Exhibit 10.27
[MASTER TRUST LOAN AGREEMENT FOR MIDDLESEX WATER CO. -
PRIVATE FORM]
LOAN AGREEMENT
BY AND BETWEEN
NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST
AND
MIDDLESEX WATER COMPANY
DATED AS OF NOVEMBER 1, 2004
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions......................................................
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower......................................
SECTION 2.02. Particular Covenants of Borrower.................................
ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan Term..................................................
SECTION 3.02. Disbursement of Loan Proceeds....................................
SECTION 3.03. Amounts Payable..................................................
SECTION 3.04. Unconditional Obligations........................................
SECTION 3.05. Loan Agreement to Survive Bond Resolution and Trust Bonds........
SECTION 3.06. Disclaimer of Warranties and Indemnification.....................
SECTION 3.07. Option to Prepay Loan Repayments.................................
SECTION 3.08. Priority of Loan and Trust Loan..................................
SECTION 3.09. Approval of the New Jersey State Treasurer.......................
ARTICLE IV
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
SECTION 4.01. Assignment and Transfer by State.................................
SECTION 4.02. Assignment by Borrower...........................................
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. Events of Default................................................
SECTION 5.02. Notice of Default................................................
SECTION 5.03. Remedies on Default..............................................
SECTION 5.04. Attorneys' Fees and Other Expenses...............................
SECTION 5.05. Application of Moneys............................................
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SECTION 5.06. No Remedy Exclusive; Waiver; Notice..............................
SECTION 5.07. Retention of State's Rights......................................
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices..........................................................
SECTION 6.02. Binding Effect...................................................
SECTION 6.03. Severability.....................................................
SECTION 6.04. Amendments, Supplements and Modifications........................
SECTION 6.05. Execution in Counterparts........................................
SECTION 6.06. Applicable Law and Regulations...................................
SECTION 6.07. Consents and Approvals...........................................
SECTION 6.08. Captions.........................................................
SECTION 6.09. Further Assurances...............................................
SCHEDULE A.Certain Additional Loan Agreement Provisions
EXHIBIT A (1) Description of Project and Environmental Infrastructure
System......................................................A-1-1
(2) Description of Loan.........................................A-2-1
EXHIBIT B Basis for Determination of Allowable Project Costs................B-1
EXHIBIT C Estimated Disbursement Schedule...................................C-1
EXHIBIT D Specimen Borrower Bond............................................D-1
EXHIBIT E Opinions of Borrower's Bond and General Counsels..................E-1
EXHIBIT F Additional Covenants and Requirements.............................F-1
EXHIBIT G General Administrative Requirements for the State
Environmental Infrastructure Financing Program..................G-1
EXHIBIT H Form of Continuing Disclosure Agreement...........................H-1
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NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into as of this November 1, 2004, by
and between the NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST, a public body
corporate and politic with corporate succession, and the Borrower (capitalized
terms used in this Loan Agreement shall have, unless the context otherwise
requires, the meanings set forth in said Section 1.01);
WITNESSETH THAT:
WHEREAS, the Trust, in accordance with the Act, the Bond Resolution and a
financial plan approved by the State Legislature in accordance with Sections 22
and 22.1 of the Act, will issue its Trust Bonds on or prior to the Loan Closing
for the purpose of making the Loan to the Borrower and the Loans to the
Borrowers from the proceeds of the Trust Bonds to finance a portion of the Costs
of Environmental Infrastructure Facilities;
WHEREAS, the Borrower has, in accordance with the Act and the Regulations,
made timely application to the Trust for a Loan to finance a portion of the
Costs of the Project;
WHEREAS, the State Legislature, in accordance with Sections 20 and 20.1 of
the Act, has in the form of an appropriations act approved a project priority
list that includes the Project and that authorizes an expenditure of proceeds of
the Trust Bonds to finance a portion of the Costs of the Project;
WHEREAS, the Trust has approved the Borrower's application for a Loan from
available proceeds of the Trust Bonds to finance a portion of the Costs of the
Project;
WHEREAS, in accordance with the applicable Bond Act (as defined in the
Fund Loan Agreement), and the Regulations, the Borrower has been awarded a Fund
Loan for a portion of the Costs of the Project; and
WHEREAS, the Borrower, in accordance with the Act, the Regulations, the
Business Corporation Law and all other applicable law, will issue a Borrower
Bond to the Trust evidencing said Loan at the Loan Closing.
NOW, THEREFORE, for and in consideration of the award of the Loan by the
Trust, the Borrower agrees to complete the Project and to perform under this
Loan Agreement in accordance with the conditions, covenants and procedures set
forth herein and attached hereto as part hereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms as used in this Loan
Agreement shall, unless the context clearly requires otherwise, have the
following meanings:
"Act" means the "New Jersey Environmental Infrastructure Trust Act",
constituting Chapter 334 of the Pamphlet Laws of 1985 of the State (codified at
N.J.S.A. 58:11B-1 et seq.), as the same may from time to time be amended and
supplemented.
"Administrative Fee" means that portion of Interest on the Loan or
Interest on the Borrower Bond payable hereunder as an annual fee of up to
four-tenths of one percent (.40%) of the initial principal amount of the Loan or
such lesser amount, if any, as may be authorized by any act of the State
Legislature and as the Trust may approve from time to time.
"Authorized Officer" means, in the case of the Borrower, any person or
persons authorized pursuant to a resolution of the board of directors of the
Borrower to perform any act or execute any document relating to the Loan, the
Borrower Bond or this Loan Agreement.
"Bond Counsel" means a law firm appointed or approved by the Trust, as the
case may be, having a reputation in the field of municipal law whose opinions
are generally acceptable by purchasers of municipal bonds.
"Borrower" means the corporation that is a party to and is described in
Schedule A to this Loan Agreement, and its successors and assigns.
"Borrower Bond" means the general obligation bond, note, debenture or
other evidence of indebtedness authorized, executed, attested and delivered by
the Borrower to the Trust and, if applicable, authenticated on behalf of the
Borrower to evidence the Loan, a specimen of which is attached hereto as Exhibit
D and made a part hereof.
"Borrowers" means any other Local Government Unit or Private Entity (as
such terms are defined in the Regulations) authorized to construct, operate and
maintain Environmental Infrastructure Facilities that have entered into Loan
Agreements with the Trust pursuant to which the Trust will make Loans to such
recipients from moneys on deposit in the Project Fund, excluding the Project
Loan Account.
"Business Corporation Law" means the "New Jersey Business Corporation
Act", constituting Chapter 263 of the Pamphlet Laws of 1968 of the State
(codified at N.J.S.A. 14A:1-1 et seq.), as the same may from time to time be
amended and supplemented.
"Code" means the Internal Revenue Code of 1986, as the same may from time
to time be amended and supplemented, including any regulations promulgated
thereunder, any successor code thereto and any administrative or judicial
interpretations thereof.
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"Cost" means those costs that are eligible, reasonable, necessary,
allocable to the Project and permitted by generally accepted accounting
principles, including Allowances and Building Costs (as defined in the
Regulations), as shall be determined on a project-specific basis in accordance
with the Regulations as set forth in Exhibit B hereto, as the same may be
amended by subsequent eligible costs as evidenced by a certificate of an
authorized officer of the Trust.
"Debt Service Reserve Fund" means the Debt Service Reserve Fund as defined
in the Bond Resolution.
"Environmental Infrastructure Facilities" means Wastewater Treatment
Facilities, Stormwater Management Facilities or Water Supply Facilities (as such
terms are defined in the Regulations).
"Environmental Infrastructure System" means the Environmental
Infrastructure Facilities of the Borrower, including the Project, described in
Exhibit A-1 attached hereto and made a part hereof for which the Borrower is
borrowing the Loan under this Loan Agreement.
"Event of Default" means any occurrence or event specified in Section 5.01
hereof.
"Fund Loan" means the loan made to the Borrower by the State, acting by
and through the New Jersey Department of Environmental Protection, pursuant to
the Fund Loan Agreement dated as of November 1, 2004 by and between the Borrower
and the State, acting by and through the New Jersey Department of Environmental
Protection, to finance or refinance a portion of the Costs of the Project.
"Fund Loan Agreement" means the loan agreement dated as of November 1,
2004 by and between the Borrower and the State, acting by and through the New
Jersey Department of Environmental Protection, regarding the terms and
conditions of the Fund Loan.
"Interest on the Loan" or "Interest on the Borrower Bond" means the sum of
(i) the Interest Portion, (ii) the Administrative Fee, and (iii) any late
charges incurred hereunder.
"Interest Portion" means that portion of Interest on the Loan or Interest
on the Borrower Bond payable hereunder that is necessary to pay the Borrower's
proportionate share of interest on the Trust Bonds (i) as set forth in Exhibit
A-2 hereof under the column heading entitled "Interest", or (ii) with respect to
any prepayment of Trust Bond Loan Repayments in accordance with Section 3.07 or
5.03 hereof, to accrue on any principal amount of Trust Bond Loan Repayments to
the date of the optional redemption or acceleration, as the case may be, of the
Trust Bonds allocable to such prepaid or accelerated Trust Bond Loan Repayment.
"Loan" means the loan made by the Trust to the Borrower to finance or
refinance a portion of the Costs of the Project pursuant to this Loan Agreement.
"Loan Agreement" means this Loan Agreement, including the Exhibits
attached hereto, as it may be supplemented, modified or amended from time to
time in accordance with the terms hereof and of the Bond Resolution.
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"Loan Agreements" means any other loan agreements entered into by and
between the Trust and one or more of the Borrowers pursuant to which the Trust
will make Loans to such Borrowers from moneys on deposit in the Project Fund,
excluding the Project Loan Account, financed with the proceeds of the Trust
Bonds.
"Loan Closing" means the date upon which the Trust shall issue and deliver
the Trust Bonds and the Borrower shall deliver its Borrower Bond, as previously
authorized, executed, attested and, if applicable, authenticated, to the Trust.
"Loan Repayments" means the sum of (i) Trust Bond Loan Repayments, (ii)
the Administrative Fee, and (iii) any late charges incurred hereunder.
"Loan Term" means the term of this Loan Agreement provided in Sections
3.01 and 3.03 hereof and in Exhibit A-2 attached hereto and made a part hereof.
"Loans" means the loans made by the Trust to the Borrowers under the Loan
Agreements from moneys on deposit in the Project Fund, excluding the Project
Loan Account.
"Master Program Trust Agreement" means that certain Master Program Trust
Agreement, dated as of November 1, 1995, by and among the Trust, the State,
United States Trust Company of New York, as Master Program Trustee thereunder,
The Bank of New York (NJ), in several capacities thereunder, and First Fidelity
Bank, N.A. (predecessor to Wachovia Bank, National Association), in several
capacities thereunder, as supplemented by that certain Agreement of Resignation
of Outgoing Master Program Trustee, Appointment of Successor Master Program
Trustee and Acceptance Agreement, dated as of November 1, 2001, by and among
United States Trust Company of New York, as Outgoing Master Program Trustee,
State Street Bank and Trust Company, N.A. (predecessor to U.S. Bank Trust
National Association), as Successor Master Program Trustee, and the Trust, as
the same may be amended and supplemented from time to time in accordance with
its terms.
"Official Statement" means the Official Statement relating to the issuance
of the Trust Bonds.
"Preliminary Official Statement" means the Preliminary Official Statement
relating to the issuance of the Trust Bonds.
"Prime Rate" means the prevailing commercial interest rate announced by
the Trustee from time to time in the State as its prime lending rate.
"Project" means the Environmental Infrastructure Facilities of the
Borrower described in Exhibit A-1 attached hereto and made a part hereof, which
constitutes a project for which the Trust is permitted to make a loan to the
Borrower pursuant to the Act, the Regulations and the Bond Resolution, all or a
portion of the Costs of which is financed or refinanced by the Trust through the
making of the Loan under this Loan Agreement and which may be identified under
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either the Drinking Water or Clean Water Project Lists with the Project Number
specified in Exhibit A-1 attached hereto.
"Project Fund" means the Project Fund as defined in the Bond Resolution.
"Project Loan Account" means the project loan account established on
behalf of the Borrower in the Project Fund in accordance with the Bond
Resolution to finance all or a portion of the Costs of the Project.
"Regulations" means the rules and regulations, as applicable, now or
hereafter promulgated under N.J.A.C. 7:22-3 et seq., 7:22-4 et seq., 7:22-5 et
seq., 7:22-6 et seq., 7:22-7 et seq., 7:22-8 et seq., 7:22-9 et seq. and 7:22-10
et seq., as the same may from time to time be amended and supplemented.
"State" means the State of New Jersey.
"Trust" means the New Jersey Environmental Infrastructure Trust, a public
body corporate and politic with corporate succession duly created and validly
existing under and by virtue of the Act.
"Trust Bond Loan Repayments" means the repayments of the principal amount
of the Loan plus the payment of any premium associated with prepaying the
principal amount of the Loan in accordance with Section 3.07 hereof plus the
Interest Portion.
"Trust Bonds" means bonds authorized by Section 2.03 of the Bond
Resolution, together with any refunding bonds authenticated, if applicable, and
delivered pursuant to Section 2.04 of the Bond Resolution, in each case issued
in order to finance (i) the portion of the Loan deposited in the Project Loan
Account, (ii) the portion of the Loans deposited in the balance of the Project
Fund, (iii) any capitalized interest related to such bonds, (iv) a portion of
the costs of issuance related to such bonds, and (v) that portion of the Debt
Service Reserve Fund, if any, allocable to the Loan or Loans, as the case may
be, a portion of which includes the funding of reserve capacity, if applicable,
for the Environmental Infrastructure Facilities of the Borrower or Borrowers, as
the case may be, or to refinance any or all of the above.
"Trustee" means, initially, Wachovia Bank, National Association, the
Trustee appointed by the Trust and its successors as Trustee under the Bond
Resolution, as provided in Article X of the Bond Resolution.
(b) In addition to the capitalized terms defined in subsection (a) of this
Section 1.01, certain additional capitalized terms used in this Loan Agreement
shall, unless the context clearly requires otherwise, have the meanings ascribed
to such additional capitalized terms in Schedule A attached hereto and made a
part hereof.
(c) Except as otherwise defined herein or where the context otherwise
requires, words importing the singular number shall include the plural number
and vice versa, and words
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importing persons shall include firms, associations, corporations, agencies and
districts. Words importing one gender shall include the other gender.
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ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower. The Borrower represents for the
benefit of the Trust, the Trustee and the holders of the Trust Bonds as follows:
(a) Organization and Authority.
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(i) The Borrower is a corporation duly created and validly existing
under and pursuant to the laws of the State, including the Business
Corporation Law.
(ii) The acting officers of the Borrower who are contemporaneously
herewith performing or have previously performed any action contemplated
in this Loan Agreement either are or, at the time any such action was
performed, were the duly appointed or elected officers of such Borrower
empowered by applicable State law and, if applicable, authorized by
resolution of the Borrower to perform such actions. To the extent any such
action was performed by an officer no longer the duly acting officer of
such Borrower, all such actions previously taken by such officer are still
in full force and effect.
(iii) The Borrower has full legal right and authority and all
necessary licenses and permits required as of the date hereof to own,
operate and maintain its Environmental Infrastructure System, to carry on
its activities relating thereto, to execute, attest and deliver this Loan
Agreement and the Borrower Bond, to authorize the authentication of the
Borrower Bond, to sell the Borrower Bond to the Trust, to undertake and
complete the Project and to carry out and consummate all transactions
contemplated by this Loan Agreement.
