M O R T G A G E
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TWENTY-FOURTH SUPPLEMENTAL INDENTURE
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MIDDLESEX WATER COMPANY
TO
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FIRST UNION NATIONAL BANK
Trustee
Dated as of October 15, 1998
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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 TWENTY-FOURTH SUPPLEMENTAL INDENTURE, dated as of the 15th day of
October, 1998, 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
FIRST UNION NATIONAL BANK, (as 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 City of
Newark, 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
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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
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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
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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
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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
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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") 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
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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
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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, 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
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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
and Twenty-Third Supplemental Indentures, and by this Twenty-Fourth 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 $1,135,000 designated Series Y and to be known as its "First Mortgage
Scheduled Interest Rates Bonds, Series Y" (herein called the "Series Y Bond"),
it being the intention of the parties that the Series Y 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 Y Bond shall be issued to
fund payment of the principal of $1,135,000,
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the amount of the Loan borrowed from the New Jersey Environmental Infrastructure
Trust (the "Trust") under the Loan Agreement dated as of November 1, 1998 (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 which are
utilized by Water Company for the furnishing of water in its New Jersey service
area; and
WHEREAS, the Trust requires as a condition of making the loan documented by
the Loan Agreement, that a single Series Y Bond be issued to the Trust, that
such Bond evidence the payment obligations of the Water Company under Section
3.03(a) of the Loan Agreement, that payments under the Series Y Bond be made to
the Loan Servicer (as defined in the Loan Agreement) for the account of the
Trust, that the Series Y 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 Y Bond, that the obligations of the Water Company under the Series Y 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
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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
Y 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
Y 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,
Twenty-Second and Twenty-Third Supplemental Indentures (to the extent
applicable) necessary to make the Series Y 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 Twenty-Fourth
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,
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Seventeenth Supplemental Indentures, the Supplementary Indenture to the
Fifteenth Supplemental Indenture and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First, Twenty-Second and Twenty-Third 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 Twenty-Fourth 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 Twenty-Fourth 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,
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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 and Twenty-Third Supplemental
Indentures, or intended to be (including without limitation all such property
acquired by Water Company since October 15, 1998, 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
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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 and Twenty-Third 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
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Supplemental Indentures and this Twenty-Fourth 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 Y
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
and the Twenty-Third Supplemental Indentures and by this Twenty-Fourth
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 Y". The Series Y 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, 1998; and shall be
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issued in non-negotiable form to the Trust. The Series Y Bond shall bear
interest from the date of issuance of the Series Y 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 September
1, 2018, 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 August 22, 1998 Order
(Docket No. WF98060336) 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 Y Bond shall evidence the obligation to pay to the
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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 $1,135,000
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 Y 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 Y Bond is subject to assignment or transfer in accordance with the terms
of the Loan Agreement. The Series Y 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 Y 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,
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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
and the Twenty-Third Supplemental Indentures, it shall be a default under this
Twenty-Fourth 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 Y 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 Y 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
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Twenty-Fourth Supplemental Indenture as Exhibit A; and shall contain appropriate
references to this Twenty-Fourth 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 and the Twenty-Third Supplemental
Indentures and appropriate changes with respect to the aggregate principal
amount, interest rate, redemption dates and provisions, and maturity date of the
Series Y 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 Y 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 and the Twenty-Third Supplemental
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Indentures, forthwith upon the execution and delivery of this Twenty-Fourth
Supplemental Indenture, or from time to time thereafter, Series Y Bond in an
aggregate principal amount of $1,135,000 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 Y 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 Twenty-Fourth Supplemental Indenture).
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ARTICLE II
Miscellaneous
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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 and the Twenty-Third Supplemental
Indentures, and as modified and extended by this Twenty-Fourth 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 and Twenty-Third 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 and Series X Bonds
shall apply to the Series Y 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,
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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 and the Twenty-Third Supplemental
Indentures to the Mortgage or any of such Supplemental Indentures shall be
construed as also referring to this Twenty-Fourth 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
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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 Y Bond shall not be amended by, and the
Series Y 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 Twenty-Fourth
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,
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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
and the Twenty-Third Supplemental Indentures and this Twenty-Fourth Supplemental
Indenture set forth. The Trustee also hereby agrees to execute and deliver the
Escrow Agreement (as defined in the Loan Agreement) and to appoint the Escrow
Agent named therein as agent as set out therein.
Section 4. The Trustee hereby authorizes the Loan Servicer to accept
payments made by Water Company of principal of the Series Y Bond for the account
of the Trust.
Section 5. This Twenty-Fourth 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 Twenty-Fourth Supplemental Indenture, for
convenience and for the purpose of reference, is dated as of October 15, 1998,
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
25
hereof by Water Company and the Trustee is the date of the closing of the sale
of the Series Y Bonds by Water Company.
Section 7. In any case where the payment of principal of the Series Y Bond
or the date fixed for redemption of any Series Y 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 Service 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.
IN WITNESS WHEREOF said MIDDLESEX WATER COMPANY has caused these presents
to be signed by its President and its corporate seal to be hereunto affixed, and
duly attested by its Secretary; and in testimony of its acceptance of the trusts
created, FIRST UNION NATIONAL BANK, as successor to United Counties Trust
Company, has caused these presents to be signed by its thereto duly authorized
officer or corporate trust officer and
26
its corporate seal to be hereunto affixed and duly attested by its thereto duly
authorized officer or corporate trust officer, as of the day and year first
above written.
27
ATTEST: MIDDLESEX WATER COMPANY
By:
- -------------------------------- --------------------------------
Marion F. Reynolds J. Richard Tompkins
Vice President, Secretary Chairman of the Board and
and Treasurer President
ATTEST: FIRST UNION NATIONAL BANK
By:
- -------------------------------- --------------------------------
Assistant Vice President Corporate Trust Officer
28
STATE OF NEW JERSEY:
: ss:
COUNTY OF ESSEX :
BE IT REMEMBERED, that on this ____ day of __________ , 1998, before me,
the subscriber, personally appeared Marion F. Reynolds, who, being by me duly
sworn according to law, on her oath deposes and says and makes proof to my
satisfaction that she is the Vice President, Secretary and Treasurer of
Middlesex Water Company, one of the corporations named in and which executed the
foregoing Twenty-Fourth Supplemental Indenture; that she is the attesting
witness to said Twenty-Fourth Supplemental Indenture; that she well knows the
seal of said corporation and that the seal thereto affixed is the proper common
or corporate seal of Middlesex Water Company; that J. Richard Tompkins is
Chairman of the Board and President of said corporation; that this deponent saw
the said J. Richard Tompkins as such Chairman of the Board and President sign
said Twenty-Fourth Supplemental Indenture, and affix said seal thereto and heard
him declare that he signed, sealed and delivered the same as the voluntary act
and deed of the said corporation, for the uses and purposes therein expressed,
he being duly authorized by resolution of the Board of Directors of the said
corporation.
