Exhibit 10.50

 

LOAN AGREEMENT

By and between

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

and

MIDDLESEX WATER COMPANY

 

Dated as of August 1, 2019

 

Subject to the “Reserved Rights”, as defined in the Indenture of Trust dated as
of the date hereof between the New Jersey Economic Development Authority (the
“Authority”) and The Bank of New York Mellon (the “Trustee”), as trustee therein
(the “Indenture”), certain rights of the Authority in this Agreement have been
assigned pursuant to the Indenture and are subject to the security interest of
the Trustee.

 

 

 

TABLE OF CONTENTS

 

ARTICLE I     DEFINITIONS   ARTICLE II     REPRESENTATIONS, COVENANTS AND
WARRANTIES   Section 2.01.   Representations, Covenants and Warranties of
Authority 7 Section 2.02.   Representations, Covenants and Warranties of the
Company 7 Section 2.03.   Public Purpose Representations and Covenants 8 Section
2.04.   Non-Arbitrage Covenant 11 Section 2.05.   Arbitrage and Rebate. 12
Section 2.06.   Other Tax Matters 15 Section 2.07.   Costs and Expenses 16
Section 2.08.   Insurance 16 Section 2.09.   Filing of Other Documents 17    
ARTICLE III     ISSUANCE OF THE BONDS   Section 3.01.   Agreement To Issue
Bonds; Application of Bond Proceeds 18 Section 3.02.   First Mortgage Bonds 18
Section 3.03.   Conditions Precedent to Financing 19 Section
3.04.   Disbursements From Project Fund 19 Section 3.05.   Establishment of the
Completion Date 20 Section 3.06.   Investment of Moneys 21     ARTICLE IV    
LOAN PROCEEDS TO COMPANY; LOAN PROVISIONS; PROVISIONS RELATING TO THE PROJECTS  
Section 4.01.   Loan of Proceeds 22 Section 4.02.   Amounts Payable 22 Section
4.03.   Obligations of Company Hereunder Unconditional 23 Section
4.04.   Preservation of Project Facilities 23 Section 4.05.   Taxes and
Governmental Charges 23 Section 4.06.   Limitation of Authority’s Liability 23
Section 4.07.   Insurance Proceeds and Condemnation Awards 24

 

 

 

ARTICLE V     SPECIAL COVENANTS AND AGREEMENTS   Section 5.01.   No Warranty of
Condition or Suitability by Authority 25 Section 5.02.   Further Assurances and
Corrective Instruments 25 Section 5.03.   Authority and Company Representatives
25     ARTICLE VI       INDEMNIFICATION AND REDEMPTION       Section
6.01.   [Intentionally Omitted.] 26 Section 6.02.   Indemnification Covenants 26
Section 6.03.   Assignment of Interest in This Agreement by Authority 27 Section
6.04.   Redemption of Bonds 27 Section 6.05.   References to Bonds Ineffective
After Bonds Paid 27 Section 6.06.   Authority To Grant Security Interest to
Trustee 27     ARTICLE VII       EVENTS OF DEFAULT AND REMEDIES       Section
7.01.   Events of Default Defined 28 Section 7.02.   Remedies on Default 29
Section 7.03.   No Remedy Exclusive 30 Section 7.04.   Agreement To Pay
Attorneys’ Fees and Expenses 30 Section 7.05.   No Additional Waiver Implied by
One Waiver 30 Section 7.06.   Additional Remedies 31 Section 7.07.   Waiver 31
ARTICLE VIII       OPTIONS; PREPAYMENT OF LOAN       Section 8.01.   Option To
Terminate at Any Time 32 Section 8.02.   Option To Prepay Loan Upon the
Occurrence of Certain Events 32     ARTICLE IX       OBLIGATION TO PREPAY LOAN
IN CERTAIN EVENTS       Section 9.01.   Determination of Taxability. 34 Section
9.02.   Public Purpose Covenant Violations 35

 

ii 

 

    ARTICLE X       MISCELLANEOUS       Section 10.01.   Term of Agreement 36
Section 10.02.   Notices 36 Section 10.03.   Binding Effect 36 Section
10.04.   Severability 37 Section 10.05.   Amounts Remaining in Bond Fund 37
Section 10.06.   Amendments, Changes and Modifications 37 Section 10.07.   No
Personal Liability of Company Officials 37 Section 10.08.   Authority Not Liable
37 Section 10.09.   Delegation of Duties by Authority 38 Section
10.10.   Execution in Counterparts 38 Section 10.11.   Applicable Law 38 Section
10.12.   Captions 38 Section 10.13.   Application of New Jersey Contractual
Liability Act. 38    

Exhibit A – Form of First Mortgage Bonds

Exhibit B – Annual Compliance Certificate

Exhibit C – Tax Completion Certificate

Exhibit D – Requisition

Exhibit E – Completion Certificate

 

Schedule A – List of Project Municipalities

 

iii 

 

LOAN AGREEMENT

 

THIS AGREEMENT by and between the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the
“Authority”), a public body corporate and politic constituting an
instrumentality of the State of New Jersey, and MIDDLESEX WATER COMPANY (the
“Company”), a corporation that is a regulated public utility company organized
under the laws of the State of New Jersey, is dated as of August 1, 2019.

Capitalized terms and phrases used in these Recitals and not otherwise defined
shall have the meanings ascribed to them in Article I of this Agreement.

