amounts applied therefor from amounts transferred to the Operating Fund
pursuant to Section 606 of theGeneral Bond Resolution
to pay as the same become due the Boroughs Allocable
Proportion of the Administrative Expenses of the Bank and
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to pay as the samebecome due the Boroughs Allocable
Proportion ofthe fees and expenses of theTrustee and payingagent for the Loan
Obligations
The Boroughs Allocable Proportion as used herein shall mean the proportionate
amount of the total requirement in respect lo which the term is used determíned by the
ratio that the principal amount of the Municipal Bond outstanding bears to the total of alt
Loans then outstanding to ah Governmental Units under the General Bond Resolution
ascer ified by the Bank The waiver by the Bank of any fees payablepursuant to this
Section shaH not constitute subsequent waiver thereof
The Borough is obligated to make the Municipal Bond Principal Payments
scheduled by the Bank The first such Municipal Bond Principal Payment is due atleast
seven business days prior to thedate indicated on Exhibit appended hereto and
thereafter on the anniversary thereof each year The Borough is obhigated to make the
Municipal Bond lnterest Payments scheduled by the Bank on semi-annual basis
commencing seven business days prior to thedate indicated on Exhibit appended
hereto and to payany Feesand Charges imposed by the Bank within 30 days of
receiving the invoice of the Bank therefor
10 TheBank shall not set and the Borough shall not redeem prior to maturity
any portion of the Municipal Bond in an amount greater than the Loan Obligations which
arethen outstanding and whichare then redeemable and in theevent of any such sale
or redemption the same shall be in an amount not less than the aggregate of the
principal amount of the Municipal Bond or portion thereof to be redeemed Ii the
interest to accrue on the Municipal Bond or portion thereof to beredeemed to thenext
redemption date thereofnot previously paid iii the applicable premium if any payable
on the Municipal Bond or portion thereof to be redeemed and iv thecost and
expenses of the Bank in effecting the redemption of the Municipal Bond or portion
thereof to be redeemed The Borough shall give the Bank atleast 50 days noticeof
intentionto redeem its Municipal Bond
In theeventthe Loan Obligations with respect to whichthe sale or redemption
prior to maturity of such Municipal Bond is being made have been refunded and the
refundig bonds of the Bank issued for the purpose of refunding such Loan Obhigations
weresued in principal amount in excess of or less thanthe principal amount of the
Municipal Bond remaining unpaid at thedate of issuance of such refunding bonds the
amount whichthe Borough shall be obligated to pay or the Bank shall receiveunder
item aboye shall be the principal amount of such refunding bonds outstanding
In theeventthe Loan Obhigations have been refunded and the interest the Bank
is required to pay on the refundíng bonds is hess than the interest the Bank was required
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to pay on the Loan Obligations the amount whichthe Borough shafl be obligated to pay
or the Bank shall receive under item ji aboye shall be the amount ofinterestto accrue
on such refunding bonds outstanding
In theeventthe Loan Obligations have been refunded the amount whichthe
Borough shall be obligated to pay or the Bank shall receiveunderitem iii aboye when
therefunded Loan Obligations are to be redeemed shall be the applicable premium if
any on the Loan Obligations to be redeemed
Nothing in this Section shall be construedas preventing the Borough from
refunding the Municipal Bond in exchange for new Municipal Bond in conjunction with
refunding of the Loan Obligations
11 Sim ultaneousiy with the delivery of the Municipal Bond to the Bank the
Borough shall furnish to the Bank evidence satisfactory to the Bank which shail set
forth among other things that the Municipal Bond will constitute valid and binding
speciai and limited obligation of the Borough secured by Lease revenues derived from
the operation of the Project
12 lnvoices for payments under this Loan Agreement shall be addressed to
theKodiak Island Borough Finance Department Attention Finance Director 710 Mill
Bay Road Kodiak Alaska 99615 The Borough shall give the Bank and the corporate
trust office of the TrusteeundertheGeneral Bond Resolution atleast 30 days written
notice of any change in such address
13 The Borough herebyagrees that it shall fully fund at the time ofloan
funding its debtservicereserve fund in an amount equal to $1346687.50 which