(iv) The proceedings of the Borrower's board of directors approving
this Loan Agreement and the Borrower Bond, authorizing the execution,
attestation and delivery of this Loan Agreement and the Borrower Bond,
authorizing the sale of the Borrower Bond to the Trust, authorizing the
authentication of the Borrower Bond on behalf of the Borrower and
authorizing the Borrower to undertake and complete the Project, including,
without limitation, the Borrower Bond Resolution (collectively, the
"Proceedings"), have been duly and lawfully adopted in accordance with the
Business Corporation Law and other applicable State law at a meeting or
meetings that were duly called and held in accordance with the Borrower
By-Laws and at which quorums were present and acting throughout.
(v) By official action of the Borrower taken prior to or concurrent
with the execution and delivery hereof, including, without limitation, the
Proceedings, the Borrower has duly authorized, approved and consented to
all necessary action to be taken by the Borrower for: (A) the execution,
attestation, delivery and performance of this Loan Agreement and the
transactions contemplated hereby; (B) the issuance of the Borrower Bond
and the sale thereof to the Trust upon the terms set forth herein; (C) the
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approval of the inclusion, if such inclusion is deemed necessary in the
sole discretion of the Trust, in the Preliminary Official Statement and
the Official Statement of all statements and information relating to the
Borrower set forth in "APPENDIX B" thereto (the "Borrower Appendices") and
any amendment thereof or supplement thereto; and (D) the execution,
delivery and due performance of any and all other certificates, agreements
and instruments that may be required to be executed, delivered and
performed by the Borrower in order to carry out, give effect to and
consummate the transactions contemplated by this Loan Agreement,
including, without limitation, the designation of the Borrower Appendices
portion of the Preliminary Official Statement, if any, as "deemed final"
for the purposes and within the meaning of Rule 15c2-12 ("Rule 15c2-12")
of the Securities and Exchange Commission ("SEC") promulgated under the
Securities Exchange Act of 1934, as amended or supplemented, including any
successor regulation or statute thereto.
(vi) This Loan Agreement and the Borrower Bond have each been duly
authorized by the Borrower and duly executed, attested and delivered by
Authorized Officers of the Borrower, and the Borrower Bond has been duly
sold by the Borrower to the Trust, duly authenticated by the trustee or
paying agent, if applicable, under the Borrower Bond Resolution and duly
issued by the Borrower in accordance with the terms of the Borrower Bond
Resolution; and assuming that the Trust has all the requisite power and
authority to authorize, execute, attest and deliver, and has duly
authorized, executed, attested and delivered, this Loan Agreement, and
assuming further that this Loan Agreement is the legal, valid and binding
obligation of the Trust, enforceable against the Trust in accordance with
its terms, each of this Loan Agreement and the Borrower Bond constitutes a
legal, valid and binding obligation of the Borrower, enforceable against
the Borrower in accordance with its respective terms, except as the
enforcement thereof may be affected by bankruptcy, insolvency or other
laws or the application by a court of legal or equitable principles
affecting creditors' rights; and the information contained under
"Description of Loan" in Exhibit A-2 attached hereto and made a part
hereof is true and accurate in all respects.
(b) Full Disclosure. There is no fact that the Borrower has not disclosed
to the Trust in writing on the Borrower's application for the Loan or otherwise
that materially adversely affects or (so far as the Borrower can now foresee)
that will materially adversely affect the properties, activities, prospects or
condition (financial or otherwise) of the Borrower or its Environmental
Infrastructure System, or the ability of the Borrower to make all Loan
Repayments and any other payments required under this Loan Agreement or
otherwise to observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement and the Borrower Bond.
(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 (i) the
undertaking or completion of the Project, (ii) the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, (iii) the ability of the Borrower to make
all Loan Repayments or any other
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payments required under this Loan Agreement, (iv) the authorization, execution,
attestation or delivery of this Loan Agreement or the Borrower Bond, (v) the
issuance of the Borrower Bond and the sale thereof to the Trust, (vi) the
adoption of the Borrower Bond Resolution, or (vii) the Borrower's ability
otherwise to observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement and the Borrower Bond, which proceedings
have not been previously disclosed in writing to the Trust either in the
Borrower's application for the Loan or otherwise.
(d) Compliance with Existing Laws and Agreements. (i) The authorization,
execution, attestation and delivery of this Loan Agreement and the Borrower Bond
by the Borrower, (ii) the authentication of the Borrower Bond by the trustee or
paying agent under the Borrower Bond Resolution, as the case may be, and the
sale of the Borrower Bond to the Trust, (iii) the adoption of the Borrower Bond
Resolution, (iv) the observation and performance by the Borrower of its duties,
covenants, obligations and agreements hereunder and thereunder, (v) the
consummation of the transactions provided for in this Loan Agreement, the
Borrower Bond Resolution and the Borrower Bond, and (vi) the undertaking and
completion of the Project will not (A) other than the lien, charge or
encumbrance created hereby, by the Borrower Bond, by the Borrower Bond
Resolution and by any other outstanding debt obligations of the Borrower that
are at parity with the Borrower Bond as to lien on, and source and security for
payment thereon from, the revenues of the Borrower's Environmental
Infrastructure System, result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Borrower pursuant to, (B)
result in any breach of any of the terms, conditions or provisions of, or (C)
constitute a default under, any existing resolution, outstanding debt or lease
obligation, trust agreement, indenture, mortgage, deed of trust, loan agreement
or other instrument to which the Borrower is a party or by which the Borrower,
its Environmental Infrastructure System or any of its properties 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, injunctions, judgments, decrees, rules, regulations or
existing orders of any court or governmental or administrative agency, authority
or person to which the Borrower, its Environmental Infrastructure System or its
properties or operations is subject.
(e) No Defaults. No event has occurred and no condition exists that, upon
the authorization, execution, attestation and delivery of this Loan Agreement
and the Borrower Bond, the issuance of the Borrower Bond and the sale thereof to
the Trust, the adoption of the Borrower Bond Resolution or the 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 Environmental Infrastructure System or its properties may be bound,
which violation would materially adversely affect the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System or the ability of the Borrower to make all
Loan Repayments, to pay all other amounts due hereunder or otherwise to observe
and perform its duties, covenants, obligations and agreements under this Loan
Agreement and the Borrower Bond.
(f) Governmental Consent. The Borrower has obtained all permits and
approvals required to date by any governmental body or officer for the
authorization, execution, attestation
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and delivery of this Loan Agreement and the Borrower Bond, for the issuance of
the Borrower Bond and the sale thereof to the Trust, for the adoption of the
Borrower Bond Resolution, for the making, observance and performance by the
Borrower of its duties, covenants, obligations and agreements under this Loan
Agreement and the Borrower Bond and for the undertaking or completion of the
Project and the financing or refinancing thereof, including, but not limited to,
if required, the approval by the New Jersey Board of Public Utilities (the
"BPU") of the issuance by the Borrower of the Borrower Bond to the Trust, as
required by Section 9a of the Act, and any other approvals required therefor by
the BPU; and the Borrower has complied 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 Borrower Bond or with the undertaking or
completion of the Project and the financing or refinancing thereof. No consent,
approval or authorization of, or filing, registration or qualification with, any
governmental body or officer that has not been obtained is required on the part
of the Borrower as a condition to the authorization, execution, attestation and
delivery of this Loan Agreement and the Borrower Bond, the issuance of the
Borrower Bond and the sale thereof to the Trust, the undertaking or completion
of the Project or the consummation of any transaction herein contemplated.
(g) Compliance with Law. The Borrower:
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(i) is in compliance with all laws, ordinances, governmental rules
and regulations to which it is subject, the failure to comply with which
would materially adversely affect (A) the ability of the Borrower to
conduct its activities or to undertake or complete the Project, (B) the
ability of the Borrower to make the Loan Repayments and to pay all other
amounts due hereunder, or (C) the condition (financial or otherwise) of
the Borrower or its Environmental Infrastructure System; and
(ii) has obtained all licenses, permits, franchises or other
governmental authorizations presently necessary for the ownership of its
properties or for the conduct of its activities that, if not obtained,
would materially adversely affect (A) the ability of the Borrower to
conduct its activities or to undertake or complete the Project, (B) the
ability of the Borrower to make the Loan Repayments and to pay all other
amounts due hereunder, or (C) the condition (financial or otherwise) of
the Borrower or its Environmental Infrastructure System.
(h) Use of Proceeds. The Borrower will apply the proceeds of the Loan from
the Trust as described in Exhibit B attached hereto and made a part hereof (i)
to finance or refinance a portion of the Costs of the Borrower's Project; and
(ii) where applicable, to reimburse the Borrower for a portion of the Costs of
the Borrower's Project, which portion was paid or incurred in anticipation of
reimbursement by the Trust and is eligible for such reimbursement under and
pursuant to the Regulations, the Code and any other applicable law. All of such
costs constitute Costs for which the Trust is authorized to make Loans to the
Borrower pursuant to the Act and the Regulations.
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(i) Official Statement. The descriptions and information set forth in the
Borrower Appendices, if any, contained in the Official Statement relating to the
Borrower, its operations and the transactions contemplated hereby, as of the
date of the Official Statement, were and, as of the date of delivery hereof, are
true and correct in all material respects, and did not and do not contain any
untrue statement of a material fact or omit to state a material fact that is
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(j) Preliminary Official Statement. As of the date of the Preliminary
Official Statement, the descriptions and information set forth in the Borrower
Appendices, if any, contained in the Preliminary Official Statement relating to
the Borrower, its operations and the transactions contemplated hereby (i) were
"deemed final" by the Borrower for the purposes and within the meaning of Rule
15c2-12 and (ii) were true and correct in all material respects, and did not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
SECTION 2.02. Particular Covenants of Borrower.
(a) Promise to Pay. The Borrower unconditionally and irrevocably promises,
in accordance with the terms of and to the extent provided in the Borrower Bond
Resolution, to make punctual payment of the principal and redemption premium, if
any, of the Loan and the Borrower Bond, the Interest on the Loan, the Interest
on the Borrower Bond and all other amounts due under this Loan Agreement and the
Borrower Bond according to their respective terms.
(b) Performance Under Loan Agreement; Rates. The Borrower covenants and
agrees (i) to comply with all applicable State and federal laws, rules and
regulations in the performance of this Loan Agreement; (ii) to maintain its
Environmental Infrastructure System in good repair and operating condition;
(iii) to cooperate with the Trust in the observance and performance of the
respective duties, covenants, obligations and agreements of the Borrower and the
Trust under this Loan Agreement; and (iv) to establish, levy and collect rents,
rates and other charges for the products and services provided by its
Environmental Infrastructure System, which rents, rates and other charges shall
be at least sufficient to comply with all covenants pertaining thereto contained
in, and all other provisions of, any bond resolution, trust indenture or other
security agreement, if any, relating to any bonds, notes or other evidences of
indebtedness issued or to be issued by the Borrower, including without
limitation rents, rates and other charges, together with other available moneys,
sufficient to pay the principal of and Interest on the Borrower Bond, plus all
other amounts due hereunder.
(c) Borrower Bond; No Prior Liens. Except for (i) the Borrower Bond, (ii)
any bonds or notes at parity with the Borrower Bond and currently outstanding or
issued on the date hereof, (iii) any future bonds or notes of the Borrower
issued under the Borrower Bond Resolution at parity with the Borrower Bond, and
(iv) any Permitted Encumbrances (as defined in the Borrower Bond Resolution),
the assets of the Borrower that are subject to the Borrower Bond Resolution are
and will be free and clear of any pledge, lien, charge or encumbrance thereon or
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with respect thereto prior to, or of equal rank with, the Borrower Bond, and all
corporate or other action on the part of the Borrower to that end has been and
will be duly and validly taken.
(d) Completion of Project and Provision of Moneys Therefor. The Borrower
covenants and agrees (i) to exercise its best efforts in accordance with prudent
environmental infrastructure utility practice to complete the Project and to
accomplish such completion on or before the estimated Project completion date
set forth in Exhibit G hereto and made a part hereof; (ii) to comply with the
terms and provisions contained in Exhibit G hereto; and (iii) to provide from
its own fiscal resources all moneys, in excess of the total amount of loan
proceeds it receives under the Loan and Fund Loan, required to complete the
Project.
(e) See Section 2.02(e) as set forth in Schedule A attached hereto, made a
part hereof and incorporated in this Section 2.02(e) by reference as if set
forth in full herein.
(f) Exclusion of Interest from Federal Gross Income and Compliance with
----------------------------------------------------------------------
Code.
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(i) The Borrower covenants and agrees that it shall not take any
action or omit to take any action that would result in the loss of the
exclusion of the interest on any Trust Bonds now or hereafter issued from
gross income for purposes of federal income taxation as that status is
governed by Section 103(a) of the Code.
(ii) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds (or amounts replaced with such
proceeds) or any other funds or take any action or omit to take any action
that would cause the Trust Bonds (assuming solely for this purpose that
the proceeds of the Trust Bonds loaned to the Borrower represent all of
the proceeds of the Trust Bonds) to be "arbitrage bonds" within the
meaning of Section 148(a) of the Code.
(iii) The Borrower shall not directly or indirectly use or permit
the use of any proceeds of the Trust Bonds to pay the principal of or the
interest or redemption premium on or any other amount in connection with
the retirement or redemption of any issue of state or local governmental
obligations ("refinancing of indebtedness"), unless the Borrower shall (A)
establish to the satisfaction of the Trust, prior to the issuance of the
Trust Bonds, that such refinancing of indebtedness will not adversely
affect the exclusion from gross income for federal income tax purposes of
the interest on the Trust Bonds, and (B) provide to the Trust an opinion
of Bond Counsel to that effect in form and substance satisfactory to the
Trust.
(iv) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds to reimburse the Borrower for an
expenditure with respect to a Costs of the Borrower's Project paid by the
Borrower prior to the issuance of the Trust Bonds, unless (A) the
allocation by the Borrower of the proceeds of the Trust Bonds to reimburse
such expenditure complies with the requirements of Treasury Regulations
ss.1.150-2 necessary to enable the reimbursement allocation to be treated
as an expenditure of the proceeds of the Trust Bonds for purposes of
applying Sections 103 and 141-150, inclusive, of the Code, or (B) such
proceeds of the Trust Bonds will be used for
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refinancing of indebtedness that was used to pay Costs of the Borrower's
Project or to reimburse the Borrower for expenditures with respect to
Costs of the Borrower's Project paid by the Borrower prior to the issuance
of such indebtedness in accordance with a reimbursement allocation for
such expenditures that complies with the requirements of Treasury
Regulations ss.1.150-2.
(v) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds to pay any Costs of the Borrower's
Project that does not constitute a "capital expenditure" within the
meaning of Treasury Regulations ss.1.150-1.
(vi) The Borrower shall not use the proceeds of the Trust Bonds
(assuming solely for this purpose that the proceeds of the Trust Bonds
loaned to the Borrower represent all of the proceeds of the Trust Bonds)
in any manner that would cause the Trust Bonds to be considered "federally
guaranteed" within the meaning of Section 149(b) of the Code or "hedge
bonds" within the meaning of Section 149(g) of the Code.
(vii) The Borrower shall not issue any debt obligations that (A) are
sold at substantially the same time as the Trust Bonds and finance or
refinance the Loan made to the Borrower, (B) are sold pursuant to the same
plan of financing as the Trust Bonds and finance or refinance the Loan
made to the Borrower, and (C) are reasonably expected to be paid out of
substantially the same source of funds as the Trust Bonds and finance or
refinance the Loan made to the Borrower.
(viii) Neither the Borrower nor any "related party" (within the
meaning of Treasury Regulations ss.1.150-1) shall purchase Trust Bonds in
an amount related to the amount of the Loan.
