Exhibit 10.26
[MASTER FUND
LOAN AGREEMENT FOR MIDDLESEX WATER COMPANY - PRIVATE FORM]
LOAN AGREEMENT
BY AND BETWEEN
THE STATE OF NEW JERSEY,
ACTING BY AND THROUGH THE NEW JERSEY
DEPARTMENT OF ENVIRONMENTAL PROTECTION,
AND
MIDDLESEX WATER COMPANY
DATED AS OF NOVEMBER 1, 2004
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01.
Definitions......................................................
ARTICLE II
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REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.01. Representations of
Borrower......................................
SECTION 2.02. Particular Covenants of
Borrower.................................
ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION 3.01. Loan; Loan
Term..................................................
SECTION 3.02. Disbursement of Loan
Proceeds....................................
SECTION 3.03. Amounts
Payable..................................................
SECTION 3.04. Unconditional
Obligations........................................
SECTION 3.05. Loan Agreement to Survive Bond
Resolution and Trust Bonds........
SECTION 3.06. Disclaimer of Warranties and
Indemnification.....................
SECTION 3.07. Option to Prepay Loan
Repayments.................................
SECTION 3.08. Priority of Loan and Fund
Loan...................................
SECTION 3.09. Approval of the New Jersey State
Treasurer.......................
ARTICLE IV
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
SECTION 4.01. Assignment and Transfer by
Trust.................................
SECTION 4.02. Assignment by
Borrower...........................................
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. Events of
Default................................................
SECTION 5.02. Notice of
Default................................................
SECTION 5.03. Remedies on
Default..............................................
SECTION 5.04. Attorneys' Fees and Other
Expenses...............................
SECTION 5.05. Application of
Moneys............................................
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SECTION 5.06. No Remedy Exclusive; Waiver;
Notice..............................
SECTION 5.07. Retention of Trust's
Rights......................................
ARTICLE VI
MISCELLANEOUS
SECTION 6.01.
Notices..........................................................
SECTION 6.02. Binding
Effect...................................................
SECTION 6.03.
Severability.....................................................
SECTION 6.04. Amendments, Supplements and
Modifications........................
SECTION 6.05. Execution in
Counterparts........................................
SECTION 6.06. Applicable Law and
Regulations...................................
SECTION 6.07. Consents and
Approvals...........................................
SECTION 6.08.
Captions.........................................................
SECTION 6.09. Benefit of Loan Agreement;
Compliance with Bond Resolution.......
SECTION 6.10. Further
Assurances...............................................
SCHEDULE A.Certain Additional Loan
Agreement Provisions
EXHIBIT A (1) Description of Project
and Environmental Infrastructure
System.....................................................A-1-1
(2) Description of
Loan........................................A-2-1
EXHIBIT B Basis for Determination of
Allowable Project Costs...............B-1
EXHIBIT C Estimated Disbursement
Schedule..................................C-1
EXHIBIT D Specimen Borrower
Bond...........................................D-1
EXHIBIT E Opinions of Borrower's Bond
and General Counsels.................E-1
EXHIBIT F Additional Covenants and
Requirements............................F-1
EXHIBIT G General Administrative
Requirements for the State
Environmental Infrastructure Financing
Program.................G-1
EXHIBIT H Form of Continuing
Disclosure Agreement..........................H-1
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NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE FUND LOAN AGREEMENT
THIS LOAN
AGREEMENT, made and
entered into as of November 1, 2003, by and
between THE STATE OF NEW JERSEY, acting by
and through the New Jersey Department
of Environmental Protection, and the Borrower (capitalized terms used in
this
Loan Agreement shall have, unless the
context otherwise
requires, the
meanings
ascribed thereto in Section 1.01
hereof);
WITNESSETH THAT:
WHEREAS,
the Borrower has, in accordance with the Regulations, made
timely
application to the State for a Loan to finance a portion of the Cost of the
Project;
WHEREAS,
the State has approved the Borrower's application for a Loan
from
Federal Funds, if and when received by and
available to the State, and moneys
from repayments of loans previously made from such Federal
Funds, in the amount
of the loan commitment set forth in Exhibit
A-2 attached hereto and made a part
hereof to finance a portion of the Cost of
the Project;
WHEREAS,
the New Jersey State
Legislature has
approved an appropriations
act that authorizes an expenditure
of said proceeds,
Federal Funds or
related
moneys to finance a portion of the Cost of
the Project;
WHEREAS,
the Borrower, in accordance with the Business Corporation Law
and
all other applicable law, will issue a Borrower
Bond to the State
evidencing
said Loan at the Loan Closing; and
WHEREAS,
in accordance with the
New Jersey
Environmental
Infrastructure
Trust Act, P.L. 1985, c. 334, as amended,
and the Regulations,
the Borrower has
been awarded a Trust Loan for a portion
of the Cost of the
Project plus, if
applicable to the Borrower, capitalized interest on the Trust Loan,
certain
costs of issuance and bond insurance
premium related thereto.
