Exhibit 4(k)
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LOAN AGREEMENT
NWK3: 352222.02
BY AND BETWEEN
NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST
AND
THE MOUNT ▇▇▇▇▇ WATER COMPANY
DATED AS OF NOVEMBER 1, 1998
-ii-
TABLE OF CONTENTS
Page
EXHIBIT A (1) Description of Project and Environmental Infrastructure System
A-1-1
(2) Description of Loan A-2-1
EXHIBIT B Basis for Determination of Allowable Project Costs B-1
EXHIBIT C Estimated Disbursement Schedule ▇-▇
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇-▇
EXHIBIT E Opinions of Borrower's Bond and General Counsels E-1
EXHIBIT F Additional Covenants and Requirements F-1
EXHIBIT G General Administrative Requirements for the State
Environmental Infrastructure Financing ProgramG-1
EXHIBIT H Form of Continuing Disclosure Agreement H-1
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NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into as of this 1st day of
November, 1998, by and between NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST,
a public body corporate and politic with corporate succession, and THE MOUNT
▇▇▇▇▇ WATER COMPANY, a corporation duly created and validly existing under
the laws of the State of New Jersey (the "State");
WITNESSETH THAT:
WHEREAS, the Trust, in accordance with the Act, the Bond Resolution and
a financial plan approved by the State Legislature in accordance with Section
23 of the Act, will issue its Trust Bonds on or prior to the Loan Closing for
the purpose of making the Loan to the Borrower and the Loans to the Borrowers
from the proceeds of the Trust Bonds to finance a portion of the cost of
Environmental Infrastructure Facilities (as each of the foregoing terms is
defined in Section 1.01 hereof; all capitalized terms used in this Loan
Agreement shall have, unless the context otherwise requires, the meanings set
forth in said Section 1.01);
WHEREAS, the Borrower has, in accordance with the Act and the
Regulations, made timely application to the Trust for a Loan to finance a
portion of the Cost of the Project;
WHEREAS, the State Legislature, in accordance with Section 20 of the
Act, has in the form of an appropriations act approved a project priority
list that includes the Project and that authorizes an expenditure of proceeds
of the Trust Bonds to finance a portion of the Cost of the Project;
WHEREAS, the Trust has approved the Borrower's application for a Loan
from available proceeds of the Trust Bonds to finance a portion of the Cost
of the Project;
WHEREAS, in accordance with the "Wastewater Treatment Bond Act of 1985",
P.L. 1985, c. 329, as amended, and the Regulations, the Borrower has been
awarded a Fund Loan for a portion of the Cost of the Project; and
WHEREAS, the Borrower, in accordance with the Act, the Regulations, the
Business Corporation Law and all other applicable law, will issue a Borrower
Bond to the Trust evidencing said Loan at the Loan Closing.
NOW, THEREFORE, for and in consideration of the award of the Loan by the
Trust, the Borrower agrees to complete the Project and to perform under this
Loan Agreement in accordance with the conditions, covenants and procedures
set forth herein and attached hereto as part hereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms as used in this Loan
Agreement shall, unless the context clearly requires otherwise, have the
following meanings:
"Act" means the "New Jersey Environmental Infrastructure Trust Act",
constituting Chapter 334 of the Pamphlet Laws of 1985 of the State (codified
at N.J.S.A. 58:11B-1 et seq.), as the same may from time to time be amended
and supplemented.
"Administrative Fee" means that portion of Interest on the Loan or
Interest on the Borrower Bond payable hereunder as an annual fee of up to
three-tenths of one percent (.30%) of the initial principal amount of the
Loan or such lesser amount, if any, as may be authorized by any act of the
State Legislature and as the Trust may approve from time to time.
"Authorized Officer" means, in the case of the Borrower, any person or
persons authorized pursuant to a resolution of the board of directors of the
Borrower to perform any act or execute any document relating to the Loan, the
Borrower Bond or this Loan Agreement.
"Bond Counsel" means a law firm appointed or approved by the Trust, as
the case may be, having a reputation in the field of municipal law whose
opinions are generally acceptable by purchasers of municipal bonds.
"Bond Resolution" means the "Environmental Infrastructure Bond
Resolution, Series 1998B", as adopted by the Board of Directors of the Trust
on or about September 21, 1998, authorizing the issuance of the Trust Bonds,
and all further amendments and supplements thereto adopted in accordance with
the provisions thereof.
"Borrower" means the corporation that is a party to and is described in
the first paragraph of this Loan Agreement, and its successors and assigns.
"Borrower Bond" means the general obligation bond, note, debenture or
other evidence of indebtedness authorized, executed, attested and delivered
by the Borrower to the Trust 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.
"Environmental Infrastructure Facilities" means Wastewater Treatment
Facilities, Stormwater Management Facilities or Water Supply Facilities (as
such terms are defined in the Regulations).
"Environmental Infrastructure System" means the Environmental
Infrastructure Facilities of the Borrower, including the Project, described
in Exhibit A-1 attached hereto and made a part hereof for which the Borrower
is borrowing the Loan under this Loan Agreement.
"Event of Default" means any occurrence or event specified in Section
5.01 hereof.
"Fund Loan" means the loan made to the Borrower by the State, acting by
and through the New Jersey Department of Environmental Protection, pursuant
to the loan agreement dated as of November 1, 1998 by and between the
Borrower and the State, acting by and through the New Jersey Department of
Environmental Protection, to finance or refinance a portion of the Cost of
the Project.
"Guarantor" means Elizabethtown Water Company, a New Jersey corporation.
"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 Cost of the Project pursuant to this Loan
Agreement. For all purposes of this Loan Agreement, the amount of the Loan
at any time shall be the initial aggregate principal amount of the Borrower
Bond (which amount equals the amount actually deposited in the Project Loan
Account at the Loan Closing plus the Borrower's allocable share of (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, and (iii) that portion of the Debt Service Reserve Fund
attributable to the cost of funding reserve capacity for the Project) less
any amount of such principal amount that has been repaid by the Borrower
under this Loan Agreement and less any adjustment made pursuant to the
provisions of the Bond Resolution, including, without limitation, Section
5.02(4) thereof, N.J.A.C. 7:22-4.26 and the appropriations act of the State
Legislature authorizing the expenditure of Trust Bond proceeds to finance a
portion of the Cost of the Project.
"Loan Agreement" means this Loan Agreement, including the Exhibits
attached hereto, as it may be supplemented, modified or amended from time to
time in accordance with the terms hereof and of the Bond Resolution.
"Loan Agreements" means any other loan agreements entered into by and
between the Trust and one or more of the Borrowers pursuant to which the
Trust will make Loans to such Borrowers from moneys on deposit in the Project
Fund, excluding the Project Loan Account, financed with the proceeds of the
Trust Bonds.
"Loan Closing" means the date upon which the Trust shall issue and
deliver the Trust Bonds and the Borrower shall deliver its Borrower Bond, as
previously authorized, executed and attested, to the Trust.
"Loan Repayments" means the sum of (i) Trust Bond Loan Repayments, (ii)
the Administrative Fee, and (iii) any late charges incurred hereunder.
