M O R T G A G E
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TWENTY-THIRD SUPPLEMENTAL INDENTURE
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MIDDLESEX WATER COMPANY
TO
FIRST UNION NATIONAL BANK
Trustee
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Dated as of October 15, 1998
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Record and Return to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇/▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Prepared By:________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
THIS TWENTY-THIRD 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
1
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, Water Company deems it necessary to borrow money and to issue its
bonds therefor, to be secured by the Mortgage, the Second Supplemental
Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture,
the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh
Supplemental Indenture, the Eighth Supplemental Indenture, the Ninth
Supplemental Indenture, the Tenth Supplemental Indenture, the Eleventh
Supplemental Indenture, the Twelfth Supplemental Indenture, the Thirteenth
Supplemental Indenture, the Fourteenth Supplemental Indenture, the Fifteenth
Supplemental Indenture, the Sixteenth Supplemental Indenture, the Seventeenth
Supplemental Indenture, the Supplementary Indenture to the Fifteenth
Supplemental Indenture and the Eighteenth, the
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Nineteenth, the Twentieth, the Twenty-First and the Twenty-Second Supplemental
Indentures, and by this Twenty-Third 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 $1,050,000 designated Series X and to be known as its "First Mortgage
0% Bonds, Series X" (herein called the "Series X Bond"), it being the intention
of the parties that the Series X 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 X Bond shall be issued to
fund payment of the principal of $1,050,000, the amount borrowed from 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 (the
"Loan Agreement") by and between the State 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
9
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 State requires as a condition of making the loan documented by
the Loan Agreement, that a single Series X Bond be issued to the State, 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 X Bond be made to
the Loan Servicer (as defined in the Loan Agreement) for the account of the
State, that the Series X 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 X Bond, that the obligations of the Water Company under the Series X Bond
shall be absolute and unconditional, without any defense or right of set-off,
counterclaim or recoupment by reason of 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
or for any other reason, that the Series X 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
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Series X 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 and
Twenty-Second Supplemental Indentures (to the extent applicable) necessary to
make the Series X 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-Third Supplemental
Indenture a valid and binding supplement to the Mortgage and the Second, Third,
Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth,
Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth Supplemental
Indentures, the Supplementary Indenture to the Fifteenth Supplemental Indenture
and the Eighteenth, the Nineteenth, the Twentieth, the Twenty-First and
Twenty-Second Supplemental Indentures, in accordance with its and their terms,
for the security of all bonds issued and which may hereafter be
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issued pursuant to the Mortgage and all indentures supplemental thereto, have
been done and performed; and the execution and delivery of this Twenty-Third
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-Third Supplemental Indenture, and has granted, bargained,
sold, aliened, enfeoffed, conveyed and confirmed, and by these presents does
grant, bargain, sell, alien, enfeoff, convey and confirm, unto to the Trustee,
its successors and assigns forever, all real property of Water Company, together
with all appurtenances and contracts, rights, privileges, permits and franchises
used or useful in connection with the business of the Water Company as a water
company or as a water utility or used directly for the purpose of supplying
water, granted, bargained, sold, aliened, enfeoffed, conveyed and confirmed unto
the Trustee by the Mortgage and the Second, Third, Fourth, Fifth, Sixth,
Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth,
Fifteenth, Sixteenth, Seventeenth Supplemental Indentures, and the Supplementary
Indenture to the Fifteenth
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Supplemental Indenture and the Eighteenth, the Nineteenth, the Twentieth, the
Twenty-First and the Twenty-Second Supplemental Indentures, or intended to be
(including without limitation all such property acquired by Water Company since
March 1, 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 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,
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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 and the
Twenty-Second Supplemental Indentures be and hereby are supplemented as
hereinafter provided, and that the above granted property is to be held and
applied subject to the covenants, conditions, uses and trusts set forth in the
Mortgage, as modified, amended and supplemented by such Supplemental Indentures
and this Twenty-Third 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:
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ARTICLE I
First Mortgage 0% Bonds, Series X
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 and Twenty-Second Supplemental
Indentures and by this Twenty-Third Supplemental Indenture, and to be designated
as, and to be distinguished from the bonds of all other series by the title,
"First Mortgage 0% Bond, Series X". The Series X 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 October 15, 1998; and shall be issued
in non-negotiable form to the State. The Series X Bond shall bear no interest,
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
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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. 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 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
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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.
In addition to any other default provided for under the Mortgage and the
Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh,
Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and Seventeenth,
Supplemental Indentures and the Supplementary Indenture to the Fifteenth
Supplemental Indenture and the Eighteenth, the Nineteenth, the Twentieth, the
Twenty-First and the Twenty-Second Supplemental Indentures, it shall be a
default under this Twenty-Third Supplemental Indenture if payment of principal
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 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
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delivered in accordance with the requirements set forth in Section 3.02 of the
Loan Agreement.
Section 3. The Series X 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 Twenty-Third
Supplemental Indenture as Exhibit A; and shall contain appropriate references to
this Twenty-Third 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 and the Twenty-Second Supplemental Indentures and appropriate
changes with respect to the aggregate principal amount, interest rate,
redemption dates and provisions, and maturity date of the Series X 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 X Bond shall not contain any
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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 and the
Twenty-Second Supplemental Indentures, forthwith upon the execution and delivery
of this Twenty-Third Supplemental Indenture, or from time to time thereafter,
Series X Bond in an aggregate principal amount of $1,050,000 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 X 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
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otherwise to be paid directly to the Company under the Mortgage as supplemented
by the Supplemental Indentures including this Twenty-Third Supplemental
Indenture).
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ARTICLE II
Miscellaneous
Section 1. The provisions of the Mortgage as modified, amended and
supplemented by the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and
Seventeenth Supplemental Indentures, the Supplementary Indenture to the
Fifteenth Supplemental Indenture and the Eighteenth, the Nineteenth, the
Twentieth, the Twenty-First and the Twenty-Second Supplemental Indentures, and
as modified and extended by this Twenty-Third 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 and the
Twenty-Second 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 and Series W Bonds shall apply to the Series X
Bond to the same extent as if they were set forth herein in full. Unless there
is something in the subject or context repugnant to such construction, each
reference in the Mortgage and the Second, Third, Fourth, Fifth, Sixth, Seventh,
Eighth, Ninth, Tenth,
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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 and the Twenty-Second Supplemental Indentures to the Mortgage or
any of such Supplemental Indentures shall be construed as also referring to this
Twenty-Third Supplemental Indenture. The Mortgage and all indentures
supplemental thereto may be modified, amended or supplemented by Water Company
with prior notice by the Water Company to but without the consent of any of the
bondholders to accomplish any more of the following:
(1) to cure any ambiguity, supply any omission, or cure or correct any
defect or inconsistent provision in the Mortgage or any indenture
supplemental thereto;
(2) to cure any ambiguity, supply any omission, or cure or correct any
defect in any description of the Mortgaged Property, if such action is
not adverse to the interests of the bondholder;
(3) to insert such provisions clarifying matters or questions arising
under the Mortgage or any indenture supplemental thereto as are
necessary or desirable and are not contrary to or inconsistent
22
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 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.
Section 2. The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity and sufficiency of this Twenty-Third
Supplemental Indenture or the due execution hereof by Water Company or for the
recitals contained herein, all of which recitals are made by Water Company
solely.
Section 3. The Trustee hereby accepts the trusts hereby declared and
provided and agrees to perform the same upon the terms and conditions in the
Mortgage, the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth and
23
Seventeenth Supplemental Indentures, the Supplementary Indenture to the
Fifteenth Supplemental Indenture, the Eighteenth, the Nineteenth, Twentieth, the
Twenty-First and the Twenty-Second Supplemental Indentures and this Twenty-Third
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 X Bond for the account
of the State.
Section 5. This Twenty-Third 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-Third 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
hereof by Water Company and the Trustee is the date of the closing of the sale
of the Series X Bonds by Water Company.
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Section 7. In any case where the payment of principal of the Series X Bond
or the date fixed for redemption of any Series X 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 an Officer or Corporate Trust
Officer and its corporate seal to be hereunto
25
affixed and duly attested by an Officer or Corporate Trust Officer, as of the
day and year first above written.
ATTEST: MIDDLESEX WATER COMPANY
_________________________ By:___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President, Secretary Chairman of the Board and
and Treasurer President
ATTEST: FIRST UNION NATIONAL BANK
_________________________ By:___________________________
Assistant Vice President Corporate Trust Officer
26
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 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-Third Supplemental Indenture; that she is the attesting witness
to said Twenty-Third 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. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is Chairman
of the Board and President of said corporation; that this deponent saw the said
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as such Chairman of the Board and President sign said
Twenty-Third 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.
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Sworn and subscribed to
before me the day and year
aforesaid.
----------------------------
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇:
: 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-Third Supplemental Indenture; that he is the attesting witness to said
Twenty-Third 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-Third 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.
------------------------------
28
LOAN AGREEMENT
NWK3: 352225.02
BY AND BETWEEN
NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST
AND
MIDDLESEX WATER COMPANY
DATED AS OF NOVEMBER 1, 1998
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.....................................................2
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower.....................................7
SECTION 2.02. Particular Covenants of Borrower...............................11
ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan Term................................................20
SECTION 3.02. Disbursement of Loan Proceeds..................................20
SECTION 3.03. Amounts Payable................................................21
SECTION 3.04. Unconditional Obligations......................................22
SECTION 3.05. Loan Agreement to Survive Bond Resolution and Trust Bonds......23
SECTION 3.06. Disclaimer of Warranties and Indemnification...................23
SECTION 3.07. Option to Prepay Loan Repayments...............................24
SECTION 3.08. Priority of Loan and Fund Loan.................................25
ARTICLE IV
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
SECTION 4.01. Assignment and Transfer by Trust...............................26
SECTION 4.02. Assignment by Borrower.........................................26
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. Events of Default..............................................27
SECTION 5.02. Notice of Default..............................................28
SECTION 5.03. Remedies on Default............................................28
SECTION 5.04. Attorneys' Fees and Other Expenses.............................28
SECTION 5.05. Application of Moneys..........................................28
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SECTION 5.06. No Remedy Exclusive; Waiver; Notice............................28
SECTION 5.07. Retention of Trust's Rights....................................29
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices........................................................30
SECTION 6.02. Binding Effect.................................................30
SECTION 6.03. Severability...................................................30
SECTION 6.04. Amendments, Supplements and Modifications......................30
SECTION 6.05. Execution in Counterparts......................................31
SECTION 6.06. Applicable Law and Regulations.................................31
SECTION 6.07. Consents and Approvals.........................................31
SECTION 6.08. Captions.......................................................31
SECTION 6.09. Benefit of Loan Agreement; Compliance with Bond Resolution.....31
SECTION 6.10. Further Assurances.............................................31
EXHIBIT A (1) Description of Project and Environmental
Infrastructure System ......................................A-1-1
(2) Description of Loan.........................................A-2-1
EXHIBIT B Basis for Determination of Allowable Project Costs................B-1
EXHIBIT C Estimated Disbursement Schedule...................................C-1
EXHIBIT D Specimen Borrower Bond............................................D-1
EXHIBIT E Opinions of Borrower's Bond and General Counsels..................E-1
EXHIBIT F Additional Covenants and Requirements.............................F-1
EXHIBIT G General Administrative Requirements for the State
Environmental Infrastructure Financing Program...........G-1
EXHIBIT H Form of Continuing Disclosure Agreement...........................H-1
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NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into as of this 1st day of November,
1998, by and between NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST, a public
body corporate and politic with corporate succession, and MIDDLESEX WATER
COMPANY, a corporation duly created and validly existing under the laws of the
State of New Jersey (the "State");
WITNESSETH THAT:
WHEREAS, the Trust, in accordance with the Act, the Bond Resolution and a
financial plan approved by the State Legislature in accordance with Section 23
of the Act, will issue its Trust Bonds on or prior to the Loan Closing for the
purpose of making the Loan to the Borrower and the Loans to the Borrowers from
the proceeds of the Trust Bonds to finance a portion of the cost of
Environmental Infrastructure Facilities (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 Borrower has, in accordance with the Act and the Regulations,
made timely application to the Trust for a Loan to finance a portion of the Cost
of the Project;
WHEREAS, the State Legislature, in accordance with Section 20 of the Act,
has in the form of an appropriations act approved a project priority list that
includes the Project and that authorizes an expenditure of proceeds of the Trust
Bonds to finance a portion of the Cost of the Project;
WHEREAS, the Trust has approved the Borrower's application for a Loan from
available proceeds of the Trust Bonds to finance a portion of the Cost of the
Project;
WHEREAS, in accordance with the "Wastewater Treatment Bond Act of 1985",
P.L. 1985, c. 329, as amended, and the Regulations, the Borrower has been
awarded a Fund Loan for a portion of the Cost of the Project; and
WHEREAS, the Borrower, in accordance with the Act, the Regulations, the
Business Corporation Law and all other applicable law, will issue a Borrower
Bond to the Trust evidencing said Loan at the Loan Closing.