 

WHEREAS, the Authority is a public body corporate and politic constituting an
instrumentality of the State, organized and existing under the Act and is
authorized under the Act (i) to extend credit or make loans to any person for
the planning, designing, acquiring, constructing, reconstructing, improving,
equipping and furnishing of a project, which credit or loans may be secured by
loan and security agreements, mortgages, leases, and any other instruments, upon
such terms and conditions as the Authority shall deem reasonable; (ii) to
require the inclusion in any mortgage, lease, contract, loan and security
agreement or other instruments, of such provisions for the construction, use,
operation and maintenance and financing of a project as the Authority may deem
necessary or desirable; and (iii) to enter into contracts with respect to the
planning, designing, financing, constructing, reconstructing, improving,
equipping, furnishing, operating and maintaining of a project, for such
consideration and upon such terms and conditions as the Authority may determine
to be reasonable; and

 

WHEREAS, the Authority, by resolution adopted on June 11, 2019 (the
“Resolution”), and in furtherance of the purposes of the Act, proposes to issue
its $53,700,000 Water Facilities Revenue Bonds (Middlesex Water Company Project)
Series 2019 (the “Series 2019 Bonds”), and to loan the proceeds of the Bonds to
the Company, and the Company desires to borrow the proceeds of the Bonds from
the Authority, to fund the following projects in the Company’s service area in
the State of New Jersey (collectively, the “Projects”): (a) the construction and
installation of water facilities and functionally related equipment including
transmission and distribution mains, service lines, meters, hydrants,
transportation equipment, dead end closures, small mains, fire service, computer
equipment, well supply redevelopment, water treatment plant improvements and
miscellaneous plant equipment to enable applicant to provide a safe, adequate
and dependable supply of water; (b) the upgrade of the Company’s primary water
treatment plant including the addition of ozone intermediate treatment,
emergency standby power generation and replacement of electrical incoming power
feeds to the water treatment plant; and (c) the rehabilitation and/or
replacement of previously unlined mains in the water distribution system, in
order to increase water flows, water pressure and water quality as well as
replace critical infrastructure that has reached or is approaching the endpoint
of its useful service life;

WHEREAS, the Company is the owner and operator of the Project Facilities which
are being financed with the proceeds of the Series 2019 Bonds, as they may at
any time exist;

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:

 1

 

 

ARTICLE I

DEFINITIONS

 

All capitalized, undefined terms used in this Agreement shall have meanings
given them in the Indenture. In addition, the following words and phrases shall
have the following meanings:

“Act” means The New Jersey Economic Development Act, constituting Chapter 80 of
the Pamphlet Laws of 1974 of the State, approved on August 7, 1974, as amended
and supplemented and as it may, from time to time, hereafter be amended or
supplemented.

“Agreement” means this Agreement and any amendments and supplements hereto.

“Affirmative Action Requirements” or “Affirmative Action Program” means the
requirements of the Authority set forth in the Authority Regulations and any
other affirmative action requirements of the Authority from time to time
announced, as the same may from time to time be revised, amended or
supplemented;

 

“Application” shall mean the Company’s application to the Authority, dated
September 6, 2018, seeking financial assistance for the financing of the
Projects, and all attachments, exhibits, correspondence and modifications
submitted in writing to the Authority in connection therewith.

 

“Authority Representative” means the person or persons at the time designated to
act on behalf of the Authority by written certificate furnished to the Company
and the Trustee containing the specimen signatures of such person or persons and
signed on behalf of the Authority by its duly authorized agent.

“Bonds” means, the Series 2019 Bonds in the total principal amount of
$53,700,000 authorized to be issued by the Authority pursuant to the Indenture
and the Resolution.

“Bond Counsel” means Chiesa Shahinian & Giantomasi PC or another attorney or
firm of attorneys of nationally recognized standing in the field of law relating
to municipal, state and public agency financing, selected by the Company and
satisfactory to the Authority and the Trustee.

“Business Day” means a day on which banking business is transacted, but not
including any day on which banks are authorized to be closed, in the city in
which the Trustee has its corporate trust office and the city in which the
Company has its principal place of business.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” shall mean Middlesex Water Company, a corporation that is a regulated
public utility company organized under the laws of the State of New Jersey,
engaged principally in the treatment and distribution of water to customers and
its successors or assigns.

 

“Company Representative” means the person or persons at the time designated to
act on behalf of Company by written certificate furnished to the Authority and
the Trustee containing the specimen signatures of such person or persons and
signed on behalf of the Company by the Senior Vice President and Treasurer, or
any other Senior Vice President, any Vice President or any Assistant Treasurer.

 2

 

“Construction Contract” shall mean, for purposes of the Prevailing Wage
Provision, any contract or subcontract in the amount of $2,000 or more for
construction, reconstruction, demolition, alteration, repair or maintenance
work, including painting and decorating, undertaken in connection with the
Projects and shall mean, for purposes of the Affirmative Action Program, any
contract or subcontract for construction, reconstruction, renovation or
rehabilitation undertaken in connection with the Projects.

 

“Contractor” shall mean the principal or general contractor or contractors
engaged by the Company in the performance of a Construction Contract.

 

“Default” and “Event of Default” mean with respect to any Default or Event of
Default under this Agreement any occurrence or event specified and defined by
Section 7.01 hereof.

“Delivery Date” means the date of delivery of the Bonds to the Underwriters.

“First Mortgage Bonds” shall mean the First Mortgage Bond, Series 2019A in the
principal amount of $53,700,000 due August 1, 2059, of the Company issued under
and secured by the Mortgage Indenture and delivered to the Trustee, in the form
attached hereto as Exhibit A.

 

“Governmental Authority” means

(1)       the government of

(A)       the United States of America or any State or other political
subdivision thereof, or

(B)       any other jurisdiction in which the Company or any other Subsidiary
conducts all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any other Subsidiary, or

(2)       any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

 

“Income Exclusion” means the exclusion of interest on the Bonds from gross
income of the holders thereof for federal income tax purposes under Section
103(a) of the Code.

