LOAN AGREEMENT BY AND BETWEEN NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST AND MIDDLESEX WATER COMPANY DATED AS OF NOVEMBER 1, 2006
Exhibit
10.31
BY
AND BETWEEN
NEW
JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST
AND
MIDDLESEX
WATER COMPANY
DATED
AS OF NOVEMBER 1, 2006
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ARTICLE
I
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DEFINITIONS
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ARTICLE
II
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REPRESENTATIONS
AND COVENANTS OF BORROWER
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ARTICLE
III
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LOAN
TO BORROWER; AMOUNTS PAYABLE; GENERAL
AGREEMENTS
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SECTION
3.05. Loan Agreement to Survive Bond Resolution and
Trust Bonds
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ARTICLE
IV
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ASSIGNMENT
OF LOAN AGREEMENT AND BORROWER BOND
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ARTICLE
V
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EVENTS
OF DEFAULT AND REMEDIES
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ARTICLE
VI
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MISCELLANEOUS
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SECTION
6.09. Benefit of Loan Agreement; Compliance with Bond
Resolution
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NEW
JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST LOAN AGREEMENT
THIS
LOAN AGREEMENT,
made
and entered into as of this November 1, 2006, by and between the NEW JERSEY
ENVIRONMENTAL INFRASTRUCTURE TRUST, a public body corporate and politic with
corporate succession, and the Borrower (capitalized terms used in this Loan
Agreement shall have, unless the context otherwise requires, the meanings set
forth in said Section 1.01);
WITNESSETH
THAT:
WHEREAS,
the
Trust, in accordance with the Act, the Bond Resolution and a financial plan
approved by the State Legislature in accordance with Sections 22 and 22.1 of
the
Act, will issue its Trust Bonds on or prior to the Loan Closing for the purpose
of making the Loan to the Borrower and the Loans to the Borrowers from the
proceeds of the Trust Bonds to finance a portion of the Costs of Environmental
Infrastructure Facilities;
WHEREAS,
the
Borrower has, in accordance with the Act and the Regulations, made timely
application to the Trust for a Loan to finance a portion of the Costs of the
Project;
WHEREAS,
the
State Legislature, in accordance with Sections 20 and 20.1 of the Act, has
in
the form of an appropriations act approved a project priority list that includes
the Project and that authorizes an expenditure of proceeds of the Trust Bonds
to
finance a portion of the Costs of the Project;
WHEREAS,
the
Trust has approved the Borrower's application for a Loan from available proceeds
of the Trust Bonds to finance a portion of the Costs of the
Project;
WHEREAS,
in
accordance with the applicable Bond Act (as defined in the Fund Loan Agreement),
and the Regulations, the Borrower has been awarded a Fund Loan for a portion
of
the Costs of the Project; and
WHEREAS,
the
Borrower, in accordance with the Act, the Regulations, the Business Corporation
Law and all other applicable law, will issue a Borrower Bond to the Trust
evidencing said Loan at the Loan Closing.
NOW,
THEREFORE,
for and
in consideration of the award of the Loan by the Trust, the Borrower agrees
to
complete the Project and to perform under this Loan Agreement in accordance
with
the conditions, covenants and procedures set forth herein and attached hereto
as
part hereof, as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01. Definitions. (a)
The
following terms as used in this Loan Agreement shall, unless the context clearly
requires otherwise, have the following meanings:
"Act"
means
the "New Jersey Environmental Infrastructure Trust Act", constituting Chapter
334 of the Pamphlet Laws of 1985 of the State (codified at N.J.S.A. 58:11B-1
et
seq.),
as the
same may from time to time be amended and supplemented.
"Administrative
Fee"
means
that portion of Interest on the Loan or Interest on the Borrower Bond payable
hereunder as an annual fee of up to four-tenths of one percent (.40%) of the
initial principal amount of the Loan or such lesser amount, if any, as may
be
authorized by any act of the State Legislature and as the Trust may approve
from
time to time.
"Authorized
Officer"
means,
in the case of the Borrower, any person or persons authorized pursuant to a
resolution of the board of directors of the Borrower to perform any act or
execute any document relating to the Loan, the Borrower Bond or this Loan
Agreement.
"Bond
Counsel"
means a
law firm appointed or approved by the Trust, as the case may be, having a
reputation in the field of municipal law whose opinions are generally acceptable
by purchasers of municipal bonds.
"Borrower"
means
the corporation that is a party to and is described in Schedule A to this Loan
Agreement, and its successors and assigns.
"Borrower
Bond"
means
the general obligation bond, note, debenture or other evidence of indebtedness
authorized, executed, attested and delivered by the Borrower to the Trust and,
if applicable, authenticated on behalf of the Borrower to evidence the Loan,
a
specimen of which is attached hereto as Exhibit D and made a part
hereof.
"Borrowers"
means
any other Local Government Unit or Private Entity (as such terms are defined
in
the Regulations) authorized to construct, operate and maintain Environmental
Infrastructure Facilities that have entered into Loan Agreements with the Trust
pursuant to which the Trust will make Loans to such recipients from moneys
on
deposit in the Project Fund, excluding the Project Loan Account.
"Business
Corporation Law"
means
the "New Jersey Business Corporation Act", constituting Chapter 263 of the
Pamphlet Laws of 1968 of the State (codified at N.J.S.A. 14A:1-1 et
seq.),
as the
same may from time to time be amended and supplemented.
"Code"
means
the Internal Revenue Code of 1986, as the same may from time to time be amended
and supplemented, including any regulations promulgated thereunder, any
successor code thereto and any administrative or judicial interpretations
thereof.
"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.
“Department”
means
the
New Jersey Department of Environmental Protection.
"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.
“Excess
Project Funds” shall
have the meaning set forth in Section 3.03A hereof.
"Fund
Loan" means
the
loan made to the Borrower by the State, acting by and through the Department,
pursuant to the Fund Loan Agreement dated as of November 1, 2006 by and between
the Borrower and the State, acting by and through the Department, to finance
or
refinance a portion of the Costs of the Project.
"Fund
Loan Agreement" means
the
loan agreement dated as of November 1, 2006 by and between the Borrower and
the
State, acting by and through the Department, regarding the terms and conditions
of the Fund Loan.
"Interest
on the Loan"
or
"Interest
on the Borrower Bond"
means
the sum of (i) the Interest Portion, (ii) the Administrative Fee, and (iii)
any
late charges incurred hereunder.
"Interest
Portion"
means
that portion of Interest on the Loan or Interest on the Borrower Bond payable
hereunder that is necessary to pay the Borrower's proportionate share of
interest on the Trust Bonds (i) as set forth in Exhibit A-2 hereof under the
column heading entitled "Interest", or (ii) with respect to any prepayment
of
Trust Bond Loan Repayments in accordance with Section 3.07 or 5.03 hereof,
to
accrue on any principal amount of Trust Bond Loan Repayments to the date of
the
optional redemption or acceleration, as the case may be, of the Trust Bonds
allocable to such prepaid or accelerated Trust Bond Loan Repayment.
"Loan"
means
the loan made by the Trust to the Borrower to finance or refinance a portion
of
the Costs of the Project pursuant to this Loan Agreement.
"Loan
Agreement"
means
this Loan Agreement, including the Exhibits attached hereto, as it may be
supplemented, modified or amended from time to time in accordance with the
terms
hereof and of the Bond Resolution.
"Loan
Agreements"
means
any other loan agreements entered into by and between the Trust and one or
more
of the Borrowers pursuant to which the Trust will make Loans to such Borrowers
from moneys on deposit in the Project Fund, excluding the Project Loan Account,
financed with the proceeds of the Trust Bonds.
"Loan
Closing"
means
the date upon which the Trust shall issue and deliver the Trust Bonds and the
Borrower shall deliver its Borrower Bond, as previously authorized, executed,
attested and, if applicable, authenticated, to the Trust.
"Loan
Repayments"
means
the sum of (i) Trust Bond Loan Repayments, (ii) the Administrative Fee, and
(iii) any late charges incurred hereunder.
"Loan
Term"
means
the term of this Loan Agreement provided in Sections 3.01 and 3.03 hereof and
in
Exhibit A-2 attached hereto and made a part hereof.
"Loans"
means
the loans made by the Trust to the Borrowers under the Loan Agreements from
moneys on deposit in the Project Fund, excluding the Project Loan
Account.
"Master
Program Trust Agreement"
means
that certain Master Program Trust Agreement, dated as of November 1, 1995,
by
and among the Trust, the State, United States Trust Company of New York, as
Master Program Trustee thereunder, The Bank of New York (NJ), in several
capacities thereunder, and First Fidelity Bank, N.A. (predecessor to Wachovia
Bank, National Association), in several capacities thereunder, as supplemented
by that certain Agreement of Resignation of Outgoing Master Program Trustee,
Appointment of Successor Master Program Trustee and Acceptance Agreement, dated
as of November 1, 2001, by and among United States Trust Company of New York,
as
Outgoing Master Program Trustee, State Street Bank and Trust Company, N.A.