securas payment of principal and interest on its Municipal Bond that such fund shall be
held in the name of the Borough with the Trustee and that the yield on amounts held in
such fund shall be restrictedto yield not in excess of 2.81942 percent The Borough
further agrees to maintainthe debt service reserve fund for the term of the Municipal
Bond in an amount equal to the lesser of 10%of the proceeds of the Municipal
Bond the maximum annualdebt service on the outstandingMunicipal Bond or
125%of average annual debtservice for the outstandingMunicipal Bond
14 The Borough hereby agrees to keep and retain until thedate six years
after the retirement of the Municipal Bond or any bond issued to refund the Municipal
Bond or such longerperiod as may be requiredby the Boroughs record retention
policies and procedures records with respect to the investment expenditure and use of
the proceeds derived from the saleof its Municipal Bond including without limitation
records schedules bilis invoices check registers cancelled checks and supporting
documentation evidencing use of proceeds and investments and/orreinvestments of
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proceeds The Borough agrees that alt records requiredby the preceding sentence shall
be made availabletothe Bond Bank upon request
15 Prior to paymentof the amount of the Loan or any portion thereof and the
delivery of the Municipal Bond to the Bank or its designee the Bank shall have the right
to cancel alt or any part of its obligations hereunder if
Any representation warranty or other statement made by the
Borough to the Bank in connection with its application tothe Bank for Loan shall be
incorrect or incomplete in any material respect
The Borough has violated commitments made by it under the terms
ofthis Loan Agreement the Lease or any related agreement
The financial position of Providence has in the opínion of the Bank
suifered materially adverse change between thedate of this Loan Agreement and the
scheduled time of delivery of the Municipal Bond to the Bank The Borough hereby
represents and covenants that the proceeds of the Loan shall only beused to construct
long term care facility the Project on land owned by the Borough and located in the
Borough The Borough further represents and covenants that it shall be the owner ofthe
Project and that it shall leasethe Project to Providence federaily recognized 501c3
organization
16 The obligation of the Bank under this Loan Agreement is contingent upon
delivery of its General Obligation Bonds 2013B Series Two Qualified 501c3 the
2013 Series Two Bonds and receipt of the proceeds thereof
17 The Borough agrees that it will provide the Bank withwrittennoticeof any
default in covenants under the Boroughs Legislation within 30 days from thedate
thereof The Borough further agrees that it will provide the Bank with writer notice of
any default in thecovenants or agreements by the Borough or Providence under the
terms of the Lease within 30 days from thedate thereof
18 The Borough shall not take or omit to take any lawful action which action
or omission would cause interest on the Municipal Bond to become subject tofederal
income taxes in additionto federal income taxes to which interest on such Municipal
Bond is subject on thedate of original issuance thereof
The Borough shallnot permit any of the proceeds of the Municipal Bond or the
Project financed with such proceeds to beused in any manner that would cause the
Municipal Bond to constitute private activity bond other than Qualified 501c3
Bond within the meaning of Section 141 of the Code
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The Borough shall make no use or investment of the proceeds of the Municipal
Bond which will cause the Municipal Bond to be an t1arbitrage bond under Section 148
of the Code So long as the Municipal Bond is outstanding the Borough shall comply
or cause compliance with ah requirements ofsaid Section 148and ah regulations of the
UnitedStates Department of Treasury ssued thereunder to theextent that such
requirements are at the time apphicable and in effect The Borough shall indemnify
and hoid harmless the Bank from any obligation of the Borough to make rebate
payments to the UnitedStatesunder said Section 148 arising from the Boroughs use or
investment of the proceeds of the Municipal Bond
19 The Borough agrees that itit is one of the Governmental Unitsthat has
ten percent or greater amount of outstanding bonds heid by the Bank under ts General
Bond Resolution it shall execute continuing disclosure agreement for purposes of
Securities and Exchange Commission Rule 15c2-12 adopted underthe Securities and
Exchangc Act of 1934 and provide the Bank for inclusion in future official statements