--------------------------------
Marion F. Reynolds
Sworn and subscribed to
before me the day and year
aforesaid.
- --------------------------------
29
STATE OF NEW JERSEY:
: ss:
COUNTY OF ESSEX :
BE IT REMEMBERED, that on this ____ day of __________ , 1998, before me,
the subscriber, personally appeared ____________, who, being by me duly sworn
according to law, on his oath deposes and says and makes proof to my
satisfaction that he is the Assistant Vice President of First Union National
Bank, one of the corporations named in and which executed the foregoing
Twenty-Fourth Supplemental Indenture; that he is the attesting witness to said
Twenty-Fourth Supplemental Indenture; that he well knows the seal of First Union
National Bank and that the seal thereto affixed is the proper common or
corporate seal of First Union National Bank; that ___________is the Corporate
Trust Officer of said corporation; that this deponent saw the said
_____________, as Corporate Trust Officer sign said Twenty-Fourth Supplemental
Indenture, and affix said seal thereto and heard him declare that he signed,
sealed and delivered the same as the voluntary act and deed of the said
corporation, for the uses and purposes therein expressed, he being duly
authorized by resolution of the Board of Directors of the said corporation.
--------------------------------
Assistant Vice President
Sworn and subscribed to
before me the day and year
aforesaid.
- --------------------------------
30
LOAN AGREEMENT
BY AND BETWEEN
THE STATE OF NEW JERSEY,
ACTING BY AND THROUGH THE NEW JERSEY
DEPARTMENT OF ENVIRONMENTAL PROTECTION,
AND
MIDDLESEX WATER COMPANY
DATED AS OF NOVEMBER 1, 1998
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions....................................................................2
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower....................................................6
SECTION 2.02. Particular Covenants of Borrower...............................................9
ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan Term...............................................................14
SECTION 3.02. Disbursement of Loan Proceeds.................................................14
SECTION 3.03. Amounts Payable...............................................................15
SECTION 3.04. Unconditional Obligations.....................................................16
SECTION 3.05. Loan Agreement to Survive Loan................................................16
SECTION 3.06. Disclaimer of Warranties and Indemnification..................................16
SECTION 3.07. Option to Prepay Loan Repayments..............................................17
SECTION 3.08. Priority of Loan and Trust Loan...............................................17
ARTICLE IV
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
SECTION 4.01. Assignment and Transfer by State..............................................19
SECTION 4.02. Assignment by Borrower........................................................19
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. Events of Default.............................................................20
SECTION 5.02. Notice of Default.............................................................21
SECTION 5.03. Remedies on Default...........................................................21
SECTION 5.04. Attorneys' Fees and Other Expenses............................................21
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SECTION 5.05. Application of Moneys.........................................................21
SECTION 5.06. No Remedy Exclusive; Waiver; Notice...........................................21
SECTION 5.07. Retention of State's Rights...................................................22
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices.......................................................................23
SECTION 6.02. Binding Effect................................................................23
SECTION 6.03. Severability..................................................................23
SECTION 6.04. Amendments, Supplements and Modifications.....................................23
SECTION 6.05. Execution in Counterparts.....................................................24
SECTION 6.06. Applicable Law and Regulations................................................24
SECTION 6.07. Consents and Approvals........................................................24
SECTION 6.08. Captions......................................................................24
SECTION 6.09. Further Assurances............................................................24
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
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NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE FUND LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into as of this 1st day of November,
1998, by and between THE STATE OF NEW JERSEY, acting by and through the New
Jersey Department of Environmental Protection, and MIDDLESEX WATER COMPANY, a
corporation duly created and validly existing under the laws of the State of New
Jersey;
WITNESSETH THAT:
WHEREAS, the Borrower has, in accordance with the Regulations, made timely
application to the State for a Loan to finance a portion of the Cost of the
Project (as each of the foregoing terms is defined in Section 1.01 hereof; all
capitalized terms used in this Loan Agreement shall have, unless the context
otherwise requires, the meanings set forth in said Section 1.01);
WHEREAS, the State has approved the Borrower's application for a Loan from
Federal Funds, if and when received by and available to the State, and moneys
from repayments of loans previously made from such Federal Funds, in an amount
not to exceed One Million Fifty Thousand Dollars ($1,050,000) to finance a
portion of the Cost of the Project;
WHEREAS, the New Jersey State Legislature has approved an appropriations
act that authorizes an expenditure of said proceeds, Federal Funds or related
moneys to finance a portion of the Cost of the Project;
WHEREAS, the Borrower, in accordance with the Business Corporation Law and
all other applicable law, will issue a Borrower Bond to the State evidencing
said Loan at the Loan Closing; and
WHEREAS, in accordance with the New Jersey Environmental Infrastructure
Trust Act, P.L. 1985, c. 334, as amended, and the Regulations, the Borrower has
been awarded a Trust Loan for a portion of the Cost of the Project plus, if
applicable to the Borrower, capitalized interest on the Trust Loan, certain
costs of issuance and bond insurance premium related thereto.
NOW, THEREFORE, for and in consideration of the award of the Loan by the
State, 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. The following terms as used in this Loan
Agreement shall, unless the context clearly requires otherwise, have the
following meanings:
"Administrative Fee" means an annual fee of up to one percent (1.0%) of the
initial principal amount of the Loan or such lesser amount, if any, as may be
authorized by any act of the New Jersey State Legislature and as the State 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.
"Borrower" means the corporation that is a party to and is described in the
first paragraph of 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 State and 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.
"Borrower Bond Resolution" means the indenture of the Borrower entitled
"Indenture of Mortgage" dated as of April 1, 1927, as amended and supplemented
from time to time, in particular by a supplemental indenture detailing the terms
of the Borrower Bond dated as of November 1, 1998 and entitled "Twenty-Third
Supplemental Indenture", pursuant to which the Borrower Bond has been issued.
"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 State pursuant to which the State will make Loans to such
recipients from Federal Funds.
"Business Corporation Law" means the "New Jersey Business Corporation Act",
constituting Chapter 263 of the Pamphlet Laws of 1968 of the State of New Jersey
(codified at N.J.S.A. 14A:1-1 et seq.), as the same has been and may from time
to time be amended and supplemented.
"Code" means the Internal Revenue Code of 1986, as the same has been and
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 State.
"Environmental Infrastructure Facilities" means Water Supply Facilities (as
such term is 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.