"Loan Servicer" means, initially, First Union National Bank, the loan
servicer for the Loan and the Fund Loan, duly appointed and designated as
"Loan Servicer" pursuant to the Loan Servicing and Trust Bonds Security
Agreement dated as of November 1, 1998 by and among the Trust, the State,
acting by and through the Treasurer of the State on behalf of the New Jersey
Department of Environmental Protection, and First Union National Bank, and
any successors as "Loan Servicer" under such agreement, as the same may be
modified, amended or supplemented from time to time in accordance with its
terms.
"Loan Term" means the term of this Loan Agreement provided in Sections
3.01 and 3.03 hereof and in Exhibit A-2 attached hereto and made a part
hereof.
"Loans" means the loans made by the Trust to the Borrowers under the
Loan Agreements from moneys on deposit in the Project Fund, excluding the
Project Loan Account.
"Master Program Trust Agreement" means that certain Master Program Trust
Agreement dated as of November 1, 1995 by and among the Trust, the State,
United States Trust Company of New York, as Master Program Trustee
thereunder, The Bank of New York (NJ), in several capacities thereunder, and
First Fidelity Bank, N.A. (predecessor to First Union National Bank), in
several capacities thereunder, as the same may be amended and supplemented
from time to time in accordance with its terms.
"Official Statement" means the Official Statement relating to the
issuance of the Trust Bonds.
"Preliminary Official Statement" means the Preliminary Official
Statement relating to the issuance of the Trust Bonds.
"Prime Rate" means the prevailing commercial interest rate announced by
the Trustee from time to time in the State as its prime lending rate.
"Project" means the Environmental Infrastructure Facilities of the
Borrower described in Exhibit A-1 attached hereto and made a part hereof,
which constitutes a project for which the Trust is permitted to make a loan
to the Borrower pursuant to the Act, the Regulations and the Bond Resolution,
all or a portion of the Cost of which is financed or refinanced by the Trust
through the making of the Loan under this Loan Agreement.
"Project Fund" means the Project Fund as defined in the Bond Resolution.
"Project Loan Account" means the project loan account established on
behalf of the Borrower in the Project Fund in accordance with the Bond
Resolution to finance all or a portion of the Cost of the Project.
"Regulations" means the rules and regulations, as applicable, now or
hereafter promulgated under N.J.A.C. 7:22-3 et seq., 7:22-4 et seq., 7:22-5
et seq., 7:22-6 et seq., 7:22-7 et seq., 7:22-8 et seq., 7:22-9 et seq. and
7:22-10 et seq., as the same may from time to time be amended and
supplemented.
"State" means the State of New Jersey.
"Trust" means the New Jersey Environmental Infrastructure Trust, a
public body corporate and politic with corporate succession duly created and
validly existing under and by virtue of the Act.
"Trust Bond Loan Repayments" means the repayments of the principal
amount of the Loan plus the payment of any premium associated with prepaying
the principal amount of the Loan in accordance with Section 3.07 hereof plus
the Interest Portion.
"Trust Bonds" means bonds authorized by Section 2.03 of the Bond
Resolution, together with any refunding bonds authenticated and delivered
pursuant to Section 2.04 of the Bond Resolution, in each case issued in order
to finance (i) the portion of the Loan deposited in the Project Loan Account,
(ii) the portion of the Loans deposited in the balance of the Project Fund,
(iii) any capitalized interest related to such bonds, (iv) a portion of the
costs of issuance related to such bonds, and (v) that portion of the Debt
Service Reserve Fund, if any, allocable to the Loan or Loans, as the case may
be, a portion of which includes the funding of reserve capacity for the
Environmental Infrastructure Facilities of the Borrower or Borrowers, as the
case may be, or to refinance any or all of the above.
"Trustee" means, initially, First Union National Bank, the Trustee
appointed by the Trust and its successors as Trustee under the Bond
Resolution, as provided in Article X of the Bond Resolution.
Except as otherwise defined herein or where the context otherwise
requires, words importing the singular number shall include the plural number
and vice versa, and words importing persons shall include firms,
associations, corporations, agencies and districts. Words importing one
gender shall include the other gender.
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
official are still in full force and effect.
(iii) The Borrower has full legal right and authority and all
necessary licenses and permits required as of the date hereof to own,
operate and maintain its Environmental Infrastructure System, to carry
on its activities relating thereto, to execute, attest and deliver this
Loan Agreement and the Borrower Bond, to 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 Borrower's board of directors has taken all necessary
action to authorize the execution, attestation and delivery of this Loan
Agreement and the Borrower Bond, the sale of the Borrower Bond to the
Trust and the Borrower's undertaking and completion of the Project.
(v) 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; 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, or (vi) 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 sale of the Borrower Bond to the
Trust, (iii) the observation and performance by the Borrower of its duties,
covenants, obligations and agreements hereunder and thereunder, (iv) the
consummation of the transactions provided for in this Loan Agreement and the
Borrower Bond, and (v) the undertaking and completion of the Project will not
(A) other than the lien, charge or encumbrance created hereby, by the
Borrower Bond 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 or the receipt of the amount of the Loan, would
constitute an Event of Default hereunder. Since December 31, 1975 and as of
the date of delivery of this Loan Agreement, the Borrower has not been, and
is not now, in default in the payment of the principal of or interest on any
of its bonds, notes, lease purchase agreements or other debt obligations.
The Borrower is not in violation of, and has not received notice of any
claimed violation of, any term of any agreement or other instrument to which
it is a party or by which it, its Environmental Infrastructure System or its
properties may be bound, which violation would materially adversely affect
the properties, activities, prospects or condition (financial or otherwise)
of the Borrower or its Environmental Infrastructure System or the ability of
the Borrower to make all Loan Repayments, to pay all principal and redemption
premiums, if any, of and interest on the Borrower Bond or otherwise to
observe and perform its duties, covenants, obligations and agreements under
this Loan Agreement and the Borrower Bond.
(f) Governmental Consent. The Borrower has obtained all permits and
approvals required to date by any governmental body or officer for the
authorization, execution, attestation and delivery of this Loan Agreement and
the Borrower Bond, for the issuance of the Borrower Bond and the sale thereof
to the Trust, for the making, observance and performance by the Borrower of
its duties, covenants, obligations and agreements under this Loan Agreement
and the Borrower Bond and for the undertaking or completion of the Project
and the financing or refinancing thereof, including, but not limited to, the
approval by the New Jersey Board of Public Utilities (the "BPU") of the
issuance by the Borrower of the Borrower Bond to the Trust, as required by
Section 9a of the Act, and any other approvals required therefor by the BPU;
and the Borrower has complied with all applicable provisions of law requiring
any notification, declaration, filing or registration with any governmental
body or officer in connection with the making, observance and performance by
the Borrower of its duties, covenants, obligations and agreements under this
Loan Agreement and the Borrower Bond or with the undertaking or completion of
the Project and the financing or refinancing thereof. No consent, approval
or authorization of, or filing, registration or qualification with, any
governmental body or officer that has not been obtained is required on the
part of the Borrower as a condition to the authorization, execution,
attestation and delivery of this Loan Agreement and the Borrower Bond, the
issuance of the Borrower Bond and the sale thereof to the Trust, the
undertaking or completion of the Project or the consummation of any
transaction herein contemplated.