NOW,
THEREFORE,
for and in
consideration of the award of the Loan by the
State, the Borrower agrees to complete the Project and to perform
under this
Loan Agreement in accordance with the
conditions,
covenants and
procedures set
forth herein and attached hereto as part
hereof, as follows:
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ARTICLE I
DEFINITIONS
SECTION
1.01. Definitions. The following terms as used in this Loan
Agreement shall, unless the context clearly requires otherwise, have the
following meanings:
"Administrative Fee"
means an annual fee of up to one percent (1.0%) of
the initial principal amount of the Loan or
such lesser amount, if
any, as may
be authorized by any act of the New
Jersey State
Legislature and as the
State
may approve from time to time.
"Authorized Officer"
means, in the case of the Borrower,
any person or
persons authorized pursuant to a resolution of the board of directors of
the
Borrower to perform any act or execute any
document relating to the Loan, the
Borrower Bond or this Loan Agreement.
"Borrower"
means the corporation that is a party to and is
described in
Schedule A to this Loan Agreement, and its
successors and assigns.
"Borrower
Bond" means the
general obligation
bond, note, debenture or
other evidence of indebtedness authorized,
executed, attested and delivered by
the Borrower to the State and authenticated, if applicable, on behalf of the
Borrower to evidence the Loan, a specimen
of which is attached hereto as Exhibit
D and made a part hereof.
"Borrowers" means any
other Local Government
Unit or Private Entity
(as
such terms are defined in the Regulations)
authorized to construct, operate and
maintain Environmental Infrastructure Facilities that have entered into Loan
Agreements with the State pursuant to which the State will make Loans
to such
recipients from Federal Funds.
"Business
Corporation
Law" means the "New
Jersey Business Corporation
Act", constituting Chapter 263 of the Pamphlet Laws of 1968 of the State
(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 State.
"Environmental
Infrastructure
Facilities" means
Water Supply Facilities
(as such term is defined in the
Regulations).
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"Environmental Infrastructure
System"
means
the Environmental
Infrastructure Facilities of the Borrower,
including the Project,
described in
Exhibit A-1 attached hereto and made a part
hereof for which the
Borrower is
borrowing the Loan under this Loan
Agreement.
"Event of
Default" means any occurrence or event specified in Section
5.01
hereof.
"Federal
Funds" means those funds awarded to the State pursuant to the
Clean Water Act (33 U.S.C. ss.1251 et seq.) or the Safe
Drinking Water Act
(42
U.S.C. ss.300f et seq.), as the same may from time to time be amended and
supplemented.
"Loan"
means the loan made by
the State to the
Borrower to
finance or
refinance a portion of the Cost of the
Project pursuant to
this Loan Agreement.
For all purposes of this Loan Agreement,
the principal amount of the Loan at any
time shall be the amount of the loan commitment set forth in Exhibit A-2
attached hereto and made a part hereof
(such amount being also specified as the
initial aggregate principal amount of the
Borrower Bond) less any amount of such
principal amount that has been repaid by the
Borrower under this Loan Agreement
and less any adjustment made for low bid or
final building costs pursuant to the
provisions of N.J.A.C. 7:22-3.26 and the appropriations act of the New Jersey
State Legislature authorizing the expenditure of
moneys to finance a portion of
the Cost of the Project.
"Loan
Agreement"
means this Loan Agreement, including the Exhibits
attached hereto, as it may be supplemented, modified or amended from time
to
time in accordance with the terms
hereof.
"Loan
Agreements"
means any other loan
agreements
entered into by and
between the State and one or more of the
Borrowers pursuant to which the State
will make Loans to such Borrowers from
Federal Funds.
"Loan
Closing" means the date upon which the
Borrower shall deliver
its
Borrower Bond, as previously authorized,
executed, attested
and, if applicable,
authenticated, to the State.
"Loan
Repayments"
means the sum of (i)
the repayments
of the principal
amount of the Loan payable by the Borrower
pursuant to Section
3.03(a) of this
Loan Agreement and (ii) any late charges incurred hereunder, but shall not
include the Administrative Fee.
"Loan
Term" means the term of this Loan
Agreement provided in Sections
3.01 and 3.03 hereof and in Exhibit A-2
attached hereto and made a part hereof.
"Loans"
means the loans made by the State to the Borrowers under the Loan
Agreements from Federal Funds.
"Master
Program Trust
Agreement" means that
certain Master Program Trust
Agreement, dated as of November 1, 1995, by and among the Trust,
the State,
United States Trust Company of New York, as
Master Program Trustee
thereunder,
The Bank of New York (NJ), in several
capacities thereunder,
and First Fidelity
Bank, N.A. (predecessor to Wachovia Bank, National Association), in several
capacities thereunder, as supplemented by
that certain
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Agreement of Resignation of Outgoing Master Program Trustee, Appointment of
Successor Master Program Trustee and
Acceptance Agreement,
dated as of November
1, 2001, by and among United States Trust Company of New York, as Outgoing
Master Program Trustee, State Street Bank and Trust
Company, N.A.