NOW, THEREFORE, for and in consideration of the award of the Loan by the
Trust, the Borrower agrees to complete the Project and to perform under this
Loan Agreement in accordance with the conditions, covenants and procedures set
forth herein and attached hereto as part hereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms as used in this Loan
Agreement shall, unless the context clearly requires otherwise, have the
following meanings:
"Act" means the "New Jersey Environmental Infrastructure Trust Act",
constituting Chapter 334 of the Pamphlet Laws of 1985 of the State (codified at
N.J.S.A. 58:11B-1 et seq.), as the same may from time to time be amended and
supplemented.
"Administrative Fee" means that portion of Interest on the Loan or Interest
on the Borrower Bond payable hereunder as an annual fee of up to three-tenths of
one percent (.30%) of the initial principal amount of the Loan or such lesser
amount, if any, as may be authorized by any act of the State Legislature and as
the Trust may approve from time to time.
"Authorized Officer" means, in the case of the Borrower, any person or
persons authorized pursuant to a resolution of the board of directors of the
Borrower to perform any act or execute any document relating to the Loan, the
Borrower Bond or this Loan Agreement.
"Bond Counsel" means a law firm appointed or approved by the Trust, as the
case may be, having a reputation in the field of municipal law whose opinions
are generally acceptable by purchasers of municipal bonds.
"Bond Resolution" means the "Environmental Infrastructure Bond Resolution,
Series 1998B", as adopted by the Board of Directors of the Trust on or about
September 21, 1998, authorizing the issuance of the Trust Bonds, and all further
amendments and supplements thereto adopted in accordance with the provisions
thereof.
"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 Trust 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-Fourth
Supplemental Indenture", pursuant to which the Borrower Bond has been issued.
-2-
"Borrowers" means any other Local Government Unit or Private Entity (as
such terms are defined in the Regulations) authorized to construct, operate and
maintain Environmental Infrastructure Facilities that have entered into Loan
Agreements with the Trust pursuant to which the Trust will make Loans to such
recipients from moneys on deposit in the Project Fund, excluding the Project
Loan Account.
"Business Corporation Law" means the "New Jersey Business Corporation Act",
constituting Chapter 263 of the Pamphlet Laws of 1968 of the State (codified at
N.J.S.A. 14A:1-1 et seq.), as the same 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.
"Cost" means those costs that are eligible, reasonable, necessary,
allocable to the Project and permitted by generally accepted accounting
principles, including Allowances and Building Costs (as defined in the
Regulations), as shall be determined on a project-specific basis in accordance
with the Regulations as set forth in Exhibit B hereto, as the same may be
amended by subsequent eligible costs as evidenced by a certificate of an
authorized officer of the Trust.
"Debt Service Reserve Fund" means the Debt Service Reserve Fund as defined
in the Bond Resolution.
"Environmental Infrastructure Facilities" means Wastewater Treatment
Facilities, Stormwater Management Facilities or Water Supply Facilities (as such
terms are defined in the Regulations).
"Environmental Infrastructure System" means the Environmental
Infrastructure Facilities of the Borrower, including the Project, described in
Exhibit A-1 attached hereto and made a part hereof for which the Borrower is
borrowing the Loan under this Loan Agreement.
"Event of Default" means any occurrence or event specified in Section 5.01
hereof.
"Fund Loan" means the loan made to the Borrower by the State, acting by and
through the New Jersey Department of Environmental Protection, pursuant to the
loan agreement dated as of November 1, 1998 by and between the Borrower and the
State, acting by and through the New Jersey Department of Environmental
Protection, to finance or refinance a portion of the Cost of the Project.
"Interest on the Loan" or "Interest on the Borrower Bond" means the sum of
(i) the Interest Portion, (ii) the Administrative Fee, and (iii) any late
charges incurred hereunder.
"Interest Portion" means that portion of Interest on the Loan or Interest
on the Borrower Bond payable hereunder that is necessary to pay the Borrower's
proportionate share of interest on the Trust Bonds (i) as set forth in Exhibit
A-2 hereof under the column heading entitled "Interest", or (ii) with respect to
any prepayment of Trust Bond Loan Repayments in accordance with Section
-3-
3.07 or 5.03 hereof, to accrue on any principal amount of Trust Bond Loan
Repayments to the date of the optional redemption or acceleration, as the case
may be, of the Trust Bonds allocable to such prepaid or accelerated Trust Bond
Loan Repayment.
"Loan" means the loan made by the Trust to the Borrower to finance or
refinance a portion of the Cost of the Project pursuant to this Loan Agreement.
For all purposes of this Loan Agreement, the amount of the Loan at any time
shall be the initial aggregate principal amount of the Borrower Bond (which
amount equals the amount actually deposited in the Project Loan Account at the
Loan Closing plus the Borrower's allocable share of certain costs of issuance
and underwriter's discount for all Trust Bonds issued to finance the Loan) less
any amount of such principal amount that has been repaid by the Borrower under
this Loan Agreement and less any adjustment made pursuant to the provisions of
the Bond Resolution, including, without limitation, Section 5.02(4) thereof,
N.J.A.C. 7:22-4.26 and the appropriations act of the State Legislature
authorizing the expenditure of Trust Bond proceeds 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 and of the Bond Resolution.
"Loan Agreements" means any other loan agreements entered into by and
between the Trust and one or more of the Borrowers pursuant to which the Trust
will make Loans to such Borrowers from moneys on deposit in the Project Fund,
excluding the Project Loan Account, financed with the proceeds of the Trust
Bonds.
"Loan Closing" means the date upon which the Trust shall issue and deliver
the Trust Bonds and the Borrower shall deliver its Borrower Bond, as previously
authorized, executed, attested and authenticated, to the Trust.
"Loan Repayments" means the sum of (i) Trust Bond Loan Repayments, (ii) the
Administrative Fee, and (iii) any late charges incurred hereunder.
"Loan Servicer" means, initially, First Union National Bank, the loan
servicer for the Loan and the Fund 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, acting by and
through the Treasurer of the State 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 Trust to the Borrowers under the Loan
Agreements from moneys on deposit in the Project Fund, excluding the Project
Loan Account.
"Master Program Trust Agreement" means that certain Master Program Trust
-4-
Agreement dated as of November 1, 1995 by and among the Trust, the State, United
States Trust Company of New York, as Master Program Trustee thereunder, The Bank
of New York (NJ), in several capacities thereunder, and First Fidelity Bank,
N.A. (predecessor to 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.
"Official Statement" means the Official Statement relating to the issuance
of the Trust Bonds.
"Preliminary Official Statement" means the Preliminary Official Statement
relating to the issuance of the Trust Bonds.
"Prime Rate" means the prevailing commercial interest rate announced by the
Trustee from time to time in the State as its prime lending rate.
"Project" means the Environmental Infrastructure Facilities of the Borrower
described in Exhibit A-1 attached hereto and made a part hereof, which
constitutes a project for which the Trust is permitted to make a loan to the
Borrower pursuant to the Act, the Regulations and the Bond Resolution, all or a
portion of the Cost of which is financed or refinanced by the Trust through the
making of the Loan under this Loan Agreement.
"Project Fund" means the Project Fund as defined in the Bond Resolution.
"Project Loan Account" means the project loan account established on behalf
of the Borrower in the Project Fund in accordance with the Bond Resolution to
finance all or a portion of the Cost of the Project.
"Regulations" means the rules and regulations, as applicable, now or
hereafter promulgated under N.J.A.C. 7:22-3 et seq., 7:22-4 et seq., 7:22-5 et
seq., 7:22-6 et seq., 7:22-7 et seq., 7:22-8 et seq., 7:22-9 et seq. and 7:22-10
et seq., as the same may from time to time be amended and supplemented.
"State" means the State of New Jersey.
"Trust" means the New Jersey Environmental Infrastructure Trust, a public
body corporate and politic with corporate succession duly created and validly
existing under and by virtue of the Act.
"Trust Bond Loan Repayments" means the repayments of the principal amount
of the Loan plus the payment of any premium associated with prepaying the
principal amount of the Loan in accordance with Section 3.07 hereof plus the
Interest Portion.
-5-
"Trust Bonds" means bonds authorized by Section 2.03 of the Bond
Resolution, together with any refunding bonds authenticated and delivered
pursuant to Section 2.04 of the Bond Resolution, in each case issued in order to
finance (i) the portion of the Loan deposited in the Project Loan Account, (ii)
the portion of the Loans deposited in the balance of the Project Fund, (iii) any
capitalized interest related to such bonds, (iv) a portion of the costs of
issuance related to such bonds, and (v) that portion of the Debt Service Reserve
Fund, if any, allocable to the Loan or Loans, as the case may be, a portion of
which includes the funding of reserve capacity for the Environmental
Infrastructure Facilities of the Borrower or Borrowers, as the case may be, or
to refinance any or all of the above.
"Trustee" means, initially, First Union National Bank, the Trustee
appointed by the Trust and its successors as Trustee under the Bond Resolution,
as provided in Article X of the Bond Resolution.
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.
-6-
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of Borrower. The Borrower represents for the
benefit of the Trust, the Trustee and the holders of the Trust Bonds as follows:
(a) Organization and Authority.
(i) The Borrower is a corporation duly created and validly existing
under the laws of the State.
(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 State law and, if applicable, authorized by
resolution of the Borrower to perform such actions. To the extent any such
action was performed by an 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 Trust, to undertake and
complete the Project and to carry out and consummate all transactions
contemplated by this Loan Agreement.