"Federal Funds" means those funds awarded to the State pursuant to the Safe
Drinking Water Act (42 U.S.C. ss.300f et seq.), as the same may from time to
time be amended and supplemented.
"Loan" means the loan made by the State to the Borrower to finance or
refinance a portion of the Cost of the Project pursuant to this Loan Agreement.
For all purposes of this Loan Agreement, the principal amount of the Loan at any
time shall be the amount of the loan commitment set forth in Exhibit A-2
attached hereto and made a part hereof (such amount being also specified as the
initial aggregate principal amount of the Borrower Bond) less any amount of such
principal amount that has been repaid by the Borrower under this Loan Agreement
and less any adjustment made for low bid or final building costs pursuant to the
provisions of N.J.A.C. 7:22-3.26 and the appropriations act of the New Jersey
State Legislature authorizing the expenditure of moneys to finance a portion of
the Cost of the Project.
"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.
"Loan Agreements" means any other loan agreements entered into by and
between the State and one or more of the Borrowers pursuant to which the State
will make Loans to such Borrowers from Federal Funds.
"Loan Closing" means the date upon which the Borrower shall deliver its
Borrower Bond, as previously authorized, executed, attested and authenticated,
to the State.
"Loan Repayments" means the repayments of the principal amount of the Loan
payable by the Borrower pursuant to Section 3.03 of this Loan Agreement,
including payments payable under the Borrower Bond, but excluding the
Administrative Fee.
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"Loan Servicer" means, initially, First Union National Bank, the loan
servicer for the Loan and the Trust Loan, duly appointed and designated as "Loan
Servicer" pursuant to the Loan Servicing and Trust Bonds Security Agreement
dated as of November 1, 1998 by and among the Trust, the State of New Jersey,
acting by and through the Treasurer of the State of New Jersey on behalf of the
New Jersey Department of Environmental Protection, and First Union National
Bank, and any successors as "Loan Servicer" under such agreement, as the same
may be modified, amended or supplemented from time to time in accordance with
its terms.
"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 State to the Borrowers under the Loan
Agreements from Federal Funds.
"Master Program Trust Agreement" means that certain Master Program Trust
Agreement dated as of November 1, 1995 by and among the Trust, the State of New
Jersey, 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 First Union National Bank), in several
capacities thereunder, as the same may be amended and supplemented from time to
time in accordance with its terms.
"Prime Rate" means the prevailing commercial interest rate announced by the
Loan Servicer from time to time in the State of New Jersey 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 State is permitted to make a loan to the
Borrower pursuant to the Regulations, all or a portion of the Cost of which is
financed or refinanced by the State through the making of the Loan under this
Loan Agreement.
"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., 7:22-9 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, acting, unless otherwise
specifically indicated, by and through the New Jersey Department of
Environmental Protection, and its successors and assigns.
"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 P.L. 1985, c. 334, as amended (N.J.S.A. 58:11B-1
et seq.).
"Trust Loan" means the loan made to the Borrower by the Trust pursuant to
the Trust Loan Agreement.
"Trust Loan Agreement" means the loan agreement by and between the Borrower
and the
-4-
Trust dated as of November 1, 1998 to finance or refinance a portion of the Cost
of the Project.
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 importing persons shall include firms, associations,
corporations, agencies and districts. Words importing one gender shall include
the other gender.
-5-
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower. The Borrower represents for the
benefit of the State as follows:
(a) Organization and Authority.
(i) The Borrower is a corporation duly created and validly existing
under the laws of the State of New Jersey.
(ii) The acting officials 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 officials of such Borrower
empowered by applicable New Jersey law and, if applicable, authorized by
resolution of the Borrower to perform such actions. To the extent any such
action was performed by an official no longer the duly acting official of
such Borrower, all such actions previously taken by such official 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 State, 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 State, 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 New Jersey law at a meeting
or meetings that were duly called and held in accordance with applicable
New Jersey law 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 State upon the terms set forth herein; and (C) the
execution, delivery and due performance of any and all other certificates,
agreements and instruments
-6-
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.
(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 State, duly authenticated by the trustee or
paying agent 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 State 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 State,
enforceable against the State 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 State 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 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, (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 State, (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 State either in the Borrower's application for the Loan or otherwise.
-7-
(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 State, (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 State, the adoption of the Borrower Bond Resolution or the receipt of the
amount of the Loan, would constitute an Event of Default hereunder. Since
December 31, 1975 and as of the date of delivery of this Loan Agreement, the
Borrower has not been, and is not now, in default in the payment of the
principal of or interest on any of its bonds, notes, lease purchase agreements
or other debt obligations. 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
principal of the Borrower Bond 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 and delivery of this Loan Agreement and
the Borrower Bond, for the issuance of the Borrower Bond and the sale thereof to
the State, 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, the approval by the New Jersey Board of
Public Utilities (the "BPU") of the issuance by the Borrower
-8-
of the Borrower Bond to the State 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 State, the undertaking or completion
of the Project or the consummation of any transaction herein contemplated.
(g) Compliance with Law. The Borrower:
(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 or (B) 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 or (B) 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 State as described in Exhibit B attached hereto and made a part hereof (i)
to finance or refinance a portion of the Cost of the Borrower's Project; and
(ii) where applicable, to reimburse the Borrower for a portion of the Cost of
the Borrower's Project, which portion was paid or incurred in anticipation of
reimbursement by the State 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 State is authorized to make Loans to the
Borrower pursuant to the Regulations.
SECTION 2.02. Particular Covenants of Borrower.
(a) Promise to Pay. The Borrower unconditionally promises, in accordance
with the terms of and to the extent provided in the Borrower Bond Resolution, to
make punctual payment of the principal of the Loan and 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 of New Jersey 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 State in the observance and
-9-
performance of the respective duties, covenants, obligations and agreements of
the Borrower and the State 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.
(c) Borrower Bond; No Prior Liens. Except for (i) the Borrower Bond, (ii)
any bonds at parity with the Borrower Bond and currently outstanding or issued
on the date hereof, (iii) any future bonds 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 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 Trust Loan, required to complete the
Project.
(e) Disposition of Environmental Infrastructure System. The Borrower shall
not sell, lease, abandon or otherwise dispose of all or substantially all of its
Environmental Infrastructure System except on ninety (90) days' prior written
notice to the State, and, in any event, shall not so sell, lease, abandon or
otherwise dispose of the same unless the Borrower shall, in accordance with
Section 4.02 hereof, assign this Loan Agreement and the Borrower Bond and its
rights and interests hereunder and thereunder to the purchaser or lessee of the
Environmental Infrastructure System, and such purchaser or lessee shall assume
all duties, covenants, obligations and agreements of the Borrower under this
Loan Agreement and the Borrower Bond.