(predecessor to U.S. Bank Trust National Association), as Successor Master
Program Trustee, and the Trust, as the same may be amended and supplemented
from
time to time in accordance with its terms.
"Official
Statement"
means
the Official Statement relating to the issuance of the Trust Bonds.
"Preliminary
Official Statement"
means
the Preliminary Official Statement relating to the issuance of the Trust
Bonds.
"Prime
Rate"
means
the prevailing commercial interest rate announced by the Trustee from time
to
time in the State as its prime lending rate.
"Project"
means
the Environmental Infrastructure Facilities of the Borrower described in Exhibit
A-1 attached hereto and made a part hereof, which constitutes a project for
which the Trust is permitted to make a loan to the Borrower pursuant to the
Act,
the Regulations and the
Bond
Resolution, all or a portion of the Costs of which is financed or refinanced
by
the Trust through the making of the Loan under this Loan Agreement and which
may
be identified under either the Drinking Water or Clean Water Project Lists
with
the Project Number specified in Exhibit A-1 attached hereto.
"Project
Fund"
means
the Project Fund as defined in the Bond Resolution.
"Project
Loan Account"
means
the project loan account established on behalf of the Borrower in the Project
Fund in accordance with the Bond Resolution to finance all or a portion of
the
Costs of the Project.
"Regulations"
means
the rules and regulations, as applicable, now or hereafter promulgated under
N.J.A.C. 7:22-3 et
seq.,
7:22-4
et
seq.,
7:22-5
et
seq.,
7:22-6
et
seq.,
7:22-7
et
seq.,
7:22-8
et
seq.,
7:22-9
et
seq.
and
7:22-10 et
seq.,
as the
same may from time to time be amended and supplemented.
"State"
means
the State of New Jersey.
"Trust"
means
the New Jersey Environmental Infrastructure Trust, a public body corporate
and
politic with corporate succession duly created and validly existing under and
by
virtue of the Act.
"Trust
Bond Loan Repayments"
means
the repayments of the principal amount of the Loan plus the payment of any
premium associated with prepaying the principal amount of the Loan in accordance
with Section 3.07 hereof plus the Interest Portion.
"Trust
Bonds"
means
bonds authorized by Section 2.03 of the Bond Resolution, together with any
refunding bonds authenticated, if applicable, and delivered pursuant to Section
2.04 of the Bond Resolution, in each case issued in order to finance (i) the
portion of the Loan deposited in the Project Loan Account, (ii) the portion
of
the Loans deposited in the balance of the Project Fund, (iii) any capitalized
interest related to such bonds, (iv) a portion of the costs of issuance related
to such bonds, and (v) that portion of the Debt Service Reserve Fund, if any,
allocable to the Loan or Loans, as the case may be, a portion of which includes
the funding of reserve capacity, if applicable, for the Environmental
Infrastructure Facilities of the Borrower or Borrowers, as the case may be,
or
to refinance any or all of the above.
"Trustee"
means,
initially, U.S. Bank National Association, the Trustee appointed by the Trust
and its successors as Trustee under the Bond Resolution, as provided in Article
X of the Bond Resolution.
(b) In
addition to the capitalized terms defined in subsection (a) of this Section
1.01, certain additional capitalized terms used in this Loan Agreement shall,
unless the context clearly requires otherwise, have the meanings ascribed to
such additional capitalized terms in Schedule A attached hereto and made a
part
hereof.
(c) Except
as
otherwise defined herein or where the context otherwise requires, words
importing the singular number shall include the plural number and vice versa,
and words importing persons shall include firms, associations, corporations,
agencies and districts. Words importing one gender shall include the other
gender.
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 and pursuant
to the Constitution and statutes of the State, including the Business
Corporation Law.
(ii) The
acting officers of the Borrower who are contemporaneously herewith performing
or
have previously performed any action contemplated in this Loan Agreement either
are or, at the time any such action was performed, were the duly appointed
or
elected officers of such Borrower empowered by applicable State law and, if
applicable, authorized by resolution of the Borrower to perform such actions.
To
the extent any such action was performed by an officer no longer the duly acting
officer of such Borrower, all such actions previously taken by such officer
are
still in full force and effect.
(iii) The
Borrower has full legal right and authority and all necessary licenses and
permits required as of the date hereof to own, operate and maintain its
Environmental Infrastructure System, to carry on its activities relating
thereto, to execute, attest and deliver this Loan Agreement and the Borrower
Bond, to authorize the authentication of the Borrower Bond, to sell the Borrower
Bond to the Trust, to undertake and complete the Project and to carry out and
consummate all transactions contemplated by this Loan Agreement.
(iv) The
proceedings of the Borrower's board of directors approving this Loan Agreement
and the Borrower Bond, authorizing the execution, attestation and delivery
of
this Loan Agreement and the Borrower Bond, authorizing the sale of the Borrower
Bond to the Trust, authorizing the authentication of the Borrower Bond on behalf
of the Borrower and authorizing the Borrower to undertake and complete the
Project, including, without limitation, the Borrower Bond Resolution
(collectively, the "Proceedings"), have been duly and lawfully adopted in
accordance with the Business Corporation Law and other applicable State law
at a
meeting or meetings that were duly called and held in accordance with the
Borrower By-Laws and at which quorums were present and acting
throughout.
(v) By
official action of the Borrower taken prior to or concurrent with the execution
and delivery hereof, including, without limitation, the Proceedings, the
Borrower has duly authorized, approved and consented to all necessary action
to
be taken by the Borrower for: (A) the execution, attestation, delivery and
performance of this Loan Agreement and the transactions contemplated hereby;
(B)
the issuance of the
Borrower
Bond and the sale thereof to the Trust upon the terms set forth herein; (C)
the
approval of the inclusion, if such inclusion is deemed necessary in the sole
discretion of the Trust, in the Preliminary Official Statement and the Official
Statement of all statements and information relating to the Borrower set forth
in "APPENDIX B" thereto (the "Borrower Appendices") and any amendment thereof
or
supplement thereto; and (D) the execution, delivery and due performance of
any
and all other certificates, agreements and instruments that may be required
to
be executed, delivered and performed by the Borrower in order to carry out,
give
effect to and consummate the transactions contemplated by this Loan Agreement,
including, without limitation, the designation of the Borrower Appendices
portion of the Preliminary Official Statement, if any, as "deemed final" for
the
purposes and within the meaning of Rule 15c2-12 ("Rule 15c2-12") of the
Securities and Exchange Commission ("SEC") promulgated under the Securities
Exchange Act of 1934, as amended or supplemented, including any successor
regulation or statute thereto.
(vi) This
Loan
Agreement and the Borrower Bond have each been duly authorized by the Borrower
and duly executed, attested and delivered by Authorized Officers of the
Borrower, and the Borrower Bond has been duly sold by the Borrower to the Trust,
duly authenticated by the trustee or paying agent, if applicable, under the
Borrower Bond Resolution and duly issued by the Borrower in accordance with
the
terms of the Borrower Bond Resolution; and assuming that the Trust has all
the
requisite power and authority to authorize, execute, attest and deliver, and
has
duly authorized, executed, attested and delivered, this Loan Agreement, and
assuming further that this Loan Agreement is the legal, valid and binding
obligation of the Trust, enforceable against the Trust in accordance with its
terms, each of this Loan Agreement and the Borrower Bond constitutes a legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its respective terms, except as the enforcement thereof
may
be affected by bankruptcy, insolvency or other laws or the application by a
court of legal or equitable principles affecting creditors' rights; and the
information contained under "Description of Loan" in Exhibit A-2 attached hereto
and made a part hereof is true and accurate in all respects.
(b) Full
Disclosure.
There
is no fact that the Borrower has not disclosed to the Trust in writing on the
Borrower's application for the Loan or otherwise that materially adversely
affects or (so far as the Borrower can now foresee) that will materially
adversely affect the properties, activities, prospects or condition (financial
or otherwise) of the Borrower or its Environmental Infrastructure System, or
the
ability of the Borrower to make all Loan Repayments and any other payments
required under this Loan Agreement or otherwise to observe and perform its
duties, covenants, obligations and agreements under this Loan Agreement and
the
Borrower Bond.
(c) Pending
Litigation.
There
are no proceedings pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower in any court or before any governmental
authority or arbitration board or tribunal that, if adversely determined, would
materially adversely affect (i) the undertaking or completion of the Project,
(ii) the properties, activities, prospects or condition (financial or otherwise)
of the Borrower or its Environmental
Infrastructure
System, (iii) the ability of the Borrower to make all Loan Repayments or any
other payments required under this Loan Agreement, (iv) the authorization,
execution, attestation or delivery of this Loan Agreement or the Borrower Bond,
(v) the issuance of the Borrower Bond and the sale thereof to the Trust, (vi)
the adoption of the Borrower Bond Resolution, or (vii) the Borrower's ability
otherwise to observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement and the Borrower Bond, which proceedings
have not been previously disclosed in writing to the Trust either in the
Borrower's application for the Loan or otherwise.
(d) Compliance
with Existing Laws and Agreements.