(predecessor
to U.S. Bank Trust National Association), as Successor Master Program
Trustee,
and the Trust, as the same may be amended
and supplemented from
time to time in
accordance with its terms.
"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 State is
permitted to make a loan to the
Borrower pursuant to the Regulations,
all or a portion of
the Cost of which is
financed or refinanced by the State through the making of the Loan
under this
Loan Agreement and which may be
identified under
either the Drinking
Water or
Clean Water Project Lists with the Project Number specified in Exhibit A-1
attached hereto.
"Regulations" means the rules and regulations, as applicable, now
or
hereafter promulgated under N.J.A.C. 7:22-3
et seq., 7:22-4 et seq., 7:22-5 et
seq., 7:22-9 et seq. and 7:22-10 et seq.,
as the same may from time to time be
amended and supplemented.
"State"
means the State of New Jersey, acting, unless otherwise
specifically indicated, by and through the New Jersey Department of
Environmental Protection, and its
successors and assigns.
"Trust"
means the New Jersey Environmental Infrastructure Trust, a public
body corporate and politic with
corporate succession
duly created and
validly
existing under and by virtue of P.L. 1985,
c. 334, as amended (N.J.S.A. 58:11B-1
et seq.).
"Trust
Loan" means the loan made to the Borrower by the Trust pursuant to
the Trust Loan Agreement.
"Trust
Loan Agreement" means the loan agreement by and between the
Borrower and the Trust dated as of
November 1, 2003 to
finance or refinance
a
portion of the Cost of the Project.
"Trustee"
means, initially, Wachovia Bank, National Association, the
Trustee appointed by the Trust and its successors as Trustee under the Bond
Resolution, as provided in Article X of the
Bond Resolution.
(b) In
addition to the capitalized terms defined in subsection (a) of
this
Section 1.01, certain additional capitalized terms used in this
Loan Agreement
shall, unless the context clearly requires
otherwise, have the meanings ascribed
to such additional capitalized terms in Schedule A attached
hereto and made a
part hereof.
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(c) Except
as otherwise
defined herein or where the context otherwise
requires, words importing the singular
number shall include
the plural number
and vice versa, and words importing
persons shall include
firms,
associations,
corporations, agencies and districts.
Words importing one
gender shall include
the other gender.
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ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION
2.01. Representations of Borrower. The Borrower represents for
the
benefit of the State as follows:
(a)
Organization and Authority.
--------------------------
(i) The Borrower is a corporation duly created and validly
existing
under
and pursuant to the laws of the State, including the Business
Corporation Law.
(ii) The acting
officers of the Borrower who are contemporaneously
herewith
performing or have
previously performed
any action contemplated
in this
Loan Agreement
either are or, at the time any such
action was
performed,
were the duly
appointed or elected
officers of such
Borrower
empowered
by applicable New Jersey law and, if applicable, authorized by
resolution
of the Borrower to perform such actions. To the extent any such
action was
performed by an officer no longer the duly
acting officer of
such
Borrower, all such actions previously taken by such officer are
still
in full
force and effect.
(iii) The Borrower has full legal right and authority and all
necessary
licenses and permits required as of the date hereof to own,
operate
and maintain its Environmental Infrastructure System, to carry
on
its
activities relating thereto, to execute, attest and deliver this Loan
Agreement
and the Borrower Bond,
to authorize the
authentication of
the
Borrower
Bond, to sell the
Borrower Bond to the
State, to undertake
and
complete
the Project
and to carry out and
consummate
all transactions
contemplated by this Loan Agreement.
(iv) The proceedings of the Borrower's board of directors
approving
this Loan
Agreement and the
Borrower Bond,
authorizing
the execution,
attestation and
delivery of this Loan
Agreement and the
Borrower Bond,
authorizing the sale
of the Borrower Bond to the State, authorizing the
authentication of
the Borrower Bond on behalf of the Borrower and
authorizing the Borrower to undertake and complete the Project,
including,
without
limitation,
the Borrower Bond Resolution (collectively, the
"Proceedings"), have been duly and lawfully adopted in accordance
with the
Business
Corporation Law and
other applicable New Jersey law at a meeting
or
meetings that were duly called and held in accordance with the
Borrower
By-Laws
and at which quorums were present and acting throughout.
(v) By official action
of the Borrower taken prior to or concurrent
with the
execution and delivery hereof, including, without limitation,
the
Proceedings, the
Borrower has duly authorized, approved and consented to
all
necessary action to be
taken by the Borrower for: (A) the execution,
attestation, delivery
and performance of this Loan Agreement and the
transactions
contemplated hereby;
(B) the issuance of
the Borrower Bond
and the
sale thereof to the State upon the terms set forth herein; and
(C)
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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.