(f) [Reserved.]
(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;
provided, that no provision of this subsection shall prevent the sale, lease,
abandonment or other disposition of property that comprises a portion of the
Borrower's Environmental Infrastructure
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System, so long as such sale, lease, abandonment or other disposition does not
materially adversely affect the Borrower's Environmental Infrastructure System.
(h) Records and Accounts. The Borrower shall keep accurate records and
accounts for its Environmental Infrastructure System specifically relating to
the Project (the "Project Records") separate and distinct from its other records
and accounts (the "General Records"). Such Project 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 Project Records and
General Records shall be made available for inspection by the State at any
reasonable time upon prior written notice, and a copy of such annual audit(s)
therefor, including all written comments and recommendations of such accountant,
shall be furnished to the State within 150 days of the close of the fiscal year
being so audited or, with the consent of the State, such additional period as
may be provided by law.
(i) Inspections; Information. The Borrower shall permit the State and any
party designated by the State, 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 State 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) Cost 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 State a certificate
from a licensed professional engineer authorized to practice in the State of New
Jersey stating that such building cost is a reasonable and accurate estimation
and that the useful life of the Project exceeds twenty (20) years from the
expected date of the Loan Closing.
(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 State each of the following
items:
(i) an opinion of the Borrower's bond counsel substantially in the
form of Exhibit E hereto; provided, however, that the State 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 such variances are acceptable to the State;
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(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 State, 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 State, (C) the resolution of the Borrower
confirming the details of the sale of the Borrower Bond to the State, each
of said resolutions of the Borrower being certified by an Authorized
Officer of the Borrower as of the date of the Loan Closing, (D) the
resolution of the BPU approving the issuance by the Borrower of the
Borrower Bond to the State and setting forth any other approvals required
therefor by the BPU, and (E) any other Proceedings; and
(iv) the certificates of insurance coverage as required pursuant to
the terms of Section 3.06(c) hereof and such other certificates, documents,
opinions and information as the State 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 State the Borrower Bond, as previously executed, attested and authenticated.
(n) Notice of Material Adverse Change. The Borrower shall promptly notify
the State 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 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) Additional Covenants and Requirements. No later than the Loan Closing
and, if necessary, in connection with 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 and the transfer
of revenues and receipts from the orrower's Environmental Infrastructure System.
The Borrower agrees to observe and comply with each such additional covenant and
requirement, if any, included in Exhibit F hereto.
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ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan Term. The State 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 State upon the terms set
forth in Exhibit A-2 attached hereto and made a part hereof; provided, however,
that the State shall be under no obligation to make the Loan if (a) at the Loan
Closing, the Borrower does not deliver to the State 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 this Loan Agreement. Although the
State 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 Cost of the
Project, due to unforeseen circumstances there may not be sufficient Federal
Funds on deposit on any date to make the disbursement in such amount.
Nevertheless, the Borrower agrees that the aggregate principal amount set forth
in Exhibit A-2 hereto shall constitute the initial principal amount of the Loan
(as the same may be adjusted downward in accordance with the definition
thereof), and the State shall have no obligation thereafter to loan any
additional amounts to the Borrower.
The Borrower shall have no legal or equitable interest in the Federal Funds
received by and available to the State or in moneys from repayments of loans
previously made from Federal Funds by the State.
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 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 State shall disburse
Federal Funds earmarked for the Loan to the Borrower in accordance with the
terms hereof. Before each and every disbursement of the proceeds of the Loan by
the State to the Borrower, the Borrower shall in accordance with the procedures
set forth in the Regulations submit to the State a requisition executed by an
Authorized Officer of the Borrower.
(b) The State shall not be under any obligation to disburse any Loan
proceeds to the Borrower under this Loan Agreement, unless:
(i) the Loan Closing shall have occurred on the date established
therefor by the State;
(ii) there shall be Federal Funds available from time to time to fund
the Loan, as
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determined solely by the State;
(iii) in accordance with the "New Jersey Environmental Infrastructure
Trust Act", P.L. 1985, c. 334, as amended (N.J.S.A. 58:11B-1 et seq.), 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 Trust 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 covered by the Loan from the
State, plus the amount of: (i) capitalized interest during the Project
construction period, if any, (ii) the cost of funding reserve capacity for
the Project, if any, as well as that portion of the Debt Service Reserve
Fund (as defined in the Trust Loan Agreement) attributable to the cost of
funding such reserve capacity for the Project, and (iii) certain issuance
expenses related thereto, including, if applicable, a municipal bond
insurance policy premium;
(iv) the Borrower shall have on hand moneys to pay for the greater of
(A) that portion of the total cost of the Project that is not eligible to
be funded from the Loan or the Trust Loan, or (B) that portion of the total
cost of the Project that exceeds the actual amounts of the loan commitments
made by the State and the Trust, respectively, for the Loan and the Trust
Loan; and
(v) 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 at
zero-interest in principal installments payable to the Loan Servicer
semiannually on February 1 and August 1, commencing August 1, 1999, 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 the State, in particular,
without limitation, to make any adjustments to the amount of the Loan in
accordance with the definition thereof; provided, however, that the amount of
any reduction in the principal amount of the Loan pursuant to N.J.A.C. 7:22-3.26
shall be credited to the principal payments set forth in Exhibit A-2 in inverse
order of their maturity. The obligations of the Borrower under the Borrower Bond
shall be deemed to be amounts payable under this Section 3.03. Each payment made
to the Loan Servicer pursuant to the Borrower Bond shall be deemed to be a
credit against the corresponding obligation of the Borrower under this Section
3.03, and any such payment made to the Loan Servicer shall fulfill the
Borrower's obligation to pay such amount hereunder and under the Borrower Bond.
Each payment made to the Loan Servicer pursuant to this Section 3.03 shall be
applied to the principal of the Loan.
(b) In addition to the principal payments on the Loan required by
subsection (a) of this Section 3.03, the Borrower shall pay a late charge for
any such payment that is received by the Loan Servicer later than the tenth
(10th) day following its due date 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 actually paid; provided,
however, that such late charge payable on the Loan shall not be in excess of the
maximum interest rate permitted by law.
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(c) In addition to the Loan Repayments payable under subsections (a) and
(b) of this Section 3.03, the Borrower shall pay one-half of the Administrative
Fee, if any, to the Loan Servicer semiannually on each February 1 and August 1,
commencing February 1, 1999 or such later date as the State authorizes, during
the term of the Loan.