(g) Compliance with Law. The Borrower:
(i) is in compliance with all laws, ordinances, governmental rules
and regulations to which it is subject, the failure to comply with which
would materially adversely affect (A) the ability of the Borrower to
conduct its activities or to undertake or complete the Project or (B)
the condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System; and
(ii) has obtained all licenses, permits, franchises or other
governmental authorizations presently necessary for the ownership of its
properties or for the conduct of its activities that, if not obtained,
would materially adversely affect (A) the ability of the Borrower to
conduct its activities or to undertake or complete the Project or (B)
the condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System.
(h) Use of Proceeds. The Borrower will apply the proceeds of the Loan
from the Trust as described in Exhibit B attached hereto and made a part
hereof (i) to finance or refinance a portion of the Cost of the Borrower's
Project; and (ii) where applicable, to reimburse the Borrower for a portion
of the Cost of the Borrower's Project, which portion was paid or incurred in
anticipation of reimbursement by the Trust and is eligible for such
reimbursement under and pursuant to the Regulations, the Code and any other
applicable law. All of such costs constitute Costs for which the Trust is
authorized to make Loans to the Borrower pursuant to the Act and the
Regulations.
(i) Official Statement. The descriptions and information set forth in
the Borrower Appendices, if any, contained in the Official Statement relating
to the Borrower, its operations and the transactions contemplated hereby, as
of the date of the Official Statement, were and, as of the date of delivery
hereof, are true and correct in all material respects, and did not and do not
contain any untrue statement of a material fact or omit to state a material
fact that is necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
(j) Preliminary Official Statement. As of the date of the Preliminary
Official Statement, the descriptions and information set forth in the
Borrower Appendices, if any, contained in the Preliminary Official Statement
relating to the Borrower, its operations and the transactions contemplated
hereby were "deemed final" by the Borrower for the purposes and within the
meaning of Rule 15c2-12.
SECTION 2.02. Particular Covenants of Borrower.
(a) Promise to Pay. The Borrower unconditionally promises 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. 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;
and (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.
(c) Revenue Obligation; No Prior Pledges. The Borrower shall not be
required to make payments under this Loan Agreement except from the revenues
of its Environmental Infrastructure System and from such other funds of such
Environmental Infrastructure System legally available therefor and from any
other sources pledged to such payment pursuant to subsection (a) of this
Section 2.02. In no event shall the Borrower be required to make payments
under this Loan Agreement from any revenues or receipts not derived from its
Environmental Infrastructure System or pledged pursuant to subsection (a) of
this Section 2.02. Except for (i) loan repayments required with respect to
the Fund Loan, (ii) the debt service on any future bonds of the Borrower
issued at parity with the Borrower Bond, and (iii) the debt service on any
bonds, notes or evidences of indebtedness of the Borrower at parity with the
Borrower Bond and currently outstanding or issued on the date hereof, the
revenues derived by the Borrower from its Environmental Infrastructure
System, after the payment of all costs of operating and maintaining the
Environmental Infrastructure System, 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 obligation of the Borrower to make Loan Repayments
under this Loan Agreement and the Borrower Bond, and all corporate or other
action on the part of the Borrower to that end has been and will be duly and
validly taken.
(d) Completion of Project and Provision of Moneys Therefor. The
Borrower covenants and agrees (i) to exercise its best efforts in accordance
with prudent environmental infrastructure utility practice to complete the
Project and to accomplish such completion on or before the estimated Project
completion date set forth in Exhibit G hereto and made a part hereof; (ii) to
comply with the terms and provisions contained in Exhibit G hereto; and (iii)
to provide from its own fiscal resources all moneys, in excess of the total
amount of loan proceeds it receives under the Loan and Fund Loan, required to
complete the Project.
(e) Disposition of Environmental Infrastructure System. Neither the
Borrower nor the Guarantor shall permit the disposition of all or
substantially all of the Borrower's Environmental Infrastructure System,
directly or indirectly, including, without limitation, by means of sale,
lease, abandonment, sale of stock, statutory merger or otherwise
(collectively, a "Disposition"), except on ninety (90) days' prior written
notice to the Trust, and, in any event, shall not permit a Disposition unless
the following conditions are met: (i) the Borrower shall, in accordance with
Section 4.02 hereof, assign this Loan Agreement and the Borrower Bond and its
rights and interests hereunder and thereunder to the purchaser or lessee of
the Environmental Infrastructure System, and such purchaser or lessee shall
assume all duties, covenants, obligations and agreements of the Borrower
under this Loan Agreement and the Borrower Bond; and (ii) the Trust shall by
appropriate action determine, in its sole discretion, that such sale, lease,
abandonment or other disposition will not adversely affect (A) the Trust's
ability to meet its duties, covenants, obligations and agreements under the
Bond Resolution, (B) the value of this Loan Agreement or the Borrower Bond as
security for the payment of Trust Bonds and the interest thereon, or (C) the
excludability from gross income for federal income tax purposes of the
interest on Trust Bonds then outstanding or that could be issued in the
future.
(f) Exclusion of Interest from Federal Gross Income and Compliance with
Code.
(i) The Borrower covenants and agrees that it shall not take any
action or omit to take any action that would result in the loss of the
exclusion of the interest on any Trust Bonds now or hereinafter issued
from gross income for purposes of federal income taxation as that status
is governed by Section 103(a) of the Code.
(ii) The Borrower shall not directly or indirectly use or permit
the use of any proceeds of the Trust Bonds (or amounts replaced with
such proceeds) or any other funds or take any action or omit to take any
action that would cause the Trust Bonds (assuming solely for this
purpose that the proceeds of the Trust Bonds loaned to the Borrower
represent all of the proceeds of the Trust Bonds) to be "arbitrage
bonds" within the meaning of Section 148(a) of the Code.
(iii) The Borrower shall not directly or indirectly use or permit
the use of any proceeds of the Trust Bonds to pay the principal of or
the interest or redemption premium on or any other amount in connection
with the retirement or redemption of any issue of state or local
governmental obligations ("refinancing of indebtedness"), unless the
Borrower shall (A) establish to the satisfaction of the Trust, prior to
the issuance of the Trust Bonds, that such refinancing of indebtedness
will not adversely affect the exclusion from gross income for federal
income tax purposes of the interest on the Trust Bonds, and (B) provide
to the Trust an opinion of Bond Counsel to that effect in form and
substance satisfactory to the Trust.
(iv) The Borrower shall not directly or indirectly use or permit
the use of any proceeds of the Trust Bonds to reimburse the Borrower for
an expenditure with respect to a Cost of the Borrower's Project paid by
the Borrower prior to the issuance of the Trust Bonds, unless (A) the
allocation by the Borrower of the proceeds of the Trust Bonds to
reimburse such expenditure complies with the requirements of Treasury
Regulations 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 Cost 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) 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.
(viii) 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.
(ix) The Borrower will not have a reserve or replacement fund
(within the meaning of Section 148(d)(1) of the Code) allocable to the
Borrower Bond evidencing the Loan.
(x) 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)).
(xi) 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.