upon request financial information generahly of the type included in Appendix under
the heading Summaries of Borrowers Representing 10%or More of Outstanding
Principal of Bonds tssued Under the 2005 General Bond Resolution to the Official
Statement and attachedhereto as Exhibit
20 The Borough agrees that if there shall be an event of default under the
terms of the Lease set forth in paragraph 28 thereof and the Borough declares all
instaltments ofrent payable underthe terms of the Lease to be immediately due and
payable the Borough shati deposit alt such amounts in yield restricted fund and
applied to the payment of principal of and interest on the Municipal Bond as such
paymenís become dueunder the terms of this Loan Agreement or ji defease the
Municip Bond Amounts heid in the yield restricted funddescribed in this paragraph
20 shahl restricted to yiehd not in excess of 2.81942 percent
21 The Borough agrees that if the Lease is terminated excluding Providence
from possession of the Project the Borough shall use its best effortsto leaseandlor
rent the Project to another qualified tenant an organization described in Section
501 c3 of the Internal Revenue Code and that alt leaseand/or rental payments
received from such tenant shall be used to pay the principal of and nterest on the
Municipal Bond
22 If any provision of this Loan Agreement shallfor any reason be heid to be
invahid or unenforceable the invalidity or unenforceability of such provision shahl not
affect ar.J of the remaining provisions of this Loan Agreement and this Loan Agreement
shall bo construed and enforcedas it such invalid or unenforceable provision had not
been cciained herein
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23 This Loan Agreement may be executed in one or more counterparts any
of which shall be regarded for alt purposes as an original and all of which constitute but
one and the same instrument Each party agrees that it will execute any and alt
documents or other instruments and take such otheractionsasare necessary to give
effectto the termsofthis Loan Agreement
24 No waiver by either party of any term or conditionof this Loan Agreement
shall be deemed or construedas waiver of any other term or condition hereof nor
shall waiver of any breach of this Loan Agreement be deemed to constitute waiver
of any subsequent breach whether of the same or of different section subsection
paragraph clause phrase or other provision of this Loan Agreement
25 In this Loan Agreement unlessotherwisedefined herein ah capitahized
terms whch aredefined in Article of theGeneral Bond Resolution shaH have the same
meanins respectively as such terms are given in Articteof theGeneral Bond
Resolution
26 This Loan Agreementmerges and supersedes aH prior negotiations
representations and agreements between the parties hereto relating to the subject
matter hereof and constitutes the entire agreement between the parties hereto
respect thereof
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IN WITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first aboye written
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ALASKA MUNICIPA
Executive Director
KODIAKISLAND BOROUGH ALASKA
By
KARLETON SHORT
Finance Director
Page9
EXHIBIT
$17110000
Kodiak Island Borough Alaska
Long -TermCare Center Revenue Bonds 2013
Providence Kodiak Island Medical Center
Municipal Bond
Due Principal lnterest
June Amount Rate
2015 $605000 3.000%
2016 625000 3.000
2017 645000 4.000
2018 670000 3.000
2019 690000 3.000
2020 71 5000 4.000
2021 745000 4.000
2022 775000 5.000
2023 815000 5.000
2024 860000 5.000
2025 900000 5.000
2026 950000 5.000
2027 995000 5.000
2Ó28 1050000 5.000
2029 1100000 5.000
2030 1160000 5.000
2031 1220000 5.000
2032 1270000 3.625
2033 1320000 3.750
Principal installmentsshall be payable on June in each of the years and in the
amounts setforth aboye lnterest on the Municipal Bond shall be payable on
December 12013 and thereafteron JuneandDecember of each year
Optional Prepayment
The Municipal Bond principal payments due in years 2025202620272028
2029and2030 are subject to prepayment in whole or in part at the option of the
Borough on any date on or after June 2018 at price of 100%of the principal
amount thereof to be prepaid plus accrued interest to the date of prepayment
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The Municipa Bond principal payments due in years 20242031 2032 and 2033
are subject to prepayment in whole or in part at the option of the Borough on any date
on or after June 2023 at price of 100%of the principal amount thereofto be
prepaid plus accrued interestto thedate of prepayment
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