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 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 of New Jersey or any political
subdivision of either or in the rules or regulations of any governmental
authority, any failure of the State to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of
or connected with the Project or this Loan Agreement, or any rights of set-off,
recoupment, abatement or counterclaim that the Borrower might otherwise have
against the State, the Loan Servicer or any other party or parties; provided,
however, that payments hereunder shall not constitute a waiver of any such
rights. The Borrower shall not be obligated to make any payments required to be
made by any other Borrowers under separate Loan Agreements.
SECTION 3.05. Loan Agreement to Survive Loan. The Borrower acknowledges
that its duties, covenants, obligations and agreements set forth in Sections
3.06(a) and (b) hereof shall survive the payment in full of the Loan.
SECTION 3.06. Disclaimer of Warranties and Indemnification. (a) The
Borrower acknowledges and agrees that: (i) the State does not make any warranty
or representation, either express or implied, as to the value, design,
condition, merchantability or fitness for particular purpose or fitness for any
use of the 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 State or its 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 for in this Loan Agreement; and (iii) during the
term of this Loan Agreement and to the fullest extent permitted by law, the
Borrower shall indemnify and hold the State 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
State 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.
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(b) It is mutually agreed by the Borrower and the State that the State and
its commissioners, 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.
(c) 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 State and its 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 State, the Borrower shall maintain said liability insurance
covering the State and said employees and officers in good standing; and (ii)
the Borrower shall include the State 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 State in good
standing.
The Borrower shall provide the State 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(c).
SECTION 3.07. Option to Prepay Loan Repayments. The Borrower may prepay the
Loan Repayments, in whole or in part, upon not less than ninety (90) days' prior
written notice to the State; provided, however, that any such full or partial
prepayment may only be made (i) if the Borrower is not then in arrears on its
Trust Loan, (ii) if the Borrower is contemporaneously making a full or partial
prepayment of the Trust Loan such that, after the prepayment of the Loan and the
Trust Loan, the Trust gives its consent required under Section 3.07(iii) of the
Trust Loan Agreement, and (iii) upon the prior written approval of the State.
Prepayments shall be applied to the principal payments on the portion of the
Loan to be prepaid in inverse order of their maturity.
SECTION 3.08. Priority of Loan and Trust Loan. (a) The Borrower hereby
acknowledges that, to the extent allowed by law, including, without limitation,
the appropriations act of the New Jersey State Legislature authorizing the
expenditure of Trust bond proceeds to finance a portion of the Cost of the
Project, or the Borrower Bond Resolution, any loan repayments then due and
payable on the Borrower's Trust Loan, including, without limitation, any
administrative fees and any late payment charges then due and payable under the
Trust Loan Agreement, shall be satisfied by the Loan Servicer before any Loan
Repayments then due and payable hereunder on the Loan shall be satisfied by the
Loan Servicer. The Borrower agrees not to interfere with any such action by the
Loan Servicer.
(b) The Borrower hereby acknowledges that in the event the Borrower fails
or is unable to pay promptly to the Trust in full any loan repayments on the
Trust Loan, then to the extent allowed by law any Loan Repayments paid by the
Borrower on the Loan under this Loan
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Agreement and received by the Loan Servicer during the time of any such loan
repayment deficiency under the Trust Loan Agreement shall first be applied by
the Loan Servicer to satisfy such Trust Loan Agreement loan repayment deficiency
as a credit against the obligations of the Borrower to make loan repayments of
that portion of interest under the Trust Loan Agreement that is allocable to the
interest payable on the Trust Bonds (as defined in the Trust Loan Agreement) and
to make payments of that portion of interest under the bond issued by the
Borrower to the Trust that is allocable to the interest payable on the Trust
Bonds, second, to the extent available, to make loan repayments of principal
under the Trust Loan Agreement and payments of principal on the bond issued by
the Borrower to the Trust pursuant to the Trust Loan Agreement, third, to the
extent available, to the payment of the administrative fee payable under the
Trust Loan Agreement and to make payments of that portion of interest under the
bond issued by the Borrower to the Trust that is allocable to the administrative
fee payable under the Trust Loan Agreement, fourth, to the extent available, to
the payment of late charges payable under the Trust Loan Agreement and to make
payments of that portion of interest under the bond issued by the Borrower to
the Trust that is allocable to the late charges payable under the Trust Loan
Agreement, and, finally, to the extent available, to make Loan Repayments on the
Loan.
(c) The Borrower hereby further acknowledges that any Loan Repayments paid
by the Borrower on the Loan under this Loan Agreement shall be applied (i)
according to Section 3(c) of the Loan Servicing and Trust Bonds Security
Agreement (as defined in the definition of Loan Servicer herein) and (ii)
according to the provisions of the Master Program Trust Agreement.
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ARTICLE IV
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
SECTION 4.01. Assignment and Transfer by State. The Borrower hereby
approves and consents to any assignment or transfer of this Loan Agreement and
the Borrower Bond that the State deems to be necessary in connection with the
environmental infrastructure loan program of the State under the Regulations.
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 State 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; and (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.
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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 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 pay, or cause to be paid, 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 State, unless
the State shall agree in writing to an extension of such time prior to its
expiration; provided, however, that if the failure stated in such notice is
correctable but cannot be corrected within the applicable period, the State may
not unreasonably withhold 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;
(c) 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;
(d) a petition is filed by or against the Borrower under any federal or
state bankruptcy or insolvency law or other similar law in effect on the date of
this Loan Agreement or thereafter enacted, unless in the case of any such
petition filed against the Borrower such petition shall be dismissed within
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;
(e) the Borrower shall generally fail to pay its debts as such debts become
due; and
(f) failure of the Borrower to observe or perform such additional duties,
covenants, obligations, agreements or conditions as are required by the State
and specified in Exhibit F attached hereto and made a part hereof.
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SECTION 5.02. Notice of Default. The Borrower shall give the State prompt
telephonic notice of the occurrence of any Event of Default referred to in
Section 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 State shall
have the right to take whatever 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 State shall, to the extent allowed by
applicable law, have the right to declare all Loan Repayments and all other
amounts due hereunder (including, without limitation, payments under the
Borrower Bond) 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 State 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 the State in the
collection of 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 State
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 principal due
and payable on the Loan, (c) third, to the extent available, to pay any other
amounts due and payable hereunder, and (d) fourth, to the extent available, to
pay principal on the Loan and other amounts payable hereunder as such amounts
become due and payable.
SECTION 5.06. No Remedy Exclusive; Waiver; Notice. No remedy herein
conferred upon or reserved to the State is intended to be exclusive, and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Loan Agreement or 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 State 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.