 

“Indemnified Parties” shall mean the State, the Authority, the Underwriters, the
Trustee, the Paying Agent, any Person who “controls” the State, the Authority,
the Paying Agent, the Underwriters or the Trustee within the meaning of Section
15 of the Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended, and any member, officer, official, director,
employee, agent or attorney of the Authority, the Underwriters, the State, the
Paying Agent or the Trustee.

 3

 

“Indenture” means the Indenture of Trust dated as of August 1, 2019 between the
Authority and the Trustee, pursuant to which the Bonds are authorized to be
issued, including any indenture supplemental thereto.

“Late Payment Rate” means a rate of interest equal to the highest rate of
interest borne by the Bonds.

“Mortgage Indenture” shall mean the Indenture of Mortgage dated as of April 1,
1927, by and between the Company and the Mortgage Trustee, as trustee, as the
same has heretofore been supplemented and as supplemented by the Supplemental
Mortgage Indenture.

 

“Mortgage Trustee” shall mean U.S. Bank National Association, as successor
trustee, under the Mortgage Indenture, or any successor thereto.

 

“Net Proceeds” shall mean the proceeds of the Bonds less any amounts placed in a
reasonably required reserve or replacement fund within the meaning of Section
148 of the Code.

 

“Permitted Investments” means any one or more of the following investments, if
and to the extent the same are then legal investments under the applicable laws
of the State for moneys proposed to be invested therein:

 

(i)       Bonds or other obligations of the United States;

 

(ii)       Bonds or other obligations, the payment of the principal and interest
of which is unconditionally guaranteed by the United States;

 

(iii)       Direct obligations issued by the United States or obligations
guaranteed in full as to principal and interest by the United States or
repurchase agreements with a qualified depository bank or securities dealers
fully collateralized by such obligations, maturing on or before the date when
such funds will be required for disbursement;

 

(iv)       Obligations of state and local government and municipal bond issuers,
which are rated investment-grade by either S&P or Moody’s or other non-rated
obligations of such issuers guaranteed or credit enhanced by a Person whose
long-term debt or long-term deposits or other obligations are rated
investment-grade by either S&P or Moody’s;

 

(v)       Prime commercial paper rated either “A-1” by S&P or “P-1” by Moody’s
and, if rated by both, not less than “A-1” by S&P and “P-1” by Moody’s;

 

(vi)       Bankers’ acceptances drawn on and accepted by commercial banks;

 

(vii)       Interests in any money market fund or trust, the investments of
which are restricted to obligations described in clauses (i) through (vi) of
this definition or obligations determined to be of comparable quality by the
board of directors of such fund or trust; and

 

(viii)       Such other obligations as may at any time hereafter be authorized
by applicable law, provided that the Trustee may require as a condition to the
investment of funds under this clause (viii) there having first been delivered
to the Trustee an opinion of Counsel to the effect that investment in such other
obligations is permitted under any applicable laws of the State.

 

 4

 

“Prevailing Wage Requirements” and “Prevailing Wage Provision” means the
requirements of the Authority set forth in the Authority Regulations and any
other prevailing wage requirements of the Authority from time to time announced,
as the same may from time to time be revised, amended or supplemented.

 

“Prevailing Wage Rate” shall mean the prevailing wage rate established by the
Commissioner of the New Jersey Department of Labor and Industry from time to
time in accordance with the provisions of N.J.S.A. 34:11-56.30 for the locality
in which the Project Facilities are located.

 

“Project” or “Projects” means, collectively, those water facilities and related
facilities acquired, constructed, improved or equipped with proceeds from the
Series 2019 Bonds, as more particularly described in the preambles hereto, as
the same may at any time exist.

“Project Cost” “Cost” or “Costs”, as used herein, shall include those items set
forth in Section 3(c) of the Act and all expenses as may be necessary or
incident to acquiring, constructing or installing the Project Facilities.

“Project Facility” or “Project Facilities” means water facilities and
functionally related equipment, including transmission and distribution mains,
service lines, meters, hydrants, transportation equipment, dead end closures,
small mains, fire service, computer equipment, well supply redevelopment, water
treatment plant improvements and miscellaneous plant equipment financed with the
proceeds of the Bonds.

“Project Municipalities” means those municipalities set forth in Schedule A
hereto.

“Proper Charge” means: (i) costs of issuance of the Series 2019 Bonds,
attorneys' fees, printing costs, Trustee's fees, dissemination agent’s fees and
similar expenses paid in connection with the Project Facilities, not exceeding
2% of the aggregate face amount of the Bonds; and (ii) with respect to the
proceeds of the Series 2019 Bonds an expenditure for the acquisition,
construction and expansion of the Project Facilities paid and incurred within
the period commencing not earlier than 60 days prior to February 19, 2019
(unless an expenditure is a “preliminary expenditure” as defined in Treasury
Regulations Section 1.150-2), including for the acquisition or improvement of
land or the acquisition, construction, reconstruction or improvement of property
of a character subject to the allowance for depreciation under the Code;

“Rebatable Arbitrage” shall mean 100% of the excess of the future value, as of a
date, of all receipts on nonpurpose investments over the future value, as of
that date, of all payments on nonpurpose investments, as more fully described in
Code Section 148(f) and Regulations Section 1.148-3.

“Rebate Expert” means any of the following chosen by the Company: (A) Bond
Counsel, (B) any nationally recognized firm of certified public accountants, (C)
any reputable firm which offers to the tax-exempt bond industry rebate
calculation services and holds itself out as having expertise in that area, or
(D) such other person as is approved by Bond Counsel.

 5

 

“Series 2019 Bonds” means the $53,700,000 Water Facilities Revenue Bonds
(Middlesex Water Company Project) Series 2019.

“State” means the State of New Jersey.

“Subcontractor” shall mean any person engaged by a Contractor or a Subcontractor
in the performance of any Construction Contract.

“Supplemental Mortgage Indenture” means the Fifty-Third Supplemental Indenture
by and between the Company and the Mortgage Trustee, dated as of August 1, 2019,
which supplements the Mortgage Indenture.