(ix) The Borrower will not issue or permit to be issued obligations
that will constitute an "advance refunding" of the Borrower Bond within
the meaning of Section 149(d)(5) of the Code without the express written
consent of the Trust, which consent may only be delivered by the Trust
after the Trust has received notice from the Borrower of such contemplated
action no later than sixty (60) days prior to any such contemplated
action, and which consent is in the sole discretion of the Trust.
(x) See Section 2.02(f)(x) as set forth in Schedule A attached
hereto, made a part hereof and incorporated in this Section 2.02(f)(x) by
reference as if set forth in full herein.
(xi) No "gross proceeds" of the Trust Bonds held by the Borrower
(other than amounts in a "bona fide debt service fund") will be held in a
"commingled fund" (as such terms are defined in Treasury Regulations
ss.1.148-1(b)).
(xii) Based upon all of the objective facts and circumstances in
existence on the date of issuance of the Trust Bonds used to finance the
Project, (A) within six months of the date of issuance of the Trust Bonds
used to finance the Project, the Borrower will incur a substantial binding
obligation to a third party to expend on the Project at least five
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percent (5%) of the "net sale proceeds" (within the meaning of Treasury
Regulations ss.1.148-1) of the Loan used to finance the Project (treating
an obligation as not being binding if it is subject to contingencies
within the control of the Borrower, the Trust or a "related party" (within
the meaning of Treasury Regulations ss.1.150-1)), (B) completion of the
Project and the allocation to expenditures of the "net sale proceeds" of
the Loan used to finance the Project will proceed with due diligence, and
(C) all of the proceeds of the Loan used to finance the Project (other
than amounts deposited into the Debt Service Reserve Fund allocable to
that portion of the Loan used to finance reserve capacity, if any) and
investment earnings thereon will be spent prior to the period ending three
(3) years subsequent to the date of issuance of the Trust Bonds used to
finance the Project. Accordingly, the proceeds of the Loan deposited in
the Project Loan Account used to finance the Project will be eligible for
the 3-year arbitrage temporary period since the expenditure test, time
test and due diligence test, as set forth in Treasury Regulations
ss.1.148-2(e)(2), will be satisfied.
(xiii) The weighted average maturity of the Loan does not exceed
120% of the average reasonably expected economic life of the Project
financed or refinanced with the Loan, determined in the same manner as
under Section 147(b) of the Code. Accordingly, the term of the Loan will
not be longer than is reasonably necessary for the governmental purposes
of the Loan within the meaning of Treasury Regulations ss.1.148-1(c)(4).
For purposes of this subsection and subsection (h) of this Section 2.02,
quoted terms shall have the meanings given thereto by Section 148 of the Code,
including, particularly, Treasury Regulations ss.ss.1.148-1 through 1.148-11,
inclusive, as supplemented or amended, to the extent applicable to the Trust
Bonds, and any successor Treasury Regulations applicable to the Trust Bonds.
(g) Operation and Maintenance of Environmental Infrastructure System. The
Borrower covenants and agrees that it shall, in accordance with prudent
environmental infrastructure utility practice, (i) at all times operate the
properties of its Environmental Infrastructure System and any business in
connection therewith in an efficient manner, (ii) maintain its Environmental
Infrastructure System in good repair, working order and operating condition, and
(iii) from time to time make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements with respect to its
Environmental Infrastructure System so that at all times the business carried on
in connection therewith shall be properly and advantageously conducted.
(h) Records and Accounts.
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(i) The Borrower shall keep accurate records and accounts for its
Environmental Infrastructure System specifically relating to the Project
(the "System Records") separate and distinct from its other records and
accounts (the "General Records"). Such System Records shall be audited
annually by an independent certified public accountant, which may be part
of the annual audit of the General Records of the Borrower. Such System
Records and General Records shall be made available for inspection by the
Trust at any reasonable time upon prior written notice, and a copy of
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such annual audit(s) therefor, including all written comments and
recommendations of such accountant, shall be furnished to the Trust within
150 days of the close of the fiscal year being so audited or, with the
consent of the Trust, such additional period as may be provided by law.
(ii) Unless otherwise advised in writing by the Trust, in
furtherance of the covenant of the Borrower contained in subsection (f) of
this Section 2.02 not to cause the Trust Bonds to be arbitrage bonds, the
Borrower shall keep, or cause to be kept, accurate records of each
investment it makes in any "nonpurpose investment" acquired with, or
otherwise allocated to, "gross proceeds" of the Trust Bonds not held by
the Trustee and each "expenditure" it makes allocated to "gross proceeds"
of the Trust Bonds. Such records shall include the purchase price,
including any constructive "payments" (or in the case of a "payment"
constituting a deemed acquisition of a "nonpurpose investment" (e.g., a
"nonpurpose investment" first allocated to "gross proceeds" of the Trust
Bonds after it is actually acquired because it is deposited in a sinking
fund for the Trust Bonds)), the "fair market value" of the "nonpurpose
investment" on the date first allocated to the "gross proceeds" of the
Trust Bonds, nominal interest rate, dated date, maturity date, type of
property, frequency of periodic payments, period of compounding, yield to
maturity, amount actually or constructively received on disposition (or in
the case of a "receipt" constituting a deemed disposition of a "nonpurpose
investment" (e.g., a "nonpurpose investment" that ceases to be allocated
to the "gross proceeds" of the Trust Bonds because it is removed from a
sinking fund for the Trust Bonds)), the "fair market value" of the
"nonpurpose investment" on the date it ceases to be allocated to the
"gross proceeds" of the Trust Bonds, the purchase date and disposition
date of the "nonpurpose investment" and evidence of the "fair market
value" of such property on the purchase date and disposition date (or
deemed purchase or disposition date) for each such "nonpurpose
investment". The purchase date, disposition date and the date of
determination of "fair market value" shall be the date on which a contract
to purchase or sell the "nonpurpose investment" becomes binding, i.e., the
trade date rather than the settlement date. For purposes of the
calculation of purchase price and disposition price, brokerage or selling
commissions, administrative expenses or similar expenses shall not
increase the purchase price of an item and shall not reduce the amount
actually or constructively received upon disposition of an item, except to
the extent such costs constitute "qualified administrative costs".
(iii) Within thirty (30) days of the last day of the fifth and each
succeeding fifth "bond year" (which, unless otherwise advised by the
Trust, shall be the five-year period ending on the date five years
subsequent to the date immediately preceding the date of issuance of the
Trust Bonds and each succeeding fifth "bond year") and within thirty (30)
days of the date the last bond that is part of the Trust Bonds is
discharged (or on any other periodic basis requested in writing by the
Trust), the Borrower shall (A) calculate, or cause to be calculated, the
"rebate amount" as of the "computation date" or "final computation date"
attributable to any "nonpurpose investment" made by the Borrower and (B)
remit the following to the Trust: (1) an amount of money that when added
to the "future value" as of the "computation date" of any previous
payments made to the Trust on account of rebate equals the "rebate
amount", (2) the calculations
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supporting the "rebate amount" attributable to any "nonpurpose investment"
made by the Borrower allocated to "gross proceeds" of the Trust Bonds, and
(3) any other information requested by the Trust relating to compliance
with Section 148 of the Code (e.g., information related to any "nonpurpose
investment" of the Borrower for purposes of application of the "universal
cap").
(iv) The Borrower covenants and agrees that it will account for
"gross proceeds" of the Trust Bonds, investments allocable to the Trust
Bonds and expenditures of "gross proceeds" of the Trust Bonds in
accordance with Treasury Regulations ss.1.148-6. All allocations of "gross
proceeds" of the Trust Bonds to expenditures will be recorded on the books
of the Borrower kept in connection with the Trust Bonds no later than 18
months after the later of the date the particular Costs of the Borrower's
Project is paid or the date the portion of the project financed by the
Trust Bonds is placed in service. All allocations of proceeds of the Trust
Bonds to expenditures will be made no later than the date that is 60 days
after the fifth anniversary of the date the Trust Bonds are issued or the
date 60 days after the retirement of the Trust Bonds, if earlier. Such
records and accounts will include the particular Cost paid, the date of
the payment and the party to whom the payment was made.
(i) Inspections; Information. The Borrower shall permit the Trust and the
Trustee and any party designated by any of such parties, at any and all
reasonable times during construction of the Project and thereafter upon prior
written notice, to examine, visit and inspect the property, if any, constituting
the Project and to inspect and make copies of any accounts, books and records,
including (without limitation) its records regarding receipts, disbursements,
contracts, investments and any other matters relating thereto and to its
financial standing, and shall supply such reports and information as the Trust
and the Trustee may reasonably require in connection therewith.
(j) Insurance. The Borrower shall maintain or cause to be maintained, in
force, insurance policies with responsible insurers or self-insurance programs
providing against risk of direct physical loss, damage or destruction of its
Environmental Infrastructure System at least to the extent that similar
insurance is usually carried by utilities constructing, operating and
maintaining Environmental Infrastructure Facilities of the nature of the
Borrower's Environmental Infrastructure System, including liability coverage,
all to the extent available at reasonable cost but in no case less than will
satisfy all applicable regulatory requirements.
(k) Costs of Project. The Borrower certifies that the building cost of the
Project, as listed in Exhibit B hereto and made a part hereof, is a reasonable
and accurate estimation thereof, and it will supply to the Trust a certificate
from a licensed professional engineer authorized to practice in the State
stating that such building cost is a reasonable and accurate estimation and that
the useful life of the Project exceeds the maturity date of the Borrower Bond.
(l) Delivery of Documents. Concurrently with the delivery of this Loan
Agreement (as previously authorized, executed and attested) at the Loan Closing,
the Borrower will cause to be delivered to the Trust and the Trustee each of the
following items:
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(i) an opinion of the Borrower's bond counsel substantially in the
form of Exhibit E hereto; provided, however, that the Trust may permit
portions of such opinion to be rendered by general counsel to the Borrower
and may permit variances in such opinion from the form set forth in
Exhibit E if, in the opinion of the Trust, such variances are not to the
material detriment of the interests of the holders of the Trust Bonds;
(ii) counterparts of this Loan Agreement as previously executed and
attested by the parties hereto;
(iii) copies of those resolutions finally adopted by the board of
directors of the Borrower and requested by the Trust, including, without
limitation, (A) the resolution of the Borrower authorizing the execution,
attestation and delivery of this Loan Agreement, (B) the Borrower Bond
Resolution, as amended and supplemented as of the date of the Loan
Closing, authorizing the execution, attestation, authentication, sale and
delivery of the Borrower Bond to the Trust, (C) the resolution of the
Borrower, if any, confirming the details of the sale of the Borrower Bond
to the Trust, (D) the resolution of the Borrower, if any, declaring its
official intent to reimburse expenditures for the Costs of the Project
from the proceeds of the Trust Bonds, each of said resolutions of the
Borrower being certified by an Authorized Officer of the Borrower as of
the date of the Loan Closing, (E) the resolution of the BPU approving the
issuance by the Borrower of the Borrower Bond to the Trust and setting
forth any other approvals required therefor by the BPU, if applicable, and
(F) any other Proceedings;
(iv) if the Loan is being made to reimburse the Borrower for all or
a portion of the Costs of the Borrower's Project or to refinance
indebtedness or reimburse the Borrower for the repayment of indebtedness
previously incurred by the Borrower to finance all or a portion of the
Costs of the Borrower's Project, an opinion of Bond Counsel, in form and
substance satisfactory to the Trust, to the effect that such reimbursement
or refinancing will not adversely affect the exclusion from gross income
for federal income tax purposes of the interest on the Trust Bonds; and
(v) the certificates of insurance coverage as required pursuant to
the terms of Section 3.06(d) hereof and such other certificates,
documents, opinions and information as the Trust may require in Exhibit F
hereto, if any.
(m) Execution and Delivery of Borrower Bond. Concurrently with the
delivery of this Loan Agreement at the Loan Closing, the Borrower shall also
deliver to the Trust the Borrower Bond, as previously executed, attested and, if
applicable, authenticated, upon the receipt of a written certification of the
Trust that a portion of the net proceeds of the Trust Bonds shall be deposited
in the Project Loan Account simultaneously with the delivery of the Borrower
Bond.
(n) Notice of Material Adverse Change. The Borrower shall promptly notify
the Trust of any material adverse change in the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, or in the ability of the Borrower to make
all Loan Repayments and otherwise to observe and perform its
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duties, covenants, obligations and agreements under this Loan Agreement and the
Borrower Bond.
(o) Continuing Representations. The representations of the Borrower
contained herein shall be true at the time of the execution of this Loan
Agreement and at all times during the term of this Loan Agreement.
(p) Continuing Disclosure Covenant. To the extent that the Trust, in its
sole discretion, determines, at any time prior to the termination of the Loan
Term, that the Borrower is a material "obligated person", as the term "obligated
person" is defined in Rule 15c2-12, with materiality being determined by the
Trust pursuant to criteria established, from time to time, by the Trust in its
sole discretion and set forth in a bond resolution or official statement of the
Trust, the Borrower hereby covenants that it will authorize and provide to the
Trust, for inclusion in any preliminary official statement or official statement
of the Trust, all statements and information relating to the Borrower deemed
material by the Trust for the purpose of satisfying Rule 15c2-12 as well as Rule
10b-5 promulgated pursuant to the Securities Exchange Act of 1934, as amended or
supplemented, including any successor regulation or statute thereto ("Rule
10b-5"), including certificates and written representations of the Borrower
evidencing its compliance with Rule 15c2-12 and Rule 10b-5; and the Borrower
hereby further covenants that the Borrower shall execute and deliver the
Continuing Disclosure Agreement, in substantially the form attached hereto as
Exhibit H, with such revisions thereto prior to execution and delivery thereof
as the Trust shall determine to be necessary, desirable or convenient, in its
sole discretion, for the purpose of satisfying Rule 15c2-12 and the purposes and
intent thereof, as Rule 15c2-12, its purposes and intent may hereafter be
interpreted from time to time by the SEC or any court of competent jurisdiction;
and pursuant to the terms and provisions of the Continuing Disclosure Agreement,
the Borrower shall thereafter provide on-going disclosure with respect to all
statements and information relating to the Borrower in satisfaction of the
requirements set forth in Rule 15c2-12 and Rule 10b-5, including, without
limitation, the provision of certificates and written representations of the
Borrower evidencing its compliance with Rule 15c2-12 and Rule 10b-5.
(q) Additional Covenants and Requirements. (i) No later than the Loan
Closing and, if necessary, in connection with the Trust's issuance of the Trust
Bonds or the making of the Loan, additional covenants and requirements have been
included in Exhibit F hereto and made a part hereof. Such covenants and
requirements may include, but need not be limited to, the maintenance of
specified levels of Environmental Infrastructure System rates, the issuance of
additional debt of the Borrower, the use by or on behalf of the Borrower of
certain proceeds of the Trust Bonds as such use relates to the exclusion from
gross income for federal income tax purposes of the interest on any Trust Bonds,
the transfer of revenues and receipts from the Borrower's Environmental
Infrastructure System, compliance with Rule 15c2-12, Rule 10b-5 and any other
applicable federal or State securities laws, and matters in connection with the
appointment of the Trustee under the Bond Resolution and any successors thereto.
The Borrower hereby agrees to observe and comply with each such additional
covenant and requirement, if any, included in Exhibit F hereto. (ii) Additional
defined terms, covenants, representations and requirements have been included in
Schedule A attached hereto and made a part hereof. Such additional defined
terms, covenants, representations and requirements are
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incorporated in this Loan Agreement by reference thereto as if set forth in full
herein and the Borrower hereby agrees to observe and comply with each such
additional term, covenant, representation and requirement included in Schedule A
as if the same were set forth in its entirety where reference thereto is made in
this Loan Agreement.