(vi) This Loan
Agreement and the
Borrower Bond have each been duly
authorized
by the Borrower and
duly executed,
attested and delivered
by
Authorized
Officers of the
Borrower, and the
Borrower Bond has been duly
sold by
the Borrower to the State, duly authenticated by the trustee or
paying
agent, if applicable,
under the Borrower
Bond Resolution and duly
issued by
the Borrower in
accordance with the
terms of the Borrower Bond
Resolution; and
assuming that the State has all the requisite power and
authority
to authorize, execute, attest and deliver, and has duly
authorized, executed,
attested and
delivered, this Loan
Agreement, and
assuming
further that this Loan Agreement is the legal, valid and binding
obligation
of the State,
enforceable against the State in accordance with
its terms,
each of this Loan Agreement and the Borrower Bond constitutes a
legal,
valid and binding obligation of the Borrower, enforceable against
the
Borrower in accordance with its respective terms, except as the
enforcement thereof
may be affected by
bankruptcy, insolvency
or other
laws or
the application
by a court
of legal or equitable principles
affecting
creditors'
rights; and the information contained under
"Description of Loan"
in Exhibit
A-2 attached hereto and made a part
hereof is
true and accurate in all respects.
(b) Full
Disclosure. There is
no fact that the Borrower has not disclosed
to the State in writing on the Borrower's
application for the
Loan or otherwise
that materially adversely affects or (so far as the Borrower
can now foresee)
that will materially adversely affect the
properties,
activities, prospects
or
condition (financial or otherwise) of the Borrower or its Environmental
Infrastructure System, or the ability of the Borrower to make all Loan
Repayments or otherwise to observe and perform its duties, covenants,
obligations and agreements under this Loan
Agreement and the Borrower Bond.
(c)
Pending Litigation. There are no proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower
in any
court or before any governmental authority or arbitration board or tribunal
that, if adversely determined, would materially adversely affect (i) the
undertaking or completion of the Project, (ii) the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, (iii) the ability of the
Borrower to make
all Loan Repayments, (iv) the
authorization,
execution, attestation or delivery
of this Loan Agreement or the Borrower
Bond, (v) the issuance of the
Borrower
Bond and the sale thereof to the State,
(vi) the adoption of
the Borrower Bond
Resolution, or (vii) the Borrower's ability
otherwise to observe and perform its
duties, covenants, obligations and agreements under
this Loan Agreement and the
Borrower Bond, which proceedings have not been
previously disclosed
in writing
to the State either in the Borrower's
application for the Loan or otherwise.
(d)
Compliance with Existing Laws and Agreements. (i) The authorization,
execution, attestation and delivery of this
Loan Agreement and the Borrower Bond
by the Borrower, (ii) the authentication of the
Borrower Bond by the trustee or
paying agent under the
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Borrower Bond Resolution, as the case may be, and the sale
of the Borrower Bond
to the State, (iii) the adoption of the Borrower Bond Resolution, (iv) the
observation and performance by the Borrower of its duties, covenants,
obligations and agreements hereunder and
thereunder, (v) the consummation of the
transactions provided for in this Loan
Agreement, the
Borrower Bond Resolution
and the Borrower Bond, and (vi) the undertaking and completion of the Project
will not (A) other than the lien,
charge or encumbrance
created hereby, by
the
Borrower Bond, by the Borrower Bond
Resolution and by any other outstanding debt
obligations of the Borrower that are at
parity with the Borrower Bond as to lien
on, and source and security for payment thereon from, the revenues of the
Borrower's Environmental Infrastructure System, result in the creation or
imposition of any lien, charge or encumbrance upon any properties or assets
of
the Borrower pursuant to, (B) result in any breach of any of the terms,
conditions or provisions of, or (C) constitute a default under, any existing
resolution, outstanding debt or lease
obligation, trust
agreement,
indenture,
mortgage, deed of trust, loan agreement or other instrument to which the
Borrower is a party or by which the
Borrower, its
Environmental
Infrastructure
System or any of its properties or assets may be bound,
nor will such
action
result in any violation of the provisions of the charter or other document
pursuant to which the Borrower was established or any laws, ordinances,
injunctions, judgments, decrees, rules, regulations or existing orders of
any
court or governmental or administrative
agency, authority or person to which the
Borrower, its Environmental Infrastructure System or its properties or
operations is subject.
(e) No
Defaults. No event has
occurred and no condition exists that, upon
the authorization, execution, attestation and delivery of this
Loan Agreement
and the Borrower Bond, the issuance of the
Borrower Bond and the sale thereof to
the State, the adoption of the Borrower
Bond Resolution or the receipt of
the
amount of the Loan, would constitute an
Event of Default hereunder. The Borrower
is not in violation of, and has not
received notice of any claimed violation of,
any term of any agreement or other
instrument to which it is a party or by which
it, its Environmental Infrastructure System or its properties may be bound,
which violation would materially
adversely affect the properties,
activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System or the ability of the
Borrower to make all
Loan Repayments, to pay all other amounts due
hereunder or otherwise to observe
and perform its duties, covenants, obligations and agreements
under this Loan
Agreement and the Borrower Bond.