“Tax Certificate” shall mean the arbitrage and tax certificate executed by the
Company in form and substance acceptable to the Authority, wherein the Company
certifies as to such matters as the Authority shall require.

“Term of Agreement” means the term of this Agreement as specified in
Section 10.01 hereof.

“Trustee” means The Bank of New York Mellon, a state banking corporation of New
York, as Trustee under the Indenture, and its successors and any corporation or
association resulting from or surviving any consolidation or merger to which it
or its successors may be a party or any corporation or association that acquires
substantially all the corporate trust business of the Trustee and any successor
Trustee at the time serving as successor trustee under the Indenture.

“Underwriters” means PNC Capital Markets LLC and Janney Montgomery Scott LLC,
the underwriters of the Series 2019 Bonds.

 6

 

ARTICLE II

REPRESENTATIONS, COVENANTS AND WARRANTIES

 

Section 2.01.       Representations, Covenants and Warranties of Authority. The
Authority represents, covenants and warrants that:

 

(a)       The Authority is a public body corporate and politic constituting an
instrumentality of the State duly organized and validly existing under the laws
of the State. Under the provisions of the Act, the Authority is authorized to
enter into the transactions contemplated by this Agreement and the Indenture and
to carry out its obligations hereunder and thereunder. The Authority has been
duly authorized to execute and deliver this Agreement and the Indenture and to
issue the Bonds.

 

(b)       All covenants, stipulations, promises, agreements and obligations of
the Authority set forth herein shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Authority and not of
any member, officer or employee of the Authority in his or her individual
capacity, and no recourse shall be had for the payment of the principal or
redemption price of or interest on the Bonds or for any claim based thereon or
hereunder against any member, officer or employee of the Authority or any person
executing the Bonds.

 

(c)       The Authority hereby covenants to comply with the provisions of the
Code applicable to the Bonds and not to take any action or fail to take any
action which would cause the interest on the Bonds to lose the Income Exclusion.
The Authority covenants and agrees that it will take or cause to be taken, at
the written direction of the Company, all required actions to assure that
interest paid on the Bonds does not lose the Income Exclusion and that it will
refrain from doing or performing any act or thing that will cause such interest
not to be so excludable.

 

(d)       The Authority agrees to direct the Trustee to deposit the Bond
Proceeds in the Bond Fund and the Project Fund on the Delivery Date upon receipt
by the Trustee of the proceeds of the Series 2019 Bonds.

 

(e)       The Authority covenants that it will not pledge the amounts derived
from this Agreement other than as contemplated by the Indenture and the Bonds.

 

The Authority makes no representation as to (i) the financial position or
business condition of the Borrower or (ii) the correctness, completeness or
accuracy of any of the statements, materials (financial or otherwise),
representations or certifications furnished or to be made by the Borrower in
connection with the sale or transfer of the Bonds, the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.

 

 

Section 2.02.       Representations, Covenants and Warranties of the Company.
The Company represents, covenants and warrants as follows:

 

 7

 

(a)       The Company is duly incorporated as a corporation that is a regulated
public utility company organized under the laws of the State of New Jersey. The
Company is in good standing under the laws of its jurisdiction of incorporation
and is qualified to do business in the State. The Company is not in violation of
any provision of its charter or its Bylaws. The Company has the power to enter
into this Agreement and the Tax Certificate and has duly authorized the
execution and delivery of this Agreement and the Tax Certificate by proper
corporate action.

 

(b)       Neither the execution and delivery of this Agreement or the Tax
Certificate, the consummation of the transactions contemplated hereby or thereby
nor the fulfillment of or compliance with the terms and conditions of this
Agreement or the Tax Certificate conflicts with or results in a breach of the
terms, conditions or provisions of any restriction or any agreement or
instrument to which the Company is now a party or by which it is bound, or
constitutes a default under any of the foregoing, or (except as provided in the
Mortgage Indenture) results in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of the property or assets of the Company under
the terms of any instrument or agreement.

 

(c)       There is no litigation or proceeding pending against the Company, or
to the knowledge of the Company pending or threatened against the Company or any
other person affecting in any manner whatsoever the right of the Company to
execute this Agreement or the Tax Certificate or (except as disclosed in the
Official Statement) affecting the ability of the Company to make the payments
required hereunder or thereunder or to otherwise comply with their respective
obligations contained herein.

 

(d)       The Projects are of the type authorized and permitted by the Act, and
their Costs are not less than $53,700,000.

 

(e)       The proceeds from the sale of the Bonds will be used only to pay Costs
of the Projects and costs incident to the issuance of the Bonds.

 

Section 2.03.       Public Purpose Representations and Covenants.

 

(a)       Inducement. The availability of financial assistance from the
Authority as provided herein has been an important inducement to the Company to
undertake the financing of the Projects and to continue to locate the Projects
in the State.

 

(b)       No Untrue Statements. The Company represents that the representations,
statements and warranties of the Company set forth in the Application, this
Agreement, or any other document furnished to the Authority in connection with
the issuance of the Bonds (i) are true, correct and complete in all material
respects, (ii) do not contain any untrue statement of a material fact and (iii)
do not omit to state a material fact necessary to make the statements contained
herein or therein not misleading or incomplete. The Company understands that all
such statements, representations and warranties have been relied upon as an
inducement by the Authority to issue the Bonds.

 

 8

 

(c)       Project Users. (i)(A) Prior to leasing, subleasing or consenting to
the subleasing or assignment of any lease of all or any part of the Project
Facilities, during the period commencing on the date hereof and terminating
three years after the Company has completed the acquisition, construction,
reconstruction or improvement of all or substantially all of such Project
Facilities, and (B) upon the request of the Authority from time to time
thereafter, the Company shall cause a Project Occupant Information Form to be
submitted to the Authority by every prospective lessee, sublessee or lease
assignee of the Project Facilities.