(i) The
authorization, execution, attestation and delivery of this Loan Agreement and
the Borrower Bond by the Borrower, (ii) the authentication of the Borrower
Bond
by the trustee or paying agent under the Borrower Bond Resolution, as the case
may be, and the sale of the Borrower Bond to the Trust, (iii) the adoption
of
the Borrower Bond Resolution, (iv) the observation and performance by the
Borrower of its duties, covenants, obligations and agreements hereunder and
thereunder, (v) the consummation of the transactions provided for in this Loan
Agreement, the Borrower Bond Resolution and the Borrower Bond, and (vi) the
undertaking and completion of the Project will not (A) other than the lien,
charge or encumbrance created hereby, by the Borrower Bond, by the Borrower
Bond
Resolution and by any other outstanding debt obligations of the Borrower that
are at parity with the Borrower Bond as to lien on, and source and security
for
payment thereon from, the revenues of the Borrower's Environmental
Infrastructure System, result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Borrower pursuant to, (B)
result in any breach of any of the terms, conditions or provisions of, or (C)
constitute a default under, any existing resolution, outstanding debt or lease
obligation, trust agreement, indenture, mortgage, deed of trust, loan agreement
or other instrument to which the Borrower is a party or by which the Borrower,
its Environmental Infrastructure System or any of its properties or assets
may
be bound, nor will such action result in any violation of the provisions of
the
charter or other document pursuant to which the Borrower was established or
any
laws, ordinances, injunctions, judgments, decrees, rules, regulations or
existing orders of any court or governmental or administrative agency, authority
or person to which the Borrower, its Environmental Infrastructure System or
its
properties or operations is subject.
(e) No
Defaults.
No
event has occurred and no condition exists that, upon the authorization,
execution, attestation and delivery of this Loan Agreement and the Borrower
Bond, the issuance of the Borrower Bond and the sale thereof to the Trust,
the
adoption of the Borrower Bond Resolution or the receipt of the amount of the
Loan, would constitute an Event of Default hereunder. The Borrower is not in
violation of, and has not received notice of any claimed violation of, any
term
of any agreement or other instrument to which it is a party or by which it,
its
Environmental Infrastructure System or its properties may be bound, which
violation would materially adversely affect the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System or the ability of the Borrower to make
all
Loan Repayments, to pay all other amounts due hereunder or otherwise to observe
and perform its duties, covenants, obligations and agreements under this Loan
Agreement and the Borrower Bond.
(f) Governmental
Consent.
The
Borrower has obtained all permits and approvals required to date by any
governmental body or officer for the authorization, execution, attestation
and
delivery of this Loan Agreement and the Borrower Bond, for the issuance of
the
Borrower Bond and the sale thereof to the Trust, for the adoption of the
Borrower Bond Resolution, for the making, observance and performance by the
Borrower of its duties, covenants, obligations and agreements under this Loan
Agreement and the Borrower Bond and for the undertaking or completion of the
Project and the financing or refinancing thereof, including, but not limited
to,
if required, the approval by the New Jersey Board of Public Utilities (the
"BPU") of the issuance by the Borrower of the Borrower Bond to the Trust, as
required by Section 9a of the Act, and any other approvals required therefor
by
the BPU; and the Borrower has complied with all applicable provisions of law
requiring any notification, declaration, filing or registration with any
governmental body or officer in connection with the making, observance and
performance by the Borrower of its duties, covenants, obligations and agreements
under this Loan Agreement and the Borrower Bond or with the undertaking or
completion of the Project and the financing or refinancing thereof. No consent,
approval or authorization of, or filing, registration or qualification with,
any
governmental body or officer that has not been obtained is required on the
part
of the Borrower as a condition to the authorization, execution, attestation
and
delivery of this Loan Agreement and the Borrower Bond, the issuance of the
Borrower Bond and the sale thereof to the Trust, the undertaking or completion
of the Project or the consummation of any transaction herein
contemplated.
(g) Compliance
with Law.
The
Borrower:
(i) is
in
compliance with all laws, ordinances, governmental rules and regulations to
which it is subject, the failure to comply with which would materially adversely
affect (A) the ability of the Borrower to conduct its activities or to undertake
or complete the Project, (B) the ability of the Borrower to make the Loan
Repayments and to pay all other amounts due hereunder, or (C) the condition
(financial or otherwise) of the Borrower or its Environmental Infrastructure
System; and
(ii) has
obtained all licenses, permits, franchises or other governmental authorizations
presently necessary for the ownership of its properties or for the conduct
of
its activities that, if not obtained, would materially adversely affect (A)
the
ability of the Borrower to conduct its activities or to undertake or complete
the Project, (B) the ability of the Borrower to make the Loan Repayments and
to
pay all other amounts due hereunder, or (C) the condition (financial or
otherwise) of the Borrower or its Environmental Infrastructure
System.
(h) Use
of
Proceeds.
The
Borrower will apply the proceeds of the Loan from the Trust as described in
Exhibit B attached hereto and made a part hereof (i) to finance or refinance
a
portion of the Costs of the Borrower's Project; and (ii) where applicable,
to
reimburse the Borrower for a portion of the Costs of the Borrower's Project,
which portion was paid or incurred in anticipation of reimbursement by the
Trust
and is eligible for such reimbursement under and pursuant to the Regulations,
the Code and any other applicable law. All of such costs constitute Costs for
which the Trust is authorized to make Loans to the Borrower pursuant to the
Act
and the Regulations.
(i) Official
Statement.
The
descriptions and information set forth in the Borrower Appendices, if any,
contained in the Official Statement relating to the Borrower, its operations
and
the transactions contemplated hereby, as of the date of the Official Statement,
were and, as of the date of delivery hereof, are true and correct in all
material respects, and did not and do not contain any untrue statement of a
material fact or omit to state a material fact that is necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(j) Preliminary
Official Statement.
As of
the date of the Preliminary Official Statement, the descriptions and information
set forth in the Borrower Appendices, if any, contained in the Preliminary
Official Statement relating to the Borrower, its operations and the transactions
contemplated hereby (i) were "deemed final" by the Borrower for the purposes
and
within the meaning of Rule 15c2-12 and (ii) were true and correct in all
material respects, and did not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
SECTION
2.02. Particular Covenants of
Borrower.
(a) Promise
to Pay.
The
Borrower unconditionally and irrevocably promises, in accordance with the terms
of and to the extent provided in the Borrower Bond Resolution, to make punctual
payment of the principal and redemption premium, if any, of the Loan and the
Borrower Bond, the Interest on the Loan, the Interest on the Borrower Bond
and
all other amounts due under this Loan Agreement and the Borrower Bond according
to their respective terms.
(b) Performance
Under Loan Agreement; Rates.
The
Borrower covenants and agrees (i) to comply with all applicable State and
federal laws, rules and regulations in the performance of this Loan Agreement;
(ii) to maintain its Environmental Infrastructure System in good repair and
operating condition; (iii) to cooperate with the Trust in the observance and
performance of the respective duties, covenants, obligations and agreements
of
the Borrower and the Trust under this Loan Agreement; and (iv) to establish,
levy and collect rents, rates and other charges for the products and services
provided by its Environmental Infrastructure System, which rents, rates and
other charges shall be at least sufficient to comply with all covenants
pertaining thereto contained in, and all other provisions of, any bond
resolution, trust indenture or other security agreement, if any, relating to
any
bonds, notes or other evidences of indebtedness issued or to be issued by the
Borrower, including without limitation rents, rates and other charges, together
with other available moneys, sufficient to pay the principal of and Interest
on
the Borrower Bond, plus all other amounts due hereunder.
(c) Borrower
Bond; No Prior Liens.
Except
for (i) the Borrower Bond, (ii) any bonds or notes at parity with the Borrower
Bond and currently outstanding or issued on the date hereof, (iii) any future
bonds or notes of the Borrower issued under the Borrower Bond Resolution at
parity with the Borrower Bond, and (iv) any Permitted Encumbrances (as defined
in the Borrower Bond Resolution), the assets of the Borrower that are subject
to
the Borrower Bond
Resolution
are and will be free and clear of any pledge, lien, charge or encumbrance
thereon or with respect thereto prior to, or of equal rank with, the Borrower
Bond, and all corporate or other action on the part of the Borrower to that
end
has been and will be duly and validly taken.
(d) Completion
of Project and Provision of Moneys Therefor.
The
Borrower covenants and agrees (i) to exercise its best efforts in accordance
with prudent environmental infrastructure utility practice to complete the
Project and to accomplish such completion on or before the estimated Project
completion date set forth in Exhibit G hereto and made a part hereof; (ii)
to
comply with the terms and provisions contained in Exhibit G hereto; and (iii)
to
provide from its own fiscal resources all moneys, in excess of the total amount
of loan proceeds it receives under the Loan and Fund Loan, required to complete
the Project.
(e) See
Section 2.02(e) as set forth in Schedule A attached hereto, made a part hereof
and incorporated in this Section 2.02(e) by reference as if set forth in full
herein.
(f) Exclusion
of Interest from Federal Gross Income and Compliance with Code.
(i) The
Borrower covenants and agrees that it shall not take any action or omit to
take
any action that would result in the loss of the exclusion of the interest on
any
Trust Bonds now or hereafter issued from gross income for purposes of federal
income taxation as that status is governed by Section 103(a) of the
Code.