(f)
Governmental
Consent. The Borrower has obtained all permits and
approvals required to date by any governmental body or officer for the
authorization, execution, attestation and delivery of this Loan
Agreement and
the Borrower Bond, for the issuance of the
Borrower Bond and the sale thereof to
the State, for the adoption of the Borrower
Bond Resolution, for the making,
observance and performance by the Borrower
of its duties, covenants, obligations
and agreements under this Loan Agreement and the Borrower Bond and for the
undertaking or completion of the Project and the financing or refinancing
thereof, including, but not limited to, if
required, the approval by the New
Jersey Board of Public Utilities (the "BPU") of the
issuance by the Borrower of
the Borrower Bond to the State and any
other approvals
required therefor by the
BPU; and the Borrower has complied with all applicable provisions of law
requiring any notification, declaration, filing or registration with any
governmental body or officer in connection with the making, observance and
performance by the Borrower of its duties,
covenants, obligations and agreements
under this Loan Agreement and the Borrower
Bond or
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with the undertaking or completion of the Project and the financing or
refinancing thereof. No consent, approval or authorization of, or filing,
registration or qualification with, any governmental body or officer that has
not been obtained is required on the part
of the Borrower as a condition to the
authorization, execution, attestation and delivery of this Loan
Agreement and
the Borrower Bond, the issuance of the
Borrower Bond and the sale thereof to the
State, the undertaking or completion of
the Project or the
consummation of any
transaction herein contemplated.
(g)
Compliance with Law. The Borrower:
-------------------
(i) is in compliance with all laws, ordinances, governmental rules
and
regulations to which
it is subject, the
failure to comply with which
would
materially
adversely affect (A) the ability of the Borrower to
conduct
its activities
or to undertake or
complete the Project,
(B) the
ability of
the Borrower to make the Loan Repayments and to pay all other
amounts
due hereunder,
or (C) the condition
(financial or
otherwise) of
the
Borrower or its Environmental Infrastructure System; and
(ii) has obtained all licenses, permits, franchises or other
governmental
authorizations
presently necessary for the ownership of its
properties
or for the conduct of
its activities
that, if not obtained,
would
materially
adversely affect (A) the ability of the Borrower to
conduct
its activities
or to undertake or
complete the Project,
(B) the
ability of
the Borrower to make the Loan Repayments and to pay all other
amounts
due hereunder,
or (C) the condition
(financial or
otherwise) of
the
Borrower or its Environmental Infrastructure System.
(h) Use of
Proceeds. The Borrower will apply the proceeds of the Loan from
the State as described in Exhibit B attached hereto and made a part hereof
(i)
to finance or refinance a portion of the Cost of
the Borrower's
Project; and
(ii) where applicable, to reimburse the Borrower for a portion of the
Cost of
the Borrower's Project, which portion was paid or incurred
in anticipation of
reimbursement by the State and is eligible for such reimbursement under and
pursuant to the Regulations, the Code and any other applicable
law. All of such
costs constitute Costs for which the State is
authorized to make
Loans to the
Borrower pursuant to the Regulations.
SECTION
2.02. Particular Covenants of Borrower.
(a)
Promise to Pay. The Borrower unconditionally promises, in accordance
with the terms of and to the extent
provided in the Borrower Bond Resolution, to
make punctual payment of the principal of
the Loan and the Borrower Bond and all
other amounts due under this Loan
Agreement and the
Borrower Bond
according to
their respective terms.
(b)
Performance Under Loan
Agreement; Rates. The
Borrower covenants
and
agrees (i) to comply with all applicable State and federal laws, rules and
regulations in the performance of this Loan Agreement; (ii) to maintain its
Environmental Infrastructure System in good repair and operating condition;
(iii) to cooperate with the State in the observance and performance of the
respective duties, covenants, obligations
and agreements of the Borrower and the
State under
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this Loan Agreement; and (iv) to establish,
levy and collect
rents, rates and
other charges for the products and services provided by its Environmental
Infrastructure System, which rents, rates and other charges shall be
at least
sufficient to comply with all covenants
pertaining thereto contained in, and all
other provisions of, any bond resolution, trust indenture or other security
agreement, if any, relating to any bonds, notes or other evidences of
indebtedness issued or to be issued by the Borrower, including without
limitation rents, rates and other charges,
together with other available moneys,
sufficient to pay the principal of and
Interest on the Borrower Bond, plus all
other amounts due hereunder.
(c)
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 Trust
Loan,
(ii) the debt service on any future bonds or notes of the Borrower issued at
parity with the Borrower Bond under the
Borrower Bond Resolution, and (iii) the
debt service on any bonds, notes or
evidences of indebtedness of the Borrower at
parity with the Borrower Bond under the
Borrower Bond
Resolution 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 Trust
Loan, required to complete the
Project.