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SECTION 5.07. Retention of State's Rights. Notwithstanding any assignment
or transfer of this Loan Agreement pursuant to the provisions hereof, or
anything else to the contrary contained herein, the State shall have the right
upon the occurrence of an Event of Default to take any action, including
(without limitation) bringing an action against the Borrower at law or in
equity, as the State may, in its discretion, deem necessary to enforce the
obligations of the Borrower to the State pursuant to 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 State and the Loan Servicer at the following addresses:
(a) State:
New Jersey Department of Environmental Protection
Municipal Finance and Construction Element
401 East State Street - 3rd Floor
Trenton, New Jersey 08625-0425
Attention: Assistant Director
New Jersey Department of the Treasury
Office of Public Finance
State Street Square - 5th Floor
Trenton, New Jersey 08625-0002
Attention: Director
(b) Loan Servicer:
First Union National Bank
765 Broad Street
Newark, New Jersey 07102
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 State 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. This Loan
Agreement may not be amended, supplemented or modified without the prior written
consent of the State and the Borrower.
-22-
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 of New
Jersey, including 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 State shall be required under the provisions of this Loan
Agreement, such consent or approval may only be given by the State.
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. Further Assurances. The Borrower shall, at the request of the
State, 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.
-23-
IN WITNESS WHEREOF, the State and the Borrower have caused this Loan
Agreement to be executed, sealed and delivered as of the date first above
written.
THE STATE OF NEW JERSEY,
ACTING BY AND THROUGH THE
NEW JERSEY DEPARTMENT OF
ENVIRONMENTAL PROTECTION
[SEAL]
By:
---------------------------
ATTEST: Robert C. Shinn, Jr.
Commissioner, Department of
Environmental Protection
- -----------------------------
Nicholas G. Binder, P.E., P.P.
Assistant Director,
Municipal Finance and Construction Element,
Department of Environmental Protection
[SEAL] MIDDLESEX WATER COMPANY
ATTEST:
By:
---------------------------
Authorized Officer
- -----------------------------
Authorized Officer
Approval of New Jersey State
Treasurer
By:
---------------------------
James A. DiEleuterio, Jr.
New Jersey State Treasurer
[Signature Page]
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
(To be supplied by Borrower's
bond counsel in substantially the following form)
IMPORTANT NOTE: The next two 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.,
include the concept of principal amount or lesser amount under Section 3.01,
reference to payments to the Loan Servicer, disbursement process, unconditional
nature, prepayment, security and date).
D-2
SEE IMPORTANT NOTE ON PRIOR PAGE
FOR VALUE RECEIVED, Middlesex Water Company, a corporation duly created and
validly existing under the Constitution and laws of the State of New Jersey (the
"Borrower"), hereby promises to pay to the order of the State of New Jersey (the
"State") the principal amount of One Million Fifty Thousand Dollars
($1,050,000), 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, plus any other amounts
due and owing under the Loan Agreement at the times and in the amounts as
provided therein. The Borrower irrevocably pledges its full faith and credit for
the punctual payment of the principal of, 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, 1998 by and between the State, acting by and through the New Jersey
Department of Environmental Protection, and the Borrower (the "Loan Agreement"),
and is issued in consideration of the loan made thereunder (the "Loan") and to
evidence the payment obligations of the Borrower set forth in Section 3.03(a)
thereof. Payments under this Borrower 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 State. This Borrower Bond is subject to
assignment or endorsement in accordance with the terms of 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 State to
the Borrower upon receipt by the State 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 absolute and unconditional, without any
defense or right of set-off, counterclaim or recoupment by reason of any default
by the State under the Loan Agreement or under any other agreement between the
Borrower and the State or out of any indebtedness or liability at any time owing
to the Borrower by the State 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.
To the extent provided by law, this Borrower Bond is junior and subordinate
in all respects to any bonds of the Borrower issued on even date herewith to the
New Jersey Environmental Infrastructure Trust as to lien on, and source and
security for payment from, the revenues of the Borrower.
D-3
IN WITNESS WHEREOF, the Borrower has caused this Borrower Bond to be duly
executed, sealed and delivered as of this 15th day of October, 1998.
MIDDLESEX WATER COMPANY
[SEAL]
By:
ATTEST: ----------------------------
-------------
By:
- ---------------------------- ----------------------------
- ------------- ---------------
D-4
EXHIBIT E
Opinions of Borrower's Bond and General Counsels
See Closing Item No. _____
E-1
[LETTERHEAD OF COUNSEL TO BORROWER]
November 5, 1998
State of New Jersey
Department of Environmental Protection
401 East State Street
Trenton, New Jersey 08625
Ladies and Gentlemen:
We have acted as counsel to Middlesex Water Company, a corporation duly
organized and validly existing under the laws of the State of New Jersey (the
"Borrower"), which has entered into a Loan Agreement (as hereinafter defined)
with the State of New Jersey, acting by and through the New Jersey Department of
Environmental Protection (the "State"), 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 an indenture of the Borrower dated as of April
1, 1927 and entitled "Indenture of Mortgage", as amended and supplemented,
including by a supplemental indenture dated as of November 1, 1998 and entitled
"Twenty-Third Supplemental Indenture" (such 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 Loan Agreement dated as of November 1, 1998 (the "Loan Agreement")
by and between the State and the Borrower;
(b) 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;
(c) the Borrower Bond dated as of October 15, 1998 (the "Borrower Bond")
issued by the Borrower to the State to evidence the Loan; and
(d) the proceedings (together with the proceedings referred to in clause
(b) 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 State (the Loan Agreement and the
Borrower Bond are referred to herein collectively as the "Loan Documents").
E-2
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 State, 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 officials 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 officials 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 therein, the Borrower has irrevocably pledged its full faith and credit
for the punctual payment of the Loan Repayments and all other amounts due under
the Loan Documents according to their respective terms.
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 State 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, and (vi) 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, 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) 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.
E-3
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 State, and the Borrower Bond has been duly
authenticated by the trustee or paying agent under the Resolution; and assuming
in the case of the Loan Agreement that the State 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 State, 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.
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.
E-4
10. Other than its bond dated as of October 15, 1998 issued to the New
Jersey Environmental Infrastructure Trust, 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.