(iv) The proceedings of the Borrower's board of directors approving
this Loan Agreement and the Borrower Bond, authorizing the execution,
attestation and delivery of this Loan Agreement and the Borrower Bond,
authorizing the sale of the Borrower Bond to the Trust, authorizing the
authentication of the Borrower Bond on behalf of the Borrower and
authorizing the Borrower to undertake and complete the Project, including,
without limitation, the Borrower Bond Resolution (collectively, the
"Proceedings"), have been duly and lawfully adopted in accordance with the
Business Corporation Law and other applicable State law at a meeting or
meetings that were duly called and held in accordance with applicable State
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 Trust upon the terms set forth herein; (C) the
approval of the inclusion, if such inclusion is deemed necessary in the
sole discretion of the Trust, in the Preliminary Official Statement and the
Official Statement of all statements and information
-7-
relating to the Borrower set forth in "APPENDIX B" thereto (the "Borrower
Appendices") and any amendment thereof or supplement thereto; and (D) the
execution, delivery and due performance of any and all other certificates,
agreements and instruments that may be required to be executed, delivered
and performed by the Borrower in order to carry out, give effect to and
consummate the transactions contemplated by this Loan Agreement, including,
without limitation, the designation of the Borrower Appendices portion of
the Preliminary Official Statement, if any, as "deemed final" for the
purposes and within the meaning of Rule 15c2-12 ("Rule 15c2-12") of the
Securities and Exchange Commission ("SEC") promulgated under the Securities
Exchange Act of 1934, as amended or supplemented, including any successor
regulation or statute thereto.
(vi) This Loan Agreement and the Borrower Bond have each been duly
authorized by the Borrower and duly executed, attested and delivered by
Authorized Officers of the Borrower, and the Borrower Bond has been duly
sold by the Borrower to the Trust, duly authenticated by the trustee or
paying agent under the Borrower Bond Resolution and duly issued by the
Borrower in accordance with the terms of the Borrower Bond Resolution; and
assuming that the Trust has all the requisite power and authority to
authorize, execute, attest and deliver, and has duly authorized, executed,
attested and delivered, this Loan Agreement, and assuming further that this
Loan Agreement is the legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, each of this
Loan Agreement and the Borrower Bond constitutes a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance
with its respective terms, except as the enforcement thereof may be
affected by bankruptcy, insolvency or other laws or the application by a
court of legal or equitable principles affecting creditors' rights; and the
information contained under "Description of Loan" in Exhibit A-2 attached
hereto and made a part hereof is true and accurate in all respects.
(b) Full Disclosure. There is no fact that the Borrower has not disclosed
to the Trust in writing on the Borrower's application for the Loan or otherwise
that materially adversely affects or (so far as the Borrower can now foresee)
that will materially adversely affect the properties, activities, prospects or
condition (financial or otherwise) of the Borrower or its Environmental
Infrastructure System, or the ability of the Borrower to make all Loan
Repayments and any other payments required under this Loan Agreement or
otherwise to observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement and the Borrower Bond.
(c) Pending Litigation. There are no proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower in any
court or before any governmental authority or arbitration board or tribunal
that, if adversely determined, would materially adversely affect (i) the
undertaking or completion of the Project, (ii) the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, (iii) the ability of the Borrower to make
all Loan Repayments or any other payments required under this Loan Agreement,
(iv) the authorization, execution, attestation or delivery of this Loan
Agreement or the Borrower Bond, (v) the issuance of the Borrower Bond and the
sale thereof to the Trust, (vi) the adoption of the Borrower Bond Resolution, or
(vii) the Borrower's ability otherwise to observe and perform its duties,
covenants, obligations and agreements under this Loan Agreement and the Borrower
Bond, which proceedings have not been previously disclosed in writing to the
Trust
-8-
either in the Borrower's application for the Loan or otherwise.
(d) Compliance with Existing Laws and Agreements. (i) The authorization,
execution, attestation and delivery of this Loan Agreement and the Borrower Bond
by the Borrower, (ii) the authentication of the Borrower Bond by the trustee or
paying agent under the Borrower Bond Resolution, as the case may be, and the
sale of the Borrower Bond to the Trust, (iii) the adoption of the Borrower Bond
Resolution, (iv) the observation and performance by the Borrower of its duties,
covenants, obligations and agreements hereunder and thereunder, (v) the
consummation of the transactions provided for in this Loan Agreement, the
Borrower Bond Resolution and the Borrower Bond, and (vi) the undertaking and
completion of the Project will not (A) other than the lien, charge or
encumbrance created hereby, by the Borrower Bond, by the Borrower Bond
Resolution and by any other outstanding debt obligations of the Borrower that
are at parity with the Borrower Bond as to lien on, and source and security for
payment thereon from, the revenues of the Borrower's Environmental
Infrastructure System, result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Borrower pursuant to, (B)
result in any breach of any of the terms, conditions or provisions of, or (C)
constitute a default under, any existing resolution, outstanding debt or lease
obligation, trust agreement, indenture, mortgage, deed of trust, loan agreement
or other instrument to which the Borrower is a party or by which the Borrower,
its Environmental Infrastructure System or any of its properties or assets may
be bound, nor will such action result in any violation of the provisions of the
charter or other document pursuant to which the Borrower was established or any
laws, ordinances, injunctions, judgments, decrees, rules, regulations or
existing orders of any court or governmental or administrative agency, authority
or person to which the Borrower, its Environmental Infrastructure System or its
properties or operations is subject.
(e) No Defaults. No event has occurred and no condition exists that, upon
the authorization, execution, attestation and delivery of this Loan Agreement
and the Borrower Bond, the issuance of the Borrower Bond and the sale thereof to
the Trust, the adoption of the Borrower Bond Resolution or the receipt of the
amount of the Loan, would constitute an Event of Default hereunder. 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 and redemption premiums, if any, of and interest on 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 Trust, for the adoption of the Borrower Bond Resolution, for the making,
observance and performance by the Borrower of its duties, covenants, obligations
and agreements under this Loan Agreement and the Borrower Bond and for the
undertaking or completion of the Project and the financing or refinancing
thereof, including, but not limited to, the approval by the New Jersey Board of
Public Utilities (the "BPU") of the issuance by the Borrower of the Borrower
Bond to the Trust, as required by Section 9a of the Act, and any other approvals
required therefor by the BPU; and the Borrower has complied with all applicable
provisions of law requiring any notification, declaration, filing or
registration with any governmental body or officer in connection with the
making, observance and performance by the Borrower of its duties, covenants,
obligations and agreements under this Loan Agreement and the Borrower Bond or
with the undertaking or
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completion of the Project and the financing or refinancing thereof. No consent,
approval or authorization of, or filing, registration or qualification with, any
governmental body or officer that has not been obtained is required on the part
of the Borrower as a condition to the authorization, execution, attestation and
delivery of this Loan Agreement and the Borrower Bond, the issuance of the
Borrower Bond and the sale thereof to the Trust, the undertaking or completion
of the Project or the consummation of any transaction herein contemplated.
(g) Compliance with Law. The Borrower:
(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 Trust 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 Trust and is eligible for such reimbursement under and
pursuant to the Regulations, the Code and any other applicable law. All of such
costs constitute Costs for which the Trust is authorized to make Loans to the
Borrower pursuant to the Act and the Regulations.
(i) Official Statement. The descriptions and information set forth in the
Borrower Appendices, if any, contained in the Official Statement relating to the
Borrower, its operations and the transactions contemplated hereby, as of the
date of the Official Statement, were and, as of the date of delivery hereof, are
true and correct in all material respects, and did not and do not contain any
untrue statement of a material fact or omit to state a material fact that is
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(j) Preliminary Official Statement. As of the date of the Preliminary
Official
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Statement, the descriptions and information set forth in the Borrower
Appendices, if any, contained in the Preliminary Official Statement relating to
the Borrower, its operations and the transactions contemplated hereby were
"deemed final" by the Borrower for the purposes and within the meaning of Rule
15c2-12.
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 and redemption premium, if any, of the
Loan and the Borrower Bond, the Interest on the Loan, the Interest on the
Borrower Bond and all other amounts due under this Loan Agreement and the
Borrower Bond according to their respective terms.
(b) Performance Under Loan Agreement; Rates. The Borrower covenants and
agrees (i) to comply with all applicable State and federal laws, rules and
regulations in the performance of this Loan Agreement; (ii) to maintain its
Environmental Infrastructure System in good repair and operating condition;
(iii) to cooperate with the Trust in the observance and performance of the
respective duties, covenants, obligations and agreements of the Borrower and the
Trust under this Loan Agreement; and (iv) to establish, levy and collect rents,
rates and other charges for the products and services provided by its
Environmental Infrastructure System, which rents, rates and other charges shall
be at least sufficient to comply with all covenants pertaining thereto contained
in, and all other provisions of, any bond resolution, trust indenture or other
security agreement, if any, relating to any bonds, notes or other evidences of
indebtedness issued or to be issued by the Borrower.
(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 Fund 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 Trust, and, in any event, shall not so sell, lease, abandon or
otherwise dispose of the same unless the following conditions are met: (i)
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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; and (ii) the Trust shall by appropriate action determine, in its
sole discretion, that such sale, lease, abandonment or other disposition will
not adversely affect (A) the Trust's ability to meet its duties, covenants,
obligations and agreements under the Bond Resolution, (B) the value of this Loan
Agreement or the Borrower Bond as security for the payment of Trust Bonds and
the interest thereon, or (C) the excludability from gross income for federal
income tax purposes of the interest on Trust Bonds then outstanding or that
could be issued in the future.
(f) Exclusion of Interest from Federal Gross Income and Compliance with
Code.
(i) The Borrower covenants and agrees that it shall not take any
action or omit to take any action that would result in the loss of the
exclusion of the interest on any Trust Bonds now or hereinafter issued from
gross income for purposes of federal income taxation as that status is
governed by Section 103(a) of the Code.
(ii) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds (or amounts replaced with such
proceeds) or any other funds or take any action or omit to take any action
that would cause the Trust Bonds (assuming solely for this purpose that the
proceeds of the Trust Bonds loaned to the Borrower represent all of the
proceeds of the Trust Bonds) to be "arbitrage bonds" within the meaning of
Section 148(a) of the Code.
(iii) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds loaned to the Borrower to pay the
principal of or the interest or redemption premium on or any other amount
in connection with the retirement or redemption of any issue of state or
local governmental obligations ("refinancing of indebtedness"), unless the
Borrower shall (A) establish to the satisfaction of the Trust, prior to the
issuance of the Trust Bonds, that such refinancing of indebtedness will not
adversely affect the exclusion from gross income of the interest on the
Trust Bonds for federal income tax purposes under Section 103 of the Code,
and (B) provide to the Trust an opinion of Bond Counsel to that effect in
form and substance satisfactory to the Trust.
(iv) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds loaned to the Borrower to reimburse
the Borrower for an expenditure with respect to a Cost of the Borrower's
Project paid by the Borrower prior to the issuance of the Trust Bonds,
unless (A) the allocation by the Borrower of the proceeds of the Trust
Bonds to reimburse such expenditure complies with the requirements of
Treasury Regulations ss.1.150-2 necessary to enable the reimbursement
allocation to be treated as an expenditure of the proceeds of the Trust
Bonds for purposes of applying Sections 103 and 141-150, inclusive, of the
Code, or (B) such proceeds of the Trust Bonds will be used for refinancing
of indebtedness that was used to pay Costs of the Borrower's Project or to
reimburse the Borrower for expenditures with respect to Costs of the
Borrower's Project paid by the Borrower prior to the issuance of such
indebtedness in accordance with a reimbursement allocation for such
expenditures that complies with the
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requirements of Treasury Regulations ss.1.150-2.
(v) The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds loaned to the Borrower to pay any
Cost of the Borrower's Project that does not constitute a "capital
expenditure" within the meaning of Treasury Regulations ss.1.150-1.
(vi) The Borrower shall not use the proceeds of the Trust Bonds
(assuming solely for this purpose that the proceeds of the Trust Bonds
loaned to the Borrower represent all of the proceeds of the Trust Bonds) in
any manner that would cause the Trust Bonds to be considered "federally
guaranteed" within the meaning of Section 149(b) of the Code or "hedge
bonds" within the meaning of Section 149(g) of the Code.