(xii) 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"). Such System
Records shall be part of the annual audit of the general records of the
Guarantor. Such System Records and general records of the Guarantor
shall be made available for inspection by the Trust at any reasonable
time upon prior written notice, and a copy of such annual audit,
including all written comments and recommendations, 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" (not held by the Trustee)
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 Cost of
the Borrower's Project is paid or the date the portion of the project
financed by the Trust Bonds is placed in service. All allocations of
proceeds of the Trust Bonds to expenditures will be made no later than
the date that is 60 days after the fifth anniversary of the date the
Trust Bonds are issued or the date 60 days after the retirement of the
Trust Bonds, if earlier. Such records and accounts will include the
particular Cost paid, the date of the payment and the party to whom the
payment was made.
(i) Inspections; Information. The Borrower shall permit the Trust and
the Trustee and any party designated by any of such parties, at any and all
reasonable times during construction of the Project and thereafter upon prior
written notice, to examine, visit and inspect the property, if any,
constituting the Project and to inspect and make copies of any accounts,
books and records, including (without limitation) its records regarding
receipts, disbursements, contracts, investments and any other matters
relating thereto and to its financial standing, and shall supply such reports
and information as the Trust and the Trustee may reasonably require in
connection therewith.
(j) Insurance. The Borrower shall maintain or cause to be maintained,
in force, insurance policies with responsible insurers or self-insurance
programs providing against risk of direct physical loss, damage or
destruction of its Environmental Infrastructure System at least to the extent
that similar insurance is usually carried by utilities constructing,
operating and maintaining Environmental Infrastructure Facilities of the
nature of the Borrower's Environmental Infrastructure System, including
liability coverage, all to the extent available at reasonable cost but in no
case less than will satisfy all applicable regulatory requirements.
(k) Cost of Project. The Borrower certifies that the building cost of
the Project, as listed in Exhibit B hereto and made a part hereof, is a
reasonable and accurate estimation thereof, and it will supply to the Trust a
certificate from a licensed professional engineer authorized to practice in
the State stating that such building cost is a reasonable and accurate
estimation and that the useful life of the Project exceeds twenty (20) years
from the expected date of the Loan Closing.
(l) Delivery of Documents. Concurrently with the delivery of this Loan
Agreement (as previously authorized, executed and attested) at the Loan
Closing, the Borrower will cause to be 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, resolutions of the Borrower authorizing the execution,
attestation and delivery of this Loan Agreement and the execution,
attestation, sale and delivery of the Borrower Bond to the Trust, and
certified copies of orders 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;
(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 and attested,
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, if the Trust determines that the Borrower is a material
"obligated person", upon request of the Trust, the Borrower shall execute and
deliver the Continuing Disclosure Agreement, in substantially the form
attached hereto as Exhibit H, with such revisions thereto prior to execution
and delivery thereof as the Trust shall determine to be necessary, desirable
or convenient, in its sole discretion, for the purpose of satisfying Rule
15c2-12 and the purposes and intent thereof, as Rule 15c2-12, its purposes
and intent may hereafter be interpreted from time to time by the SEC or any
court of competent jurisdiction; and pursuant to the terms and provisions of
the Continuing Disclosure Agreement, the Borrower shall thereafter provide
on-going disclosure with respect to all statements and information relating
to the Borrower in satisfaction of the requirements set forth in Rule 15c2-12
and Rule 10b-5, including the provision of certificates and written
representations of the Borrower evidencing its compliance with Rule 15c2-12
and Rule 10b-5.
(q) Additional Covenants and Requirements. No later than the Loan
Closing and, if necessary, in connection with the Trust's issuance of the
Trust Bonds or the making of the Loan, additional covenants and requirements
have been included in Exhibit F hereto and made a part hereof. Such
covenants and requirements may include, but need not be limited to, the
maintenance of specified levels of Environmental Infrastructure System rates,
the issuance of additional debt of the Borrower, the use by or on behalf of
the Borrower of certain proceeds of the Trust Bonds as such use relates to
the exclusion from gross income for federal income tax purposes of the
interest on any Trust Bonds, the transfer of revenues and receipts from the
Borrower's Environmental Infrastructure System, compliance with Rule 15c2-12,
Rule 10b-5 and any other applicable federal or State securities laws, and
matters in connection with the appointment of the Trustee under the Bond
Resolution and any successors thereto. The Borrower agrees to observe and
comply with each such additional covenant and requirement, if any, included
in Exhibit F hereto.
ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan Term. The Trust hereby agrees to make the
Loan as described in Exhibit A-2 hereof and to disburse proceeds of the Loan
to the Borrower in accordance with Section 3.02 and Exhibit C hereof, and the
Borrower hereby agrees to borrow and accept the Loan from the Trust upon the
terms set forth in Exhibit A-2 attached hereto and made a part hereof;
provided, however, that the Trust shall be under no obligation to make the
Loan if (a) at the Loan Closing, the Borrower does not deliver to the Trust a
Borrower Bond and such other documents required under Section 2.02(l) hereof,
or (b) an Event of Default has occurred and is continuing under the Bond
Resolution or this Loan Agreement. Although the Trust intends to disburse
proceeds of the Loan to the Borrower at the times and up to the amounts set
forth in Exhibit C to pay a portion of the Cost of the Project, due to
unforeseen circumstances there may not be a sufficient amount on deposit in
the Project Fund on any date to make the disbursement in such amount.
Nevertheless, the Borrower agrees that the amount actually deposited in the
Project Loan Account at the Loan Closing plus the Borrower's allocable share
of (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, and (iii) that portion of the Debt Service
Reserve Fund attributable to the cost of funding reserve capacity for the
Project 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.
SECTION 3.02. Disbursement of Loan Proceeds. (a) The Trustee, as the
agent of the Trust, shall disburse the amounts on deposit in the Project Loan
Account to the Borrower upon receipt of a requisition executed by an
Authorized Officer of the Borrower, and approved by the Trust, in a form
meeting the requirements of Section 5.02(3) of the Bond Resolution.
(b) The Trust and Trustee shall not be required to disburse any Loan
proceeds to the Borrower under this Loan Agreement, unless:
(i) the proceeds of the Trust Bonds shall be available for
disbursement, as determined solely by the Trust;
(ii) in accordance with the "Wastewater Treatment Bond Act of
1985", P.L. 1985, c. 329, as amended, and the Regulations, the Borrower
shall have timely applied for, shall have been awarded and, prior to or
simultaneously with the Loan Closing, shall have closed a Fund Loan for
a portion of the Allowable Costs (as defined in such regulations) of the
Project in an amount not in excess of the amount of Allowable Costs of
the Project covered by the Loan from the Trust;
(iii) the Borrower shall have on hand or otherwise available moneys
to pay for the greater of (A) that portion of the total cost of the
Project that is not eligible to be funded from the Fund Loan or the
Loan, or (B) that portion of the total cost of the Project that exceeds
the actual amounts of the loan commitments made by the State and the
Trust, respectively, for the Fund Loan and the Loan; and
(iv) no Event of Default nor any event that, with the passage of
time or service of notice or both, would constitute an Event of Default
shall have occurred and be continuing hereunder.