 

             (ii) The Company shall not permit any such leasing, subleasing or
assigning of leases that would impair the Income Exclusion, or that would impair
the ability of the Company to operate any Project Facility or cause any Project
Facility not to be operated as an authorized project under the Act.

 

(d)        Maintain Existence; Merge, Sell, Transfer. The Company shall maintain
its existence as a corporation that is a regulated public utility company, and
shall not sell, assign, transfer or otherwise dispose of the Project Facilities
or substantially all of its assets without the consent of the Authority;
provided however that the Company may merge with or into or consolidate with
another entity, and the Project Facilities or this Agreement may be transferred
pursuant to such merger or consolidation without violating this section
provided:

 

(i)the Company shall cause the proposed surviving, resulting or transferee
company to furnish the Authority with a Change of Ownership Information Form;

(ii)the net worth of the surviving, resulting or transferee company following
the merger, consolidation or transfer is equal to or greater than the net worth
of the Company immediately preceding the merger, consolidation or transfer;

(iii)any litigation or investigations in which the surviving, resulting or
transferee company or its principals, officers and directors are involved, and
any court, administrative or other orders to which the surviving, resulting or
transferee company or its officers and directors are subject, relate to matters
arising in the ordinary course of business;

(iv)the merger, consolidation or transfer will not impair the Income Exclusion
pursuant to an opinion of Bond Counsel;

(v)the surviving, resulting or transferee company assumes in writing the
obligations of the Company, as the case may be, under this Agreement and the
Company’s obligations under the First Mortgage Bonds; and

(vi)after the merger, consolidation or transfer, the Project Facilities shall be
operated as authorized projects under the Act.

 

(e)       Relocate Project Facilities. The Company shall not relocate the
Project Facilities or any part thereof out of the State. The Company shall not
relocate the Project Facilities within the State without the prior written
consent of an Authority Representative and an opinion of Bond Counsel that the
relocation will not affect the Income Exclusion.

 

 9

 

(f)        Operate Project Facilities. The Company shall operate or cause each
Project to be operated as an authorized project for a purpose and use as
provided for under the Act until the expiration or earlier termination of this
Agreement. The Projects are of a character included within the definition of
“project” in the Act. The Company will operate the Project Facilities
substantially in the form represented in the Application and will not cause a
change in the use of any Project Facility such that any Project Facility would
cease to be a “facility for the furnishing of water” within the meaning of
Section 142(a)(4) of the Code.

 

(g)       Annual Certification. On each anniversary hereof, the Company shall
furnish to the Authority the following:

 

(i)       a certification indicating whether or not the Company is aware of any
condition, event or act which constitutes an Event of Default, or which would
constitute an Event of Default with the giving of notice or passage of time, or
both, under any of the documents executed by the Company in connection with the
issuance of the Bonds;

 

(ii)       a written description of the present use of the Project Facilities
and a description of any anticipated material change in the use of the Project
Facilities or in the number of employees employed at the Project Facilities;

 

(iii)       a report from every entity that leases or occupies space at the
Project Facilities indicating the number of persons the entity employs at the
Project Facilities;

 

(iv)       as required by Section 2.06(d) hereof, the Annual Compliance
Certificate, substantially in the form attached hereto as Exhibit B; and

 

(v)       The certificate as to insurance required by Section 2.08(e) hereof.

 

(h)       Payment of Prevailing Wage. The Company shall, in every Construction
Contract to which it is a party or by other means satisfactory to the Authority,
require the Contractor to pay workers engaged in the performance of such
Construction Contract a wage rate not less than the Prevailing Wage Rate. The
Company shall further require that the Contractor execute the Contractor’s
Certificate and Agreement, submit certified copies of payroll records to the
Authority, as required by the Authority, and execute and file the Contractor’s
Completion Certificate. The Company shall cooperate with the Authority in
securing the compliance of the Contractor and any Subcontractor with the
foregoing.

 

(i)       Compliance with the Affirmative Action and Prevailing Wage
Requirements As determined by the Authority, the Company shall comply with the
Authority's Affirmative Action and Prevailing Wage Rate Regulations and to that
end copies of the Affirmation Action Regulations are available on the
Authority's Internet web page at: www.njeda.com/affirmativeaction or contacting:
New Jersey Economic Development Authority - Internal Process Management - 24
Commerce Street, Suite 301, Newark, NJ 07102 Phone, 973-855-3450 or e-mail:
affirmativeaction@njeda.com.

 

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(j)         Preservation of Project Facilities. (A) The Company will at all
times preserve and protect the Project Facilities in good repair, working order
and safe condition, and from time to time will make, or will cause to be made,
all needed and proper repairs, renewals, replacements, betterments and
improvements.

 

(B)       In addition, the Company shall have the privilege of making
substitutions, additions, modifications and improvements to the Project
Facilities from time to time as the Company may deem to be desirable for their
use for such purposes as shall be permitted by the Act, provided the same are
included as part of the Project Facilities, the costs of which substitutions,
additions, modifications and improvements shall be paid by or on behalf of the
Company, and the same shall be the property of the Company (including, for this
purpose, the Company or any other wholly-owned subsidiary or affiliate of the
Company).

(k)       Access to the Project Facilities and Inspection. The Authority and its
duly authorized agents shall have the right, at all reasonable times upon the
furnishing of notice that is reasonable under the circumstances to the Company,
to enter upon the Project sites and to examine and inspect the Project
Facilities and the Project sites for the purpose of determining compliance with
this Agreement.