We hereby authorize McCarter & English, LLP, acting as bond counsel to the
State in connection with the Loan, and the Attorney General of the State of New
Jersey, acting as general counsel to the State in connection with the Loan, 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
[None]
F-1
EXHIBIT G
General Administrative Requirements for the
State Environmental Infrastructure Financing Program
----------------------------------------------------
G-1
MIDDLESEX WATER COMPANY
NO. R-1 $1,050,000
NON-NEGOTIABLE
FIRST MORTGAGE 0% BOND, SERIES X, DUE September 1, 2018
MIDDLESEX WATER COMPANY, a corporation organized and existing under the
laws of the State of New Jersey (hereinafter called the "Water Company"), for
value received, hereby promises to pay to The State of New Jersey, acting by and
through the New Jersey Department of Environmental Protection ("State") under
the Loan Agreement dated as of November 1, 1998 ("Loan Agreement") by and
between the Water Company and the State, or its registered assigns on the first
day of September 2018, at the office of FIRST UNION NATIONAL BANK in the City of
Newark, State of New Jersey, Trustee under the Mortgage and Supplemental
Indentures hereinafter mentioned, or its successor as such Trustee, the
principal sum of One Million Fifty Thousand Dollars ($1,050,000) or such lesser
amount as shall be determined in accordance with Section 3.01 of the Loan
Agreement, without interest, thereon at the times and in the amounts determined
as provided in Section 3.03(a) of the Loan Agreement (including without
limitation payment of installments of principal semi-annually on February 1 and
August 1, commencing August 1, 1999, in accordance with the schedule set forth
in Exhibit A-2 attached to the Loan
Agreement), as the same may be amended or modified by the State as provided in
the Loan Agreement, plus any other amounts due and owing under the Loan
Agreement at the times and in the amounts provided therein in coin or currency
of the United States of America which at the time of payment is legal tender for
public and private debts, until Water Company's obligation with respect to the
payment of such principal shall be discharged.
2
This Bond is the sole Bond of a duly authorized issue of non-negotiable
bonds of Water Company known as its First Mortgage 0% Bonds, Series X
(hereinafter called the "Series X Bond"), of the principal amount of $1,050,000
issued and secured (together with all other bonds of the Water Company
[hereinafter called "Bonds"] issued under the Mortgage and Supplemental
Indentures [as hereinafter defined]), by an Indenture of Mortgage dated April 1,
1927 (hereinafter called the "Mortgage"), a Second Supplemental Indenture dated
as of October 1, 1939, (hereinafter called the "Second Supplemental Indenture"),
a Third Supplemental Indenture dated as of April 1, 1946, (hereinafter called
the "Third Supplemental Indenture"), a Fourth Supplemental Indenture dated as of
April 1, 1949, (hereinafter called the "Fourth Supplemental Indenture"), a Fifth
Supplemental Indenture dated as of February 1, 1955 (hereinafter called the
"Fifth Supplemental Indenture"), a Sixth Supplemental Indenture dated as of
December 1, 1959, (hereinafter called the "Sixth Supplemental Indenture"), a
Seventh Supplemental Indenture dated as of January 15, 1963, (hereinafter called
the "Seventh Supplemental Indenture"), an Eighth Supplemental Indenture dated as
of July 1, 1964, (hereinafter called the "Eighth Supplemental Indenture"), a
Ninth Supplemental Indenture dated as of June 1, 1965, (hereinafter called the
"Ninth Supplemental Indenture"), a Tenth Supplemental Indenture dated as of
February 1, 1968, (hereinafter called
3
the "Tenth Supplemental Indenture"), an Eleventh Supplemental Indenture dated as
of December 1, 1968, (hereinafter called the "Eleventh Supplemental Indenture"),
a Twelfth Supplemental Indenture dated as of December 1, 1970, (hereinafter
called the "Twelfth Supplemental Indenture"), a Thirteenth Supplemental
Indenture dated as of December 1, 1972, (hereinafter called the "Thirteenth
Supplemental Indenture", a Fourteenth Supplemental Indenture dated as of April
1, 1979, (hereinafter called the "Fourteenth Supplemental Indenture"), a
Fifteenth Supplemental Indenture dated as of April 1, 1983, (hereinafter called
the "Fifteenth Supplemental Indenture"), a Sixteenth Supplemental Indenture
dated as of August 1, 1988, (hereinafter called the "Sixteenth Supplemental
Indenture"), a Seventeenth Supplemental Indenture dated as of June 15, 1991,
(hereinafter called the "Seventeenth Supplemental Indenture"), a Supplementary
Indenture to the Fifteenth Supplemental Indenture dated as of March 1, 1993
(hereinafter called the "Supplementary Indenture"), an Eighteenth Supplemental
Indenture dated as of September 1, 1993 (hereinafter called the "Eighteenth
Supplemental Indenture"), a Nineteenth Supplemental Indenture dated as of
September 1, 1993 (hereinafter called the "Nineteenth Supplemental Indenture"),
a Twentieth Supplemental Indenture dated as of January 1, 1994 (hereinafter
called the "Twentieth Supplemental Indenture"), a Twenty-First
4
Supplemental Indenture dated as of January 1, 1994 (hereinafter called the
"Twenty-First Supplemental Indenture"), and a Twenty-Second Supplemental
Indenture dated as of March 1, 1998 (hereinafter called the "Twenty-Second
Supplemental Indenture"), and a Twenty-Third Supplemental Indenture dated as of
October 15, 1998 (hereinafter called the "Twenty-Third Supplemental Indenture")
all executed by Water Company to the First Union National Bank, or its
predecessors, United Counties Trust Company and Union County Trust Company, as
Trustee, which Second Supplemental Indenture, Third Supplemental Indenture,
Fourth Supplemental Indenture, Fifth Supplemental Indenture, Sixth Supplemental
Indenture, Seventh Supplemental Indenture, Eighth Supplemental Indenture, Ninth
Supplemental Indenture, Tenth Supplemental Indenture, Eleventh Supplemental
Indenture, Twelfth Supplemental Indenture, Thirteenth Supplemental Indenture,
Fourteenth Supplemental Indenture, Fifteenth Supplemental Indenture, Sixteenth
Supplemental Indenture, Seventeenth Supplemental Indenture, Supplementary
Indenture, Eighteenth Supplemental Indenture, Nineteenth Supplemental Indenture,
Twentieth Supplemental Indenture, Twenty-First Supplemental Indenture,
Twenty-Second Supplemental Indenture and Twenty-Third Supplemental Indenture are
referred to herein sometimes as the "Supplemental Indentures", to which Mortgage
and Supplemental Indentures reference is hereby made for a
5
description of the property mortgaged and pledged, the nature and extent of the
security, the terms and conditions upon which the Bonds are issued and are to be
secured and the rights of registered owners thereof and of the Trustee in
respect of such security. As provided in the Mortgage and Supplemental
Indentures, and subject to the conditions therein imposed, additional bonds of
other series, with the same or different maturity dates, bearing the same or
different rates of interest and varying in other respects, may be issued. This
Series X Bond is the Series X Bond described in the Twenty-Third Supplemental
Indenture and designated therein as First Mortgage 0% Bond, Series X.