(vii) The Borrower shall not issue any debt obligations that (A) are
sold at substantially the same time as the Trust Bonds and finance or
refinance the Loan made to the Borrower, (B) are sold pursuant to the same
plan of financing as the Trust Bonds and finance or refinance the Loan made
to the Borrower, and (C) are reasonably expected to be paid out of
substantially the same source of funds as the Trust Bonds and finance or
refinance the Loan made to the Borrower.
(viii) Neither the Borrower nor any "related party" (within the
meaning of Treasury Regulations ss.1.150-1) shall purchase Trust Bonds in
an amount related to the amount of the Loan.
(ix) The Borrower will not issue or permit to be issued obligations
that will constitute an "advance refunding" of the Borrower Bond within the
meaning of Section 149(d)(5) of the Code without the express written
consent of the Trust, which consent may only be delivered by the Trust
after the Trust has received notice from the Borrower of such contemplated
action no later than sixty (60) days prior to any such contemplated action,
and which consent is in the sole discretion of the Trust.
(x) The Borrower will not have a reserve or replacement fund (within
the meaning of Section 148(d)(1) of the Code) allocable to the Borrower
Bond evidencing the Loan.
(xi) No "gross proceeds" of the Trust Bonds held by the Borrower
(other than amounts in a "bona fide debt service fund") will be held in a
"commingled fund" (as such terms are defined in Treasury Regulations
ss.1.148-1(b)).
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(xii) Based upon all of the objective facts and circumstances in
existence on the date of issuance of the Trust Bonds used to finance the
Project, (A) within six months of the date of issuance of the Trust Bonds
used to finance the Project, the Borrower will incur a substantial binding
obligation to a third party to expend on the Project at least five percent
(5%) of the "net sale proceeds" (within the meaning of Treasury Regulations
ss.1.148-1) of the Loan used to finance the Project (treating an obligation
as not being binding if it is subject to contingencies within the control
of the Borrower, the Trust or a "related party" (within the meaning of
Treasury Regulations ss.1.150-1)), (B) completion of the Project and the
allocation to expenditures of the "net sale proceeds" of the Loan used to
finance the Project will proceed with due diligence, and (C) at least 85
percent (85%) of the proceeds of the Loan used to finance the Project
(other than amounts deposited into the Debt Service Reserve Fund allocable
to that portion of the Loan used to finance reserve capacity, if any) and
investment earnings thereon will be spent prior to the period ending three
(3) years subsequent to the date of issuance of the Trust Bonds used to
finance the Project. Accordingly, the proceeds of the Loan deposited in the
Project Loan Account used to finance the Project will be eligible for the
3-year arbitrage temporary period since the expenditure test, time test and
due diligence test, as set forth in Treasury Regulations ss.1.148-2(e)(2),
will be satisfied.
(xiii) The weighted average maturity of the Loan does not exceed 120%
of the average reasonably expected economic life of the Project financed or
refinanced with the Loan, determined in the same manner as under Section
147(b) of the Code. Accordingly, the term of the Loan will not be longer
than is reasonably necessary for the governmental purposes of the Loan
within the meaning of Treasury Regulations ss.1.148-1(c)(4).
For purposes of this subsection and subsection (h) of this Section 2.02,
quoted terms shall have the meanings given thereto by Section 148 of the Code,
including, particularly, Treasury Regulations ss.ss.1.148-1 through 1.148-11,
inclusive, as supplemented or amended, to the extent applicable to the Trust
Bonds, and any successor Treasury Regulations applicable to the Trust Bonds.
(g) Operation and Maintenance of Environmental Infrastructure System. The
Borrower covenants and agrees that it shall, in accordance with prudent
environmental infrastructure utility practice, (i) at all times operate the
properties of its Environmental Infrastructure System and any business in
connection therewith in an efficient manner, (ii) maintain its Environmental
Infrastructure System in good repair, working order and operating condition, and
(iii) from time to time make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements with respect to its
Environmental Infrastructure System so that at all times the business carried on
in connection therewith shall be properly and advantageously conducted;
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 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.
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(i) 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
Trust 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 Trust within
150 days of the close of the fiscal year being so audited or, with the
consent of the Trust, such additional period as may be provided by law.
(ii) Unless otherwise advised in writing by the Trust, in furtherance
of the covenant of the Borrower contained in subsection (f) of this Section
2.02 not to cause the Trust Bonds to be arbitrage bonds, the Borrower shall
keep, or cause to be kept, accurate records of each investment it makes in
any "nonpurpose investment" acquired with, or otherwise allocated to,
"gross proceeds" of the Trust Bonds not held by the Trustee and each
"expenditure" it makes allocated to "gross proceeds" of the Trust Bonds.
Such records shall include the purchase price, including any constructive
"payments" (or in the case of a "payment" constituting a deemed acquisition
of a "nonpurpose investment" (e.g., a "nonpurpose investment" first
allocated to "gross proceeds" of the Trust Bonds after it is actually
acquired because it is deposited in a sinking fund for the Trust Bonds)),
the "fair market value" of the "nonpurpose investment" on the date first
allocated to the "gross proceeds" of the Trust Bonds, nominal interest
rate, dated date, maturity date, type of property, frequency of periodic
payments, period of compounding, yield to maturity, amount actually or
constructively received on disposition (or in the case of a "receipt"
constituting a deemed disposition of a "nonpurpose investment" (e.g., a
"nonpurpose investment" that ceases to be allocated to the "gross proceeds"
of the Trust Bonds because it is removed from a sinking fund for the Trust
Bonds)), the "fair market value" of the "nonpurpose investment" on the date
it ceases to be allocated to the "gross proceeds" of the Trust Bonds, the
purchase date and disposition date of the "nonpurpose investment" and
evidence of the "fair market value" of such property on the purchase date
and disposition date (or deemed purchase or disposition date) for each such
"nonpurpose investment". The purchase date, disposition date and the date
of determination of "fair market value" shall be the date on which a
contract to purchase or sell the "nonpurpose investment" becomes binding,
i.e., the trade date rather than the settlement date. For purposes of the
calculation of purchase price and disposition price, brokerage or selling
commissions, administrative expenses or similar expenses shall not increase
the purchase price of an item and shall not reduce the amount actually or
constructively received upon disposition of an item, except to the extent
such costs constitute "qualified administrative costs".
(iii) Within thirty (30) days of the last day of the fifth and each
succeeding fifth "bond year" (which, unless otherwise advised by the Trust,
shall be the five-year period ending on the date five years subsequent to
the date immediately preceding the date of issuance of the Trust Bonds and
each succeeding fifth "bond year") and within thirty (30) days of the date
the last bond that is part of the Trust Bonds is discharged (or on any
other periodic basis requested in writing by the Trust), the Borrower shall
(A) calculate, or cause
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to be calculated, the "rebate amount" as of the "computation date" or
"final computation date" attributable to any "nonpurpose investment" made
by the Borrower and (B) remit the following to the Trust: (1) an amount of
money that when added to the "future value" as of the "computation date" of
any previous payments made to the Trust on account of rebate equals the
"rebate amount", (2) the calculations supporting the "rebate amount"
attributable to any "nonpurpose investment" made by the Borrower allocated
to "gross proceeds" of the Trust Bonds, and (3) any other information
requested by the Trust relating to compliance with Section 148 of the Code
(e.g., information related to any "nonpurpose investment" of the Borrower
for purposes of application of the "universal cap").
(iv) The Borrower covenants and agrees that it will account for "gross
proceeds" of the Trust Bonds, investments allocable to the Trust Bonds and
expenditures of "gross proceeds" of the Trust Bonds in accordance with
Treasury Regulations ss.1.148-6. All allocations of "gross proceeds" of the
Trust Bonds to expenditures will be recorded on the books of the Borrower
kept in connection with the Trust Bonds no later than 18 months after the
later of the date the particular Cost of the Borrower's Project is paid or
the date the portion of the project financed by the Trust Bonds is placed
in service. All allocations of proceeds of the Trust Bonds to expenditures
will be made no later than the date that is 60 days after the fifth
anniversary of the date the Trust Bonds are issued or the date 60 days
after the retirement of the Trust Bonds, if earlier. Such records and
accounts will include the particular Cost paid, the date of the payment and
the party to whom the payment was made.
(i) Inspections; Information. The Borrower shall permit the Trust and the
Trustee and any party designated by any of such parties, at any and all
reasonable times during construction of the Project and thereafter upon prior
written notice, to examine, visit and inspect the property, if any, constituting
the Project and to inspect and make copies of any accounts, books and records,
including (without limitation) its records regarding receipts, disbursements,
contracts, investments and any other matters relating thereto and to its
financial standing, and shall supply such reports and information as the Trust
and the Trustee may reasonably require in connection therewith.
(j) Insurance. The Borrower shall maintain or cause to be maintained, in
force, insurance policies with responsible insurers or self-insurance programs
providing against risk of direct physical loss, damage or destruction of its
Environmental Infrastructure System at least to the extent that similar
insurance is usually carried by utilities constructing, operating and
maintaining Environmental Infrastructure Facilities of the nature of the
Borrower's Environmental Infrastructure System, including liability coverage,
all to the extent available at reasonable cost but in no case less than will
satisfy all applicable regulatory requirements.
(k) 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 Trust a certificate
from a licensed professional engineer authorized to practice in the State
stating that such building cost is a reasonable and accurate estimation and that
the useful life of the Project exceeds 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
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delivered to the Trust and the Trustee 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 Trust may permit
portions of such opinion to be rendered by general counsel to the Borrower
and may permit variances in such opinion from the form set forth in Exhibit
E if, in the opinion of the Trust, such variances are not to the material
detriment of the interests of the holders of the Trust Bonds;
(ii) counterparts of this Loan Agreement as previously executed and
attested by the parties hereto;
(iii) copies of those resolutions finally adopted by the board of
directors of the Borrower and requested by the Trust, including, without
limitation, (A) the resolution of the Borrower authorizing the execution,
attestation and delivery of this Loan Agreement, (B) the Borrower Bond
Resolution, as amended and supplemented as of the date of the Loan Closing,
authorizing the execution, attestation, authentication, sale and delivery
of the Borrower Bond to the Trust, (C) the resolution of the Borrower
confirming the details of the sale of the Borrower Bond to the Trust, (D)
the resolution of the Borrower, if any, declaring its official intent to
reimburse expenditures for the Cost of the Project from the proceeds of the
Trust Bonds, each of said resolutions of the Borrower being certified by an
Authorized Officer of the Borrower as of the date of the Loan Closing, (E)
the resolution of the BPU approving the issuance by the Borrower of the
Borrower Bond to the Trust and setting forth any other approvals required
therefor by the BPU, and (F) any other Proceedings;
(iv) if the Loan is being made to reimburse the Borrower for all or a
portion of the Costs of the Borrower's Project or to refinance indebtedness
or reimburse the Borrower for the repayment of indebtedness previously
incurred by the Borrower to finance all or a portion of the Costs of the
Borrower's Project, an opinion of Bond Counsel, in form and substance
satisfactory to the Trust, to the effect that such reimbursement or
refinancing will not adversely affect the exclusion from gross income of
the interest on the Trust Bonds for federal income tax purposes under
Section 103 of the Code; and
(v) the certificates of insurance coverage as required pursuant to the
terms of Section 3.06(d) hereof and such other certificates, documents,
opinions and information as the Trust may require in Exhibit F hereto, if
any.
(m) Execution and Delivery of Borrower Bond. Concurrently with the delivery
of this Loan Agreement at the Loan Closing, the Borrower shall also deliver to
the Trust the Borrower Bond, as previously executed, attested and authenticated,
upon the receipt of a written certification of the Trust that a portion of the
net proceeds of the Trust Bonds shall be deposited in the Project Loan Account
simultaneously with the delivery of the Borrower Bond.