SECTION 3.03. Amounts Payable. (a) The Borrower shall repay the Loan
in installments payable to the Loan Servicer as follows:
(i) the principal of the Loan shall be repaid annually on August 1,
commencing August 1, 2000, in accordance with the schedule set forth in
Exhibit A-2 attached hereto and made a part hereof, as the same may be
amended or modified by any credits applicable to the Borrower as set
forth in the Bond Resolution;
(ii) the Interest Portion described in clause (i) of the definition
thereof shall be paid semiannually on February 1 and August 1,
commencing August 1, 2000, in accordance with the schedule set forth in
Exhibit A-2 attached hereto and made a part hereof, as the same may be
amended or modified by any credits applicable to the Borrower as set
forth in the Bond Resolution; and
(iii) the Interest Portion described in clause (ii) of the
definition thereof shall be paid upon the date of optional redemption or
acceleration, as the case may be, of the Trust Bonds allocable to any
prepaid or accelerated Trust Bond Loan Repayment.
The obligations of the Borrower under the Borrower Bond shall be deemed
to be amounts payable under this Section 3.03. Each Loan Repayment, whether
satisfied through a direct payment by the Borrower to the Loan Servicer or
(with respect to the Interest Portion) through the use of Trust Bond proceeds
and income thereon on deposit in the Interest Account (as defined in the Bond
Resolution) to pay interest on the Trust Bonds, shall be deemed to be a
credit against the corresponding obligation of the Borrower under this
Section 3.03 and shall fulfill the Borrower's obligation to pay such amount
hereunder and under the Borrower Bond. Each payment made to the Loan
Servicer pursuant to this Section 3.03 shall be applied first to the Interest
Portion then due and payable, second to the principal of the Loan then due
and payable, third to the payment of the Administrative Fee, and, finally, to
the payment of any late charges hereunder.
(b) The Interest on the Loan described in clause (iii) of the
definition thereof shall (i) consist of a late charge for any Trust Bond Loan
Repayment that is received by the Loan Servicer later than the tenth (10th)
day following its due date and (ii) be payable immediately thereafter in an
amount equal to the greater of twelve percent (12%) per annum or the Prime
Rate plus one half of one percent per annum on such late payment from its due
date to the date it is actually paid; provided, however, that the rate of
Interest on the Loan, including, without limitation, any late payment charges
incurred hereunder, shall not exceed the maximum interest rate permitted by
law.
(c) The Borrower shall receive, as a credit against its semiannual
payment obligations of the Interest Portion, the amounts certified by the
Trust pursuant to Section 5.10 of the Bond Resolution. Such amounts shall
represent the Borrower's allocable share of the interest earnings on certain
funds and accounts established under the Bond Resolution, calculated in
accordance with Section 5.10 of the Bond Resolution.
(d) In accordance with the provisions of the Bond Resolution, the
Borrower shall receive, as a credit against its Trust Bond Loan Repayments,
the amounts set forth in the certificate of the Trust filed with the Trustee
pursuant to Section 5.02(4) of the Bond Resolution.
(e) The Interest on the Loan described in clause (ii) of the definition
thereof shall be paid by the Borrower in the amount of one-half of the
Administrative Fee, if any, to the Loan Servicer semiannually on each
February 1 and August 1, commencing February 1, 1999, during the term of the
Loan.
SECTION 3.04. Unconditional Obligations. The obligation of the
Borrower to make the Loan Repayments and all other payments required
hereunder and the obligation to perform and observe the other duties,
covenants, obligations and agreements on its part contained herein shall be
absolute and unconditional, and shall not be abated, rebated, set-off,
reduced, abrogated, terminated, waived, diminished, postponed or otherwise
modified in any manner or to any extent whatsoever while any Trust Bonds
remain outstanding or any Loan Repayments remain unpaid, for any reason,
regardless of any contingency, act of God, event or cause whatsoever,
including (without limitation) any acts or circumstances that may constitute
failure of consideration, eviction or constructive eviction, the taking by
eminent domain or destruction of or damage to the Project or Environmental
Infrastructure System, commercial frustration of the purpose, any change in
the laws of the United States of America or of the State or any political
subdivision of either or in the rules or regulations of any governmental
authority, any failure of the Trust or the Trustee to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with the Project, this Loan Agreement or the Bond
Resolution, or any rights of set-off, recoupment, abatement or counterclaim
that the Borrower might otherwise have against the Trust, the Trustee, the
Loan Servicer or any other party or parties; provided, however, that payments
hereunder shall not constitute a waiver of any such rights. The Borrower
shall not be obligated to make any payments required to be made by any other
Borrowers under separate Loan Agreements or the Bond Resolution.
The Borrower acknowledges that payment of the Trust Bonds by the Trust,
including payment from moneys drawn by the Trustee from the Debt Service
Reserve Fund, does not constitute payment of the amounts due under this Loan
Agreement and the Borrower Bond. If at any time the amount in the Debt
Service Reserve Fund shall be less than the Debt Service Reserve Requirement
as the result of any transfer of moneys from the Debt Service Reserve Fund to
the Debt Service Fund (as all such terms are defined in the Bond Resolution)
as the result of a failure by the Borrower to make any Trust Bond Loan
Repayments required hereunder, the Borrower agrees to replenish (i) such
moneys so transferred and (ii) any deficiency arising from losses incurred in
making such transfer as the result of the liquidation by the Trust of
Investment Securities (as defined in the Bond Resolution) acquired as an
investment of moneys in the Debt Service Reserve Fund, by making payments to
the Trust in equal monthly installments for the lesser of six (6) months or
the remaining term of the Loan at an interest rate to be determined by the
Trust necessary to make up any loss caused by such deficiency.
The Borrower acknowledges that payment of the Trust Bonds from moneys
that were originally received by the Loan Servicer from repayments by the
Borrowers of loans made to the Borrowers by the State, acting by and through
the New Jersey Department of Environmental Protection, pursuant to loan
agreements dated as of November 1, 1998 by and between the Borrowers and the
State, acting by and through the New Jersey Department of Environmental
Protection, to finance or refinance a portion of the cost of the
Environmental Infrastructure Facilities of the Borrowers, and which moneys
were upon such receipt by the Loan Servicer deposited in the Trust Bonds
Security Account (as defined in the Bond Resolution), does not constitute
payment of the amounts due under this Loan Agreement and the Borrower Bond.
SECTION 3.05. Loan Agreement to Survive Bond Resolution and Trust
Bonds. The Borrower acknowledges that its duties, covenants, obligations and
agreements hereunder shall survive the discharge of the Bond Resolution
applicable to the Trust Bonds and shall survive the payment of the principal
and redemption premium, if any, of and the interest on the Trust Bonds until
the Borrower can take no action or fail to take any action that could
adversely affect the exclusion from gross income of the interest on the Trust
Bonds for 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) during
the term of this Loan Agreement and to the fullest extent permitted by law,
the Borrower shall indemnify and hold the Trust and the Trustee harmless
against, and the Borrower shall pay any and all, liability, loss, cost,
damage, claim, judgment or expense of any and all kinds or nature and however
arising and imposed by law, which the Trust and the Trustee may sustain, be
subject to or be caused to incur by reason of any claim, suit or action based
upon personal injury, death or damage to property, whether real, personal or
mixed, or upon or arising out of contracts entered into by the Borrower, the
Borrower's ownership of the Environmental Infrastructure System or the
Project, or the acquisition, construction or installation of the Project.