(e) See
Section 2.02(e) as set forth in Schedule A attached hereto, made
a
part hereof and incorporated in this Section 2.02(e) by reference as if set
forth in full herein.
(f)
Reserved.
(g)
Operation and Maintenance of Environmental Infrastructure System. The
Borrower covenants and agrees that it shall, in accordance with prudent
environmental infrastructure utility practice, (i) at all times operate the
properties of its Environmental Infrastructure System and any business in
connection therewith in an efficient
manner, (ii) maintain its Environmental
Infrastructure System in good repair,
working order and operating
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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.
The Borrower shall
keep accurate
records and
accounts for its Environmental Infrastructure System specifically relating to
the project (the "System Records")
separate and distinct
from its other records
and accounts (the "General Records"). Such System Records shall be audited
annually by an independent certified public
accountant, which may be part of the
annual audit of the General Records of the Borrower. Such System Records and
General Records shall be made available for inspection by the State at any
reasonable time upon prior written
notice, and a copy of such annual
audit(s)
therefor, including all written comments
and recommendations of such accountant,
shall be furnished to the State within 150
days of the close of the fiscal year
being so audited or, with the consent of
the State, such
additional
period as
may be provided by law.
(i)
Inspections;
Information. The Borrower shall permit the State and any
party designated by the State, at any and all reasonable times during
construction of the Project and thereafter upon prior written notice, to
examine, visit and inspect the property, if
any, constituting the Project and to
inspect and make copies of any accounts,
books and records,
including (without
limitation) its records regarding receipts, disbursements, contracts,
investments and any other matters relating thereto and to its financial
standing, and shall supply such reports and information as the State may
reasonably require in connection
therewith.
(j)
Insurance. The
Borrower shall maintain or cause to be maintained, in
force, insurance policies with
responsible insurers or self-insurance programs
providing against risk of direct
physical loss, damage or destruction of its
Environmental Infrastructure System at least to the extent that similar
insurance is usually carried by utilities constructing, operating and
maintaining Environmental Infrastructure Facilities of the nature of the
Borrower's Environmental Infrastructure System,
including liability
coverage,
all to the extent available at reasonable cost but in no case less than
will
satisfy all applicable regulatory
requirements.
(k) Cost
of Project. The
Borrower certifies that the building cost of the
Project, as listed in Exhibit B hereto and
made a part hereof, is
a reasonable
and accurate estimation thereof, and it will supply to the State a
certificate
from a licensed professional engineer authorized to practice in the State
stating that such building cost is a
reasonable and accurate estimation and that
the useful life of the Project exceeds the
maturity date of the Borrower Bond.
(l)
Delivery of
Documents.
Concurrently
with the delivery of
this Loan
Agreement (as previously authorized,
executed and attested) at the Loan Closing,
the Borrower will cause to be delivered to the State each of the following
items:
(i) an opinion of the Borrower's bond counsel substantially in the
form of
Exhibit E hereto;
provided, however, that the State may permit
portions
of such opinion to be rendered by general counsel to the
Borrower
and may
permit variances in such opinion from the form set forth in
Exhibit E
if such variances are acceptable to the State;
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<PAGE>
(ii) counterparts of this Loan Agreement as previously executed and
attested
by the parties hereto;
(iii) copies of those
resolutions finally
adopted by the board
of
directors
of the Borrower and requested by the State, including, without
limitation, (A) the
resolution of the Borrower authorizing the execution,
attestation and
delivery of this Loan
Agreement, (B) the
Borrower Bond
Resolution, as
amended and supplemented as of the date of the Loan
Closing,
authorizing the execution, attestation, authentication, sale and
delivery
of the Borrower
Bond to the State,
(C) the resolution of the
Borrower
confirming
the details of the
sale of the Borrower
Bond to the
State,
each of said
resolutions
of the Borrower
being certified by an
Authorized
Officer of the Borrower as of the date of the Loan Closing, (D)
the
resolution
of the BPU
approving the issuance
by the Borrower of the
Borrower
Bond to the State and setting forth any other approvals
required
therefor
by the BPU, if applicable, and (E) any other Proceedings; and
(iv) the certificates of insurance coverage as required pursuant
to
the
terms of Section 3.06(c) hereof and such other certificates,
documents,
opinions and
information as the State may require in Exhibit F
hereto, if
any.
(m)
Execution and Delivery of Borrower Bond. Concurrently with the
delivery of this Loan Agreement at the Loan Closing, the Borrower shall also
deliver to the State the Borrower Bond, as
previously executed, attested and, if
applicable, authenticated.
(n) Notice
of Material Adverse Change. The Borrower shall promptly
notify
the State of any material adverse change in the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, or in the ability of the
Borrower to make
all Loan Repayments and otherwise to
observe and perform its duties, covenants,
obligations and agreements under this Loan
Agreement and the Borrower Bond.