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ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan Term. The Trust hereby agrees to make the Loan as
described in Exhibit A-2 hereof and to disburse proceeds of the Loan to the
Borrower in accordance with Section 3.02 and Exhibit C hereof, and the Borrower
hereby agrees to borrow and accept the Loan from the Trust upon the terms set
forth in Exhibit A-2 attached hereto and made a part hereof; provided, however,
that the Trust shall be under no obligation to make the Loan if (a) at the Loan
Closing, the Borrower does not deliver to the Trust a Borrower Bond and such
other documents required under Section 2.02(l) hereof, or (b) an Event of
Default has occurred and is continuing under the Bond Resolution or this Loan
Agreement. Although the Trust intends to disburse proceeds of the Loan to the
Borrower at the times and up to the amounts set forth in Exhibit C to pay a
portion of the Costs of the Project, due to unforeseen circumstances there may
not be a sufficient amount on deposit in the Project Fund on any date to make
the disbursement in such amount. Nevertheless, the Borrower agrees that the
amount actually deposited in the Project Loan Account at the Loan Closing plus
the Borrower's allocable share of (i) certain costs of issuance and
underwriter's discount for all Trust Bonds issued to finance the Loan; (ii)
capitalized interest during the Project construction period, if applicable; and
(iii) that portion of the Debt Service Reserve Fund attributable to the cost of
funding reserve capacity for the Project, if applicable, shall constitute the
initial principal amount of the Loan (as the same may be adjusted downward in
accordance with the definition thereof), and neither the Trust nor the Trustee
shall have any obligation thereafter to loan any additional amounts to the
Borrower.
The Borrower shall use the proceeds of the Loan strictly in accordance
with Section 2.01(h) hereof.
The payment obligations created under this Loan Agreement and the
obligations to pay the principal of the Borrower Bond, Interest on the Borrower
Bond and other amounts due under the Borrower Bond are each direct, general,
irrevocable and unconditional obligations of the Borrower payable from any
source legally available to the Borrower in accordance with the terms of and to
the extent provided in the Borrower Bond Resolution.
SECTION 3.02. Disbursement of Loan Proceeds. (a) The Trustee, as the agent
of the Trust, shall disburse the amounts on deposit in the Project Loan Account
to the Borrower upon receipt of a requisition executed by an Authorized Officer
of the Borrower, and approved by the Trust, in a form meeting the requirements
of Section 5.02(3) of the Bond Resolution.
(b) The Trust and Trustee shall not be required to disburse any Loan
proceeds to the Borrower under this Loan Agreement, unless:
(i) the proceeds of the Trust Bonds shall be available for
disbursement, as determined solely by the Trust;
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(ii) in accordance with the Bond Act, and the Regulations, the
Borrower shall have timely applied for, shall have been awarded and, prior
to or simultaneously with the Loan Closing, shall have closed a Fund Loan
for a portion of the Allowable Costs (as defined in such Regulations) of
the Project in an amount not in excess of the amount of Allowable Costs of
the Project financed by the Loan from the Trust;
(iii) the Borrower shall have on hand moneys to pay for the greater
of (A) that portion of the total Costs of the Project that is not eligible
to be funded from the Fund Loan or the Loan, or (B) that portion of the
total Costs of the Project that exceeds the actual amounts of the loan
commitments made by the State and the Trust, respectively, for the Fund
Loan and the Loan; and
(iv) no Event of Default nor any event that, with the passage of
time or service of notice or both, would constitute an Event of Default
shall have occurred and be continuing hereunder.
SECTION 3.03. Amounts Payable. (a) The Borrower shall repay the Loan in
installments payable to the Trustee as follows:
(i) the principal of the Loan shall be repaid annually on the
Principal Payment Dates, in accordance with the schedule set forth in
Exhibit A-2 attached hereto and made a part hereof, as the same may be
amended or modified by any credits applicable to the Borrower as set forth
in the Bond Resolution;
(ii) the Interest Portion described in clause (i) of the definition
thereof shall be paid semiannually on the Interest Payment Dates, in
accordance with the schedule set forth in Exhibit A-2 attached hereto and
made a part hereof, as the same may be amended or modified by any credits
applicable to the Borrower as set forth in the Bond Resolution; and
(iii) the Interest Portion described in clause (ii) of the
definition thereof shall be paid upon the date of optional redemption or
acceleration, as the case may be, of the Trust Bonds allocable to any
prepaid or accelerated Trust Bond Loan Repayment.
The obligations of the Borrower under the Borrower Bond shall be deemed to
be amounts payable under this Section 3.03. Each Loan Repayment, whether
satisfied through a direct payment by the Borrower to the Trustee or (with
respect to the Interest Portion) through the use of Trust Bond proceeds and
income thereon on deposit in the Interest Account (as defined in the Bond
Resolution) to pay interest on the Trust Bonds, shall be deemed to be a credit
against the corresponding obligation of the Borrower under this Section 3.03 and
shall fulfill the Borrower's obligation to pay such amount hereunder and under
the Borrower Bond. Each payment made to the Trustee pursuant to this Section
3.03 shall be applied first to the Interest Portion then due and payable, second
to the principal of the Loan then due and payable, third to the payment of the
Administrative Fee, and finally to the payment of any late charges hereunder.
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(b) The Interest on the Loan described in clause (iii) of the definition
thereof shall (i) consist of a late charge for any Trust Bond Loan Repayment
that is received by the Trustee later than the tenth (10th) day following its
due date and (ii) be payable immediately thereafter in an amount equal to the
greater of twelve percent (12%) per annum or the Prime Rate plus one half of one
percent per annum on such late payment from its due date to the date it is
actually paid; provided, however, that the rate of Interest on the Loan,
including, without limitation, any late payment charges incurred hereunder,
shall not exceed the maximum interest rate permitted by law.
(c) The Borrower shall receive, as a credit against its semiannual payment
obligations of the Interest Portion, the amounts certified by the Trust pursuant
to Section 5.10 of the Bond Resolution. Such amounts shall represent the
Borrower's allocable share of the interest earnings on certain funds and
accounts established under the Bond Resolution, calculated in accordance with
Section 5.10 of the Bond Resolution.
(d) In accordance with the provisions of the Bond Resolution, the Borrower
shall receive, as a credit against its Trust Bond Loan Repayments, the amounts
set forth in the certificate of the Trust filed with the Trustee pursuant to
Section 5.02(4) of the Bond Resolution.
(e) The Interest on the Loan described in clause (ii) of the definition
thereof shall be paid by the Borrower in the amount of one-half of the
Administrative Fee, if any, to the Trustee on each Interest Payment Date,
commencing with the first Interest Payment Date subsequent to the Loan Closing.
(f) The Borrower hereby agrees to pay to the Trust at the Loan Closing a
"Security Review Fee" in the amount necessary to reimburse the Trust for all of
its costs and expenses incurred in connection with reviewing the additional
security securing the Trust Loan as set forth in Exhibit F hereto, if any,
including without limitation the fees and expenses of any professional advisers
hired by the Trust in connection therewith.
SECTION 3.04. Unconditional Obligations. The obligation of the Borrower to
make the Loan Repayments and all other payments required hereunder and the
obligation to perform and observe the other duties, covenants, obligations and
agreements on its part contained herein shall be absolute and unconditional, and
shall not be abated, rebated, set-off, reduced, abrogated, terminated, waived,
diminished, postponed or otherwise modified in any manner or to any extent
whatsoever while any Trust Bonds remain outstanding or any Loan Repayments
remain unpaid, for any reason, regardless of any contingency, act of God, event
or cause whatsoever, including (without limitation) any acts or circumstances
that may constitute failure of consideration, eviction or constructive eviction,
the taking by eminent domain or destruction of or damage to the Project or
Environmental Infrastructure System, commercial frustration of the purpose, any
change in the laws of the United States of America or of the State or any
political subdivision of either or in the rules or regulations of any
governmental authority, any failure of the Trust or the Trustee to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with the Project, this Loan Agreement or
the Bond Resolution, or any rights of set-off, recoupment, abatement or
counterclaim that the Borrower might otherwise have against the Trust, the
Trustee or any other party or parties; provided,
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however, that payments hereunder shall not constitute a waiver of any such
rights. The Borrower shall not be obligated to make any payments required to be
made by any other Borrowers under separate Loan Agreements or the Bond
Resolution.
The Borrower acknowledges that payment of the Trust Bonds by the Trust,
including payment from moneys drawn by the Trustee from the Debt Service Reserve
Fund, does not constitute payment of the amounts due under this Loan Agreement
and the Borrower Bond. If at any time the amount in the Debt Service Reserve
Fund shall be less than the Debt Service Reserve Requirement as the result of
any transfer of moneys from the Debt Service Reserve Fund to the Debt Service
Fund (as all such terms are defined in the Bond Resolution) as the result of a
failure by the Borrower to make any Trust Bond Loan Repayments required
hereunder, the Borrower agrees to replenish (i) such moneys so transferred and
(ii) any deficiency arising from losses incurred in making such transfer as the
result of the liquidation by the Trust of Investment Securities (as defined in
the Bond Resolution) acquired as an investment of moneys in the Debt Service
Reserve Fund, by making payments to the Trust in equal monthly installments for
the lesser of six (6) months or the remaining term of the Loan at an interest
rate to be determined by the Trust necessary to make up any loss caused by such
deficiency.
The Borrower acknowledges that payment of the Trust Bonds from moneys that
were originally received by the Trustee from repayments by the Borrowers of
loans made to the Borrowers by the State, acting by and through the New Jersey
Department of Environmental Protection, pursuant to loan agreements dated as of
November 1, 2004 by and between the Borrowers and the State, acting by and
through the New Jersey Department of Environmental Protection, to finance or
refinance a portion of the Costs of the Environmental Infrastructure Facilities
of the Borrowers, and which moneys were upon such receipt by the Trustee
deposited in the Trust Bonds Security Account (as defined in the Bond
Resolution), does not constitute payment of the amounts due under this Loan
Agreement and the Borrower Bond.
SECTION 3.05. Loan Agreement to Survive Bond Resolution and Trust Bonds.
The Borrower acknowledges that its duties, covenants, obligations and agreements
hereunder shall survive the discharge of the Bond Resolution applicable to the
Trust Bonds and shall survive the payment of the principal and redemption
premium, if any, of and the interest on the Trust Bonds until the Borrower can
take no action or fail to take any action that could adversely affect the
exclusion from gross income of the interest on the Trust Bonds for purposes of
federal income taxation, at which time such duties, covenants, obligations and
agreements hereunder shall, except for those set forth in Sections 3.06(a) and
(b) hereof, terminate.
SECTION 3.06. Disclaimer of Warranties and Indemnification. (a) The
Borrower acknowledges and agrees that (i) neither the Trust nor the Trustee
makes any warranty or representation, either express or implied, as to the
value, design, condition, merchantability or fitness for particular purpose or
fitness for any use of the Environmental Infrastructure System or the Project or
any portions thereof or any other warranty or representation with respect
thereto; (ii) in no event shall the Trust or the Trustee or their respective
agents be liable or responsible for any incidental, indirect, special or
consequential damages in connection with or arising out of this Loan Agreement
or the Project or the existence, furnishing, functioning or use of the
Environmental Infrastructure System or the Project or any item or products or
services provided
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for in this Loan Agreement; and (iii) to the fullest extent permitted by law,
the Borrower shall indemnify and hold the Trust and the Trustee harmless
against, and the Borrower shall pay any and all, liability, loss, cost, damage,
claim, judgment or expense of any and all kinds or nature and however arising
and imposed by law, which the Trust and the Trustee may sustain, be subject to
or be caused to incur by reason of any claim, suit or action based upon personal
injury, death or damage to property, whether real, personal or mixed, or upon or
arising out of contracts entered into by the Borrower, the Borrower's ownership
of the Environmental Infrastructure System or the Project, or the acquisition,
construction or installation of the Project.
(b) It is mutually agreed by the Borrower, the Trust and the Trustee that
the Trust and its officers, agents, servants or employees shall not be liable
for, and shall be indemnified and saved harmless by the Borrower in any event
from, any action performed under this Loan Agreement and any claim or suit of
whatsoever nature, except in the event of loss or damage resulting from their
own negligence or willful misconduct. It is further agreed that the Trustee and
its directors, officers, agents, servants or employees shall not be liable for,
and shall be indemnified and saved harmless by the Borrower in any event from,
any action performed pursuant to this Loan Agreement, except in the event of
loss or damage resulting from their own negligence or willful misconduct.
(c) The Borrower and the Trust agree that all claims shall be subject to
and governed by the provisions of the New Jersey Contractual Liability Act,
N.J.S.A. 59:13-1 et seq. (except for N.J.S.A. 59:13-9 thereof), although such
Act by its express terms does not apply to claims arising under contract with
the Trust.
(d) In connection with its obligation to provide the insurance required
under Section 2.02(j) hereof: (i) the Borrower shall include, or cause to be
included, the Trust and its directors, employees and officers as additional
"named insureds" on (A) any certificate of liability insurance procured by the
Borrower (or other similar document evidencing the liability insurance coverage
procured by the Borrower) and (B) any certificate of liability insurance
procured by any contractor or subcontractor for the Project, and from the latter
of the date of the Loan Closing or the date of the initiation of construction of
the Project until the date the Borrower receives the written certificate of
Project completion from the Trust, the Borrower shall maintain said liability
insurance covering the Trust and said directors, employees and officers in good
standing; and (ii) the Borrower shall include the Trust as an additional "named
insured" on any certificate of insurance providing against risk of direct
physical loss, damage or destruction of the Environmental Infrastructure System,
and during the Loan Term the Borrower shall maintain said insurance covering the
Trust in good standing.
The Borrower shall provide the Trust with a copy of each of any such
original, supplemental, amendatory or reissued certificates of insurance (or
other similar documents evidencing the insurance coverage) required pursuant to
this Section 3.06(d).
SECTION 3.07. Option to Prepay Loan Repayments. The Borrower may prepay
the Trust Bond Loan Repayments, in whole or in part (but if in part, in the
amount of $100,000 or any integral multiple thereof), upon prior written notice
to the Trust and the Trustee not less than ninety (90) days in addition to the
number of days' advance notice to the Trustee required for any
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optional redemption of the Trust Bonds, and upon payment by the Borrower to the
Trustee of amounts that, together with investment earnings thereon, will be
sufficient to pay the principal amount of the Trust Bond Loan Repayments to be
prepaid plus the Interest Portion described in clause (ii) of the definition
thereof on any such date of redemption; provided, however, that any such full or
partial prepayment may only be made (i) if the Borrower is not then in arrears
on its Fund Loan, (ii) if the Borrower is contemporaneously making a full or
partial prepayment of the Fund Loan such that, after the prepayment of the Loan
and the Fund Loan, the Trust, in its sole discretion, determines that the
interests of the owners of the Trust Bonds are not adversely affected by such
prepayments, and (iii) upon the prior written approval of the Trust. In
addition, if at the time of such prepayment the Trust Bonds may only be redeemed
at the option of the Trust upon payment of a premium, the Borrower shall add to
its prepayment of Trust Bond Loan Repayments an amount, as determined by the
Trust, equal to such premium allocable to the Trust Bonds to be redeemed as a
result of the Borrower's prepayment. Prepayments shall be applied first to the
Interest Portion that accrues on the portion of the Loan to be prepaid until
such prepayment date as described in clause (ii) of the definition thereof and
then to principal payments (including premium, if any) on the Loan in inverse
order of their maturity.