(b) It is mutually agreed by the Borrower, the Trust and the Trustee
that the Trust and its officers, agents, servants or employees shall not be
liable for, and shall be indemnified and saved harmless by the Borrower in
any event from, any action performed under this Loan Agreement and any claim
or suit of whatsoever nature, except in the event of loss or damage resulting
from their own negligence or willful misconduct. It is further agreed that
the Trustee and its directors, officers, agents, servants or employees shall
not be liable for, and shall be indemnified and saved harmless by the
Borrower in any event from, any action performed pursuant to this Loan
Agreement, except in the event of loss or damage resulting from their own
negligence or willful misconduct.
(c) The Borrower and the Trust agree that all claims shall be subject
to and governed by the provisions of the New Jersey Contractual Liability
Act, N.J.S.A. 59:13-1 et seq. (except for N.J.S.A. 59:13-9 thereof), although
such Act by its express terms does not apply to claims arising under contract
with the Trust.
(d) In connection with its obligation to provide the insurance required
under Section 2.02(j) hereof: (i) the Borrower shall include, or cause to be
included, the Trust and its directors, employees and officers as additional
"named insureds" on (A) any certificate of liability insurance procured by
the Borrower (or other similar document evidencing the liability insurance
coverage procured by the Borrower) and (B) any certificate of liability
insurance procured by any contractor or subcontractor for the Project, and
from the latter of the date of the Loan Closing or the date of the initiation
of construction of the Project until the date the Borrower receives the
written certificate of Project completion from the Trust, the Borrower shall
maintain said liability insurance covering the Trust and said directors,
employees and officers in good standing; and (ii) the Borrower shall include
the Trust as an additional "named insured" on any certificate of insurance
providing against risk of direct physical loss, damage or destruction of the
Environmental Infrastructure System, and during the Loan Term the Borrower
shall maintain said insurance covering the Trust in good standing.
The Borrower shall provide the Trust with a copy of each of any such
original, supplemental, amendatory or reissued certificates of insurance (or
other similar documents evidencing the insurance coverage) required pursuant
to this Section 3.06(d).
SECTION 3.07. Option to Prepay Loan Repayments. The Borrower may
prepay the Trust Bond Loan Repayments, in whole or in part (but if in part,
in the amount of $100,000 or any integral multiple thereof), upon prior
written notice to the Trust and the Trustee not less than ninety (90) days in
addition to the number of days' advance notice to the Trustee required for
any optional redemption of the Trust Bonds, and upon payment by the Borrower
to the Trustee of amounts that, together with investment earnings thereon,
will be sufficient to pay the principal amount of the Trust Bond Loan
Repayments to be prepaid plus the Interest Portion described in clause (ii)
of the definition thereof on any such date of redemption; provided, however,
that any such full or partial prepayment may only be made (i) if the Borrower
is not then in arrears on its Fund Loan, (ii) if the Borrower is
contemporaneously making a full or partial prepayment of the Fund Loan such
that, after the prepayment of the Loan and the Fund Loan, the Trust, in its
sole discretion, determines that the interests of the owners of the Trust
Bonds are not adversely affected by such prepayments, and (iii) upon the
prior written approval of the Trust. In addition, if at the time of such
prepayment the Trust Bonds may only be redeemed at the option of the Trust
upon payment of a premium, the Borrower shall add to its prepayment of Trust
Bond Loan Repayments an amount, as determined 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, 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 Loan
Servicer during the time of any such Trust Bond Loan Repayment deficiency,
shall first be applied by the Loan Servicer to satisfy such Trust Bond Loan
Repayment deficiency as a credit against the obligations of the Borrower to
make payments of the Interest Portion under the Loan and the Borrower Bond,
second, to the extent available, to make Trust Bond Loan Repayments of
principal hereunder and payments of principal under the Borrower Bond, third,
to the extent available, to pay the Administrative Fee, fourth, to the extent
available, to pay any late charges hereunder, fifth, to the extent available,
to satisfy the repayment of the Borrower's Fund Loan under its related loan
agreement therefor, and, finally, to the extent available, to satisfy the
repayment of the administrative fee under any such related loan agreement.
(c) The Borrower hereby further acknowledges that any loan repayments
paid by the Borrower on its Fund Loan under the related loan agreement
therefor shall be applied (i) according to Section 3(c) of the Loan Servicing
and Trust Bonds Security Agreement (as defined in the definition of Loan
Servicer herein) and (ii) according to the provisions of the Master Program
Trust Agreement.
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 (except to the Guarantor,
which shall occur pursuant to N.J.S.A. 14A:10-5.1 or such successor
provision, upon notice to the Trust and the Trustee) 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 pay, or cause to be paid, the
Administrative Fee or any late charges incurred hereunder or any portion
thereof when due or to observe and perform any duty, covenant, obligation or
agreement on its part to be observed or performed under this Loan Agreement,
other than as referred to in subsection (a) of this Section 5.01 or other
than the obligations of the Borrower contained in Section 2.02(d)(ii) hereof
and in Exhibit F hereto, which failure shall continue for a period of thirty
(30) days after written notice, specifying such failure and requesting that
it be remedied, is given to the Borrower by the Trustee, unless the Trustee
shall agree in writing to an extension of such time prior to its expiration;
provided, however, that if the failure stated in such notice is correctable
but cannot be corrected within the applicable period, the Trustee may not
unreasonably withhold its consent to an extension of such time up to 120 days
from the delivery of the written notice referred to above if corrective
action is instituted by the Borrower within the applicable period and
diligently pursued until the Event of Default is corrected;
(c) any representation made by or on behalf of the Borrower contained
in this Loan Agreement, or in any instrument furnished in compliance with or
with reference to this Loan Agreement or the Loan, is false or misleading in
any material respect;
(d) a petition is filed by or against the Borrower under any federal or
state bankruptcy or insolvency law or other similar law in effect on the date
of this Loan Agreement or thereafter enacted, unless in the case of any such
petition filed against the Borrower such petition shall be dismissed within
thirty (30) days after such filing and such dismissal shall be final and not
subject to appeal; or the Borrower shall become insolvent or bankrupt or
shall make an assignment for the benefit of its creditors; or a custodian
(including, without limitation, a receiver, liquidator or trustee) of the
Borrower or any of its property shall be appointed by court order or take
possession of the Borrower or its property or assets if such order remains in
effect or such possession continues for more than thirty (30) days;
(e) the Borrower shall generally fail to pay its debts as such debts
become due; and
(f) failure of the Borrower to observe or perform such additional
duties, covenants, obligations, agreements or conditions as are required by
the Trust and specified in Exhibit F attached hereto and made a part hereof.
SECTION 5.02. Notice of Default. The Borrower shall give the Trustee
and the Trust 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, the Trustee and the Loan
Servicer at the following addresses:
(a) Trust:
New Jersey Environmental Infrastructure Trust
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Director
(b) Trustee:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
(c) Loan Servicer:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Any of the foregoing parties may designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent by notice in writing given to the others.
SECTION 6.02. Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Trust and the Borrower and their
respective successors and assigns.