(o)
Continuing
Representations.
The representations of the Borrower
contained herein shall be true at the time of the execution of this Loan
Agreement and at all times during the term
of this Loan Agreement.
(p)
Additional
Covenants and Requirements. (i) No later than the Loan
Closing and, if necessary, in connection
with the making of the Loan, additional
covenants and requirements have been included in Exhibit F hereto and
made a
part hereof. Such covenants and requirements may include, but need not be
limited to, the maintenance of specified
levels of Environmental Infrastructure
System rates, the issuance of additional
debt of the Borrower
and the transfer
of revenues and receipts from the Borrower's Environmental Infrastructure
System. The Borrower agrees to observe and comply
with each such
additional
covenant and requirement, if any, included in Exhibit F
hereto. (ii) Additional
defined terms, covenants, representations
and requirements have been included in
Schedule A attached hereto and made a part
hereof. Such additional defined
terms, covenants, representations and
requirements are incorporated in this Loan
Agreement by reference thereto as if set
forth in full herein and the
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<PAGE>
Borrower hereby agrees to observe and comply with
each such additional
term,
covenant, representation and requirement
included in Schedule A
as if the same
were set forth in its entirety where reference thereto is made in this Loan
Agreement.
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<PAGE>
ARTICLE III
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
SECTION
3.01. Loan; Loan Term. The State hereby agrees to make the Loan
as
described in Exhibit A-2 hereof and to disburse proceeds of the Loan to the
Borrower in accordance with Section 3.02
and Exhibit C hereof,
and the Borrower
hereby agrees to borrow and accept the Loan from the State
upon the terms set
forth in Exhibit A-2 attached hereto and
made a part hereof; provided, however,
that the State shall be under no
obligation to make the
Loan if (a) at the Loan
Closing, the Borrower does not deliver to the State a
Borrower Bond and
such
other documents required under Section 2.02(l) hereof, or (b) an Event of
Default has occurred and is continuing
under this Loan
Agreement. Although
the
State intends to disburse proceeds of the Loan to the
Borrower at the times and
up to the amounts set forth in Exhibit C to pay a portion
of the Cost of the
Project, due to unforeseen circumstances there may not be sufficient
Federal
Funds on deposit on any date to make the disbursement in such amount.
Nevertheless, the Borrower agrees that the
aggregate principal amount set forth
in Exhibit A-2 hereto shall constitute the
initial principal
amount of the Loan
(as the same may be adjusted downward in accordance with the definition
thereof), and the State shall have no obligation thereafter to loan any
additional amounts to the Borrower.
The
Borrower shall have no legal or
equitable interest in the Federal
Funds received by and available to the State or in
moneys from repayments
of
loans previously made from Federal Funds by
the State.
The
Borrower shall use the proceeds of the Loan
strictly in
accordance
with Section 2.01(h) hereof.
The
payment obligations created under this Loan Agreement and the
obligations to pay the principal of and other amounts due under the Borrower
Bond are each direct, general, irrevocable and unconditional
obligations of the
Borrower payable from any source legally
available to the Borrower in accordance
with the terms of and to the extent
provided in the Borrower Bond Resolution.
SECTION
3.02. Disbursement of
Loan Proceeds. (a) The State shall disburse
Federal Funds earmarked for the Loan to the Borrower in
accordance
with the
terms hereof. Before each and every disbursement
of the proceeds of the Loan by
the State to the Borrower, the Borrower shall in accordance
with the procedures
set forth in the Regulations submit to the State a requisition
executed by an
Authorized Officer of the Borrower.
(b) The
State shall
not be under any
obligation
to disburse any Loan
proceeds to the Borrower under this Loan
Agreement, unless:
(i) the Loan Closing
shall have
occurred on the date
established
therefor
by the State;
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<PAGE>
(ii) there shall be
Federal Funds
available from time to time to
fund the
Loan, as determined solely by the State;
(iii) in
accordance
with
the "New Jersey Environmental
Infrastructure Trust
Act", P.L. 1985, c. 334, as amended (N.J.S.A.
58:11B-1
et seq.), and the
Regulations,
the Borrower
shall have timely
applied
for, shall have been awarded and, prior to or simultaneously
with
the Loan
Closing, shall have closed a Trust Loan for a portion of the
Allowable
Costs (as defined in such Regulations) of the Project in an
amount
not in excess
of the amount of Allowable Costs of the Project
financed
by the Loan from the State, plus the amount of: (i)
capitalized
interest
during the Project
construction period, if any, (ii) the cost of
funding
reserve capacity for the Project, if any, as well as that
portion
of the
Debt Service Reserve
Fund (as defined in the Trust Loan Agreement)
attributable to the cost of funding such reserve capacity for the
Project,
and
(iii) certain issuance expenses related thereto, including, if
applicable, a municipal bond insurance policy premium;
(iv) the Borrower
shall have on hand
moneys to pay for the greater
of (A)
that portion of the
total cost of the Project that is not eligible
to be
funded from the Loan or the Trust Loan, or (B) that portion of the
total cost
of the Project
that exceeds the actual amounts of the loan
commitments made by
the State and the Trust, respectively, for the Loan
and the
Trust Loan; and
(v) no Event of Default nor any event that, with the passage of
time
or service
of notice or both,
would constitute an
Event of Default shall
have
occurred and be continuing hereunder.