(ii) The
Borrower shall not directly or indirectly use or permit the use of any proceeds
of the Trust Bonds (or amounts replaced with such proceeds) or any other funds
or take any action or omit to take any action that would cause the Trust Bonds
(assuming solely for this purpose that the proceeds of the Trust Bonds loaned
to
the Borrower represent all of the proceeds of the Trust Bonds) to be "arbitrage
bonds" within the meaning of Section 148(a) of the Code.
(iii) The
Borrower shall not directly or indirectly use or permit the use of any proceeds
of the Trust Bonds to pay the principal of or the interest or redemption premium
on or any other amount in connection with the retirement or redemption of any
issue of state or local governmental obligations ("refinancing of
indebtedness"), unless the Borrower shall (A) establish to the satisfaction
of
the Trust, prior to the issuance of the Trust Bonds, that such refinancing
of
indebtedness will not adversely affect the exclusion from gross income for
federal income tax purposes of the interest on the Trust Bonds, and (B) provide
to the Trust an opinion of Bond Counsel to that effect in form and substance
satisfactory to the Trust.
(iv) The
Borrower shall not directly or indirectly use or permit the use of any proceeds
of the Trust Bonds to reimburse the Borrower for an expenditure with respect
to
Costs of the Borrower's Project paid by the Borrower prior to the issuance
of
the Trust Bonds, unless (A) the allocation by the Borrower of the proceeds
of
the Trust Bonds to reimburse such expenditure complies with the requirements
of
Treasury Regulations §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 requirements of Treasury Regulations
§1.150-2.
(v) The
Borrower shall not directly or indirectly use or permit the use of any proceeds
of the Trust Bonds to pay any Costs of the Borrower's Project that does not
constitute a "capital expenditure" within the meaning of Treasury Regulations
§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
§1.150-1) shall purchase Trust Bonds in an amount related to the amount of the
Loan.
(ix) The
Borrower will not issue or permit to be issued obligations that will constitute
an "advance refunding" of the Borrower Bond within the meaning of Section
149(d)(5) of the Code without the express written consent of the Trust, which
consent may only be delivered by the Trust after the Trust has received notice
from the Borrower of such contemplated action no later than sixty (60) days
prior to any such contemplated action, and which consent is in the sole
discretion of the Trust.
(x) See
Section 2.02(f)(x) as set forth in Schedule A attached hereto, made a part
hereof and incorporated in this Section 2.02(f)(x) by reference as if set forth
in full herein.
(xi) No
"gross
proceeds" of the Trust Bonds held by the Borrower (other than amounts in a
"bona
fide debt service fund") will be held in a "commingled fund" (as such terms
are
defined in Treasury Regulations §1.148-1(b)).
(xii) Based
upon all of the objective facts and circumstances in existence on the date
of
issuance of the Trust Bonds used to finance the Project, (A) within six months
of the date of issuance of the Trust Bonds used to finance the Project, the
Borrower will
incur
a
substantial binding obligation to a third party to expend on the Project at
least five percent (5%) of the "net sale proceeds" (within the meaning of
Treasury Regulations §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 §1.150-1)), (B) completion of the Project and the
allocation to expenditures of the "net sale proceeds" of the Loan used to
finance the Project will proceed with due diligence, and (C) all of the proceeds
of the Loan used to finance the Project (other than amounts deposited into
the
Debt Service Reserve Fund allocable to that portion of the Loan used to finance
reserve capacity, if any) and investment earnings thereon will be spent prior
to
the period ending three (3) years subsequent to the date of issuance of the
Trust Bonds used to finance the Project. Accordingly, the proceeds of the Loan
deposited in the Project Loan Account used to finance the Project will be
eligible for the 3-year arbitrage temporary period since the expenditure test,
time test and due diligence test, as set forth in Treasury Regulations
§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 §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 §§1.148-1 through 1.148-11,
inclusive, as supplemented or amended, to the extent applicable to the Trust
Bonds, and any successor Treasury Regulations applicable to the Trust
Bonds.
(g) Operation
and Maintenance of Environmental Infrastructure System.
The
Borrower covenants and agrees that it shall, in accordance with prudent
environmental infrastructure utility practice, (i) at all times operate the
properties of its Environmental Infrastructure System and any business in
connection therewith in an efficient manner, (ii) maintain its Environmental
Infrastructure System in good repair, working order and operating condition,
and
(iii) from time to time make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements with respect to its
Environmental Infrastructure System so that at all times the business carried
on
in connection therewith shall be properly and advantageously
conducted.
(h) Records
and Accounts.
(i) The
Borrower shall keep accurate records and accounts for its Environmental
Infrastructure System (the "System Records") separate and distinct from its
other records and accounts (the "General Records"). Such System Records shall
be
audited annually by an independent certified public accountant, which may be
part of the annual audit of the General Records of the Borrower. Such System
Records and General Records shall be made available for inspection by the Trust
at any reasonable time upon
prior
written notice, and a copy of such annual audit(s) therefor, including all
written comments and recommendations of such accountant, shall be furnished
to
the Trust within 150 days of the close of the fiscal year being so audited
or,
with the consent of the Trust, such additional period as may be provided by
law.
(ii) Unless
otherwise advised in writing by the Trust, in furtherance of the covenant of
the
Borrower contained in subsection (f) of this Section 2.02 not to cause the
Trust
Bonds to be arbitrage bonds, the Borrower shall keep, or cause to be kept,
accurate records of each investment it makes in any "nonpurpose investment"
acquired with, or otherwise allocated to, "gross proceeds" of the Trust Bonds
not held by the Trustee and each "expenditure" it makes allocated to "gross
proceeds" of the Trust Bonds. Such records shall include the purchase price,
including any constructive "payments" (or in the case of a "payment"
constituting a deemed acquisition of a "nonpurpose investment" (e.g., a
"nonpurpose investment" first allocated to "gross proceeds" of the Trust Bonds
after it is actually acquired because it is deposited in a sinking fund for
the
Trust Bonds)), the "fair market value" of the "nonpurpose investment" on the
date first allocated to the "gross proceeds" of the Trust Bonds, nominal
interest rate, dated date, maturity date, type of property, frequency of
periodic payments, period of compounding, yield to maturity, amount actually
or
constructively received on disposition (or in the case of a "receipt"
constituting a deemed disposition of a "nonpurpose investment" (e.g., a
"nonpurpose investment" that ceases to be allocated to the "gross proceeds"
of
the Trust Bonds because it is removed from a sinking fund for the Trust Bonds)),
the "fair market value" of the "nonpurpose investment" on the date it ceases
to
be allocated to the "gross proceeds" of the Trust Bonds, the purchase date
and
disposition date of the "nonpurpose investment" and evidence of the "fair market
value" of such property on the purchase date and disposition date (or deemed
purchase or disposition date) for each such "nonpurpose investment". The
purchase date, disposition date and the date of determination of "fair market
value" shall be the date on which a contract to purchase or sell the "nonpurpose
investment" becomes binding, i.e., the trade date rather than the settlement
date. For purposes of the calculation of purchase price and disposition price,
brokerage or selling commissions, administrative expenses or similar expenses
shall not increase the purchase price of an item and shall not reduce the amount
actually or constructively received upon disposition of an item, except to
the
extent such costs constitute "qualified administrative costs".
(iii) Within
thirty (30) days of the last day of the fifth and each succeeding fifth "bond
year" (which, unless otherwise advised by the Trust, shall be the five-year
period ending on the date five years subsequent to the date immediately
preceding the date of issuance of the Trust Bonds and each succeeding fifth
"bond year") and within thirty (30) days of the date the last bond that is
part
of the Trust Bonds is discharged (or on any other periodic basis requested
in
writing by the Trust), the Borrower shall (A) calculate, or cause to be
calculated, the "rebate amount" as of the "computation date" or "final
computation date" attributable to any "nonpurpose investment" made by the
Borrower and (B) remit the following to the Trust: (1) an amount of money that
when added to the "future value" as of the "computation date" of any previous
payments made to the Trust on account of rebate equals the "rebate amount",
(2)
the calculations
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 §1.148-6.
All allocations of "gross proceeds" of the Trust Bonds to expenditures will
be
recorded on the books of the Borrower kept in connection with the Trust Bonds
no
later than 18 months after the later of the date the particular Costs of the
Borrower's Project is paid or the date the portion of the project financed
by
the Trust Bonds is placed in service. All allocations of proceeds of the Trust
Bonds to expenditures will be made no later than the date that is 60 days after
the fifth anniversary of the date the Trust Bonds are issued or the date 60
days
after the retirement of the Trust Bonds, if earlier. Such records and accounts
will include the particular Cost paid, the date of the payment and the party
to
whom the payment was made.
(i) Inspections;
Information.
The
Borrower shall permit the Trust and the Trustee and any party designated by
any
of such parties, at any and all reasonable times during construction of the
Project and thereafter upon prior written notice, to examine, visit and inspect
the property, if any, constituting the Project and to inspect and make copies
of
any accounts, books and records, including (without limitation) its records
regarding receipts, disbursements, contracts, investments and any other matters
relating thereto and to its financial standing, and shall supply such reports
and information as the Trust and the Trustee may reasonably require in
connection therewith.