SECTION 6.03. Severability. In the event any provision of this Loan
Agreement shall be held illegal, invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
SECTION 6.04. Amendments, Supplements and Modifications. Except as
otherwise provided in this Section 6.04, this Loan Agreement may not be
amended, supplemented or modified without the prior written consent of the
Trust and the Borrower and without the satisfaction of all conditions set
forth in Section 11.12 of the Bond Resolution. Notwithstanding 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.
[Signature Page]
IN WITNESS WHEREOF, the Trust and the Borrower have caused this Loan
Agreement to be executed, sealed and delivered as of the date first above
written.
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
[SEAL]
ATTEST: By:_______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-Chairman
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Secretary
THE MOUNT ▇▇▇▇▇ WATER
COMPANY
[SEAL]
ATTEST: By:_______________________
Authorized Officer
_____________________________
Authorized Officer
Approval of New Jersey State
Treasurer required pursuant
to Section 9a of the Act
By:_______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
New Jersey State Treasurer
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
Description of Project and Environmental Infrastructure System
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
Description of Loan
B-38
EXHIBIT B
Basis for Determination of Allowable Project Costs
C-39
EXHIBIT C
Estimated Disbursement Schedule
D-40
EXHIBIT D
Specimen Borrower Bond
(Except for assignment page, to be supplied by Borrower's
bond counsel in substantially the following form)
IMPORTANT NOTE: The next three pages set forth the form of the Borrower
Bond prepared by the Trust's Bond Counsel for municipal/county Borrowers.
Although the Trust recognizes that each corporate Borrower has its own bond
form as required pursuant to its Borrower Bond Resolution, please incorporate
in the bond form the pertinent information from this municipal/county bond
form (e.g., amounts payable under the Borrower Bond set forth in the first
paragraph, assignment in the second paragraph, disbursement language in the
third paragraph, unconditional obligation in the fourth paragraph, optional
prepayment provisions in the fifth paragraph and the date of the Borrower
Bond).
SEE IMPORTANT NOTE ON PRIOR PAGE
FOR VALUE RECEIVED, The Mount ▇▇▇▇▇ Water Company, a corporation duly
created and validly existing under the Constitution and laws of the State of
New Jersey (the "Borrower"), hereby promises to pay to the order of the New
Jersey Environmental Infrastructure Trust (the "Trust") (i) the principal
amount of __________________________ Dollars ($__________), or such lesser
amount as shall be determined in accordance with Section 3.01 of the Loan
Agreement (as hereinafter defined), at the times and in the amounts
determined as provided in the Loan Agreement, together with (ii) Interest on
the Loan constituting the Interest Portion, the Administrative Fee and any
late charges incurred under the Loan Agreement (as such terms are defined in
the Loan Agreement) in the amount calculated as provided in the Loan
Agreement, payable on the days and in the amounts and as provided in the Loan
Agreement, which principal amount and Interest Portion of the Interest on the
Loan shall, unless otherwise provided in the Loan Agreement, be payable on
the days and in the amounts as also set forth in Exhibit A attached hereto
under the column headings respectively entitled "Principal" and "Interest",
plus (iii) any other amounts due and owing under the Loan Agreement at the
times and in the amounts as provided therein. The Borrower irrevocably
pledges its full faith and credit for the punctual payment of the principal
of and the Interest on this Borrower Bond (as defined in the Loan Agreement)
and for the punctual payment of all other amounts due under this Borrower
Bond and the Loan Agreement according to their respective terms.
This Borrower Bond is issued pursuant to the Loan Agreement dated as of
November 1, 1998 by and between the Trust and the Borrower (the "Loan
Agreement"), and is issued in consideration of the loan made thereunder (the
"Loan") and to evidence the payment obligations of the Borrower set forth in
the Loan Agreement. This Borrower Bond has been assigned to First Union
National Bank, as trustee (the "Trustee") under the "Environmental
Infrastructure Bond Resolution, Series 1998B", adopted by the Trust on
September 21, 1998, as the same may be amended and supplemented in accordance
with the terms thereof (the "Bond Resolution"), and payments hereunder shall,
except as otherwise provided in the Loan Agreement, be made directly to the
Loan Servicer (as defined in the Loan Agreement) for the account of the Trust
pursuant to such assignment. Such assignment has been made as security for
the payment of the Trust Bonds (as defined in the Loan Agreement) issued to
finance or refinance the Loan and as otherwise described in the Loan
Agreement. This Borrower Bond is subject to further assignment or
endorsement in accordance with the terms of the Bond Resolution and the Loan
Agreement. All of the terms, conditions and provisions of the Loan Agreement
are, by this reference thereto, incorporated herein as part of this Borrower
Bond.
Pursuant to the Loan Agreement, disbursements shall be made by the
Trustee to the Borrower, in accordance with written instructions of the
Trust, upon receipt by the Trust and the Trustee of requisitions from the
Borrower executed and delivered in accordance with the requirements set forth
in Section 3.02 of the Loan Agreement.
This Borrower Bond is entitled to the benefits and is subject to the
conditions of the Loan Agreement. The obligations of the Borrower to make
the payments required hereunder shall be absolute and unconditional, without
any defense or right of set-off, counterclaim or recoupment by reason of any
default by the Trust under the Loan Agreement or under any other agreement
between the Borrower and the Trust or out of any indebtedness or liability at
any time owing to the Borrower by the Trust or for any other reason.
This Borrower Bond is subject to optional prepayment under the terms and
conditions, and in the amounts, provided in Section 3.07 of the Loan
Agreement. To the extent allowed by applicable law, this Borrower Bond may
be subject to acceleration under the terms and conditions, and in the
amounts, provided in Section 5.03 of the Loan Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Borrower Bond to be
duly executed, sealed and delivered as of this 15th day of October, 1998.
THE MOUNT ▇▇▇▇▇ WATER
COMPANY
[SEAL]
By:___________________
ATTEST: _____________
_____________________ By:___________________
_______________ _____________
New Jersey Environmental Infrastructure Trust hereby assigns the
foregoing Borrower Bond to First Union National Bank, as Trustee under the
"Environmental Infrastructure Bond Resolution, Series 1998B", adopted on
September 21, 1998, as amended and supplemented, all as of the date of this
Borrower Bond, as security for the Trust Bonds issued or to be issued under
the Bond Resolution to finance or refinance the Project Fund (as defined in
the Bond Resolution).
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
[SEAL]
ATTEST: By:_______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice-Chairman
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Secretary
E-45
EXHIBIT E
Opinions of Borrower's Bond and General Counsels
See Closing Item No. 11.04
[LETTERHEAD OF COUNSEL TO BORROWER]
November 5, 1998
New Jersey Environmental Infrastructure Trust
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First Union National Bank
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▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have acted as counsel to The Mount ▇▇▇▇▇ Water Company, a corporation
duly organized and validly existing under the laws of the State of New Jersey
(the "Borrower"), which has entered into a Loan Agreement (as hereinafter
defined) with the New Jersey Environmental Infrastructure Trust (the
"Trust"), and have acted as such in connection with the authorization,
execution, attestation and delivery by the Borrower of its Loan Agreement and
Borrower Bond (as hereinafter defined) pursuant to the New Jersey Business
Corporation Act, P.L. 1968, c. 263, as amended (the "Business Corporation
Law"), and resolutions of the Board of Directors of the Borrower adopted on
________, 1998 (the "Resolutions"). All capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Loan
Agreement.