(n) Notice of Material Adverse Change. The Borrower shall promptly notify
the Trust of any material adverse change in the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, or in the ability of the Borrower to make
all Loan Repayments and otherwise to observe and perform its duties, covenants,
obligations and agreements under this Loan Agreement and the Borrower Bond.
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(o) Continuing Representations. The representations of the Borrower
contained herein shall be true at the time of the execution of this Loan
Agreement and at all times during the term of this Loan Agreement.
(p) Continuing Disclosure Covenant. To the extent that the Trust, in its
sole discretion, determines, at any time prior to the termination of the Loan
Term, that the Borrower is a material "obligated person", as the term "obligated
person" is defined in Rule 15c2-12, with materiality being determined by the
Trust pursuant to criteria established, from time to time, by the Trust in its
sole discretion and set forth in a bond resolution or official statement of the
Trust, the Borrower hereby covenants that it will authorize and provide to the
Trust, for inclusion in any preliminary official statement or official statement
of the Trust, all statements and information relating to the Borrower deemed
material by the Trust for the purpose of satisfying Rule 15c2-12 as well as Rule
10b-5 promulgated pursuant to the Securities Exchange Act of 1934, as amended or
supplemented, including any successor regulation or statute thereto ("Rule
10b-5"), including certificates and written representations of the Borrower
evidencing its compliance with Rule 15c2-12 and Rule 10b-5; and the Borrower
hereby further covenants that the Borrower shall execute and deliver the
Continuing Disclosure Agreement, in substantially the form attached hereto as
Exhibit H, with such revisions thereto prior to execution and delivery thereof
as the Trust shall determine to be necessary, desirable or convenient, in its
sole discretion, for the purpose of satisfying Rule 15c2-12 and the purposes and
intent thereof, as Rule 15c2-12 its purposes and intent may hereafter be
interpreted from time to time by the SEC or any court of competent jurisdiction;
and pursuant to the terms and provisions of the Continuing Disclosure Agreement,
the Borrower shall thereafter provide on-going disclosure with respect to all
statements and information relating to the Borrower in satisfaction of the
requirements set forth in Rule 15c2-12 and Rule 10b-5, including the provision
of certificates and written representations of the Borrower evidencing its
compliance with Rule 15c2-12 and Rule 10b-5.
(q) Additional Covenants and Requirements. No later than the Loan Closing
and, if necessary, in connection with the Trust's issuance of the Trust Bonds or
the making of the Loan, additional covenants and requirements have been included
in Exhibit F hereto and made a part hereof. Such covenants and requirements may
include, but need not be limited to, the maintenance of specified levels of
Environmental Infrastructure System rates, the issuance of additional debt of
the Borrower, the use by or on behalf of the Borrower of certain proceeds of the
Trust Bonds as such use relates to the exclusion from gross income for federal
income tax purposes of the interest on any Trust Bonds, the transfer of revenues
and receipts from the Borrower's Environmental Infrastructure System, compliance
with Rule 15c2-12, Rule 10b-5 and any other applicable federal or State
securities laws, and matters in connection with the appointment of the Trustee
under the Bond Resolution and any successors thereto. The Borrower 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 Trust hereby agrees to make the Loan as
described in Exhibit A-2 hereof and to disburse proceeds of the Loan to the
Borrower in accordance with Section 3.02 and Exhibit C hereof, and the Borrower
hereby agrees to borrow and accept the Loan from the Trust upon the terms set
forth in Exhibit A-2 attached hereto and made a part hereof; provided, however,
that the Trust shall be under no obligation to make the Loan if (a) at the Loan
Closing, the Borrower does not deliver to the Trust a Borrower Bond and such
other documents required under Section 2.02(l) hereof, or (b) an Event of
Default has occurred and is continuing under the Bond Resolution or this Loan
Agreement. Although the Trust intends to disburse proceeds of the Loan to the
Borrower at the times and up to the amounts set forth in Exhibit C to pay a
portion of the Cost of the Project, due to unforeseen circumstances there may
not be a sufficient amount on deposit in the Project Fund on any date to make
the disbursement in such amount. Nevertheless, the Borrower agrees that the
amount actually deposited in the Project Loan Account at the Loan Closing plus
the Borrower's allocable share of certain costs of issuance and underwriter's
discount for all Trust Bonds issued to finance the Loan shall constitute the
initial principal amount of the Loan (as the same may be adjusted downward in
accordance with the definition thereof), and neither the Trust nor the Trustee
shall have any obligation thereafter to loan any additional amounts to the
Borrower.
The Borrower shall use the proceeds of the Loan strictly in accordance with
Section 2.01(h) hereof.
The payment obligations created under this Loan Agreement and the
obligations to pay the principal of the Borrower Bond, Interest on the Borrower
Bond and other amounts due under the Borrower Bond are each direct, general,
irrevocable and unconditional obligations of the Borrower payable from any
source legally available to the Borrower in accordance with the terms of and to
the extent provided in the Borrower Bond Resolution.
SECTION 3.02. Disbursement of Loan Proceeds. (a) The Trustee, as the agent
of the Trust, shall disburse the amounts on deposit in the Project Loan Account
to the Borrower upon receipt of a requisition executed by an Authorized Officer
of the Borrower, and approved by the Trust, in a form meeting the requirements
of Section 5.02(3) of the Bond Resolution.
(b) The Trust and Trustee shall not be required to disburse any Loan
proceeds to the Borrower under this Loan Agreement, unless:
(i) the proceeds of the Trust Bonds shall be available for
disbursement, as determined solely by the Trust;
(ii) in accordance with the "Wastewater Treatment Bond Act of 1985",
P.L. 1985, c. 329, as amended, and the Regulations, the Borrower shall have
timely applied for, shall have been awarded and, prior to or simultaneously
with the Loan Closing, shall have closed a Fund Loan for a portion of the
Allowable Costs (as defined in such regulations) of the
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Project in an amount not in excess of the amount of Allowable Costs of the
Project covered by the Loan from the Trust;
(iii) the Borrower shall have on hand moneys to pay for the greater of
(A) that portion of the total cost of the Project that is not eligible to
be funded from the Fund Loan or the 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 Fund Loan and the
Loan; and
(iv) no Event of Default nor any event that, with the passage of time
or service of notice or both, would constitute an Event of Default shall
have occurred and be continuing hereunder.
SECTION 3.03. Amounts Payable. (a) The Borrower shall repay the Loan in
installments payable to the Loan Servicer as follows:
(i) the principal of the Loan shall be repaid annually on August 1,
commencing August 1, 2000, in accordance with the schedule set forth in
Exhibit A-2 attached hereto and made a part hereof, as the same may be
amended or modified by any credits applicable to the Borrower as set forth
in the Bond Resolution;
(ii) the Interest Portion described in clause (i) of the definition
thereof shall be paid semiannually on 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 any credits applicable to the Borrower as set forth in the Bond
Resolution; and
(iii) the Interest Portion described in clause (ii) of the definition
thereof shall be paid upon the date of optional redemption or acceleration,
as the case may be, of the Trust Bonds allocable to any prepaid or
accelerated Trust Bond Loan Repayment.
The obligations of the Borrower under the Borrower Bond shall be deemed to
be amounts payable under this Section 3.03. Each Loan Repayment, whether
satisfied through a direct payment by the Borrower to the Loan Servicer or (with
respect to the Interest Portion) through the use of Trust Bond proceeds and
income thereon on deposit in the Interest Account (as defined in the Bond
Resolution) to pay interest on the Trust Bonds, shall be deemed to be a credit
against the corresponding obligation of the Borrower under this Section 3.03 and
shall fulfill the Borrower's obligation to pay such amount hereunder and under
the Borrower Bond. Each payment made to the Loan Servicer pursuant to this
Section 3.03 shall be applied first to the Interest Portion then due and
payable, second to the principal of the Loan then due and payable, third to the
payment of the Administrative Fee, and, finally, to the payment of any late
charges hereunder.
(b) The Interest on the Loan described in clause (iii) of the definition
thereof shall (i) consist of a late charge for any Trust Bond Loan Repayment
that is received by the Loan Servicer later than the tenth (10th) day following
its due date and (ii) be payable immediately thereafter in an amount equal to
the greater of twelve percent (12%) per annum or the Prime Rate plus one half of
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one percent per annum on such late payment from its due date to the date it is
actually paid; provided, however, that the rate of Interest on the Loan,
including, without limitation, any late payment charges incurred hereunder,
shall not exceed the maximum interest rate permitted by law.
(c) The Borrower shall receive, as a credit against its semiannual payment
obligations of the Interest Portion, the amounts certified by the Trust pursuant
to Section 5.10 of the Bond Resolution. Such amounts shall represent the
Borrower's allocable share of the interest earnings on certain funds and
accounts established under the Bond Resolution, calculated in accordance with
Section 5.10 of the Bond Resolution.
(d) In accordance with the provisions of the Bond Resolution, the Borrower
shall receive, as a credit against its Trust Bond Loan Repayments, the amounts
set forth in the certificate of the Trust filed with the Trustee pursuant to
Section 5.02(4) of the Bond Resolution.
(e) The Interest on the Loan described in clause (ii) of the definition
thereof shall be paid by the Borrower in the amount of one-half of the
Administrative Fee, if any, to the Loan Servicer semiannually on each February 1
and August 1, commencing February 1, 1999, 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 Trust Bonds remain outstanding or any Loan Repayments
remain unpaid, for any reason, regardless of any contingency, act of God, event
or cause whatsoever, including (without limitation) any acts or circumstances
that may constitute failure of consideration, eviction or constructive eviction,
the taking by eminent domain or destruction of or damage to the Project or
Environmental Infrastructure System, commercial frustration of the purpose, any
change in the laws of the United States of America or of the State or any
political subdivision of either or in the rules or regulations of any
governmental authority, any failure of the Trust or the Trustee to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with the Project, this Loan Agreement or
the Bond Resolution, or any rights of set-off, recoupment, abatement or
counterclaim that the Borrower might otherwise have against the Trust, the
Trustee, 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 or the Bond Resolution.
The Borrower acknowledges that payment of the Trust Bonds by the Trust,
including payment from moneys drawn by the Trustee from the Debt Service Reserve
Fund, does not constitute payment of the amounts due under this Loan Agreement
and the Borrower Bond. If at any time the amount in the Debt Service Reserve
Fund shall be less than the Debt Service Reserve Requirement as the result of
any transfer of moneys from the Debt Service Reserve Fund to the Debt Service
Fund (as all such terms are defined in the Bond Resolution) as the result of a
failure by the Borrower to make any Trust Bond Loan Repayments required
hereunder, the Borrower
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agrees to replenish (i) such moneys so transferred and (ii) any deficiency
arising from losses incurred in making such transfer as the result of the
liquidation by the Trust of Investment Securities (as defined in the Bond
Resolution) acquired as an investment of moneys in the Debt Service Reserve
Fund, by making payments to the Trust in equal monthly installments for the
lesser of six (6) months or the remaining term of the Loan at an interest rate
to be determined by the Trust necessary to make up any loss caused by such
deficiency.
The Borrower acknowledges that payment of the Trust Bonds from moneys that
were originally received by the Loan Servicer from repayments by the Borrowers
of loans made to the Borrowers by the State, acting by and through the New
Jersey Department of Environmental Protection, pursuant to loan agreements dated
as of November 1, 1998 by and between the Borrowers and the State, acting by and
through the New Jersey Department of Environmental Protection, to finance or
refinance a portion of the cost of the Environmental Infrastructure Facilities
of the Borrowers, and which moneys were upon such receipt by the Loan Servicer
deposited in the Trust Bonds Security Account (as defined in the Bond
Resolution), does not constitute payment of the amounts due under this Loan
Agreement and the Borrower Bond.