(j) Insurance.
The
Borrower shall maintain or cause to be maintained, in force, insurance policies
with responsible insurers or self-insurance programs providing against risk
of
direct physical loss, damage or destruction of its Environmental Infrastructure
System at least to the extent that similar insurance is usually carried by
utilities constructing, operating and maintaining Environmental Infrastructure
Facilities of the nature of the Borrower's Environmental Infrastructure System,
including liability coverage, all to the extent available at reasonable cost
but
in no case less than will satisfy all applicable regulatory
requirements.
(k) Costs
of Project.
The
Borrower certifies that the building cost of the Project, as listed in Exhibit
B
hereto and made a part hereof, is a reasonable and accurate estimation thereof,
and it will supply to the Trust a certificate from a licensed professional
engineer authorized to practice in the State stating that such building cost
is
a reasonable and accurate estimation and that the useful life of the Project
exceeds the maturity date of the Borrower Bond.
(l) Delivery
of Documents.
Concurrently with the delivery of this Loan Agreement (as previously authorized,
executed and attested) at the Loan Closing, the Borrower will cause to be
delivered to the Trust and the Trustee each of the following
items:
(i) an
opinion of the Borrower's bond counsel substantially in the form of Exhibit
E
hereto; provided, however, that the Trust may permit portions of such opinion
to
be rendered by general counsel to the Borrower and may permit variances in
such
opinion from the form set forth in Exhibit E if, in the opinion of the Trust,
such variances are not to the material detriment of the interests of the holders
of the Trust Bonds;
(ii) counterparts
of this Loan Agreement as previously executed and attested by the parties
hereto;
(iii) copies
of
those resolutions finally adopted by the board of directors of the Borrower
and
requested by the Trust, including, without limitation, (A) the resolution of
the
Borrower authorizing the execution, attestation and delivery of this Loan
Agreement, (B) the Borrower Bond Resolution, as amended and supplemented as
of
the date of the Loan Closing, authorizing the execution, attestation,
authentication, sale and delivery of the Borrower Bond to the Trust, (C) the
resolution of the Borrower, if any, confirming the details of the sale of the
Borrower Bond to the Trust, (D) the resolution of the Borrower, if any,
declaring its official intent to reimburse expenditures for the Costs of the
Project from the proceeds of the Trust Bonds, each of said resolutions of the
Borrower being certified by an Authorized Officer of the Borrower as of the
date
of the Loan Closing, (E) the resolution of the BPU approving the issuance by
the
Borrower of the Borrower Bond to the Trust and setting forth any other approvals
required therefor by the BPU, if applicable, and (F) any other
Proceedings;
(iv) if
the
Loan is being made to reimburse the Borrower for all or a portion of the Costs
of the Borrower's Project or to refinance indebtedness or reimburse the Borrower
for the repayment of indebtedness previously incurred by the Borrower to finance
all or a portion of the Costs of the Borrower's Project, an opinion of Bond
Counsel, in form and substance satisfactory to the Trust, to the effect that
such reimbursement or refinancing will not adversely affect the exclusion from
gross income for federal income tax purposes of the interest on the Trust Bonds;
and
(v) the
certificates of insurance coverage as required pursuant to the terms of Section
3.06(d) hereof and such other certificates, documents, opinions and information
as the Trust may require in Exhibit F hereto, if any.
(m) Execution
and Delivery of Borrower Bond.
Concurrently with the delivery of this Loan Agreement at the Loan Closing,
the
Borrower shall also deliver to the Trust the Borrower Bond, as previously
executed, attested and, if applicable, authenticated, upon the receipt of a
written certification of the Trust that a portion of the net proceeds of the
Trust Bonds shall be deposited in the Project Loan Account simultaneously with
the delivery of the Borrower Bond.
(n) Notice
of Material Adverse Change.
The
Borrower shall promptly notify the Trust of any material adverse change in
the
properties, activities, prospects or condition (financial or otherwise) of
the
Borrower or its Environmental Infrastructure System, or in the ability of the
Borrower to make all Loan Repayments and otherwise to observe and perform
its
duties,
covenants, obligations and agreements under this Loan Agreement and the Borrower
Bond.
(o) Continuing
Representations.
The
representations of the Borrower contained herein shall be true at the time
of
the execution of this Loan Agreement and at all times during the term of this
Loan Agreement.
(p) Continuing
Disclosure Covenant.
To the
extent that the Trust, in its sole discretion, determines, at any time prior
to
the termination of the Loan Term, that the Borrower is a material "obligated
person", as the term "obligated person" is defined in Rule 15c2-12, with
materiality being determined by the Trust pursuant to criteria established,
from
time to time, by the Trust in its sole discretion and set forth in a bond
resolution or official statement of the Trust, the Borrower hereby covenants
that it will authorize and provide to the Trust, for inclusion in any
preliminary official statement or official statement of the Trust, all
statements and information relating to the Borrower deemed material by the
Trust
for the purpose of satisfying Rule 15c2-12 as well as Rule 10b-5 promulgated
pursuant to the Securities Exchange Act of 1934, as amended or supplemented,
including any successor regulation or statute thereto ("Rule 10b-5"), including
certificates and written representations of the Borrower evidencing its
compliance with Rule 15c2-12 and Rule 10b-5; and the Borrower hereby further
covenants that the Borrower shall execute and deliver the Continuing Disclosure
Agreement, in substantially the form attached hereto as Exhibit H, with such
revisions thereto prior to execution and delivery thereof as the Trust shall
determine to be necessary, desirable or convenient, in its sole discretion,
for
the purpose of satisfying Rule 15c2-12 and the purposes and intent thereof,
as
Rule 15c2-12, its purposes and intent may hereafter be interpreted from time
to
time by the SEC or any court of competent jurisdiction; and pursuant to the
terms and provisions of the Continuing Disclosure Agreement, the Borrower shall
thereafter provide on-going disclosure with respect to all statements and
information relating to the Borrower in satisfaction of the requirements set
forth in Rule 15c2-12 and Rule 10b-5, including, without limitation, the
provision of certificates and written representations of the Borrower evidencing
its compliance with Rule 15c2-12 and Rule 10b-5.
(q) Additional
Covenants and Requirements.
(i) No
later than the Loan Closing and, if necessary, in connection with the Trust's
issuance of the Trust Bonds or the making of the Loan, additional covenants
and
requirements have been included in Exhibit F hereto and made a part hereof.
Such
covenants and requirements may include, but need not be limited to, the
maintenance of specified levels of Environmental Infrastructure System rates,
the issuance of additional debt of the Borrower, the use by or on behalf of
the
Borrower of certain proceeds of the Trust Bonds as such use relates to the
exclusion from gross income for federal income tax purposes of the interest
on
any Trust Bonds, the transfer of revenues and receipts from the Borrower's
Environmental Infrastructure System, compliance with Rule 15c2-12, Rule 10b-5
and any other applicable federal or State securities laws, and matters in
connection with the appointment of the Trustee under the Bond Resolution and
any
successors thereto. The Borrower hereby agrees to observe and comply with each
such additional covenant and requirement, if any, included in Exhibit F hereto.
(ii) Additional defined terms, covenants, representations and requirements
have
been included in Schedule
A
attached
hereto and made a part hereof. Such additional defined terms, covenants,
representations and requirements are
incorporated
in this Loan Agreement by reference thereto as if set forth in full herein
and
the Borrower hereby agrees to observe and comply with each such additional
term,
covenant, representation and requirement included in Schedule
A
as if
the same were set forth in its entirety where reference thereto is made in
this
Loan Agreement.
ARTICLE
III
LOAN
TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION
3.01. Loan; Loan Term. The
Trust
hereby agrees to make the Loan as described in Exhibit A-2 hereof and to
disburse proceeds of the Loan to the Borrower in accordance with Section 3.02
and Exhibit C hereof, and the Borrower hereby agrees to borrow and accept the
Loan from the Trust upon the terms set forth in Exhibit A-2 attached hereto
and
made a part hereof; provided, however, that the Trust shall be under no
obligation to make the Loan if (a) at the Loan Closing, the Borrower does not
deliver to the Trust a Borrower Bond and such other documents required under
Section 2.02(l) hereof, or (b) an Event of Default has occurred and is
continuing under the Bond Resolution or this Loan Agreement. Although the Trust
intends to disburse proceeds of the Loan to the Borrower at the times and up
to
the amounts set forth in Exhibit C to pay a portion of the Costs of the Project,
due to unforeseen circumstances there may not be a sufficient amount on deposit
in the Project Fund on any date to make the disbursement in such amount.
Nevertheless, the Borrower agrees that the amount actually deposited in the
Project Loan Account at the Loan Closing plus the Borrower's allocable share
of
(i) certain costs of issuance and underwriter's discount for all Trust Bonds
issued to finance the Loan; (ii) capitalized interest during the Project
construction period, if applicable; and (iii) that portion of the Debt Service
Reserve Fund attributable to the cost of funding reserve capacity for the
Project, if applicable, shall constitute the initial principal amount of the
Loan (as the same may be adjusted downward in accordance with the definition
thereof), and neither the Trust nor the Trustee shall have any obligation
thereafter to loan any additional amounts to the Borrower.