In so acting, I have examined the Constitution and laws of the State of
New Jersey, including, without limitation, the Business Corporation Law, and
the certificate of incorporation and by-laws of the Borrower. I have also
examined originals, or copies certified or otherwise identified to my
satisfaction, of the following:
(a) the Trust's "Environmental Infrastructure Bond Resolution, Series
1998B", adopted by the Board of Directors of the Trust on September 21, 1998;
(b) the Loan Agreement dated as of November 1, 1998 (the "Loan
Agreement") by and between the Trust and the Borrower;
(c) the Resolutions and the proceedings of the Board of Directors of
the Borrower relating to the undertaking and completion of the Project;
(d) the Borrower Bond dated as of October 15, 1998 (the "Borrower
Bond") issued by the Borrower to the Trust to evidence the Loan; and
(e) the proceedings of the Board of Directors of the Borrower,
including, without limitation, the Resolutions, relating to the authorization
of the Borrower Bond and the sale, execution, attestation and delivery
thereof to the Trust (the Loan Agreement and the Borrower Bond are referred
to herein collectively as the "Loan Documents").
I have also examined and relied upon originals, or copies certified or
otherwise authenticated to my satisfaction, of such other records, documents,
certificates and other instruments, and have made such investigation of law
as in my judgment I have deemed necessary or appropriate, to enable me to
render the opinions expressed below.
I am of the opinion that:
1. The Borrower is a corporation duly created and validly existing
under and pursuant to the Constitution and statutes of the State of New
Jersey, including the Business Corporation Law, with the legal right to carry
on the business of its Environmental Infrastructure System as currently being
conducted and as proposed to be conducted.
2. The Borrower has full legal right and authority to execute, attest
and deliver the Loan Documents, to sell the Borrower Bond to the Trust, to
observe and perform its duties, covenants, obligations and agreements under
the Loan Documents and to undertake and complete the Project.
3. The acting officers of the Borrower who are contemporaneously
herewith performing or have previously performed any action contemplated in
the Loan Agreement are, and at the time any such action was performed were,
the duly appointed or elected officers of the Borrower empowered by
applicable New Jersey law and authorized by resolution of the Borrower to
perform such actions.
4. The proceedings of the Borrower's board of directors (i) approving
the Loan Documents, (ii) authorizing their execution, attestation and
delivery on behalf of the Borrower, (iii) with respect to the Borrower Bond
only, authorizing its sale by the Borrower to the Trust, (iv) authorizing the
Borrower to consummate the transactions contemplated by the Loan Documents,
(v) authorizing the Borrower to undertake and complete the Project, and (vi)
authorizing the execution and delivery of all other certificates, agreements,
documents and instruments in connection with the execution, attestation and
delivery of the Loan Documents, have each been duly and lawfully adopted and
authorized in accordance with applicable law, including, without limitation,
the Business Corporation Law.
5. The Loan Documents have been duly authorized, executed, attested
and delivered by the Authorized Officers of the Borrower and the Borrower
Bond has been duly sold by the Borrower to the Trust; and assuming in the
case of the Loan Agreement that the Trust has the requisite power and
authority to authorize, execute, attest and deliver, and has duly authorized,
executed, attested and delivered, the Loan Agreement, the Loan Documents
constitute the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
subject, however, to the effect of, and to restrictions and limitations
imposed by or resulting from, bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally.
No opinion is rendered as to the availability of any particular remedy.
6. The authorization, execution, attestation and delivery of the Loan
Documents by the Borrower and, in the case of the Borrower Bond only, the
sale thereof to the Trust, the observation and performance by the Borrower of
its duties, covenants, obligations and agreements thereunder, the
consummation of the transactions contemplated therein, and the undertaking
and completion of the Project do not and will not (i) other than the lien,
charge or encumbrance created by the Loan Documents and by any other
outstanding debt obligations of the Borrower that are at parity with the
Borrower Bond as to lien on, and source and security for payment thereon
from, the revenues of the Borrower, result in the creation or imposition of
any lien, charge or encumbrance upon any properties or assets of the Borrower
pursuant to, (ii) result in any breach of any of the terms, conditions or
provisions of, or (iii) constitute a default under, any 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.
7. All approvals, consents or authorizations of, or registrations of
or filings with, any governmental or public agency, authority or person
required to date on the part of the Borrower in connection with the
authorization, execution, attestation, delivery and performance of the Loan
Documents, the sale of the Borrower Bond and the undertaking and completion
of the Project have been obtained or made.
8. There is no litigation or other proceeding pending or, to my
knowledge, after due inquiry, threatened in any court or other tribunal of
competent jurisdiction (either State or federal) (i) questioning the
creation, organization or existence of the Borrower, (ii) questioning the
validity, legality or enforceability of the Resolutions, the Loan or the Loan
Documents, (iii) questioning the undertaking or completion of the Project,
(iv) otherwise challenging the Borrower's ability to consummate the
transactions contemplated by the Loan or the Loan Documents, or (v) that, if
adversely decided, would have a materially adverse impact on the financial
condition of the Borrower.
9. The Borrower has no bonds, notes or other debt obligations
outstanding that are superior or senior to the Borrower Bond as to lien on,
and source and security for payment thereof from, the revenues of the
Borrower.
10. To the best of my knowledge, upon due inquiry, (i) all
representations made by the Borrower contained within subsections (f) and (h)
of Section 2.02 and, if applicable, Exhibit F of the Loan Agreement are true,
accurate and complete, and (ii) all expectations contained therein are
reasonable, and I know of no reason why the Borrower would be unable to
comply on a continuing basis with the covenants contained within subsections
(f) and (h) of Section 2.02 and, if applicable, Exhibit F of the Loan
Agreement.
11. Assuming that (i) the Borrower complies on a continuing basis with
the covenants contained in subsections (f) and (h) of Section 2.02 and, if
applicable, Exhibit F of the Loan Agreement, (ii) interest on the Trust Bonds
is otherwise excluded from gross income of the holders thereof for federal
income tax purposes under the Internal Revenue Code of 1986, as amended, and
(iii) the proceeds of the Trust Bonds loaned to the Borrower represent all of
the proceeds of the Trust Bonds, the application of the proceeds of the Loan
for their intended purposes will not adversely affect the exclusion from
gross income for federal income tax purposes of the interest on the Trust
Bonds.
I hereby authorize ▇▇▇▇▇▇▇▇ & English, LLP, acting as bond counsel to
the Trust, and the Attorney General of the State of New Jersey, acting as
general counsel to the Trust, to rely on this opinion as if I had addressed
this opinion to them in addition to you.
Very truly yours,
F-50
EXHIBIT F
Additional Covenants and Requirements
Guaranty of Loan:
The repayment of the Loan will be guaranteed by the Guarantor pursuant
to the terms and conditions as set forth in that certain Guaranty made and
delivered as of November 1, 1998 by the Guarantor, a copy of which is
attached hereto.
G-51
EXHIBIT G
General Administrative Requirements for the
State Environmental Infrastructure Financing Program
H-52
EXHIBIT H
Form of Continuing Disclosure Agreement