SECTION 3.05. Loan Agreement to Survive Bond Resolution and Trust Bonds.
The Borrower acknowledges that its duties, covenants, obligations and agreements
hereunder shall survive the discharge of the Bond Resolution applicable to the
Trust Bonds and shall survive the payment of the principal and redemption
premium, if any, of and the interest on the Trust Bonds until the Borrower can
take no action or fail to take any action that could adversely affect the
exclusion from gross income of the interest on the Trust Bonds for federal
income tax purposes under Section 103 of the Code, at which time such duties,
covenants, obligations and agreements hereunder shall, except for those set
forth in Sections 3.06(a) and (b) hereof, terminate.
SECTION 3.06. Disclaimer of Warranties and Indemnification. (a) The
Borrower acknowledges and agrees that (i) neither the Trust nor the Trustee
makes any warranty or representation, either express or implied, as to the
value, design, condition, merchantability or fitness for particular purpose or
fitness for any use of the Environmental Infrastructure System or the Project or
any portions thereof or any other warranty or representation with respect
thereto; (ii) in no event shall the Trust or the Trustee or their respective
agents be liable or responsible for any incidental, indirect, special or
consequential damages in connection with or arising out of this Loan Agreement
or the Project or the existence, furnishing, functioning or use of the
Environmental Infrastructure System or the Project or any item or products or
services provided 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 Trust and the Trustee harmless against, and the Borrower
shall pay any and all, liability, loss, cost, damage, claim, judgment or expense
of any and all kinds or nature and however arising and imposed by law, which the
Trust and the Trustee may sustain, be subject to or be caused to incur by reason
of any claim, suit or action based upon personal injury, death or damage to
property, whether real, personal or mixed, or upon or arising out of contracts
entered into by the Borrower, the Borrower's ownership of the Environmental
Infrastructure System or the Project, or the acquisition, construction or
installation of the Project.
(b) It is mutually agreed by the Borrower, the Trust and the Trustee that
the Trust and its officers, agents, servants or employees shall not be liable
for, and shall be indemnified and saved
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harmless by the Borrower in any event from, any action performed under this Loan
Agreement and any claim or suit of whatsoever nature, except in the event of
loss or damage resulting from their own negligence or willful misconduct. It is
further agreed that the Trustee and its directors, officers, agents, servants or
employees shall not be liable for, and shall be indemnified and saved harmless
by the Borrower in any event from, any action performed pursuant to this Loan
Agreement, except in the event of loss or damage resulting from their own
negligence or willful misconduct.
(c) The Borrower and the Trust agree that all claims shall be subject to
and governed by the provisions of the New Jersey Contractual Liability Act,
N.J.S.A. 59:13-1 et seq. (except for N.J.S.A. 59:13-9 thereof), although such
Act by its express terms does not apply to claims arising under contract with
the Trust.
(d) In connection with its obligation to provide the insurance required
under Section 2.02(j) hereof: (i) the Borrower shall include, or cause to be
included, the Trust and its directors, employees and officers as additional
"named insureds" on (A) any certificate of liability insurance procured by the
Borrower (or other similar document evidencing the liability insurance coverage
procured by the Borrower) and (B) any certificate of liability insurance
procured by any contractor or subcontractor for the Project, and from the latter
of the date of the Loan Closing or the date of the initiation of construction of
the Project until the date the Borrower receives the written certificate of
Project completion from the Trust, the Borrower shall maintain said liability
insurance covering the Trust and said directors, employees and officers in good
standing; and (ii) the Borrower shall include the Trust as an additional "named
insured" on any certificate of insurance providing against risk of direct
physical loss, damage or destruction of the Environmental Infrastructure System,
and during the Loan Term the Borrower shall maintain said insurance covering the
Trust in good standing.
The Borrower shall provide the Trust with a copy of each of any such
original, supplemental, amendatory or reissued certificates of insurance (or
other similar documents evidencing the insurance coverage) required pursuant to
this Section 3.06(d).
SECTION 3.07. Option to Prepay Loan Repayments. The Borrower may prepay the
Trust Bond Loan Repayments, in whole or in part (but if in part, in the amount
of $100,000 or any integral multiple thereof), upon prior written notice to the
Trust and the Trustee not less than ninety (90) days in addition to the number
of days' advance notice to the Trustee required for any optional redemption of
the Trust Bonds, and upon payment by the Borrower to the Trustee of amounts
that, together with investment earnings thereon, will be sufficient to pay the
principal amount of the Trust Bond Loan Repayments to be prepaid plus the
Interest Portion described in clause (ii) of the definition thereof on any such
date of redemption; provided, however, that any such full or partial prepayment
may only be made (i) if the Borrower is not then in arrears on its Fund Loan,
(ii) if the Borrower is contemporaneously making a full or partial prepayment of
the Fund Loan such that, after the prepayment of the Loan and the Fund Loan, the
Trust, in its sole discretion, determines that the interests of the owners of
the Trust Bonds are not adversely affected by such prepayments, and (iii) upon
the prior written approval of the Trust. In addition, if at the time of such
prepayment the Trust Bonds may only be redeemed at the option of the Trust upon
payment of a premium, the Borrower shall add to its prepayment of Trust Bond
Loan Repayments an amount, as determined
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by the Trust, equal to such premium allocable to the Trust Bonds to be redeemed
as a result of the Borrower's prepayment. Prepayments shall be applied first to
the Interest Portion that accrues on the portion of the Loan to be prepaid until
such prepayment date as described in clause (ii) of the definition thereof and
then to principal payments (including premium, if any) on the Loan in inverse
order of their maturity.
SECTION 3.08. Priority of Loan and Fund Loan. (a) The Borrower hereby
acknowledges that, to the extent allowed by law or the Borrower Bond Resolution,
any Loan Repayments then due and payable on the Loan shall be satisfied by the
Loan Servicer before any loan repayments on the Borrower's Fund 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 Trust Bond Loan Repayments
under this Loan Agreement when due, then to the extent allowed by law any (i)
Administrative Fee paid hereunder, (ii) late charges paid hereunder, and (iii)
loan repayments paid by the Borrower on its Fund Loan under the related loan
agreement therefor, any of which payments shall be received by the Loan Servicer
during the time of any such Trust Bond Loan Repayment deficiency, shall first be
applied by the Loan Servicer to satisfy such Trust Bond Loan Repayment
deficiency as a credit against the obligations of the Borrower to make payments
of the Interest Portion under the Loan and the Borrower Bond, second, to the
extent available, to make Trust Bond Loan Repayments of principal hereunder and
payments of principal under the Borrower Bond, third, to the extent available,
to pay the Administrative Fee, fourth, to the extent available, to pay any late
charges hereunder, fifth, to the extent available, to satisfy the repayment of
the Borrower's Fund Loan under its related loan agreement therefor, and,
finally, to the extent available, to satisfy the repayment of the administrative
fee under any such related loan agreement.
(c) The Borrower hereby further acknowledges that any loan repayments paid
by the Borrower on its Fund Loan under the related loan agreement therefor shall
be applied (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 Trust. (a) The Borrower hereby
expressly acknowledges that, other than the provisions of Section 2.02(d)(ii)
hereof, the Trust's right, title and interest in, to and under this Loan
Agreement and the Borrower Bond have been assigned to the Trustee as security
for the Trust Bonds as provided in the Bond Resolution, and that if any Event of
Default shall occur, the Trustee or any Bond Insurer (as such term may be
defined in the Bond Resolution), if applicable, pursuant to the Bond Resolution,
shall be entitled to act hereunder in the place and stead of the Trust. The
Borrower hereby acknowledges the requirements of the Bond Resolution applicable
to the Trust Bonds and consents to such assignment and appointment. This Loan
Agreement and the Borrower Bond, including, without limitation, the right to
receive payments required to be made by the Borrower hereunder and to compel or
otherwise enforce observance and performance by the Borrower of its other
duties, covenants, obligations and agreements hereunder, may be further
transferred, assigned and reassigned in whole or in part to one or more
assignees or subassignees by the Trustee at any time subsequent to their
execution without the necessity of obtaining the consent of, but after giving
prior written notice to, the Borrower.
The Trust shall retain the right to compel or otherwise enforce observance
and performance by the Borrower of its duties, covenants, obligations and
agreements under Section 2.02(d)(ii) hereof; provided, however, that in no event
shall the Trust have the right to accelerate the Borrower Bond in connection
with the enforcement of Section 2.02(d)(ii) hereof.
(b) The Borrower hereby approves and consents to any assignment or transfer
of this Loan Agreement and the Borrower Bond that the Trust deems to be
necessary in connection with any refunding of the Trust Bonds or the issuance of
additional bonds under the Bond Resolution or otherwise, all in connection with
the pooled loan program of the Trust.
SECTION 4.02. Assignment by Borrower. Neither this Loan Agreement nor the
Borrower Bond may be assigned by the Borrower for any reason, unless the
following conditions shall be satisfied: (i) the Trust and the Trustee shall
have approved said assignment in writing; (ii) the assignee shall have expressly
assumed in writing the full and faithful observance and performance of the
Borrower's duties, covenants, obligations and agreements under this Loan
Agreement and, to the extent permitted under applicable law, the Borrower Bond;
(iii) immediately after such assignment, the assignee shall not be in default in
the observance or performance of any duties, covenants, obligations or
agreements of the Borrower under this Loan Agreement or the Borrower Bond; and
(iv) the Trust shall have received an opinion of Bond Counsel to the effect that
such assignment will not adversely affect the security of the holders of the
Trust Bonds or the exclusion of the interest on the Trust Bonds from gross
income for purposes of federal income taxation under Section 103(a) of the Code.
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ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. Events of Default. If any of the following events occur, it
is hereby defined as and declared to be and to constitute an "Event of Default":
(a) failure by the Borrower to pay, or cause to be paid, any Trust Bond
Loan Repayment required to be paid hereunder when due, which failure shall
continue for a period of fifteen (15) days;
(b) failure by the Borrower to pay, or cause to be paid, the Administrative
Fee or any late charges incurred hereunder or any portion thereof when due or to
observe and perform any duty, covenant, obligation or agreement on its part to
be observed or performed under this Loan Agreement, other than as referred to in
subsection (a) of this Section 5.01 or other than the obligations of the
Borrower contained in Section 2.02(d)(ii) hereof and in Exhibit F hereto, which
failure shall continue for a period of thirty (30) days after written notice,
specifying such failure and requesting that it be remedied, is given to the
Borrower by the Trustee, unless the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, that if the
failure stated in such notice is correctable but cannot be corrected within the
applicable period, the Trustee may not unreasonably withhold its consent to an
extension of such time up to 120 days from the delivery of the written notice
referred to above if corrective action is instituted by the Borrower within the
applicable period and diligently pursued until the Event of Default is
corrected;
(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 Trust
and specified in Exhibit F attached hereto and made a part hereof.
SECTION 5.02. Notice of Default. The Borrower shall give the Trustee and
the Trust
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prompt telephonic notice of the occurrence of any Event of Default referred to
in Section 5.01(d) or (e) hereof and of the occurrence of any other event or
condition that constitutes an Event of Default at such time as any senior
administrative or financial officer of the Borrower becomes aware of the
existence thereof.