SECTION 3.08. Priority of Loan and Fund Loan. (a) The Borrower hereby
agrees that, to the extent allowed by law or the Borrower Bond Resolution, any
Loan Repayments then due and payable on the Loan shall be satisfied by the
Borrower before any loan repayments on the Borrower's Fund Loan shall be
satisfied by the Borrower.
(b) The Borrower hereby acknowledges that in the event the Borrower fails
or is unable to pay promptly to the Trust in full any Trust Bond Loan Repayments
under this Loan Agreement when due, then any (i) Administrative Fee paid
hereunder, (ii) late charges paid hereunder, and (iii) loan repayments paid by
the Borrower on its Fund Loan under the related loan agreement therefor, any of
which payments shall be received by the Trustee during the time of any such
Trust Bond Loan Repayment deficiency, shall be applied by the Trustee first to
satisfy such Trust Bond Loan Repayment deficiency as a credit against the
obligations of the Borrower to make payments of the Interest Portion under the
Loan and the Borrower Bond, second, to the extent available, to make Trust Bond
Loan Repayments of principal hereunder and payments of principal under the
Borrower Bond, third, to the extent available, to pay the Administrative Fee,
fourth, to the extent available, to pay any late charges hereunder, fifth, to
the extent available, to satisfy the repayment of the Borrower's Fund Loan under
its related loan agreement therefor, and finally, to the extent available, to
satisfy the repayment of the administrative fee under any such related loan
agreement.
(c) The Borrower hereby further acknowledges that any loan repayments paid
by the Borrower on its Fund Loan under the related loan agreement therefor shall
be applied according to the provisions of the Master Program Trust Agreement.
SECTION 3.09. Approval of the New Jersey State Treasurer. The Borrower and
the Trust hereby acknowledge that prior to or simultaneously with the Loan
Closing the New Jersey State Treasurer, in satisfaction of the requirements of
Section 9a of the Act, issued the "Certificate of the New Jersey State Treasurer
Regarding the Approval of the Trust Loan and the Fund Loan" (the "Treasurer's
Certificate"). Pursuant to the terms of the Treasurer's Certificate,
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the New Jersey State Treasurer approved the Loan and the terms and conditions
thereof as established by the provisions of this Loan Agreement.
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ARTICLE IV
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
SECTION 4.01. Assignment and Transfer by Trust. (a) The Borrower hereby
expressly acknowledges that, other than the provisions of Section 2.02(d)(ii)
hereof, the Trust's right, title and interest in, to and under this Loan
Agreement and the Borrower Bond have been assigned to the Trustee as security
for the Trust Bonds as provided in the Bond Resolution, and that if any Event of
Default shall occur, the Trustee or any Bond Insurer (as such term may be
defined in the Bond Resolution), if applicable, pursuant to the Bond Resolution,
shall be entitled to act hereunder in the place and stead of the Trust. The
Borrower hereby acknowledges the requirements of the Bond Resolution applicable
to the Trust Bonds and consents to such assignment and appointment. This Loan
Agreement and the Borrower Bond, including, without limitation, the right to
receive payments required to be made by the Borrower hereunder and to compel or
otherwise enforce observance and performance by the Borrower of its other
duties, covenants, obligations and agreements hereunder, may be further
transferred, assigned and reassigned in whole or in part to one or more
assignees or subassignees by the Trustee at any time subsequent to their
execution without the necessity of obtaining the consent of, but after giving
prior written notice to, the Borrower.
The Trust shall retain the right to compel or otherwise enforce observance
and performance by the Borrower of its duties, covenants, obligations and
agreements under Section 2.02(d)(ii) hereof; provided, however, that in no event
shall the Trust have the right to accelerate the Borrower Bond in connection
with the enforcement of Section 2.02(d)(ii) hereof.
(b) The Borrower hereby approves and consents to any assignment or
transfer of this Loan Agreement and the Borrower Bond that the Trust deems to be
necessary in connection with any refunding of the Trust Bonds or the issuance of
additional bonds under the Bond Resolution or otherwise, all in connection with
the pooled loan program of the Trust.
SECTION 4.02. Assignment by Borrower. Neither this Loan Agreement nor the
Borrower Bond may be assigned by the Borrower for any reason, unless the
following conditions shall be satisfied: (i) the Trust and the Trustee shall
have approved said assignment in writing; (ii) the assignee shall have expressly
assumed in writing the full and faithful observance and performance of the
Borrower's duties, covenants, obligations and agreements under this Loan
Agreement and, to the extent permitted under applicable law, the Borrower Bond;
(iii) immediately after such assignment, the assignee shall not be in default in
the observance or performance of any duties, covenants, obligations or
agreements of the Borrower under this Loan Agreement or the Borrower Bond; and
(iv) the Trust shall have received an opinion of Bond Counsel to the effect that
such assignment will not adversely affect the security of the holders of the
Trust Bonds or the exclusion of the interest on the Trust Bonds from gross
income for purposes of federal income taxation under Section 103(a) of the Code.
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ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. Events of Default. If any of the following events occur, it
is hereby defined as and declared to be and to constitute an "Event of Default":
(a) failure by the Borrower to pay, or cause to be paid, any Trust Bond
Loan Repayment required to be paid hereunder when due, which failure shall
continue for a period of fifteen (15) days;
(b) failure by the Borrower to make, or cause to be made, any required
payments of principal, redemption premium, if any, and interest on any bonds,
notes or other obligations of the Borrower issued under the Borrower Bond
Resolution (other than the Loan and the Borrower Bond) or otherwise secured by
all or a portion of the property pledged under the Borrower Bond Resolution,
after giving effect to the applicable grace period;
(c) failure by the Borrower to pay, or cause to be paid, the
Administrative Fee or any late charges incurred hereunder or any portion thereof
when due or to observe and perform any duty, covenant, obligation or agreement
on its part to be observed or performed under this Loan Agreement, other than as
referred to in subsection (a) of this Section 5.01 or other than the obligations
of the Borrower contained in Section 2.02(d)(ii) hereof and in Exhibit F hereto,
which failure shall continue for a period of thirty (30) days after written
notice, specifying such failure and requesting that it be remedied, is given to
the Borrower by the Trustee, unless the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, that if the
failure stated in such notice is correctable but cannot be corrected within the
applicable period, the Trustee may not unreasonably withhold its consent to an
extension of such time up to 120 days from the delivery of the written notice
referred to above if corrective action is instituted by the Borrower within the
applicable period and diligently pursued until the Event of Default is
corrected;
(d) any representation made by or on behalf of the Borrower contained in
this Loan Agreement, or in any instrument furnished in compliance with or with
reference to this Loan Agreement or the Loan, is false or misleading in any
material respect;
(e) 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
thirty (30) days after such filing and such dismissal shall be final and not
subject to appeal; or the Borrower shall become insolvent or bankrupt or shall
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) days;
(f) the Borrower shall generally fail to pay its debts as such debts
become due; and
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(g) failure of the Borrower to observe or perform such additional duties,
covenants, obligations, agreements or conditions as are required by the Trust
and specified in Exhibit F attached hereto and made a part hereof.
SECTION 5.02. Notice of Default. The Borrower shall give the Trustee and
the Trust prompt telephonic notice of the occurrence of any Event of Default
referred to in Section 5.01(d) or (e) 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.
SECTION 5.03. Remedies on Default. Whenever an Event of Default referred
to in Section 5.01 hereof shall have occurred and be continuing, the Borrower
acknowledges the rights of the Trustee and of any Bond Insurer to direct any and
all remedies in accordance with the terms of the Bond Resolution, and the
Borrower also acknowledges that the Trust shall have the right to take, or to
direct the Trustee to take, any action permitted or required pursuant to the
Bond Resolution and to take whatever other action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter to become
due hereunder or to enforce the observance and performance of any duty,
covenant, obligation or agreement of the Borrower hereunder.
In addition, if an Event of Default referred to in Section 5.01(a) hereof
shall have occurred and be continuing, the Trust shall, to the extent allowed by
applicable law and to the extent and in the manner set forth in the Bond
Resolution, have the right to declare, or to direct the Trustee to declare, all
Loan Repayments and all other amounts due hereunder (including, without
limitation, payments under the Borrower Bond) together with the prepayment
premium, if any, calculated pursuant to Section 3.07 hereof to be immediately
due and payable, and upon notice to the Borrower the same shall become due and
payable without further notice or demand.
SECTION 5.04. Attorneys' Fees and Other Expenses. The Borrower shall on
demand pay to the Trust or the Trustee the reasonable fees and expenses of
attorneys and other reasonable expenses (including, without limitation, the
reasonably allocated costs of in-house counsel and legal staff) incurred by
either of them in the collection of Trust Bond Loan Repayments or any other sum
due hereunder or in the enforcement of the observation or performance of any
other duties, covenants, obligations or agreements of the Borrower upon an Event
of Default.
SECTION 5.05. Application of Moneys. Any moneys collected by the Trust or
the Trustee pursuant to Section 5.03 hereof shall be applied (a) first to pay
any attorneys' fees or other fees and expenses owed by the Borrower pursuant to
Section 5.04 hereof, (b) second, to the extent available, to pay the Interest
Portion then due and payable, (c) third, to the extent available, to pay the
principal due and payable on the Loan, (d) fourth, to the extent available, to
pay the Administrative Fee, any late charges incurred hereunder or any other
amounts due and payable under this Loan Agreement, and (e) fifth, to the extent
available, to pay the Interest Portion and the principal on the Loan and other
amounts payable hereunder as such amounts become due and payable.
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SECTION 5.06. No Remedy Exclusive; Waiver; Notice. No remedy herein
conferred upon or reserved to the Trust or the Trustee is intended to be
exclusive, and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Loan Agreement or now or hereafter existing
at law or in equity. No delay or omission to exercise any right, remedy or power
accruing upon any Event of Default shall impair any such right, remedy or power
or shall be construed to be a waiver thereof, but any such right, remedy or
power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Trust or the Trustee to exercise any remedy
reserved to it in this Article V, it shall not be necessary to give any notice
other than such notice as may be required in this Article V.
SECTION 5.07. Retention of Trust's Rights. Notwithstanding any assignment
or transfer of this Loan Agreement pursuant to the provisions hereof or of the
Bond Resolution, or anything else to the contrary contained herein, the Trust
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 Trust may, in its discretion, deem necessary to
enforce the obligations of the Borrower to the Trust pursuant to Section 5.03
hereof.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when hand
delivered or mailed by registered or certified mail, postage prepaid, to the
Borrower at the address specified in Exhibit A-1 attached hereto and made a part
hereof and to the Trust and the Trustee at the following addresses:
(a) Trust:
New Jersey Environmental Infrastructure Trust
P.O. Box 440
Trenton, New Jersey 08625
Attention: Executive Director
(b) Trustee:
Wachovia Bank, National Association
21 South Street, 3rd Floor
Morristown, New Jersey 07960
Attention: Corporate Trust Department
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 6.02. Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Trust and the Borrower and their
respective successors and assigns.
SECTION 6.03. 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 6.04. Amendments, Supplements and Modifications. Except as
otherwise provided in this Section 6.04, this Loan Agreement may not be amended,
supplemented or modified without the prior written consent of the Trust and the
Borrower and without the satisfaction of all conditions set forth in Section
11.12 of the Bond Resolution. Notwithstanding the conditions set forth in
Section 11.12 of the Bond Resolution, (i) Section 2.02(p) hereof may be amended,
supplemented or modified upon the written consent of the Trust and the Borrower
and without the consent of the Trustee, any Bond Insurer or any holders of the
Trust Bonds, and (ii) Exhibit H hereto may be amended, supplemented or modified
prior to the execution and delivery thereof as the Trust, in its sole
discretion, shall determine to be necessary, desirable or convenient for the
purpose of satisfying Rule 15c2-12 and the purpose and intent thereof as Rule
15c2-12, its purpose and intent may hereafter be interpreted from time to time
by the SEC or any
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court of competent jurisdiction, and such amendment, supplement or modification
shall not require the consent of the Borrower, the Trustee, any Bond Insurer or
any holders of the Trust Bonds.
SECTION 6.05. 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 6.06. Applicable Law and Regulations. This Loan Agreement shall be
governed by and construed in accordance with the laws of the State, including
the Act and the Regulations, which Regulations are, by this reference thereto,
incorporated herein as part of this Loan Agreement.
SECTION 6.07. Consents and Approvals. Whenever the written consent or
approval of the Trust shall be required under the provisions of this Loan
Agreement, such consent or approval may only be given by the Trust unless
otherwise provided by law or by rules, regulations or resolutions of the Trust
or unless expressly delegated to the Trustee and except as otherwise provided in
Section 6.09 hereof.
SECTION 6.08. Captions. The captions or headings in this Loan Agreement
are for convenience only and shall not in any way define, limit or describe the
scope or intent of any provisions or sections of this Loan Agreement.
SECTION 6.09. Benefit of Loan Agreement; Compliance with Bond Resolution.
This Loan Agreement is executed, among other reasons, to induce the purchase of
the Trust Bonds. Accordingly, all duties, covenants, obligations and agreements
of the Borrower herein contained are hereby declared to be for the benefit of
and are enforceable by the Trust, the holders of the Trust Bonds and the
Trustee. The Borrower covenants and agrees to observe and comply with, and to
enable the Trust to observe and comply with, all duties, covenants, obligations
and agreements contained in the Bond Resolution.
SECTION 6.10. Further Assurances. The Borrower shall, at the request of
the Trust, authorize, execute, attest, 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 and the Borrower Bond.
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IN WITNESS WHEREOF, the Trust and the Borrower have caused this Loan
Agreement to be executed, sealed and delivered as of the date first above
written.
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
[SEAL]
By:________________________
ATTEST: Robert A. Briant, Sr.
Chairman
- -----------------------------
Eileen Swan
Secretary
MIDDLESEX WATER COMPANY
[SEAL]
By: /s/ Dennis G. Sullivan
---------------------------
ATTEST: Dennis G. Sullivan
President
/s/ Kenneth J. Quinn
- ----------------------------------
Kenneth J. Quinn
Secretary
[Signature Page]
SCHEDULE A
Certain Additional Loan Agreement Provisions
--------------------------------------------
S-1
EXHIBIT A-1
Description of Project and Environmental Infrastructure System
--------------------------------------------------------------
A-1-1
EXHIBIT A-2
Description of Loan
-------------------
A-2-1
EXHIBIT B
Basis for Determination of Allowable Project Costs
--------------------------------------------------
B-1
EXHIBIT C
Estimated Disbursement Schedule
-------------------------------
C-1
EXHIBIT D
Specimen Borrower Bond
----------------------
D-1
(Except for assignment page, to be supplied by Borrower's
bond counsel in substantially the following form)
IMPORTANT NOTE: The next three pages set forth the form of the Borrower
Bond prepared by the Trust's Bond Counsel for municipal/county Borrowers.
Although the Trust recognizes that each corporate Borrower has its own bond form
as required pursuant to its Borrower Bond Resolution, please incorporate in the
bond form the pertinent information from this municipal/county bond form (e.g.,
amounts payable under the Borrower Bond set forth in the first paragraph,
assignment in the second paragraph, disbursement language in the third
paragraph, unconditional obligation in the fourth paragraph, optional prepayment
provisions in the fifth paragraph and the date of the Borrower Bond). To the
extent that you do not have an existing Bond Resolution, the pledge under your
Bond Resolution should be drafted to constitute a general obligation pledge of
(i) all the gross revenues of the company and (ii) any specific property (e.g.
mortgage) or other security pledged for this transaction (e.g. letter of
credit).