As provided in the Twenty-Third Supplemental Indenture, this Series X Bond
is subject to redemption (i) under the terms and conditions and in the amounts
provided in Section 3.07 of the Loan Agreement at the option of Water Company
with, to the extent required by the Augsut 22, 1998 Order (Docket No.
WP98060336) 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
6
the Loan Agreement.
The Series X Bond shall evidence the obligation to pay to the order of the
State the principal amount of the loan made by the State under the Loan
Agreement which shall be $1,050,000 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
X Bond are absolute and unconditional, without any defense or right of set-off,
counterclaim or recoupment by reason of any default by the State under the Loan
Agreement or under any other agreement between the Water Company and the State
or out of any indebtedness or liability at any time owing to the Water Company
by the State or for any other reason. The Series X Bond is subject to assignment
or transfer in accordance with the terms of the Loan Agreement. The Series X
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 X 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 State.
7
Disbursements of the proceeds of the loan from the State under the Loan
Agreement evidenced by the Series X Bond shall be made by the State to the Water
Company upon receipt by the State of requisitions from the Water Company
executed and delivered in accordance with the requirements set forth in Section
3.02 of the Loan Agreement.
If an event of default, as defined in the Mortgage or Supplemental
Indentures or in the Loan Agreement, shall occur, the principal of the Series X
Bond may become or be declared due and payable, in the manner and with the
effect provided in the Mortgage and Supplemental Indentures and the Loan
Agreement.
8
As provided in the Mortgage as modified, amended and supplemented by the
Supplemental Indentures, and subject to the limitations therein contained, the
Mortgage and all indentures supplemental thereto may be modified, amended or
supplemented with the consent in writing of the holders of not less than 75% in
principal amount of each series of Bonds outstanding at the time and effective
upon the date all of the Series R Bonds are retired or defeased or the holders
thereof consent thereto, with the consent in writing of the holders of not less
than 51% in aggregate principal amount of all series of Bonds outstanding at any
time; provided, however, that no such modification shall reduce the principal
amount of a Bond or the premium, if any, payable on a redemption thereof, extend
the maturity thereof, reduce the rate or extend time for payment of interest
thereon, give a Bond any preference over another Bond, create or permit a lien
on the property subject to the Mortgage (other than a Permitted Encumbrance as
defined in the Eighth Supplemental Indenture) prior to or on a parity with the
Mortgage, or reduce the percentage of the holders required for any action
authorized to be taken by the holders of Bonds under the Mortgage, without the
consent of the holders of all Bonds affected by such modification; provided,
further, that no modification shall impose additional duties or responsibilities
on the Trustee without the consent of the Trustee.
9
The Mortgage may be modified, amended or supplemented by Water Company
without the consent of the holders of the Bonds for one or more of the following
purposes: (1) to cure any ambiguity, supply any omission, or cure or correct any
defect or inconsistent provision in the Mortgage; (2) to cure any ambiguity,
supply any omission or cure or correct any defect in any description of the
Mortgage Property, if such action is not adverse to the interests of the holders
of the Bonds; (3) to insert such provisions clarifying matters or questions
arising under the mortgage indenture as are necessary or desirable and are not
contrary to or inconsistent with the Mortgage 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 Company shall provide prior notice of such change to the
holders.
10
This Series X Bond shall not be transferred except (i) as provided or
required under and pursuant to the Loan Agreement, (ii) to effect an exchange in
connection with a bankruptcy, reorganization, insolvency, or similar proceeding
involving Water Company and (iii) to effect an exchange in connection with
prepayment by redemption or otherwise of the Series X Bond. This Series X Bond
may be transferred at the principal corporate trust office of the Trustee by
surrendering this Series X Bond for cancellation, accompanied by a written
instrument of transfer in form designated by the holder and reasonably
acceptable to the Water Company and the Trustee, duly executed by the registered
owner hereof in person or by attorney duly authorized in writing, and upon
payment of any taxes or other governmental charges incident to such transfer,
and upon any such transfer new registered Bond or Bonds of the same series and
of the same aggregate principal amount in authorized denominations, will be
issued to the transferee in exchange herefor.
This Series X Bond, upon surrender hereof to the Trustee, accompanied by a
written instrument of transfer as aforesaid, may be exchanged for another
registered Bond of the same series and of the same principal amount; to the
extent permitted by the Loan Agreement and upon payment of any charges and
subject to the terms and conditions set
11
forth in the Mortgage and Supplemental Indentures and the Loan Agreement.
The person in whose name this Series X Bond shall be registered shall be
deemed the owner hereof for all purposes, and payment of or on account of the
principal hereof and interest hereon shall be made only to or upon the order in
writing of the registered owner hereof; and all such payments shall be valid and
effectual to satisfy and discharge the liability upon this Series X Bond to the
extent of the sum or sums so paid.
No recourse shall be had for the payment of the principal of or interest on
this Series X Bond or for any claim based hereon or otherwise in respect hereof
or of the Mortgage or of any indenture supplemental thereto against any
incorporator, or against any stockholder, director or officer, as such, past,
present or future, of Water Company or of any predecessor or successor
corporation, either directly or through Water Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law or equity, or by the enforcement of any assessment or penalty, or otherwise
howsoever, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released by every
holder or
12
registered owner hereof as more fully provided in the Mortgage and Supplemental
Indentures; it being expressly agreed and understood that the Mortgage and
Supplemental Indentures and all Bonds thereby secured are solely corporate
obligations.
The terms and provisions of the Series X Bond shall not be amended by, and
the Series X 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.
This Series X Bond shall not be entitled to any benefit under the Mortgage
or any indenture supplemental thereto, or be valid or become obligatory for any
purpose, until First Union National Bank, as the Trustee under the Mortgage and
Supplemental Indentures, or its successor thereunder, shall have signed the form
of certificate endorsed hereon.
IN WITNESS WHEREOF, Middlesex Water Company has caused this Bond to be
signed in its name by its President or a Vice President and its corporate seal
to be hereto affixed by its Secretary or any Assistant Secretary.
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Dated: _________________, 1998
ATTEST: MIDDLESEX WATER COMPANY
[SEAL]
By:
- ------------------------- ---------------------------------
Marion F. Reynolds J. Richard Tompkins
Vice President, Secretary Chairman of the Board and
and Treasurer President
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Bond is the bond described in the within mentioned Mortgage and
Twenty-Third Supplemental Indenture.
FIRST UNION NATIONAL BANK,
Trustee
By:
---------------------------------
Corporate Trust Officer
This Bond has not been registered under the Securities Act of 1933, as
amended, and may be offered or sold only in compliance with the provisions of
said Act.
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