SECTION 5.03. Remedies on Default. Whenever an Event of Default referred to
in Section 5.01 hereof shall have occurred and be continuing, the Borrower
acknowledges the rights of the Trustee and of any Bond Insurer to direct any and
all remedies in accordance with the terms of the Bond Resolution, and the
Borrower also acknowledges that the Trust shall have the right to take, or to
direct the Trustee to take, any action permitted or required pursuant to the
Bond Resolution and to take whatever other action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter to become
due hereunder or to enforce the observance and performance of any duty,
covenant, obligation or agreement of the Borrower hereunder.
In addition, if an Event of Default referred to in Section 5.01(a) hereof
shall have occurred and be continuing, the Trust shall, to the extent allowed by
applicable law and to the extent and in the manner set forth in the Bond
Resolution, have the right to declare, or to direct the Trustee to declare, all
Loan Repayments and all other amounts due hereunder (including, without
limitation, payments under the Borrower Bond) together with the prepayment
premium, if any, calculated pursuant to Section 3.07 hereof to be immediately
due and payable, and upon notice to the Borrower the same shall become due and
payable without further notice or demand.
SECTION 5.04. Attorneys' Fees and Other Expenses. The Borrower shall on
demand pay to the Trust or the Trustee the reasonable fees and expenses of
attorneys and other reasonable expenses (including, without limitation, the
reasonably allocated costs of in-house counsel and legal staff) incurred by
either of them in the collection of Trust Bond Loan Repayments or any other sum
due hereunder or in the enforcement of the observation or performance of any
other duties, covenants, obligations or agreements of the Borrower upon an Event
of Default.
SECTION 5.05. Application of Moneys. Any moneys collected by the Trust or
the Trustee pursuant to Section 5.03 hereof shall be applied (a) first, to pay
any attorneys' fees or other fees and expenses owed by the Borrower pursuant to
Section 5.04 hereof, (b) second, to the extent available, to pay the Interest
Portion then due and payable, (c) third, to the extent available, to pay the
principal due and payable on the Loan, (d) fourth, to the extent available, to
pay the Administrative Fee, any late charges incurred hereunder or any other
amounts due and payable under this Loan Agreement, and (e) fifth, to the extent
available, to pay the Interest Portion and the principal on the Loan and other
amounts payable hereunder as such amounts become due and payable.
SECTION 5.06. No Remedy Exclusive; Waiver; Notice. No remedy herein
conferred upon or reserved to the Trust or the Trustee is intended to be
exclusive, and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Loan Agreement or now or hereafter existing
at law or in equity. No delay or omission to exercise any right, remedy or power
accruing upon any Event of Default shall impair any such right, remedy or power
or shall be construed to be a waiver thereof, but any such right, remedy or
power may be
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exercised from time to time and as often as may be deemed expedient. In order to
entitle the Trust or the Trustee to exercise any remedy reserved to it in this
Article V, it shall not be necessary to give any notice other than such notice
as may be required in this Article V.
SECTION 5.07. Retention of Trust's Rights. Notwithstanding any assignment
or transfer of this Loan Agreement pursuant to the provisions hereof or of the
Bond Resolution, or anything else to the contrary contained herein, the Trust
shall have the right upon the occurrence of an Event of Default to take any
action, including (without limitation) bringing an action against the Borrower
at law or in equity, as the Trust may, in its discretion, deem necessary to
enforce the obligations of the Borrower to the Trust pursuant to Section 5.03
hereof.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when hand
delivered or mailed by registered or certified mail, postage prepaid, to the
Borrower at the address specified in Exhibit A-1 attached hereto and made a part
hereof and to the Trust, the Trustee and the Loan Servicer at the following
addresses:
(a) Trust:
New Jersey Environmental Infrastructure Trust
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Director
(b) Trustee:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
(c) Loan Servicer:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Any of the foregoing parties may designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent by notice in writing given to the others.
SECTION 6.02. Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Trust and the Borrower and their
respective successors and assigns.
SECTION 6.03. Severability. In the event any provision of this Loan
Agreement shall be held illegal, invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate, render unenforceable
or otherwise affect any other provision hereof.
SECTION 6.04. Amendments, Supplements and Modifications. Except as
otherwise provided in this Section 6.04, this Loan Agreement may not be amended,
supplemented or modified without the prior written consent of the Trust and the
Borrower and without the satisfaction of all conditions set forth in Section
11.12 of the Bond Resolution. Notwithstanding
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the conditions set forth in Section 11.12 of the Bond Resolution, (i) Section
2.02(p) hereof may be amended, supplemented or modified upon the written consent
of the Trust and the Borrower and without the consent of the Trustee, any Bond
Insurer or any holders of the Trust Bonds, and (ii) Exhibit H hereto may be
amended, supplemented or modified prior to the execution and delivery thereof as
the Trust, in its sole discretion, shall determine to be necessary, desirable or
convenient for the purpose of satisfying Rule 15c2-12 and the purpose and intent
thereof as Rule 15c2-12, its purpose and intent may hereafter be interpreted
from time to time by the SEC or any court of competent jurisdiction, and such
amendment, supplement or modification shall not require the consent of the
Borrower, the Trustee, any Bond Insurer or any holders of the Trust Bonds.
SECTION 6.05. Execution in Counterparts. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
SECTION 6.06. Applicable Law and Regulations. This Loan Agreement shall be
governed by and construed in accordance with the laws of the State, including
the Act and the Regulations, which Regulations are, by this reference thereto,
incorporated herein as part of this Loan Agreement.
SECTION 6.07. Consents and Approvals. Whenever the written consent or
approval of the Trust shall be required under the provisions of this Loan
Agreement, such consent or approval may only be given by the Trust unless
otherwise provided by law or by rules, regulations or resolutions of the Trust
or unless expressly delegated to the Trustee and except as otherwise provided in
Section 6.09 hereof.
SECTION 6.08. Captions. The captions or headings in this Loan Agreement are
for convenience only and shall not in any way define, limit or describe the
scope or intent of any provisions or sections of this Loan Agreement.
SECTION 6.09. Benefit of Loan Agreement; Compliance with Bond Resolution.
This Loan Agreement is executed, among other reasons, to induce the purchase of
the Trust Bonds. Accordingly, all duties, covenants, obligations and agreements
of the Borrower herein contained are hereby declared to be for the benefit of
and are enforceable by the Trust, the holders of the Trust Bonds and the
Trustee. The Borrower covenants and agrees to observe and comply with, and to
enable the Trust to observe and comply with, all duties, covenants, obligations
and agreements contained in the Bond Resolution.
SECTION 6.10. Further Assurances. The Borrower shall, at the request of the
Trust, authorize, execute, attest, acknowledge and deliver such further
resolutions, conveyances, transfers, assurances, financing statements and other
instruments as may be necessary or desirable for better assuring, conveying,
granting, assigning and confirming the rights, security interests and agreements
granted or intended to be granted by this Loan Agreement and the Borrower Bond.
-30-
IN WITNESS WHEREOF, the Trust and the Borrower have caused this Loan
Agreement to be executed, sealed and delivered as of the date first above
written.
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
[SEAL]
ATTEST: By:_______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-Chairman
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Secretary
MIDDLESEX WATER COMPANY
[SEAL]
ATTEST: By:_______________________
Authorized Officer
_____________________________
Authorized Officer
Approval of New Jersey State
Treasurer required pursuant
to Section 9a of the Act
By:_______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
New Jersey State Treasurer
[Signature Page]
EXHIBIT A-1
Description of Project and Environmental Infrastructure System
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
Description of Loan
A-2-1
EXHIBIT B
Basis for Determination of Allowable Project Costs
B-1
EXHIBIT C
Estimated Disbursement Schedule
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇-▇
(Except for assignment page, to be supplied by Borrower's
bond counsel in substantially the following form)
IMPORTANT NOTE: The next three pages set forth the form of the Borrower
Bond prepared by the Trust's Bond Counsel for municipal/county Borrowers.
Although the Trust recognizes that each corporate Borrower has its own bond form
as required pursuant to its Borrower Bond Resolution, please incorporate in the
bond form the pertinent information from this municipal/county bond form (e.g.,
amounts payable under the Borrower Bond set forth in the first paragraph,
assignment in the second paragraph, disbursement language in the third
paragraph, unconditional obligation in the fourth paragraph, optional prepayment
provisions in the fifth paragraph and the date of the Borrower Bond).
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 New Jersey Environmental
Infrastructure Trust (the "Trust") (i) the principal amount of
__________________________ Dollars ($__________), or such lesser amount as shall
be determined in accordance with Section 3.01 of the Loan Agreement (as
hereinafter defined), at the times and in the amounts determined as provided in
the Loan Agreement, together with (ii) Interest on the Loan constituting the
Interest Portion, the Administrative Fee and any late charges incurred under the
Loan Agreement (as such terms are defined in the Loan Agreement) in the amount
calculated as provided in the Loan Agreement, payable on the days and in the
amounts and as provided in the Loan Agreement, which principal amount and
Interest Portion of the Interest on the Loan shall, unless otherwise provided in
the Loan Agreement, be payable on the days and in the amounts as also set forth
in Exhibit A attached hereto under the column headings respectively entitled
"Principal" and "Interest", plus (iii) any other amounts due and owing under the
Loan Agreement at the times and in the amounts as provided therein. The Borrower
irrevocably pledges its full faith and credit for the punctual payment of the
principal of and the Interest on this Borrower Bond (as defined in the Loan
Agreement) and for the punctual payment of 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 Trust 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 the
Loan Agreement. This Borrower Bond has been assigned to First Union National
Bank, as trustee (the "Trustee") under the "Environmental Infrastructure Bond
Resolution, Series 1998B", adopted by the Trust on September 21, 1998, as the
same may be amended and supplemented in accordance with the terms thereof (the
"Bond Resolution"), and payments hereunder shall, except as otherwise provided
in the Loan Agreement, be made directly to the Loan Servicer (as defined in the
Loan Agreement) for the account of the Trust pursuant to such assignment. Such
assignment has been made as security for the payment of the Trust Bonds (as
defined in the Loan Agreement) issued to finance or refinance the Loan and as
otherwise described in the Loan Agreement. This Borrower Bond is subject to
further assignment or endorsement in accordance with the terms of the Bond
Resolution and the Loan Agreement. All of the terms, conditions and provisions
of the Loan Agreement are, by this reference thereto, incorporated herein as
part of this Borrower Bond.
Pursuant to the Loan Agreement, disbursements shall be made by the Trustee
to the Borrower, in accordance with written instructions of the Trust, upon
receipt by the Trust and the Trustee of requisitions from the Borrower executed
and delivered in accordance with the requirements set forth in Section 3.02 of
the Loan Agreement.
D-3
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 Trust under the Loan Agreement or under any other agreement between the
Borrower and the Trust or out of any indebtedness or liability at any time owing
to the Borrower by the Trust or for any other reason.
This Borrower Bond is subject to optional prepayment under the terms and
conditions, and in the amounts, provided in Section 3.07 of the Loan Agreement.
To the extent allowed by applicable law, this Borrower Bond may be subject to
acceleration under the terms and conditions, and in the amounts, provided in
Section 5.03 of the Loan Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Borrower Bond to be duly
executed, sealed and delivered as of this 15th day of October, 1998.
MIDDLESEX WATER COMPANY
[SEAL]
By:_______________________
ATTEST:
_____________________ By:_______________________
D-4
New Jersey Environmental Infrastructure Trust hereby assigns the foregoing
Borrower Bond to First Union National Bank, as Trustee under the "Environmental
Infrastructure Bond Resolution, Series 1998B", adopted on September 21, 1998, as
amended and supplemented, all as of the date of this Borrower Bond, as security
for the Trust Bonds issued or to be issued under the Bond Resolution to finance
or refinance the Project Fund (as defined in the Bond Resolution).