 

(l)       Additional Information. Until payment of the Bonds in full shall have
occurred, the Company shall promptly, from time to time, deliver to the Trustee
and upon the request of the Authority, to the Authority, such information
regarding the operations, business affairs and financial condition of the
Company as the Trustee (or the Authority) may reasonably request. The Trustee is
hereby authorized to deliver a copy of any such financial information delivered
hereunder, or otherwise obtained by the Trustee, to the Authority, any
Bondholder or prospective Bondholder, to any regulatory authority having
jurisdiction over the Trustee and to any other Person as may be required by law.
The Trustee is authorized to provide information concerning the outstanding
principal amount and payment history of, and other information pertaining to,
the Bonds or the First Mortgage Bonds to any agency or regulatory authority of
the State requesting such information.

 

Section 2.04.       Non-Arbitrage Covenant. The Company hereby covenants and
agrees with the Authority and the Trustee for the benefit of the holders of any
Bonds, present and future, that it will not make, or permit, any use of the
proceeds of the Bonds which will cause the Bonds to be “arbitrage bonds” within
the meaning of Section 148 of the Code. The Company shall deliver to the
Authority its certificate, evidencing the reasonable expectations of the
Company, in such reasonable form as the Authority shall specify and upon which
the Authority may rely in furnishing its own certificate. The covenants
contained in this Section are in addition to, and not in limitation of, the
covenants contained in Section 2.05 or 2.06 hereof.

 

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Section 2.05.       Arbitrage and Rebate.

 

(a)       The Company covenants that it will not take any action, or fail to
take any action, if any such action or failure to take action would adversely
affect the Income Exclusion. The Company will take and will cause its officers,
employees and agents to take all affirmative action legally within its power
necessary to ensure that the Bonds continue to be subject to the Income
Exclusion (including, without limitation, the calculation of rebate required to
preserve the Income Exclusion). The Company will comply with Sections 103
through 150 of the Code and further covenants not to directly or indirectly use
or permit the use (including the making of any investment) of any Bond proceeds
or any other funds of the Authority or the Company, or take or omit to take any
action, that would cause the Bonds to be “arbitrage bonds” within the meaning of
Section 148(a) of the Code.

 

(b)       The Company hereby covenants that in connection with complying with
the requirement for payment of the Rebatable Arbitrage to the United States with
respect to the Bonds the Company will take the following actions:

 

(i)       Six months after closing, the Company will provide a written
certification to the Authority and the Trustee indicating whether the Company
complied with the six month exception to the arbitrage rebate requirement set
forth in Section 148(f)(4)(B) of the Code.

 

(ii)       Unless the Company has complied with the six month exception, the
Company will retain a Rebate Expert (defined below) on or within thirty (30)
days before the Initial Rebate Computation Date (defined below) and on each
Rebate Computation Date (defined below) thereafter, (A) to compute the Rebatable
Arbitrage with respect to the Bonds for the period ending on Initial Rebate
Computation Date, (B) to deliver an opinion to the Authority and Trustee,
concerning its conclusions with respect to the amount (if any) of such Rebatable
Arbitrage together with a written report providing a summary of the calculations
relating thereto and (C) to deliver an opinion to the Authority and the Trustee
that all of the gross proceeds of the Bonds (within the meaning of Section
148(f) of the Code), other than gross proceeds of the Bonds on deposit in a bona
fide debt service fund (within the meaning of Section 148(f)(4) of the Code),
have been expended on or prior to the Initial Rebate Computation Date. If a
rebate exception applies to the proceeds of the Bonds, the Company will cause a
Rebate Expert to deliver an opinion to the Authority and Trustee that all of the
gross Bond proceeds (within the meaning of Section 148(f) of the Code), other
than gross Bond proceeds on deposit in a bona fide debt service fund (within the
meaning of Section 148(f)(4) of the Code), have been expended on or prior to the
Initial Rebate Computation Date.

 

(iii)       The Company shall within ten (10) days of receipt of the report
furnished by the Rebate Expert pursuant to subparagraph (ii) above, pay or cause
to be paid to the Trustee for deposit into the Rebate Fund the difference
between the amount therein and the amount required to fund the Rebatable
Arbitrage. If the Company fails to make or causes to be made any payment
required pursuant to this subparagraph (iii) when due, the Authority shall have
the right, but shall not be required, to make such payment to the Trustee on
behalf of the Company. Any amount advanced by the Authority pursuant to this
subparagraph (iii) shall be added to the moneys owing by the Company under this
Agreement and shall be payable on demand with interest at the Late Payment Rate

 

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(iv)       Each payment of Rebatable Arbitrage to be paid to the United States
shall be filed with the Internal Revenue Service at such address that may be
specified by the Internal Revenue Service. Each payment shall be accompanied by
Form 8038-T (or such other form required by the Internal Revenue Service
furnished by the Company or the Authority), executed by the Authority, and a
statement identifying the Authority, the date of the issue, the CUSIP number for
the Bonds with the longest maturity and a copy of the applicable Form 8038.

 

(v)       In the event Rebatable Arbitrage is due, the Company will direct the
Trustee in writing to withdraw from the Rebate Fund and pay over to the United
States the Rebatable Arbitrage with respect to the Bonds in installments as
follows: each payment shall be made not later than sixty (60) days after the
then current Rebate Computation Date and shall be in an amount which ensures
that 100% of the Rebatable Arbitrage with respect to the Bonds, as of the then
current Rebate Computation Date, will have been paid to the United States.

 

(vi)       The Company acknowledges that the Authority shall have the right at
any time and in the sole and absolute discretion of the Authority to obtain from
the Company and the Trustee the information necessary to determine the amount
required to be paid to the United States pursuant to Section 148(f) of the Code.
Additionally, the Authority may, with reasonable cause, (A) review or cause to
be reviewed any determination of the amount to be paid to the United States made
by or on behalf of the Company and (B) make or retain a Rebate Expert to make
the determination of the amount to be paid to the United States. The Company
hereby agrees to be bound by any such review or determination, absent manifest
error, to pay the costs of such review, including without limitation the
reasonable fees and expenses of counsel or a Rebate Expert retained by the
Authority, and to pay to the Trustee any additional amounts for deposit in the
Rebate Fund required as the result of any such review or determination.