The
Borrower shall use the proceeds of the Loan strictly in accordance with Section
2.01(h) hereof.
The
payment obligations created under this Loan Agreement and the obligations to
pay
the principal of the Borrower Bond, Interest on the Borrower Bond and other
amounts due under the Borrower Bond are each direct, general, irrevocable and
unconditional obligations of the Borrower payable from any source legally
available to the Borrower in accordance with the terms of and to the extent
provided in the Borrower Bond Resolution.
SECTION
3.02. Disbursement of Loan Proceeds. (a)
The
Trustee, as the agent of the Trust, shall disburse the amounts on deposit in
the
Project Loan Account to the Borrower upon receipt of a requisition executed
by
an Authorized Officer of the Borrower, and approved by the Trust, in a form
meeting the requirements of Section 5.02(3) of the Bond Resolution.
(b) The
Trust
and Trustee shall not be required to disburse any Loan proceeds to the Borrower
under this Loan Agreement, unless:
(i) the
proceeds of the Trust Bonds shall be available for disbursement, as determined
solely by the Trust;
(ii) in
accordance with the Bond Act, and the Regulations, the Borrower shall have
timely applied for, shall have been awarded and, prior to or simultaneously
with
the Loan Closing, shall have closed a Fund Loan for a portion of the Allowable
Costs (as defined in such Regulations) of the Project in an amount not in excess
of the amount of Allowable Costs of the Project financed by the Loan from the
Trust;
(iii) the
Borrower shall have on hand moneys to pay for the greater of (A) that portion
of
the total Costs of the Project that is not eligible to be funded from the Fund
Loan or the Loan, or (B) that portion of the total Costs of the Project that
exceeds the actual amounts of the loan commitments made by the State and the
Trust, respectively, for the Fund Loan and the Loan; and
(iv) no
Event
of Default nor any event that, with the passage of time or service of notice
or
both, would constitute an Event of Default shall have occurred and be continuing
hereunder.
SECTION
3.03. Amounts Payable. (a)
The
Borrower shall repay the Loan in installments payable to the Trustee as
follows:
(i) the
principal of the Loan shall be repaid annually on the Principal Payment Dates,
in accordance with the schedule set forth in Exhibit A-2 attached hereto and
made a part hereof, as the same may be amended or modified by any credits
applicable to the Borrower as set forth in the Bond Resolution;
(ii) the
Interest Portion described in clause (i) of the definition thereof shall be
paid
semiannually on the Interest Payment Dates, in accordance with the schedule
set
forth in Exhibit A-2 attached hereto and made a part hereof, as the same may
be
amended or modified by any credits applicable to the Borrower as set forth
in
the Bond Resolution; and
(iii) the
Interest Portion described in clause (ii) of the definition thereof shall be
paid upon the date of optional redemption or acceleration, as the case may
be,
of the Trust Bonds allocable to any prepaid or accelerated Trust Bond Loan
Repayment.
The
obligations of the Borrower under the Borrower Bond shall be deemed to be
amounts payable under this Section 3.03. Each Loan Repayment, whether satisfied
through a direct payment by the Borrower to the Trustee or (with respect to
the
Interest Portion) through the use of Trust Bond proceeds and income thereon
on
deposit in the Interest Account (as defined in the Bond Resolution) to pay
interest on the Trust Bonds, shall be deemed to be a credit against the
corresponding obligation of the Borrower under this Section 3.03 and shall
fulfill the Borrower's obligation to pay such amount hereunder and under the
Borrower Bond. Each payment made to the Trustee pursuant to this Section 3.03
shall be applied first
to the
Interest Portion then due and payable, second
to the
principal of the Loan then due and payable, third
to the
payment of the Administrative Fee, and finally
to the
payment of any late charges hereunder.
(b) The
Interest on the Loan described in clause (iii) of the definition thereof shall
(i) consist of a late charge for any Trust Bond Loan Repayment that is received
by the Trustee later than the tenth (10th) day following its due date and (ii)
be payable immediately thereafter in an amount equal to the greater of twelve
percent (12%) per annum or the Prime Rate plus one half of one percent per
annum
on such late payment from its due date to the date it is actually paid;
provided, however, that the rate of Interest on the Loan, including, without
limitation, any late payment charges incurred hereunder, shall not exceed the
maximum interest rate permitted by law.
(c) The
Borrower shall receive, as a credit against its semiannual payment obligations
of the Interest Portion, the amounts certified by the Trust pursuant to Section
5.10 of the Bond Resolution. Such amounts shall represent the Borrower's
allocable share of the interest earnings on certain funds and accounts
established under the Bond Resolution, calculated in accordance with Section
5.10 of the Bond Resolution.
(d) In
accordance with the provisions of the Bond Resolution, the Borrower shall
receive, as a credit against its Trust Bond Loan Repayments, the amounts set
forth in the certificate of the Trust filed with the Trustee pursuant to Section
5.02(4) of the Bond Resolution.
(e) The
Interest on the Loan described in clause (ii) of the definition thereof shall
be
paid by the Borrower in the amount of one-half of the Administrative Fee, if
any, to the Trustee on each Interest Payment Date, commencing with the first
Interest Payment Date subsequent to the Loan Closing.
(f) The
Borrower hereby agrees to pay to the Trust at the Loan Closing a “Security
Review Fee” in the amount necessary to reimburse the Trust for all of its costs
and expenses incurred in connection with reviewing the additional security
securing the Trust Loan as set forth in Exhibit F hereto, if any, including
without limitation the fees and expenses of any professional advisers hired
by
the Trust in connection therewith.
SECTION
3.03A. Amounts on Deposit in Project Loan Account after Completion of Draw
Schedule. (a)
If,
on the date which is one hundred eighty (180) days following the final date
for
which a disbursement of Loan proceeds is scheduled to be made pursuant to
Exhibit C hereto, any amounts remain on deposit in the Borrower’s Project Loan
Account, the Borrower must provide to the Trust and the Department a certificate
of an Authorized Officer of the Borrower (i) stating that the Borrower has
not
yet completed the Project, (ii) stating that the Borrower intends to complete
the Project, (iii) setting forth the amount of remaining Loan Proceeds required
to complete the Project, and (iv) providing a revised draw schedule, in a form
similar to Exhibit C hereto and approved by the Department.
(b) If,
on
the date which is one hundred eighty (180) days following the final date for
which a disbursement of Loan proceeds is scheduled to be made pursuant to a
revised draw schedule certified to the Trust and the Department in accordance
with Section 3.03A(a) hereof, any amounts remain on deposit in the Borrower’s
Project Loan Account, the Borrower must provide to the Trust and the Department
a certificate of an Authorized Officer of the Borrower (i) stating that the
Borrower has not yet completed the Project, (ii) stating that the Borrower
intends
to
complete the Project, (iii) setting forth the amount of remaining Loan Proceeds
required to complete the Project, and (iv) providing a revised draw schedule,
in
a form similar to Exhibit C hereto and approved by the Department.
(c) If
the
Borrower fails to provide the certificate described in paragraphs (a) or (b)
of
this Section 3.03A, when due, or if such certificate states that the Borrower
does not require all or any portion of the amount on deposit in the Project
Loan
Account to complete the Project, such amounts on deposit in the Project Loan
Account which are not certified by an Authorized Officer of the Borrower as
being required to complete the Project (“Excess Project Funds”) shall be applied
as follows:
(i) If
the
Excess Project Funds are less than or equal to the greater of (A) $250,000
or
(B) the amount of Loan Repayments due from the Borrower to the Trust in the
next
succeeding calendar year, the Excess Project Funds shall be applied by the
Trust
toward the Borrower’s obligation to make the Loan Repayments next coming due;
or
(ii) If
the
Excess Project Funds are greater than the greater of (A) $250,000 or (B) the
amount of Loan Repayments due from the Borrower to the Trust in the next
succeeding calendar year, the Excess Project Funds shall be applied by the
Trust
as a prepayment of the Borrower’s Loan Repayments, and shall be applied to the
principal payments (including premium, if any) on the Loan in inverse order
of
their maturity.
SECTION
3.04. Unconditional Obligations. The
obligation of the Borrower to make the Loan Repayments and all other payments
required hereunder and the obligation to perform and observe the other duties,
covenants, obligations and agreements on its part contained herein shall be
absolute and unconditional, and shall not be abated, rebated, set-off, reduced,
abrogated, terminated, waived, diminished, postponed or otherwise modified
in
any manner or to any extent whatsoever while any Trust Bonds remain outstanding
or any Loan Repayments remain unpaid, for any reason, regardless of any
contingency, act of God, event or cause whatsoever, including (without
limitation) any acts or circumstances that may constitute failure of
consideration, eviction or constructive eviction, the taking by eminent domain
or destruction of or damage to the Project or Environmental Infrastructure
System, commercial frustration of the purpose, any change in the laws of the
United States of America or of the State or any political subdivision of either
or in the rules or regulations of any governmental authority, any failure of
the
Trust or the Trustee to perform and observe any agreement, whether express
or
implied, or any duty, liability or obligation arising out of or connected with
the Project, this Loan Agreement or the Bond Resolution, or any rights of
set-off, recoupment, abatement or counterclaim that the Borrower might otherwise
have against the Trust, the Trustee or any other party or parties; provided,
however, that payments hereunder shall not constitute a waiver of any such
rights. The Borrower shall not be obligated to make any payments required to
be
made by any other Borrowers under separate Loan Agreements or the Bond
Resolution.