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
[SEAL]
ATTEST: By:_______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-Chairman
__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Secretary
D-5
EXHIBIT E
Opinions of Borrower's Bond and General Counsels
E-1
[LETTERHEAD OF COUNSEL TO BORROWER]
November 5, 1998
New Jersey Environmental Infrastructure Trust
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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 New Jersey Environmental Infrastructure Trust (the "Trust"), and have
acted as such in connection with the authorization, execution, attestation and
delivery by the Borrower of its Loan Agreement and Borrower Bond (as hereinafter
defined) pursuant to the New Jersey Business Corporation Act, P.L. 1968, c. 263,
as amended (the "Business Corporation Law"), and 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-Fourth 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 Trust's "Environmental Infrastructure Bond Resolution, Series
1998B", adopted by the Board of Directors of the Trust on September 21, 1998;
(b) the Loan Agreement dated as of November 1, 1998 (the "Loan Agreement")
by and between the Trust and the Borrower;
(c) the proceedings of the board of directors of the Borrower relating to
the approval of the Loan Agreement and the execution, attestation and delivery
thereof on behalf of the Borrower and the authorization of the undertaking and
completion of the Project;
(d) the Borrower Bond dated as of October 15, 1998 (the "Borrower Bond")
issued by the Borrower to the Trust to evidence the Loan; and
(e) the proceedings (together with the proceedings referred to in clause
(c) above and
E-2
Section 5 below, the "Proceedings") of the board of directors of the Borrower,
including, without limitation, the Resolution, relating to the authorization of
the Borrower Bond and the sale, execution, attestation, authentication and
delivery thereof to the Trust (the Loan Agreement and the Borrower Bond are
referred to herein collectively as the "Loan Documents").
We have also examined and relied upon originals, or copies certified or
otherwise authenticated to our satisfaction, of such other records, documents,
certificates and other instruments, and have made such investigation of law as
in our judgment we have deemed necessary or appropriate, to enable us to render
the opinions expressed below.
We are of the opinion that:
1. The Borrower is a corporation duly created and validly existing under
and pursuant to the Constitution and statutes of the State of New Jersey,
including the Business Corporation Law, with the legal right to carry on the
business of its Environmental Infrastructure System as currently being conducted
and as proposed to be conducted.
2. The Borrower has full legal right and authority to execute, attest and
deliver the Loan Documents, to sell the Borrower Bond to the Trust, to cause the
authentication of the Borrower Bond, to observe and perform its duties,
covenants, obligations and agreements under the Loan Documents and to undertake
and complete the Project.
3. The acting 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 Trust and authorizing its
authentication on behalf of the Borrower, (iv) authorizing the Borrower to
consummate the transactions contemplated by the Loan Documents, (v) authorizing
the Borrower to undertake and complete the Project, 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
E-3
meeting or meetings duly called and held in accordance with applicable New
Jersey law and at which quorums were present and acting throughout.
6. The Loan Documents have been duly authorized, executed, attested and
delivered by the Authorized Officers of the Borrower, the Borrower Bond has been
duly sold by the Borrower to the Trust, and the Borrower Bond has been duly
authenticated by the trustee or paying agent under the Resolution; and assuming
in the case of the Loan Agreement that the Trust has the requisite power and
authority to authorize, execute, attest and deliver, and has duly authorized,
executed, attested and delivered, the Loan Agreement, the Loan Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject,
however, to the effect of, and to restrictions and limitations imposed by or
resulting from, bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting creditors' rights generally. No opinion is rendered as to
the availability of any particular remedy.
7. The authorization, execution, attestation and delivery of the Loan
Documents by the Borrower and, in the case of the Borrower Bond only, the
authentication thereof by the trustee or paying agent under the Resolution and
the sale thereof to the Trust, the observation and performance by the Borrower
of its duties, covenants, obligations and agreements thereunder, the
consummation of the transactions contemplated therein, and the undertaking and
completion of the Project do not and will not (i) other than the lien, charge or
encumbrance created by the Loan Documents, by the Resolution and by any other
outstanding debt obligations of the Borrower that are at parity with the
Borrower Bond as to lien on, and source and security for payment thereon from,
the revenues of the Borrower, result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Borrower pursuant to,
(ii) result in any breach of any of the terms, conditions or provisions of, or
(iii) constitute a default under, any existing resolution, outstanding debt or
lease obligation, trust agreement, indenture, mortgage, deed of trust, loan
agreement or other instrument to which the Borrower is a party or by which the
Borrower, its Environmental Infrastructure System or any of its properties or
assets may be bound, nor will such action result in any violation of the
provisions of the charter or other document pursuant to which the Borrower was
established or any laws, ordinances, injunctions, judgments, decrees, rules,
regulations or existing orders of any court or governmental or administrative
agency, authority or person to which the Borrower, its Environmental
Infrastructure System or its properties or operations is subject.
8. All approvals, consents or authorizations of, or registrations of or
filings with, any governmental or public agency, authority or person required to
date on the part of the Borrower in connection with the authorization,
execution, attestation, delivery and performance of the Loan Documents, the sale
of the Borrower Bond and the undertaking and completion of the Project have been
obtained or made.
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
E-4
consummate the transactions contemplated by the Loan or the Loan Documents, or
(v) that, if adversely decided, would have a materially adverse impact on the
financial condition of the Borrower.
10. The Borrower has no bonds, notes or other debt obligations outstanding
that are superior or senior to the Borrower Bond as to lien on, and source and
security for payment thereof from, the revenues of the Borrower.
11. We have consulted with the Borrower and have advised the Borrower as to
the obligations to which the Borrower has agreed in subsections (f) and (h) of
Section 2.02 of the Loan Agreement. We have further advised the Borrower of the
possible consequences that might follow, should the Borrower fail to comply with
its obligations under those subsections of Section 2.02. To the best of our
knowledge, upon due inquiry, (i) all representations made by the Borrower
contained within subsections (f) and (h) of Section 2.02 and, if applicable,
Exhibit F of the Loan Agreement are true, accurate and complete, (ii) we have no
reason to believe that any of the expectations expressed by the Borrower therein
is unreasonable, and (iii) we know of no reason why the Borrower would be unable
to comply on a continuing basis with the covenants contained within subsections
(f) and (h) of Section 2.02 and, if applicable, Exhibit F of the Loan Agreement.
12. Assuming that (i) the Borrower complies on a continuing basis with the
covenants contained in subsections (f) and (h) of Section 2.02 and, if
applicable, Exhibit F of the Loan Agreement, (ii) interest on the Trust Bonds is
otherwise excluded from gross income of the holders thereof for federal income
tax purposes under Section 103(a) of the Internal Revenue Code of 1986, as
amended, and (iii) the proceeds of the Trust Bonds loaned to the Borrower
represent all of the proceeds of the Trust Bonds, the application of the
proceeds of the Loan for their intended purposes will not adversely affect the
exclusion from gross income for federal income tax purposes of the interest on
the Trust Bonds under Section 103 (a) of the Internal Revenue Code of 1986, as
amended.
We hereby authorize ▇▇▇▇▇▇▇▇ & English, LLP, acting as bond counsel to the
Trust, and the Attorney General of the State of New Jersey, acting as general
counsel to the Trust, to rely on this opinion as if we had addressed this
opinion to them in addition to you.
Very truly yours,
E-5
EXHIBIT F
Additional Covenants and Requirements
[None]
F-1
EXHIBIT G
General Administrative Requirements for the
State Environmental Infrastructure Financing Program
G-1
EXHIBIT H
Form of Continuing Disclosure Agreement
▇-▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY
NO. R-1 $1,135,000
NON-NEGOTIABLE
FIRST MORTGAGE SCHEDULED INTEREST RATES BOND, SERIES Y, DUE SEPTEMBER 1, 2018
MIDDLESEX WATER COMPANY, a corporation organized and existing under the
laws of the Trust of New Jersey (hereinafter called the "Water Company"), for
value received, hereby promises to pay to the New Jersey Environmental
Infrastructure Trust (the "Trust") under the Loan Agreement dated as of November
1, 1998 ("Loan Agreement") by and between the Water Company and the Trust, 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 amount of the Loan (as defined in the Loan
Agreement) immediately after Loan Closing (as defined in the Loan Agreement)
which is principal sum of One Million One Hundred Thirty Five Thousand Dollars
($1,135,000) or such lesser amount as shall be determined in accordance with
Section 3.01 of the Loan Agreement, together with Interest on the Loan
constituting the Interest Portion, the Administrative Fee and any late charges
incurred under the Loan Agreement (as such terms are
defined in the Loan Agreement) in the amounts calculated as provided in the Loan
Agreement, which principal amount and Interest Portion of the Interest on the
Loan shall, unless otherwise provided in the Loan Agreement, be payable on the
days and in the amounts as also set forth in Exhibit A-2 to the Loan Agreement
under the column headings respectively entitled "Principal" and "Interest" 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 together with the Interest Portion then due 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 Trust 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 Scheduled Interest Rates
Bonds, Series Y (hereinafter called the "Series Y Bond"), of the principal
amount of $1,135,000 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
3
Indenture dated as of February 1, 1968, (hereinafter called 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
4
"Twentieth Supplemental Indenture"), a Twenty-First 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"), a
Twenty-Third Supplemental Indenture dated as of October 15, 1998 (hereinafter
called the "Twenty-Third Supplemental Indenture") and a Twenty-Fourth
Supplemental Indenture dated as of October 15, 1998 (hereinafter called the
"Twenty-Fourth 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
5
Indenture, Twenty-Second Supplemental Indenture, Twenty-Third Supplemental
Indenture and Twenty-Fourth Supplemental Indenture are referred to herein
sometimes as the "Supplemental Indentures", to which Mortgage and Supplemental
Indentures reference is hereby made for a 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 Y Bond is the Series Y
Bond described in the Fourth Supplemental Indenture and designated therein as
First Mortgage Scheduled Interest Rates Bond, Series Y.
As provided in the Twenty-Fourth Supplemental Indenture, this Series Y 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 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
6
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 order of the
Trust the principal amount of the loan 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, together with Interest on
the Loan constituting the Interest Portion, the Administrative Fee and any late
charges incurred under the Loan Agreement (as such terms are defined in the Loan
Agreement) in the amounts calculated as provided in the Loan Agreement, which
principal amount and Interest Portion of the Interest on the Loan shall, unless
otherwise provided in the Loan Agreement, be payable on the days and in the
amounts as also set forth in Exhibit A-2 to the Loan Agreement under the column
headings respectively entitled "Principal" and "Interest," 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
7
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.
If this Series Y Bond is called for redemption and payment is duly provided
therefor, as specified in the Mortgage and Supplemental Indentures and in the
Loan Agreement or if this Series Y Bond is forthwith redeemed without payment
due to having excess proceeds in the Project Fund (as defined in the Loan
Agreement) on the day on which the Project (as defined in the Loan Agreement) is
completed, interest shall cease to accrue hereon from and after the date fixed
for redemption.
Disbursements of the proceeds of the loan from the Trust under the Loan
Agreement evidenced by the Series Y
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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.
If an event of default, as defined in the Mortgage or Supplemental
Indentures or in the Loan Agreement, shall occur, the Series Y 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.
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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.
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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.
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This Series Y 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 Y Bond. This Series Y Bond
may be transferred at the principal corporate trust office of the Trustee by
surrendering this Series Y 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 Y 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
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forth in the Mortgage and Supplemental Indentures and the Loan Agreement.
The person in whose name this Series Y 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 Y 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 Y 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
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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 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.
This Series Y 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:________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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-Fourth 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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