 

(vii)       Notwithstanding any provision of this subsection to the contrary,
the Company shall be liable, and shall indemnify and hold the Authority and the
Trustee harmless against any liability, for payments due to the United States
pursuant to Section 148(f) of the Code. Further, the Company specifically agrees
that neither the Authority nor the Trustee shall be held liable, or in any way
responsible, and the Company shall indemnify and hold harmless the Trustee and
Authority against any liability, for any mistake or error in the filing of the
payment or the determination of the amount due to the United States or for any
consequences resulting from any such mistake or error. The provisions of this
subparagraph (vii) shall survive termination of this Agreement.

 

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(viii)       The Authority, the Trustee and the Company acknowledge that the
provisions of this section are intended to comply with Section 148(f) of the
Code and the regulations promulgated thereunder and if as a result of a change
in such section of the Code or the promulgated regulations thereunder or in the
interpretation thereof, a change in this section shall be permitted or necessary
to assure continued compliance with Section 148(f) of the Code and the
promulgated regulations thereunder, then with written notice to the Trustee, the
Authority and the Company shall be empowered to amend this section and the
Authority may require, by written notice to the Company and the Trustee, the
Company to amend this section to the extent necessary or desirable to assure
compliance with the provisions of Section 148 of the Code and the regulations
promulgated thereunder; provided that the Authority shall require, prior to any
such amendment becoming effective, at the sole cost and expense of the Company,
an opinion of Bond Counsel satisfactory to the Authority and the Trustee to the
effect that either (A) such amendment is required to maintain the Income
Exclusion or (B) such amendment shall not adversely affect the Income Exclusion.
In the event of a conflict between the provisions of this Section and the Code,
the provisions of the Code shall control.

 

(ix)       The term “Initial Rebate Computation Date” shall mean the first
Computation Date, which shall be within sixty (60) days after the fifth (5th)
anniversary of the date of issuance of the Bonds. The term “Rebate Computation
Date” shall mean any subsequent Computation Date. The term “Computation Date”
shall have the meaning assigned to such term as set forth in Treasury Regulation
Section 1.148-1 et seq.

 

(c)       The Company will aid and assist the Authority in connection with
preparing and submitting to the Internal Revenue Service a Form 8038 (or other
applicable information reporting statement) at the time and in the form required
by the Code.

 

(d)       The Company will comply fully at all times with the Tax Certificate,
and the Company will not take any action, or omit to take any action, which, if
taken or omitted, respectively, would violate the Tax Certificate.

 

(e)       The Projects were not acquired or placed in service by the Company
(determined in accordance with the provisions of Section 103 of the Code and
applicable regulations thereunder) more than eighteen (18) months prior to the
date of issuance of the Series 2019 Bonds.

 

(f)       Nothing contained in this Agreement or in the Indenture shall be
interpreted or construed to require the Authority to pay the Rebatable
Arbitrage, such obligations being the sole responsibility of the Company.

 

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Section 2.06.       Other Tax Matters.

 

(a)       Subsequent to fifteen (15) days prior to the date the Bonds are sold
and fifteen (15) days subsequent to the date the Bonds are sold, the Company has
not, or will not, as the case may be, guarantied, arranged, participated in,
assisted with, borrowed the proceeds of, or leased facilities financed by
obligations issued pursuant to Section 103 of the Code by any state or local
governmental unit or any constituted authority empowered to issue obligations by
or on behalf of any state or local governmental unit other than the Authority.
During the period commencing on the date of the sale of the Bonds and ending
fifteen (15) days thereafter, there will be no obligations issued pursuant to
Section 103 that are guaranteed by the Company or which are issued with the
assistance or participation of, or by arrangement with, the Company without the
written opinion of Bond Counsel to the effect that the issuance of such
obligation will not adversely affect their opinion as to the Income Exclusion.
Other than the Company and the financial advisors to the Company, no person has
(i) guarantied, arranged, participated in, assisted with the issuance of, or
paid any portion of the cost of the issuance of the Bonds, or (ii) provided any
property or any franchise, trademark or trade name (within the meaning of Code
Section 1253) which is to be used in connection with the Projects.

 

(b)       The information contained in the Company’s Tax Certificate, setting
forth the respective cost, economic life, ADR midpoint life, if any, under Rev.
Proc. 87-56, 1987-2 C.B. 674, as supplemented and amended from time to time, and
guideline life, if any, under Rev. Proc. 62-21, 1962-2 C.B. 118, as supplemented
and amended from time to time, of each asset constituting the Projects to be
financed with the Bond proceeds is true, accurate and complete.

 

(c)       The Bonds will not be federally guaranteed within the meaning of
Section 149(b) of the Code.

 

(d)       The Company will adopt and implement written tax compliance procedures
sufficient (i) to monitor the requirements of Section 148 of the Code; and (ii)
to ensure that all nonqualified bonds are remediated in accordance with
requirements of the Code and the regulations thereunder, including without
limitation:

 

(i)       upon each five (5) year anniversary of the Issue Date, the Company
will file with the Authority and the Trustee a certification to the effect that
it is in compliance with the rebate requirements contained in this Agreement and
the Tax Certificate;

 

(ii)       shall give immediate telephonic notice, promptly confirmed in
writing, to the Authority and the Trustee of any Determination of Taxability by
reason of an Event Notice and as soon as practicable after the determination
that a violation of a Tax Covenant has occurred;

 

(iii)       if pursuant to its procedures the Company determines that it must
take remedial action to cure a violation of a covenant regarding the tax status
of the Bonds, it will promptly notify the Authority and the Trustee as to the
action to be taken;

 

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(iv)       in the event the Authority becomes aware of a possible violation of a
covenant regarding the tax status of the Bonds, the Authority shall have the
right, upon notice to the Company, to conduct its own investigation, and at the
sole cost of expense of the Company, to retain Bond Counsel to determine any and
all actions required to remediate such violation; and

 

(v)       commencing August 1, 2020, on or before August 1st of each year, the
Company shall furnish an Annual Compliance Certificate, duly completed and in
substantially the form attached hereto as Exhibit B.