D-2
SEE IMPORTANT NOTE ON PRIOR PAGE
FOR VALUE RECEIVED, [NAME OF BORROWER], a corporation duly created and
validly existing under the Constitution and laws of the State (the "Borrower"),
hereby promises to pay to the order of the New Jersey Environmental
Infrastructure Trust (the "Trust") (i) the principal amount of
__________________________ Dollars ($__________), or such lesser amount as shall
be determined in accordance with Section 3.01 of the Loan Agreement (as
hereinafter defined), at the times and in the amounts determined as provided in
the Loan Agreement, together with (ii) Interest on the Loan constituting the
Interest Portion, the Administrative Fee and any late charges incurred under the
Loan Agreement (as such terms are defined in the Loan Agreement) in the amount
calculated as provided in the Loan Agreement, payable on the days and in the
amounts and as provided in the Loan Agreement, which principal amount and
Interest Portion of the Interest on the Loan shall, unless otherwise provided in
the Loan Agreement, be payable on the days and in the amounts as also set forth
in Exhibit A attached hereto under the column headings respectively entitled
"Principal" and "Interest", plus (iii) any other amounts due and owing under the
Loan Agreement at the times and in the amounts as provided therein. The Borrower
unconditionally and irrevocably promises, in accordance with the terms of and to
the extent provided in the Borrower Bond Resolution (as defined in the Loan
Agreement) to pay in full and when due the principal of and the Interest on this
Borrower Bond (as defined in the Loan Agreement) and all other amounts due under
this Borrower Bond and the Loan Agreement according to their respective terms.
This Borrower Bond is issued pursuant to the Loan Agreement dated as of
November 1, 2004 by and between the Trust and the Borrower (the "Loan
Agreement"). This Borrower Bond is issued in consideration of the loan made
under the Loan Agreement (the "Loan") to evidence the payment obligations of the
Borrower set forth therein. This Borrower Bond has been assigned to
_____________________________, as trustee (the "Trustee") under the
"Environmental Infrastructure Bond Resolution, Series 2004[_]", adopted by the
Trust on September __, 2004, as the same may be amended and supplemented in
accordance with the terms thereof (the "Bond Resolution"), and payments
hereunder shall, except as otherwise provided in the Loan Agreement, be made
directly to the Trustee for the account of the Trust pursuant to such
assignment. Such assignment has been made as security for the payment of the
Trust Bonds (as defined in the Loan Agreement) issued to finance or refinance
the Loan and as otherwise described in the Loan Agreement. This Borrower Bond is
subject to further assignment or endorsement in accordance with the terms of the
Bond Resolution and the Loan Agreement. All of the terms, conditions and
provisions of the Loan Agreement are, by this reference thereto, incorporated
herein as part of this Borrower Bond.
Pursuant to the Loan Agreement, disbursements shall be made by the Trustee
to the Borrower, in accordance with written instructions of the Trust, upon
receipt by the Trust and the Trustee of requisitions from the Borrower executed
and delivered in accordance with the requirements set forth in Section 3.02 of
the Loan Agreement.
This Borrower Bond is entitled to the benefits and is subject to the
conditions of the Loan Agreement. The obligations of the Borrower to make the
payments required hereunder shall be
D-3
absolute and unconditional, without any defense or right of set-off,
counterclaim or recoupment by reason of any default by the Trust under the Loan
Agreement or under any other agreement between the Borrower and the Trust or out
of any indebtedness or liability at any time owing to the Borrower by the Trust
or for any other reason.
This Borrower Bond is subject to optional prepayment under the terms and
conditions, and in the amounts, provided in Section 3.07 of the Loan Agreement.
To the extent allowed by applicable law, this Borrower Bond may be subject to
acceleration under the terms and conditions, and in the amounts, provided in
Section 5.03 of the Loan Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Borrower Bond to be duly
executed, sealed and delivered as of October 15, 2004.
[NAME OF BORROWER]
[SEAL]
By:_______________________
ATTEST: Mayor
_____________________ By:_______________________
Clerk [Treasurer] [Chief Financial Officer]
D-4
New Jersey Environmental Infrastructure Trust hereby assigns the foregoing
Borrower Bond to _________________________, as Trustee under the "Environmental
Infrastructure Bond Resolution, Series 2004[_]", adopted on September __, 2004,
as amended and supplemented, all as of the date of this Borrower Bond, as
security for the Trust Bonds issued or to be issued under the Bond Resolution to
finance or refinance the Project Fund (as defined in the Bond Resolution).
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
[SEAL]
By:____________________________
ATTEST: Robert A. Briant, Sr.
Chairman
- -----------------------------
Eileen Swan
Secretary
D-6
EXHIBIT E
Opinions of Borrower's Bond and General Counsels
------------------------------------------------
E-1
[LETTERHEAD OF COUNSEL TO BORROWER]
November __, 2004
New Jersey Environmental Infrastructure Trust
P.O. Box 440
Trenton, New Jersey 08625
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- --------------------------------
- --------------------------------
- --------------------------------
Ladies and Gentlemen:
We have acted as counsel to [Name of Borrower], a corporation duly
organized and validly existing under the laws of the State (the "Borrower"),
which has entered into a Loan Agreement (as hereinafter defined) with the New
Jersey Environmental Infrastructure Trust (the "Trust"), and have acted as such
in connection with the authorization, execution, attestation and delivery by the
Borrower of its Loan Agreement and Borrower Bond (as hereinafter defined)
pursuant to the New Jersey Business Corporation Act, P.L. 1968, c. 263, as
amended (the "Business Corporation Law"), and a [bond resolution] [indenture] of
the Borrower [adopted on] [dated] [DATE] and entitled "[TITLE]", as amended and
supplemented, including by a supplemental [resolution] [indenture] [adopted on]
[dated] [DATE] and entitled "[TITLE]" (such [resolutions] [indentures] shall be
collectively referred to herein as the "Resolution"). All capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
Loan Agreement.
In so acting, we have examined the Constitution and laws of the State of
New Jersey, including, without limitation, the Business Corporation Law, and the
certificate of incorporation and by-laws of the Borrower. We have also examined
originals, or copies certified or otherwise identified to our satisfaction, of
the following:
(a) the Trust's "Environmental Infrastructure Bond Resolution, Series
2004[_]", adopted by the Board of Directors of the Trust on September __, 2004
(b) the Loan Agreement dated as of November 1, 2004 (the "Loan Agreement")
by and between the Trust and the Borrower;
(c) the proceedings of the board of directors of the Borrower relating to
the approval of the Loan Agreement and the execution, attestation and delivery
thereof on behalf of the Borrower and the authorization of the undertaking and
completion of the Project;
(d) the Borrower Bond dated as of October 15, 2004 (the "Borrower Bond")
issued by the Borrower to the Trust to evidence the Loan; and
E-2
(e) the proceedings (together with the proceedings referred to in clause
(c) above and Section 5 below, the "Proceedings") of the board of directors of
the Borrower, including, without limitation, the Resolution, relating to the
authorization of the Borrower Bond and the sale, execution, attestation,
authentication and delivery thereof to the Trust (the Loan Agreement and the
Borrower Bond are referred to herein collectively as the "Loan Documents").
We have also examined and relied upon originals, or copies certified or
otherwise authenticated to our satisfaction, of such other records, documents,
certificates and other instruments, and have made such investigation of law as
in our judgment we have deemed necessary or appropriate, to enable us to render
the opinions expressed below.
We are of the opinion that:
1. The Borrower is a corporation duly created and validly existing under
and pursuant to the Constitution and statutes of the State of New Jersey,
including the Business Corporation Law, with the legal right to carry on the
business of its Environmental Infrastructure System as currently being conducted
and as proposed to be conducted.
2. The Borrower has full legal right and authority to execute, attest and
deliver the Loan Documents, to sell the Borrower Bond to the Trust, to cause the
authentication of the Borrower Bond, to observe and perform its duties,
covenants, obligations and agreements under the Loan Documents and to undertake
and complete the Project.
3. The acting officers of the Borrower who are contemporaneously herewith
performing or have previously performed any action contemplated in the Loan
Agreement are, and at the time any such action was performed were, the duly
appointed or elected officers of the Borrower empowered by applicable New Jersey
law and authorized by resolution of the Borrower to perform such actions.
4. In accordance with the terms of the Resolution and to the extent
provided in the Resolution, the Borrower has unconditionally and irrevocably
promised to make the Loan Repayments and pay all other amounts due under the
Loan Documents.
5. The proceedings of the Borrower's board of directors (i) approving the
Loan Documents, (ii) authorizing their execution, attestation and delivery on
behalf of the Borrower, (iii) with respect to the Borrower Bond only,
authorizing its sale by the Borrower to the Trust and authorizing its
authentication on behalf of the Borrower, (iv) authorizing the Borrower to
consummate the transactions contemplated by the Loan Documents, (v) authorizing
the Borrower to undertake and complete the Project,[(vi) authorizng the approval
of the inclusion in the Official Statement of the Borrower Appendices,] and (vi)
[(vii)] authorizing the execution and delivery of all other certificates,
agreements, documents and instruments in connection with the execution,
attestation and delivery of the Loan Documents, [including, without limitation,
the designation of the Borrower Appendices portion of the Preliminary Official
Statement as "deemed final" for the purposes and within the meaning of Rule
15c2-12(b)(1) of the Securities Exchange Act of 1934, as amended, as promulgated
by the Securities and Exchange
E-3
Commission,] have each been duly and lawfully adopted and authorized in
accordance with applicable law and applicable resolutions of the Borrower,
including, without limitation, the Resolution, the other Proceedings and the
Business Corporation Law, which Proceedings constitute all of the actions
necessary to be taken by the Borrower to authorize its actions contemplated by
clauses (i) through (vi) [(vii)] above and which Proceedings, including, without
limitation, the Resolution, were duly adopted in accordance with applicable New
Jersey law at a meeting or meetings duly called and held in accordance with
applicable New Jersey law and at which quorums were present and acting
throughout.
6. The Loan Documents have been duly authorized, executed, attested and
delivered by the Authorized Officers of the Borrower, the Borrower Bond has been
duly sold by the Borrower to the Trust, and the Borrower Bond has been duly
authenticated by the trustee or paying agent under the Resolution, if
applicable; and assuming in the case of the Loan Agreement that the Trust has
the requisite power and authority to authorize, execute, attest and deliver, and
has duly authorized, executed, attested and delivered, the Loan Agreement, the
Loan Documents constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, subject, however, to the effect of, and to restrictions and limitations
imposed by or resulting from, bankruptcy, insolvency, moratorium, reorganization
or other similar laws affecting creditors' rights generally. No opinion is
rendered as to the availability of any particular remedy.
7. The authorization, execution, attestation and delivery of the Loan
Documents by the Borrower and, in the case of the Borrower Bond only, the
authentication thereof by the trustee or paying agent under the Resolution and
the sale thereof to the Trust, the observation and performance by the Borrower
of its duties, covenants, obligations and agreements thereunder, the
consummation of the transactions contemplated therein, and the undertaking and
completion of the Project do not and will not (i) other than the lien, charge or
encumbrance created by the Loan Documents, by the Resolution and by any other
outstanding debt obligations of the Borrower that are at parity with the
Borrower Bond as to lien on, and source and security for payment thereon from,
the revenues of the Borrower, result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Borrower pursuant to,
(ii) result in any breach of any of the terms, conditions or provisions of, or
(iii) constitute a default under, any existing resolution, outstanding debt or
lease obligation, trust agreement, indenture, mortgage, deed of trust, loan
agreement or other instrument to which the Borrower is a party or by which the
Borrower, its Environmental Infrastructure System or any of its properties 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, injunctions, judgments, decrees, rules,
regulations or existing orders of any court or governmental or administrative
agency, authority or person to which the Borrower, its Environmental
Infrastructure System or its properties or operations is subject.
8. All approvals, consents or authorizations of, or registrations of or
filings with, any governmental or public agency, authority or person required to
date on the part of the Borrower in connection with the authorization,
execution, attestation, delivery and performance of the Loan Documents, the sale
of the Borrower Bond and the undertaking and completion of the Project have been
obtained or made.
E-4
9. There is no litigation or other proceeding pending or, to our
knowledge, after due inquiry, threatened in any court or other tribunal of
competent jurisdiction (either State or federal) (i) questioning the creation,
organization or existence of the Borrower, (ii) questioning the validity,
legality or enforceability of the Resolution, the Loan or the Loan Documents,
(iii) questioning the undertaking or completion of the Project, (iv) otherwise
challenging the Borrower's ability to consummate the transactions contemplated
by the Loan or the Loan Documents, or (v) that, if adversely decided, would have
a materially adverse impact on the financial condition of the Borrower.
10. The Borrower has no bonds, notes or other debt obligations outstanding
that are superior or senior to the Borrower Bond as to lien on, and source and
security for payment thereof from, the revenues of the Borrower.
11. To the best of our knowledge, upon due inquiry, (i) all
representations made by the Borrower contained within subsections (f) and (h) of
Section 2.02 and, if applicable, Exhibit F of the Loan Agreement are true,
accurate and complete, and (ii) all expectations contained therein are
reasonable, and we know of no reason why the Borrower would be unable to comply
on a continuing basis with the covenants contained within subsections (f) and
(h) of Section 2.02 and, if applicable, Exhibit F of the Loan Agreement.
12. Assuming that (i) the Borrower complies on a continuing basis with the
covenants contained in subsections (f) and (h) of Section 2.02 and, if
applicable, Exhibit F of the Loan Agreement, (ii) interest on the Trust Bonds is
otherwise excluded from gross income of the holders thereof for federal income
tax purposes under the Internal Revenue Code of 1986, as amended, and (iii) the
proceeds of the Trust Bonds loaned to the Borrower represent all of the proceeds
of the Trust Bonds, the application of the proceeds of the Loan for their
intended purposes will not adversely affect the exclusion from gross income for
federal income tax purposes of the interest on the Trust Bonds.
We hereby authorize McCarter & English, LLP, acting as bond counsel to the
Trust, and the Attorney General of the State of New Jersey, acting as general
counsel to the Trust, to rely on this opinion as if we had addressed this
opinion to them in addition to you.
Very truly yours,
E-5
EXHIBIT F
Additional Covenants and Requirements
-------------------------------------
F-1
EXHIBIT G
General Administrative Requirements for the
State Environmental Infrastructure Financing Program
----------------------------------------------------
G-1
EXHIBIT H
Form of Continuing Disclosure Agreement
---------------------------------------
H-1
M O R T G A G E
THIRTY-FIRST SUPPLEMENTAL INDENTURE
MIDDLESEX WATER COMPANY
TO
WACHOVIA BANK, NATIONAL ASSOCIATION
Trustee
Dated as of October 15, 2004
Record and Return to:
Peter D. Hutcheon, Esq.
Norris, McLaughlin & Marcus
721 Route 202/206
P.O. Box 1018
Somerville, NJ 08876
(908) 722-0700
Prepared By: ________________________
Peter D. Hutcheon, Esq.