SECTION
3.03. Amounts
Payable. (a) The Borrower shall repay the
Loan at
zero-interest in principal installments payable to the Trustee
semiannually on
the Principal Payment Dates, in accordance with the schedule set forth in
Exhibit A-2 attached hereto and made a part hereof,
as the same may be
amended
or modified by the State, in particular, without limitation, to make any
adjustments to the amount of the Loan in
accordance with the definition thereof;
provided, however, that the amount of any reduction
in the principal amount of
the Loan pursuant to N.J.A.C. 7:22-3.26 shall be credited to the principal
payments set forth in Exhibit A-2 in inverse order of their maturity. The
obligations of the Borrower under the Borrower Bond shall be deemed to be
amounts payable under this Section 3.03. Each payment made to the Trustee
pursuant to the Borrower Bond shall be deemed to be a credit against the
corresponding obligation of the Borrower
under this Section
3.03, and any such
payment made to the Trustee shall fulfill
the Borrower's
obligation to pay such
amount hereunder and under the Borrower
Bond. Each payment
made to the Trustee
pursuant to this Section 3.03 shall be
applied to the principal of the Loan.
(b) In
addition to the principal payments on the Loan required by
subsection (a) of this Section 3.03,
the Borrower
shall pay a late
charge for
any such payment that is received by the
Trustee later than the tenth (10th) day
following its due date in an amount equal
to the greater of twelve percent (12%)
per annum or the Prime Rate plus one half
of one percent per annum on
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<PAGE>
such late payment from its due date to the date actually paid; provided,
however, that such late charge payable on
the Loan shall not be in excess of the
maximum interest rate permitted by law.
(c) In
addition to the Loan Repayments payable under subsections (a) and
(b) of this Section 3.03, the Borrower
shall pay one-half of the Administrative
Fee, if any, to the Trustee semiannually on each Principal Payment Date,
commencing with the first Principal Payment
Date subsequent to the Loan Closing.
SECTION
3.04. Unconditional Obligations. The obligation of the Borrower
to
make the Loan Repayments and all other payments required hereunder and the
obligation to perform and observe the other
duties, covenants,
obligations and
agreements on its part contained herein
shall be absolute and unconditional, and
shall not be abated, rebated, set-off,
reduced, abrogated,
terminated,
waived,
diminished, postponed or otherwise modified in any manner or to any extent
whatsoever while any Loan Repayments remain
unpaid, for any
reason, regardless
of any contingency, act of God, event or cause
whatsoever, including
(without
limitation) any acts or circumstances that may constitute failure of
consideration, eviction or constructive
eviction, the taking
by eminent domain
or destruction of or damage to the Project or Environmental Infrastructure
System, commercial frustration of the purpose, any change in the laws of the
United States of America or of the State or
any political
subdivision of either
or in the rules or regulations of any
governmental authority, any failure of the
State to perform and observe any agreement,
whether express or
implied, or any
duty, liability or obligation
arising out of or
connected with the
Project or
this Loan Agreement, or any rights of set-off, recoupment, abatement or
counterclaim that the Borrower might otherwise have against the State, the
Trustee or any other party or parties; provided, however, that payments
hereunder shall not constitute a waiver of
any such rights. The
Borrower shall
not be obligated to make any payments
required to be made by any other Borrowers
under separate Loan Agreements.
SECTION
3.05. Loan Agreement
to Survive Loan. The
Borrower
acknowledges
that its duties, covenants, obligations and agreements set forth in
Sections
3.06(a) and (b) hereof shall survive the
payment in full of the Loan.
SECTION
3.06. Disclaimer of Warranties and Indemnification. (a) The
Borrower acknowledges and agrees that: (i)
the State does not make any warranty
or representation, either express or implied, as to the value, design,
condition, merchantability or fitness for
particular purpose or fitness for any
use of the Environmental Infrastructure System or the Project or any
portions
thereof or any other warranty or
representation with respect thereto; (ii) in no
event shall the State or its agents be
liable or responsible for any incidental,
indirect, special or consequential damages
in connection with or arising out of
this Loan Agreement or the Project or the
existence, furnishing,
functioning or
use of the Environmental Infrastructure System or the Project or any item or
products or services provided for in this Loan Agreement; and (iii) to the
fullest extent permitted by law, the
Borrower shall indemnify and hold the State
harmless against, and the Borrower shall
pay any and all, liability, loss, cost,
damage, claim, judgm