The
Borrower acknowledges that payment of the Trust Bonds by the Trust, including
payment from moneys drawn by the Trustee from the Debt Service Reserve Fund,
does not constitute payment of the amounts due under this Loan Agreement and
the
Borrower Bond. If at any time the amount in the Debt Service Reserve Fund shall
be less than the Debt Service
Reserve
Requirement as the result of any transfer of moneys from the Debt Service
Reserve Fund to the Debt Service Fund (as all such terms are defined in the
Bond
Resolution) as the result of a failure by the Borrower to make any Trust Bond
Loan Repayments required hereunder, the Borrower agrees to replenish (i) such
moneys so transferred and (ii) any deficiency arising from losses incurred
in
making such transfer as the result of the liquidation by the Trust of Investment
Securities (as defined in the Bond Resolution) acquired as an investment of
moneys in the Debt Service Reserve Fund, by making payments to the Trust in
equal monthly installments for the lesser of six (6) months or the remaining
term of the Loan at an interest rate to be determined by the Trust necessary
to
make up any loss caused by such deficiency.
The
Borrower acknowledges that payment of the Trust Bonds from moneys that were
originally received by the Trustee from repayments by the Borrowers of loans
made to the Borrowers by the State, acting by and through the Department,
pursuant to loan agreements dated as of November 1, 2006 by and between the
Borrowers and the State, acting by and through the Department, to finance or
refinance a portion of the Costs of the Environmental Infrastructure Facilities
of the Borrowers, and which moneys were upon such receipt by the Trustee
deposited in the Trust Bonds Security Account (as defined in the Bond
Resolution), does not constitute payment of the amounts due under this Loan
Agreement and the Borrower Bond.
SECTION
3.05. Loan Agreement to Survive Bond Resolution and Trust
Bonds. The
Borrower acknowledges that its duties, covenants, obligations and agreements
hereunder shall survive the discharge of the Bond Resolution applicable to
the
Trust Bonds and shall survive the payment of the principal and redemption
premium, if any, of and the interest on the Trust Bonds until the Borrower
can
take no action or fail to take any action that could adversely affect the
exclusion from gross income of the interest on the Trust Bonds for purposes
of
federal income taxation, at which time such duties, covenants, obligations
and
agreements hereunder shall, except for those set forth in Sections 3.06(a)
and
(b) hereof, terminate.
SECTION
3.06. Disclaimer of Warranties and Indemnification.
(a)
The
Borrower acknowledges and agrees that (i) neither the Trust nor the Trustee
makes any warranty or representation, either express or implied, as to the
value, design, condition, merchantability or fitness for particular purpose
or
fitness for any use of the Environmental Infrastructure System or the Project
or
any portions thereof or any other warranty or representation with respect
thereto; (ii) in no event shall the Trust or the Trustee or their respective
agents be liable or responsible for any incidental, indirect, special or
consequential damages in connection with or arising out of this Loan Agreement
or the Project or the existence, furnishing, functioning or use of the
Environmental Infrastructure System or the Project or any item or products
or
services provided for in this Loan Agreement; and (iii) to the fullest extent
permitted by law, the Borrower shall indemnify and hold the Trust and the
Trustee harmless against, and the Borrower shall pay any and all, liability,
loss, cost, damage, claim, judgment or expense of any and all kinds or nature
and however arising and imposed by law, which the Trust and the Trustee may
sustain, be subject to or be caused to incur by reason of any claim, suit or
action based upon personal injury, death or damage to property, whether real,
personal or mixed, or upon or arising out of contracts entered into by the
Borrower, the Borrower's ownership of the Environmental Infrastructure System
or
the Project, or the acquisition, construction or installation of the
Project.
(b) It
is
mutually agreed by the Borrower, the Trust and the Trustee that the Trust and
its officers, agents, servants or employees shall not be liable for, and shall
be indemnified and saved harmless by the Borrower in any event from, any action
performed under this Loan Agreement and any claim or suit of whatsoever nature,
except in the event of loss or damage resulting from their own negligence or
willful misconduct. It is further agreed that the Trustee and its directors,
officers, agents, servants or employees shall not be liable for, and shall
be
indemnified and saved harmless by the Borrower in any event from, any action
performed pursuant to this Loan Agreement, except in the event of loss or damage
resulting from their own negligence or willful misconduct.
(c) The
Borrower and the Trust agree that all claims shall be subject to and governed
by
the provisions of the New Jersey Contractual Liability Act, N.J.S.A. 59:13-1
et
seq.
(except
for N.J.S.A. 59:13-9 thereof), although such Act by its express terms does
not
apply to claims arising under contract with the Trust.
(d) In
connection with its obligation to provide the insurance required under Section
2.02(j) hereof: (i) the Borrower shall include, or cause to be included, the
Trust and its directors, employees and officers as additional "named insureds"
on (A) any certificate of liability insurance procured by the Borrower (or
other
similar document evidencing the liability insurance coverage procured by the
Borrower) and (B) any certificate of liability insurance procured by any
contractor or subcontractor for the Project, and from the later 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, with respect
to
any prepayment other than those required by Section 3.03A hereof, any such
full
or partial prepayment may only be made (i) if the Borrower is not then in
arrears on its Fund Loan, (ii) if the Borrower is contemporaneously making
a
full or partial prepayment of the Fund Loan such that, after the prepayment
of
the Loan and the Fund Loan, the Trust, in its sole discretion, determines that
the interests of the owners of the Trust Bonds are not adversely affected by
such
prepayments,
and (iii) upon the prior written approval of the Trust. In addition, if at
the
time of such prepayment the Trust Bonds may only be redeemed at the option
of
the Trust upon payment of a premium, the Borrower shall add to its prepayment
of
Trust Bond Loan Repayments an amount, as determined by the Trust, equal to
such
premium allocable to the Trust Bonds to be redeemed as a result of the
Borrower's prepayment. Prepayments shall be applied first to the Interest
Portion that accrues on the portion of the Loan to be prepaid until such
prepayment date as described in clause (ii) of the definition thereof and then
to principal payments (including premium, if any) on the Loan in inverse order
of their maturity.
SECTION
3.08. Priority of Loan and Fund Loan.
(a)
The
Borrower hereby agrees that, to the extent allowed by law or the Borrower Bond
Resolution, any Loan Repayments then due and payable on the Loan shall be
satisfied by the Borrower before any loan repayments on the Borrower's Fund
Loan
shall be satisfied by the Borrower.
(b) The
Borrower hereby acknowledges that in the event the Borrower fails or is unable
to pay promptly to the Trust in full any Trust Bond Loan Repayments under this
Loan Agreement when due, then any (i) Administrative Fee paid hereunder, (ii)
late charges paid hereunder, and (iii) loan repayments paid by the Borrower
on
its Fund Loan under the related loan agreement therefor, any of which payments
shall be received by the Trustee during the time of any such Trust Bond Loan
Repayment deficiency, shall be applied by the Trustee first
to
satisfy such Trust Bond Loan Repayment deficiency as a credit against the
obligations of the Borrower to make payments of the Interest Portion under
the
Loan and the Borrower Bond, second,
to the
extent available, to make Trust Bond Loan Repayments of principal hereunder
and
payments of principal under the Borrower Bond, third,
to the
extent available, to pay the Administrative Fee, fourth,
to the
extent available, to pay any late charges hereunder, fifth,
to the
extent available, to satisfy the repayment of the Borrower's Fund Loan under
its
related loan agreement therefor, and finally,
to the
extent available, to satisfy the repayment of the administrative fee under
any
such related loan agreement.
(c) The
Borrower hereby further acknowledges that any loan repayments paid by the
Borrower on its Fund Loan under the related loan agreement therefor shall be
applied according to the provisions of the Master Program Trust
Agreement.
SECTION
3.09. Approval of the New Jersey State
Treasurer.
The
Borrower and the Trust hereby acknowledge that prior to or simultaneously with
the Loan Closing the New Jersey State Treasurer, in satisfaction of the
requirements of Section 9a of the Act, issued the “Certificate of the New Jersey
State Treasurer Regarding the Approval of the Trust Loan and the Fund Loan” (the
“Treasurer’s Certificate”). Pursuant to the terms of the Treasurer’s
Certificate, the New Jersey State Treasurer approved the Loan and the terms
and
conditions thereof as established by the provisions of this Loan
Agreement.
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.