THIS THIRTY-FIRST SUPPLEMENTAL INDENTURE, dated as of the fifteenth
day of October, 2004, between MIDDLESEX WATER COMPANY, a corporation organized
and existing under the laws of the State of New Jersey, having its principal
office in the Township of Iselin, New Jersey (herein called the "Water
Company"), and WACHOVIA BANK, NATIONAL ASSOCIATION, (as successor to First Union
National Bank, the successor to Meridian Bank, the successor to United Counties
Trust Company in turn the successor to the Union County Trust Company), a
corporation organized and existing under the laws of the United States, having
its principal New Jersey corporate trust office in the Town of Morristown, New
Jersey, as Trustee under the Indenture of Mortgage hereinafter mentioned (herein
called the "Trustee"):
WHEREAS, on April 1, 1927, Water Company executed and delivered to
the Trustee an Indenture of Mortgage (herein called the "Mortgage") to secure
its First and Refunding Mortgage Gold Bonds, Series A, 5-1/2%, which bonds have
since been redeemed by Water Company, and which Mortgage provides that bonds of
other series may be issued under and pursuant to an indenture supplemental
thereto; and
WHEREAS, on May 14, 1935, Water Company executed and delivered to
the Trustee a Supplemental Indenture to secure its First and Refunding Mortgage
Bonds, Series B, 4-1/2%, which Supplemental Indenture, prior to the execution
and delivery hereof, was satisfied and discharged of record, no bonds having
been issued thereunder; and
WHEREAS, as of October 1, 1939, Water Company executed and delivered
to the Trustee a Second Supplemental Indenture of Mortgage (herein called the
"Second Supplemental Indenture") to secure its First and Refunding Mortgage
3-3/4% Bonds, Series C (herein called the "Series C Bonds"), which bonds were
paid at maturity by Water Company, and otherwise modifying, amending and
supplementing the Mortgage; and
WHEREAS, as of April 1, 1946, Water Company executed and delivered
to the Trustee a Third Supplemental Indenture of Mortgage (herein called the
"Third Supplemental Indenture") to secure its First and Refunding Mortgage 3%
Bonds, Series D (herein called the "Series D Bonds"), which bonds were paid at
maturity by Water Company, and otherwise modifying, amending and supplementing
the Mortgage; and
WHEREAS, as of April 1, 1949, Water Company executed and delivered
to the Trustee a Fourth Supplemental Indenture of Mortgage (herein called the
"Fourth Supplemental Indenture") to secure its First Mortgage 3-1/2% Bonds,
Series E (herein called the "Series E Bonds"), which bonds were paid at maturity
by Water Company, and otherwise modifying, amending and supplementing the
Mortgage; and
WHEREAS, as of February 1, 1955, Water Company executed and
delivered to the Trustee a Fifth Supplemental Indenture of Mortgage (herein
called the "Fifth Supplemental Indenture") to secure its First Mortgage 3-5/8%
Bonds, Series F (herein called the "Series F Bonds"), which bonds were paid at
maturity by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of December 1, 1959, Water Company executed and
delivered to the Trustee a Sixth Supplemental Indenture of Mortgage (herein
called the "Sixth Supplemental Indenture") to secure its First Mortgage 5-3/4%
Bonds, Series G (herein called the "Series G Bonds"), which bonds have since
been redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of January 15, 1963, Water Company executed and
delivered to the Trustee a Seventh Supplemental Indenture of Mortgage (herein
called the "Seventh Supplemental Indenture") to secure its First Mortgage 4-1/2%
Bonds, Series H (herein called the "Series H Bonds"), which bonds were paid at
maturity by Water Company and otherwise supplementing the Mortgage; and
WHEREAS, as of July 1, 1964, Water Company executed and delivered to
the Trustee, an Eighth Supplemental Indenture of Mortgage (herein called the
"Eighth Supplemental Indenture") to secure its First Mortgage 4 3/4% Bonds,
Series I (herein called the "Series I Bonds"), which bonds have since been
redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of June 1, 1965, Water Company executed and delivered to
the Trustee a Ninth Supplemental Indenture of Mortgage (herein called the "Ninth
Supplemental Indenture") to secure its First Mortgage 4-3/4% Bonds, Series J
(herein called the "Series J Bonds"), which bonds have since been redeemed by
Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of February 1, 1968, Water Company executed and
delivered to the Trustee a Tenth Supplemental Indenture of Mortgage (herein
called the "Tenth Supplemental Indenture") to secure its First Mortgage 6-3/4%
Bonds, Series K (herein called the "Series K Bonds"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of December 1, 1968, Water Company executed and
delivered to the Trustee an Eleventh Supplemental Indenture of Mortgage (herein
called the "Eleventh Supplemental Indenture") to secure its First Mortgage
6-7/8% Bonds, Series L (herein called the "Series L Bonds"), which bonds have
since been redeemed by Water Company, and otherwise supplementing the Mortgage;
and
WHEREAS, as of December 1, 1970, Water Company executed and
delivered to the Trustee a Twelfth Supplemental Indenture of Mortgage (herein
called the "Twelfth Supplemental Indenture") to secure its First Mortgage 10%
Bonds, Series M (herein called the "Series M Bonds"), which bonds have since
been redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of December 1, 1972, Water Company executed and
delivered to the Trustee a Thirteenth Supplemental Indenture of Mortgage (herein
called the "Thirteenth Supplemental Indenture") to secure its First Mortgage
8-1/8% Bonds, Series N (herein called the
"Series N Bonds"), which bonds have since been redeemed by Water Company, and
otherwise supplementing the Mortgage; and
WHEREAS, as of April 1, 1979, Water Company executed and delivered
to the Trustee a Fourteenth Supplemental Indenture of Mortgage (herein called
the "Fourteenth Supplemental Indenture") to secure its First Mortgage 7% Bonds,
Series 0 (herein called the "Series 0 Bonds"), which bonds have since been
redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of April 1, 1983, Water Company executed and delivered
to the Trustee a Fifteenth Supplemental Indenture of Mortgage (herein called the
"Fifteenth Supplemental Indenture") to secure its First Mortgage 10-1/2% Bonds,
Series P (herein called the "Series P Bonds"), which bonds have since been
redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of August 1, 1988, Water Company executed and delivered
to the Trustee a Sixteenth Supplemental Indenture of Mortgage (herein called the
"Sixteenth Supplemental Indenture") to secure its First Mortgage 8% Bonds,
Series Q (herein called the "Series Q Bonds"), which bonds have since been
redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of June 15, 1991, Water Company executed and delivered
to the Trustee a Seventeenth Supplemental Indenture of Mortgage (herein called
the "Seventeenth Supplemental Indenture") to secure its First Mortgage 7.25%
Bonds, Series R (herein called the "Series R Bonds"), which bonds have since
been redeemed by Water Company, and otherwise supplementing the Mortgage; and
WHEREAS, as of March 1, 1993, Water Company executed and delivered
to the Trustee a Supplementary Indenture of Mortgage to the Fifteenth
Supplemental Indenture of Mortgage (herein called the "Supplementary Indenture
to the Fifteenth Supplemental Indenture") to secure its First Mortgage 2 7/8%,
Series P-1 (herein called the "Series P-1 Bonds"), which bonds have since been
redeemed by Water Company, and otherwise supplementing the Mortgage.
WHEREAS, as of September 1, 1993, Water Company executed and
delivered to the Trustee an Eighteenth Supplemental Indenture of Mortgage
(herein called the "Eighteenth Supplemental Indenture") to secure its First
Mortgage 5.20% Bonds, Series S (herein called the "Series S Bonds"), and
otherwise supplementing the Mortgage; and
WHEREAS, as of September 1, 1993, Water Company executed and
delivered to the Trustee a Nineteenth Supplemental Indenture of Mortgage (herein
called the "Nineteenth Supplemental Indenture") to secure its First Mortgage
5.25% Bonds, Series T (herein called the "Series T Bonds"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of January 1, 1994, Water Company executed and delivered
to Trustee a Twentieth Supplemental Indenture of Mortgage (herein called the
"Twentieth Supplemental Indenture") to secure its First Mortgage 6.4% Bonds,
Series U (herein called the "Series U Bonds"), and otherwise supplementing the
Mortgage; and
WHEREAS, as of January 1, 1994, Water Company executed and delivered
to Trustee a Twenty-First Supplemental Indenture of Mortgage (herein called the
"Twenty-First Supplemental Indenture") to secure its First Mortgage 5.25% Bonds,
Series V (herein called the "Series V Bonds"), and otherwise supplementing the
Mortgage; and
WHEREAS, as of March 1, 1998, Water Company executed and delivered
to Trustee a Twenty-Second Supplemental Indenture of Mortgage (herein called the
"Twenty-Second Supplemental Indenture") to secure its First Mortgage 5.35%
Bonds, Series W (herein called the "Series W Bonds"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of October 15, 1998, Water Company executed and
delivered to Trustee a Twenty-Third Supplemental Indenture of Mortgage (herein
called the "Twenty-Third Supplemental Indenture") to secure its First Mortgage
0% Bond, Series X (herein called the "Series X Bond"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of October 15, 1998, Water Company executed and
delivered to Trustee a Twenty-Fourth Supplemental Indenture of Mortgage (herein
called the "Twenty-Fourth Supplemental Indenture") to secure its First Mortgage
Scheduled Interest Rate Bond, Series Y (herein called the "Series Y Bond"), and
otherwise supplementing the Mortgage; and
WHEREAS, as of October 15, 1999, Water Company executed and
delivered to Trustee a Twenty-Fifth Supplemental Indenture of Mortgage (herein
called the "Twenty-Fifth Supplemental Indenture") to secure its First Mortgage
0% Bond, Series Z (herein called the "Series Z Bond"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of October 15, 1999, Water Company executed and
delivered to Trustee a Twenty-Sixth Supplemental Indenture of Mortgage (herein
called the "Twenty-Sixth Supplemental Indenture") to secure its First Mortgage
Scheduled Interest Rate Bond, Series AA (herein called the "Series AA Bond"),
and otherwise supplementing the Mortgage; and
WHEREAS, as of October 15, 2001, Water Company executed and
delivered to Trustee a Twenty-Seventh Supplemental Indenture of Mortgage (herein
called the "Twenty-Seventh Supplemental Indenture") to secure its First Mortgage
0% Bond, Series BB (herein called the "Series BB Bond"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of October 15, 2001, Water Company executed and
delivered to Trustee a Twenty-Eighth Supplemental Indenture of Mortgage (herein
called the "Twenty-Eighth Supplemental Indenture") to secure its First Mortgage
Scheduled Interest Rates Bond, Series CC (herein called the "Series CC Bond"),
and otherwise supplementing the Mortgage; and
WHEREAS, as of January 15, 2002, Water Company executed and
delivered to Trustee a Twenty-Ninth Supplemental Indenture of Mortgage (herein
called the "Twenty-Seventh Supplemental Indenture") to secure its First Mortgage
5.10% Bonds, Series DD (herein called the "Series DD Bond"), and otherwise
supplementing the Mortgage; and
WHEREAS, as of October 15, 2004, Water Company executed and
delivered to Trustee a Thirtieth Supplemental Indenture of Mortgage (herein
called the "Thirtieth Supplemental Indenture") to secure its First Mortgage 0%
Bond, Series EE (herein called the "Series EE Bond"), and otherwise
supplementing the Mortgage; and
WHEREAS, Water Company deems it necessary to borrow money and to
issue its bonds therefor, to be secured by the Mortgage, the Second Supplemental
Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture,
the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh
Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth
Supplemental Indenture, the Tenth Supplemental Indenture, the Eleventh
Supplemental Indenture, the Twelfth Supplemental Indenture, the Thirteenth
Supplemental Indenture, the Fourteenth Supplemental Indenture, the Fifteenth
Supplemental Indenture, the Sixteenth Supplemental Indenture, the Seventeenth
Supplemental Indenture, the Supplementary Indenture to the Fifteenth
Supplemental Indenture and the Eighteenth, the Nineteenth, the Twentieth, the
Twenty-First, the Twenty-Second, the Twenty-Third, the Twenty-Fourth, the
Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the Twenty-Eighth, the
Twenty-Ninth, the Thirtieth Supplemental Indentures and by this Thirty-First
Supplemental Indenture;
WHEREAS, Water Company desires to authorize and create a series of
bonds under which a single bond shall be issued limited to an aggregate
principal amount of $8,920,000 designated Series FF and to be known as its
"First Mortgage Scheduled Interest Rates Bonds, Series FF" (herein called the
"Series FF Bond"), it being the intention of the parties that the Series FF Bond
shall, together with all other Bonds issued under the Mortgage and all
indentures supplemental thereto, be entitled to priority over all other
obligations of the Water Company and shall be secured by a prior first lien on
all the mortgaged property, subject only to the prior liens specifically
permitted under the Mortgage or under any indenture supplemental thereto; and
WHEREAS, Water Company desires that the Series FF Bond shall be
issued to fund payment of the principal of $8,920,000, the amount of the Loan
borrowed from the New Jersey Environmental Infrastructure Trust (the "Trust")
under the Loan Agreement dated as of November 1, 2004 (the "Loan Agreement") by
and between the Trust and the Water Company, or such lesser amount as shall be
determined in accordance with Section 3.01 of the Loan Agreement, plus any other
amounts due and owing under the Loan Agreement at the time and in the amounts as
provided therein, which principal amount is to be applied for the cleaning and
lining of certain pipes and mains and the spot replacement of water mains,
hydrants, service lines and valves which are utilized by Water Company for the
furnishing of water in its New Jersey service area, and construction of a six
thousand two hundred fifty linear foot, sixty inch diameter
ductile iron pipe line from its raw water pump station in the City of New
Brunswick, New Jersey, to the Carl J. Olsen Water Treatment Plant in the
Township of Edison, New Jersey; and
WHEREAS, the Trust requires as a condition of making the loan
documented by the Loan Agreement, that a single Series FF Bond be issued to the
Trust, that such Bond evidence the payment obligations of the Water Company
under Section 2.02(m) of the Loan Agreement, that payments under the Series FF
Bond be made to the Loan Servicer (as defined in the Loan Agreement) for the
account of the Trust, that the Series FF Bond be subject to assignment or
transfer in accordance with the terms of the Loan Agreement, that all of the
terms, conditions and provisions of the Loan Agreement be expressly incorporated
by reference into the Series FF Bond, that the obligations of the Water Company
under the Series FF Bond shall be absolute and unconditional, without any
defense or right of set-off, counterclaim or recoupment by reason of default by
the Trust under the Loan Agreement or under any other agreement between the
Water Company and the Trust or out of any indebtedness or liability at any time
owing to the Water Company or for any other reason, that the Series FF Bond be
subject to optional prepayment under the terms and conditions and in the amounts
provided in Section 3.07 of the Loan Agreement, and that the Series FF Bond may
be subject to acceleration under the terms and conditions and in the amounts,
provided in Section 5.03 of the Loan Agreement; and
WHEREAS, Water Company represents that all acts and proceedings
required by law and by the Charter and By-Laws of Water Company, and by the
Mortgage and the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth,
Seventeenth Supplemental Indentures, the Supplementary Indenture to the
Fifteenth Supplemental Indenture, and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First, the Twenty-Second, the Twenty-Third, the
Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the
Twenty-Eighth, the Twenty-Ninth, and the Thirtieth Supplemental Indentures (to
the extent applicable) necessary to make the Series FF Bond, when executed by
Water Company, authenticated and delivered by the Trustee, and duly issued, the
valid, binding and legal obligations of Water Company and to constitute this
Thirty-First Supplemental Indenture a valid and binding supplement to the
Mortgage and the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth,
Seventeenth Supplemental Indentures, the Supplementary Indenture to the
Fifteenth Supplemental Indenture and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First, the Twenty-Second, the Twenty-Third, the
Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the
Twenty-Eighth, the Twenty-Ninth, and the Thirtieth Supplemental Indentures in
accordance with its and their terms, for the security of all bonds issued and
which may hereafter be issued pursuant to the Mortgage and all indentures
supplemental thereto, have been done and performed; and the execution and
delivery of this Thirty-First Supplemental Indenture have been in all respects
duly authorized;
NOW THEREFORE, THIS INDENTURE WITNESSETH, that for and in
consideration of the premises, and of the sum of One Dollar ($1.00), lawful
money of the United States of America, by each of the parties paid to the other,
at or before the delivery hereof, and for other valuable consideration, the
receipt and sufficiency whereof is hereby acknowledged,
Water Company has executed and delivered this Thirty-First Supplemental
Indenture, and has granted, bargained, sold, aliened, enfeoffed, conveyed and
confirmed, and by these presents does grant, bargain, sell, alien, enfeoff,
convey and confirm, unto to the Trustee, its successors and assigns forever, all