ARTICLE
V
EVENTS
OF DEFAULT AND REMEDIES
SECTION
5.01. Events of Default. If
any of
the following events occur, it is hereby defined as and declared to be and
to
constitute an "Event of Default":
(a) failure
by the Borrower to pay, or cause to be paid, any Trust Bond Loan Repayment
required to be paid hereunder when due, which failure shall continue for a
period of fifteen (15) days;
(b) failure
by the Borrower to make, or cause to be made, any required payments of
principal, redemption premium, if any, and interest on any bonds, notes or
other
obligations of the Borrower issued under the Borrower Bond Resolution (other
than the Loan and the Borrower Bond) or otherwise secured by all or a portion
of
the property pledged under the Borrower Bond Resolution, after giving effect
to
the applicable grace period;
(c) failure
by the Borrower to pay, or cause to be paid, the Administrative Fee or any
late
charges incurred hereunder or any portion thereof when due or to observe and
perform any duty, covenant, obligation or agreement on its part to be observed
or performed under this Loan Agreement, other than as referred to in subsection
(a) of this Section 5.01 or other than the obligations of the Borrower contained
in Section 2.02(d)(ii) hereof and in Exhibit F hereto, which failure shall
continue for a period of thirty (30) days after written notice, specifying
such
failure and requesting that it be remedied, is given to the Borrower by the
Trustee, unless the Trustee shall agree in writing to an extension of such
time
prior to its expiration; provided, however, that if the failure stated in such
notice is correctable but cannot be corrected within the applicable period,
the
Trustee may not unreasonably withhold its consent to an extension of such time
up to 120 days from the delivery of the written notice referred to above if
corrective action is instituted by the Borrower within the applicable period
and
diligently pursued until the Event of Default is corrected;
(d) any
representation made by or on behalf of the Borrower contained in this Loan
Agreement, or in any instrument furnished in compliance with or with reference
to this Loan Agreement or the Loan, is false or misleading in any material
respect;
(e) a
petition is filed by or against the Borrower under any federal or state
bankruptcy or insolvency law or other similar law in effect on the date of
this
Loan Agreement or thereafter enacted, unless in the case of any such petition
filed against the Borrower such petition shall be dismissed within thirty (30)
days after such filing and such dismissal shall be final and not subject to
appeal; or the Borrower shall become insolvent or bankrupt or shall make an
assignment for the benefit of its creditors; or a custodian (including, without
limitation, a receiver, liquidator or trustee) of the Borrower or any of its
property shall be appointed by court order or take possession of the Borrower
or
its property or assets if such order remains in effect or such possession
continues for more than thirty (30) days;
(f) the
Borrower shall generally fail to pay its debts as such debts become due;
and
(g) failure
of the Borrower to observe or perform such additional duties, covenants,
obligations, agreements or conditions as are required by the Trust and specified
in Exhibit F attached hereto and made a part hereof.
SECTION
5.02. Notice of Default. The
Borrower shall give the Trustee and the Trust prompt telephonic notice of the
occurrence of any Event of Default referred to in Section 5.01(d) or (e) hereof
and of the occurrence of any other event or condition that constitutes an Event
of Default at such time as any senior administrative or financial officer of
the
Borrower becomes aware of the existence thereof.
SECTION
5.03. Remedies on Default. Whenever
an Event of Default referred to in Section 5.01 hereof shall have occurred
and
be continuing, the Borrower acknowledges the rights of the Trustee and of any
Bond Insurer to direct any and all remedies in accordance with the terms of
the
Bond Resolution, and the Borrower also acknowledges that the Trust shall have
the right to take, or to direct the Trustee to take, any action permitted or
required pursuant to the Bond Resolution and to take whatever other action
at
law or in equity may appear necessary or desirable to collect the amounts then
due and thereafter to become due hereunder or to enforce the observance and
performance of any duty, covenant, obligation or agreement of the Borrower
hereunder.
In
addition, if an Event of Default referred to in Section 5.01(a) hereof shall
have occurred and be continuing, the Trust shall, to the extent allowed by
applicable law and to the extent and in the manner set forth in the Bond
Resolution, have the right to declare, or to direct the Trustee to declare,
all
Loan Repayments and all other amounts due hereunder (including, without
limitation, payments under the Borrower Bond) together with the prepayment
premium, if any, calculated pursuant to Section 3.07 hereof to be immediately
due and payable, and upon notice to the Borrower the same shall become due
and
payable without further notice or demand.
SECTION
5.04. Attorneys' Fees and Other Expenses.
The
Borrower shall on demand pay to the Trust or the Trustee the reasonable fees
and
expenses of attorneys and other reasonable expenses (including, without
limitation, the reasonably allocated costs of in-house counsel and legal staff)
incurred by either of them in the collection of Trust Bond Loan Repayments
or
any other sum due hereunder or in the enforcement of the observation or
performance of any other duties, covenants, obligations or agreements of the
Borrower upon an Event of Default.
SECTION
5.05. Application of Moneys. Any
moneys collected by the Trust or the Trustee pursuant to Section 5.03 hereof
shall be applied (a) first
to pay
any attorneys' fees or other fees and expenses owed by the Borrower pursuant
to
Section 5.04 hereof, (b) second,
to the
extent available, to pay the Interest Portion then due and payable, (c)
third,
to the
extent available, to pay the principal due and payable on the Loan, (d)
fourth,
to the
extent available, to pay the Administrative Fee, any late charges incurred
hereunder or any other amounts due and payable under this Loan Agreement, and
(e) fifth,
to the
extent available, to pay the Interest Portion and the principal on the Loan
and
other amounts payable hereunder as such amounts become due and
payable.
SECTION
5.06. No Remedy Exclusive; Waiver; Notice.
No
remedy
herein conferred upon or reserved to the Trust or the Trustee is intended to
be
exclusive, and every such remedy shall be cumulative and shall be in addition
to
every other remedy given under this Loan Agreement or now or hereafter existing
at law or in equity. No delay or omission to exercise any right, remedy or
power
accruing upon any Event of Default shall impair any such right, remedy or power
or shall be construed to be a waiver thereof, but any such right, remedy or
power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Trust or the Trustee to exercise any remedy
reserved to it in this Article V, it shall not be necessary to give any notice
other than such notice as may be required in this Article V.
SECTION
5.07. Retention of Trust's Rights. Notwithstanding
any assignment or transfer of this Loan Agreement pursuant to the provisions
hereof or of the Bond Resolution, or anything else to the contrary contained
herein, the Trust shall have the right upon the occurrence of an Event of
Default to take any action, including (without limitation) bringing an action
against the Borrower at law or in equity, as the Trust may, in its discretion,
deem necessary to enforce the obligations of the Borrower to the Trust pursuant
to Section 5.03 hereof.
ARTICLE
VI
MISCELLANEOUS
SECTION
6.01. Notices. All
notices, certificates or other communications hereunder shall be sufficiently
given and shall be deemed given when hand delivered or mailed by registered
or
certified mail, postage prepaid, to the Borrower at the address specified in
Exhibit A-1 attached hereto and made a part hereof and to the Trust and the
Trustee at the following addresses:
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(a)
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Trust:
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New
Jersey Environmental Infrastructure Trust
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Attention:
Executive Director
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(b)
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Trustee:
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U.S.
Bank
National Association
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▇▇▇▇▇▇, ▇▇▇
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Attention:
Corporate Trust Department
Any
of
the foregoing parties may designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent by notice
in writing given to the others.
SECTION
6.02. Binding Effect. This
Loan
Agreement shall inure to the benefit of and shall be binding upon the Trust
and
the Borrower and their respective successors and assigns.
SECTION
6.03. Severability. In
the
event any provision of this Loan Agreement shall be held illegal, invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate, render unenforceable or otherwise affect any other provision
hereof.
SECTION
6.04. Amendments, Supplements and
Modifications.
Except
as otherwise provided in this Section 6.04, this Loan Agreement may not be
amended, supplemented or modified without the prior written consent of the
Trust
and the Borrower and without the satisfaction of all conditions set forth in
Section 11.12 of the Bond Resolution. Notwithstanding the conditions set forth
in Section 11.12 of the Bond Resolution, (i) Section 2.02(p) hereof may be
amended, supplemented or modified upon the written consent of the Trust and
the
Borrower and without the consent of the Trustee, any Bond Insurer or any holders
of the Trust Bonds, and (ii) Exhibit H hereto may be amended, supplemented
or
modified prior to the execution and delivery thereof as the Trust, in its sole
discretion, shall determine to be necessary, desirable or convenient for the
purpose of satisfying Rule 15c2-12 and the purpose and intent thereof as Rule
15c2-12, its purpose and intent may hereafter be interpreted from time to time
by the SEC or any
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.
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.
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NEW
JERSEY ENVIRONMENTAL
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INFRASTRUCTURE
TRUST
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[SEAL]
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/s/
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▇. ▇▇▇▇▇▇, ▇▇.
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ATTEST:
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇.
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Chairman
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/s/
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▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇
Secretary
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MIDDLESEX
WATER COMPANY
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[SEAL]
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/s/
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▇▇▇▇▇▇
▇. ▇▇▇▇
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ATTEST:
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Authorized
Officer
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/s/
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
Authorized
Officer
H-1