real property of Water Company, together with all appurtenances and contracts,
rights, privileges, permits and franchises used or useful in connection with the
business of the Water Company as a water company or as a water utility or used
directly for the purpose of supplying water, granted, bargained, sold, aliened,
enfeoffed, conveyed and confirmed unto the Trustee by the Mortgage and the
Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh,
Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth Supplemental
Indentures, and the Supplementary Indenture to the Fifteenth Supplemental
Indenture and the Eighteenth, the Nineteenth, the Twentieth, the Twenty-First,
the Twenty-Second, the Twenty-Third, the Twenty-Fourth, the Twenty-Fifth, the
Twenty-Sixth, the Twenty-Seventh, the Twenty-Eighth, the Twenty-Ninth, the
Thirtieth and the Thirty-First Supplemental Indentures, or intended to be
(including without limitation all such property acquired by Water Company since
October 15, 2004, and all such property which Water Company may hereafter
acquire), subject, however, to Permissible Encumbrances, and excepting all
Property heretofore released from the lien of the Mortgage and the indentures
supplemental thereto, and excepting all property of Water Company which is not
used or useful in connection with its business as a water company or as a water
utility as well as all personal property (both tangible and intangible) as to
which a security interest may not be perfected by a filing under the Uniform
Commercial Code as in effect in the State of New Jersey;
TO HAVE AND TO HOLD all and singular the above granted property,
unto the Trustee, its successors and assigns forever, IN TRUST, nevertheless,
for the equal and proportionate use, benefit, security and protection of those
who from time to time shall hold any bonds which have been or may be issued
under the Mortgage or any indenture supplemental thereto, without any
discrimination, preference or priority of any one bond over any other by reason
of priority in the time of issue, sale or negotiation thereof or otherwise,
except as otherwise in the Mortgage or in any indenture supplemental thereto
provided; and in trust for enforcing the payment of the principal of and the
interest on such bonds, according to the tenor, purport and effect of the bonds
and of the Mortgage and all indentures supplemental thereto and for enforcing
the terms, provisions, covenants and stipulations therein and in the bonds set
forth; and upon the trust, uses and purposes and subject to the covenants,
agreements and conditions set forth and declared in the Mortgage as modified,
amended and supplemented by all indentures supplemental thereto;
AND the parties do hereby covenant and agree that the Mortgage and
the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth
Supplemental Indentures, the Supplementary Indenture to the Fifteenth
Supplemental Indenture and the Eighteenth, the Nineteenth, the Twentieth, the
Twenty-First, the Twenty-Second, the Twenty-Third, the Twenty-Fourth, the
Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the Twenty-Eighth, the
Twenty-Ninth, and the Thirtieth Supplemental Indentures be and hereby are
supplemented as hereinafter provided, and that the above granted property is to
be held and applied subject to the covenants, conditions, uses and trusts set
forth in the Mortgage, as modified, amended and supplemented by such
Supplemental Indentures and this Thirty-First Supplemental Indenture; and Water
Company for
itself and its successors does hereby covenant and agree to and with the
Trustee, and its successors in said trust, for the equal benefit of all present
and future holders and registered owners of the bonds issued under the Mortgage
and all indentures supplemental thereto, as follows:
ARTICLE I
First Mortgage Scheduled Interest Rates Bond, Series FF
Section 1. Water Company hereby creates a series of bonds to be issued
under and secured by the Mortgage, the Second, Third, Fourth, Fifth,
Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth,
Fourteenth, Fifteenth, Sixteenth, and Seventeenth Supplemental Indentures,
the Supplementary Indenture to the Fifteenth Supplemental Indenture, the
Eighteenth, the Nineteenth, the Twentieth, the Twenty-First, the
Twenty-Second, the Twenty-Third, the Twenty-Fourth, the Twenty-Fifth, the
Twenty-Sixth, the Twenty-Seventh, the Twenty-Eighth, the Twenty-Ninth and
the Thirtieth Supplemental Indentures and by this Thirty-First
Supplemental Indenture, and to be designated as, and to be distinguished
from the bonds of all other series by the title, "First Mortgage Scheduled
Interest Rates Bond, Series FF". The Series FF Bond shall be issued only
as a single registered bond without coupons in the principal amount of the
Loan under the Loan Agreement; shall be dated as of November 1, 2004; and
shall be issued in non-negotiable form to the Trust. The Series FF Bond
shall bear interest from the date of issuance of the Series FF Bond,
computed on the basis of a 360-day year composed of twelve 30-day months
until the obligations of the Water Company with respect to the payment of
principal shall be discharged, in the dollar amount set forth for each
respective payment period under the column heading "Interest" in Exhibit
A-2 to the Loan Agreement, shall be payable as set forth below, shall
state that, subject to certain limitations, the Mortgage and all
indentures supplemental thereto may be modified, amended or supplemented
as provided in the Mortgage as heretofore supplemented; shall mature on
November 1, 2024; and shall be earlier redeemable (i) under the terms and
conditions and in the amounts provided in Section 3.07 of the Loan
Agreement at the option of the Water Company with, to the extent required
by the July 8, 2004 Order (Docket No. WF04050341) of the Board of Public
Utilities of the State of New Jersey ("BPU") and/or required by then
applicable law and regulations, the prior approval of the BPU, (ii) as,
when and to the extent mandated pursuant to subsection B of Section 4 of
Article VIII of the Second Supplemental Indenture; and shall be subject
to, entitled to the benefit of, and expressly incorporate by reference,
all of the terms, conditions and provisions of the Loan Agreement.
The Series FF Bond shall evidence the obligation to pay to the order of
the Trust the principal amount of the Loan (as defined in the Loan Agreement)
made by the Trust under the Loan Agreement which shall be $8,920,000 or such
lesser amount as determined in accordance with Section 3.01 of the Loan
Agreement, at the times and in the amounts determined as provided in the Loan
Agreement, plus any other amounts due and owing under the Loan Agreement at the
times and in the amounts as provided therein. The obligations of the
Water Company to make payments under the Series FF Bond are absolute and
unconditional, without any defense or right of set-off, counterclaim or
recoupment by reason of any default by the Trust under the Loan Agreement or
under any other agreement between the Water Company and the Trust or out of any
indebtedness or liability at any time owing to the Water Company by the Trust or
for any other reason. The Series FF Bond is subject to assignment or transfer in
accordance with the terms of the Loan Agreement. The Series FF Bond is subject
to acceleration under the terms and conditions, and in the amounts, provided in
Section 5.03 of the Loan Agreement. Payments under the Series FF Bond shall,
except as otherwise provided in the Loan Agreement, be made directly to the Loan
Servicer (as defined in the Loan Agreement), for the account of the Trust.
In addition to any other default provided for under the Mortgage and the
Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh,
Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and Seventeenth,
Supplemental Indentures and the Supplementary Indenture to the Fifteenth
Supplemental Indenture and the Eighteenth, the Nineteenth, the Twentieth, the
Twenty-First, the Twenty-Second, the Twenty-Third, Twenty-Fourth, the
Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the Twenty-Eighth, the
Twenty-Ninth and the Thirtieth Supplemental Indentures, it shall be a default
under this Thirty-First Supplemental Indenture if payment of any of the
principal or of the Interest on the Loan constituting the Interest Portion, the
Administrative Fee and any late charges incurred under the Loan Agreement (as
such terms are defined in the Loan Agreement) is not made when the same shall
become due and payable in installments, at maturity, upon redemption or
otherwise.
Section 2. Disbursements of the proceeds of the Loan from the Trust
under the Loan Agreement evidenced by the Series FF Bond shall be made by the
Trust to the Water Company upon receipt by the Trust of requisitions from the
Water Company executed and delivered in accordance with the requirements set
forth in Section 3.02 of the Loan Agreement.
Section 3. The Series FF Bond and the certificate of authentication
of the Trustee to be executed thereon shall be substantially in the form
prescribed for registered bonds without coupons in the Second Supplemental
Indenture (except that there may be deleted therefrom all references to the
issuance of coupon bonds in exchange therefor); shall be in the form attached to
this Thirty-First Supplemental Indenture as Exhibit A; and shall contain
appropriate references to this Thirty-First Supplemental Indenture in addition
to the Mortgage and the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth,
Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth
and Seventeenth Supplemental Indentures and the Supplementary Indenture to the
Fifteenth Supplemental Indenture and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First, the Twenty-Second, the Twenty-Third, the
Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the
Twenty-Eighth, the Twenty-Ninth and the Thirtieth Supplemental Indentures and
appropriate changes with respect to the aggregate principal amount, interest
rate, redemption dates and provisions, and maturity date of the Series FF Bond,
and with appropriate reference to the provision of the Fourth Supplemental
Indenture that, subject to certain limitations, the Mortgage and all indentures
supplemental thereto may be modified, amended or supplemented only as provided
in the Mortgage and except that the Series FF Bond shall not contain any
references to a sinking fund.
Section 4. Subject to the provisions of the Mortgage and the Second,
Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth,
Thirteenth, Fourteenth, Fifteenth, Sixteenth and Seventeenth Supplemental
Indentures, the Supplementary Indenture to the Fifteenth Supplemental Indenture
and the Eighteenth, the Nineteenth, the Twentieth, the Twenty-First, the
Twenty-Second, the Twenty-Third, the Twenty-Fourth, the Twenty-Fifth, the
Twenty-Sixth, the Twenty-Seventh, the Twenty-Eighth, the Twenty-Ninth and the
Thirtieth Supplemental Indentures, forthwith upon the execution and delivery of
this Thirty-First Supplemental Indenture, or from time to time thereafter,
Series FF Bond in an aggregate principal amount of $8,920,000 may be executed by
Water Company and delivered to the Trustee for authentication and shall
thereupon be authenticated and delivered by the Trustee upon the written order
of Water Company, signed by its President or a Vice President and its Treasurer
or Assistant Treasurer, in such denominations and registered in such name or
names as may be specified in such written order.
Section 5. Sections 4(A)(iii) and (iv) of Article VIII of the Second
Supplemental Indenture shall not be available to the Water Company with respect
to the Series FF Bond. The Water Company shall issue its written order under
Section 4(a)(i) or (ii), as the case may be, reasonably promptly after receipt
by the Trustee of proceeds of sale, eminent domain or insurance (not otherwise
to be paid directly to the Company under the Mortgage as supplemented by the
Supplemental Indentures including this Thirty-First Supplemental Indenture).
ARTICLE II
Miscellaneous
-------------
Section 1. The provisions of the Mortgage as modified, amended and
supplemented by the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth,
Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth,
Sixteenth and Seventeenth Supplemental Indentures, the Supplementary
Indenture to the Fifteenth Supplemental Indenture and the Eighteenth, the
Nineteenth, the Twentieth, the Twenty-First, the Twenty-Second, the
Twenty-Third, the Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the
Twenty-Seventh, the Twenty-Eighth, the Twenty-Ninth and the Thirtieth
Supplemental Indentures, and as modified and extended by this Thirty-First
Supplemental Indenture are hereby reaffirmed. Except insofar as they are
inconsistent with the provisions hereof, the provisions of the Mortgage
and the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and
Seventeenth Supplemental Indentures and the Supplementary Indenture to the
Fifteenth Supplemental Indenture and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First, the Twenty-Second, the Twenty-Third, the
Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the
Twenty-Eighth, the Twenty-Ninth and the Thirtieth Supplemental Indentures
with respect to the Series C, Series D, Series E, Series F, Series G,
Series H, Series I, Series J, Series K, Series L, Series M, Series N,
Series O, Series P, Series Q, Series R, Series P-1, Series S, Series T,
Series U, Series V, Series W, Series X, Series Y, Series Z, Series AA,
Series BB, Series CC, Series DD and Series EE Bonds shall apply to the
Series FF Bond to the same extent as if they were set forth
herein in full. Unless there is something in the subject or context
repugnant to such construction, each reference in the Mortgage and the
Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and
Seventeenth Supplemental Indentures, the Supplementary Indenture to the
Fifteenth Supplemental Indenture and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First, the Twenty-Second, the Twenty-Third, the
Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the Twenty-Seventh, the
Twenty-Eighth, the Twenty-Ninth and the Thirtieth Supplemental Indentures
to the Mortgage or any of such Supplemental Indentures shall be construed
as also referring to this Thirty-First Supplemental Indenture. The
Mortgage and all indentures supplemental thereto may be modified, amended
or supplemented by Water Company with prior notice by the Water Company to
but without the consent of any of the bondholders to accomplish any more
of the following:
(1) to cure any ambiguity, supply any omission, or cure or correct
any defect or inconsistent provision in the Mortgage or any
indenture supplemental thereto;
(2) to cure any ambiguity, supply any omission, or cure or correct
any defect in any description of the Mortgaged Property, if
such action is not adverse to the interests of the bondholder;
(3) to insert such provisions clarifying matters or questions
arising under the Mortgage or any indenture supplemental
thereto as are necessary or desirable and are not contrary to
or inconsistent with the Mortgage or any indenture
supplemental thereto as in effect; or
(4) to restate the Mortgage as supplemented by the Supplemental
Indentures as a single integrated document which may add
headings, an index and other provisions aiding the convenience
of use.
The terms and provisions of the Series FF Bond shall not be amended by, and the
Series FF Bond shall not be entitled to the benefit of any covenant, term or
condition contained in any subsequent supplemental indenture without the express
written concurrence of the Water Company.
Section 2. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity and sufficiency of this
Thirty-First Supplemental Indenture or the due execution hereof by Water Company
or for the recitals contained herein, all of which recitals are made by Water
Company solely.
Section 3. The Trustee hereby accepts the trusts hereby declared and
provided and agrees to perform the same upon the terms and conditions in the
Mortgage, the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and
Seventeenth Supplemental
Indentures, the Supplementary Indenture to the Fifteenth Supplemental Indenture,
the Eighteenth, the Nineteenth, Twentieth, the Twenty-First, the Twenty-Second,
the Twenty-Third, the Twenty-Fourth, the Twenty-Fifth, the Twenty-Sixth, the
Twenty-Seventh, the Twenty-Eighth, the Twenty-Ninth, the Thirtieth and this
Thirty-First Supplemental Indenture set forth. The Trustee also hereby agrees to
execute and deliver the Escrow Agreement (as defined in the Loan Agreement).
Section 4. The Trustee hereby authorizes the Loan Servicer to accept
payments made by Water Company of principal of the Series FF Bond for the
account of the Trust.
Section 5. This Thirty-First Supplemental Indenture has been
executed simultaneously in several counterparts and all of said counterparts
executed and delivered, each as an original, shall constitute one and the same
instrument.
Section 6. Although this Thirty-First Supplemental Indenture, for
convenience and for the purpose of reference, is dated as of October 15, 2004,
the actual date of execution by Water Company and the Trustee is as shown by
their respective acknowledgments hereto annexed, and the actual date of delivery
hereof by Water Company and the Trustee is the date of the closing of the sale
of the Series FF Bonds by Water Company.
Section 7. In any case where the payment of principal of the Series
FF Bond or the date fixed for redemption of any Series FF Bond shall be a
Saturday or Sunday or a legal holiday or a day on which banking institutions in
the City of the principal corporate trust office of the Loan Servicer is located
are authorized by law to close, then payment of interest or principal or
redemption price need not be made on such date but may be made on the next
proceeding business day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest on such payment shall
accrue after such date.
THE MORTGAGOR HEREBY DECLARES AND ACKNOWLEDGES THAT IT HAS RECEIVED,
WITHOUT CHARGE, A TRUE COPY OF THIS MORTGAGE.
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