 

Section 2.07.        Costs and Expenses. All expenses in connection with the
preparation, execution, delivery, recording and filing of this Agreement, the
First Mortgage Bonds and other collateral documents and in connection with the
preparation, issuance and delivery of the Bonds, the Authority’s fees, the fees
and expenses of Chiesa Shahinian & Giantomasi PC, the fees and expenses of the
Trustee, the fees and expenses of Trustee’s counsel and the fees and expenses of
counsel to the Underwriters shall be paid directly by the Company. The Company
shall also pay throughout the term of the Bonds the Authority’s annual fees and
expenses, if any, and the Trustee’s annual and special fees and expenses under
the Indenture, this Agreement and the First Mortgage Bonds, including, but not
limited to, reasonable attorney’s fees and all costs of issuing, marketing,
collecting payment on and redeeming the Bonds thereunder, and any costs and
expenses of any Bondholder (or Beneficial Owner) in connection with any
approval, consent or waiver under, or modification of, any such document.

 

Section 2.08.       Insurance. (a) Until payment of the Bonds shall be made, the
Company will at a minimum, maintain general comprehensive liability insurance
against claims for bodily injury, death or property damage occurring on, in or
about the Project Facilities or the Project sites (such coverage to include
provisions waiving subrogation against the Authority) in amounts not less than
$1,000,000 with respect to bodily injury to any one person, $3,000,000 with
respect to bodily injury to two or more persons in any one accident and,
$1,000,000 with respect to property damage resulting from any one occurrence
naming each of the Trustee and the Authority, as an additional insured.

 

(b)       Each insurance policy obtained in satisfaction of the requirements of
this section hereof:

 

(i)       shall be by such insurer (or insurers) as shall be financially
responsible, qualified to do business in the State and of recognized standing;

 

(ii)       shall be in such form and have such provisions as are generally
considered standard provisions for the type of insurance involved;

 

(iii)       shall prohibit cancellation or substantial modification, termination
or lapse in coverage by the insurer without at least thirty (30) days prior
written notice to the Trustee and the Authority;

 

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(iv)       without limiting the generality of the foregoing, policies carried on
the Project Facilities shall name the Company, the Authority and the Trustee as
parties insured thereunder as the respective interests of each may appear, and
any loss thereunder shall be made payable and shall be applied as provided in
the Mortgage Indenture and all liability insurance shall name the Authority and
the Trustee as additional insureds;

 

(v)       prior to expiration of any such policy, the Company shall furnish the
Authority with evidence satisfactory to the Authority that the policy or
certificates has been renewed or replaced in compliance with this Agreement.

 

(c)       In the event the Company shall fail to maintain the insurance coverage
required by this Agreement, the Authority or the Trustee may (but shall be under
no obligation to), after ten (10) days written notice to the Company unless
cured within such ten (10) days, contract for the required policies of insurance
and pay the premiums on the same and the Company agrees to reimburse the
Authority or the Trustee to the extent of the amounts so advanced with interest
thereon at the maximum rate permitted by law.

 

(d)       In addition to the provisions of Section 2.08(a), (b) and (c) above,
the Company shall also comply with any insurance requirements set forth in the
Mortgage Indenture.

 

(e)       The Company shall provide the Trustee annually on the anniversary of
the date of this Agreement, with a certificate certifying compliance with the
provisions of this Section 2.08. The Trustee shall be entitled to rely upon said
certificate as to the Company’s compliance with the insurance requirements
without further inquiry. The Trustee makes no representation as to and shall
have no responsibility for the sufficiency or adequacy of the insurance or the
issuing insurer.

 

Section 2.09.       Filing of Other Documents. The parties hereto shall execute,
at the request of the Company, and the Company shall file financing statements,
continuation statements, notices and such other documents necessary to perfect
all security interests created pursuant to the terms of this Agreement and the
Indenture and to preserve and protect the rights of the Trustee in the granting
by the Authority of certain rights of the Authority, pursuant to the Indenture,
under this Agreement and the First Mortgage Bonds, and the Authority and the
Trustee shall have no responsibilities for such filings whatsoever, other than
executing the documents requested by the Company as applicable. The Company
shall provide to the Trustee, and upon its request, to the Authority, copies of
such filed documents.

 

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ARTICLE III

ISSUANCE OF THE BONDS

Section 3.01.       Agreement To Issue Bonds; Application of Bond Proceeds. In
order to provide funds to finance the Project Costs, the Authority agrees that
it will issue under the Indenture, sell and cause to be delivered to the
respective Underwriters or their designee, the Bonds in the aggregate principal
amount of $53,700,000, bearing interest, maturing and having the terms as set
forth in the Indenture. The proceeds received from the sale of the Bonds shall
be deposited with the Trustee as follows: (a) a sum equal to the accrued
interest, if any, shall be deposited into the Bond Fund and used to pay interest
on the Bonds on the first Bond interest payment date; and (b) the balance of the
proceeds received from the sale of the Bonds, together with the funds furnished
by the Company shall be applied in accordance with Section 3.04 hereof to pay
Project Costs.

 

Section 3.02.       First Mortgage Bonds. To evidence the Loan to the Company,
the Company shall deliver to the Authority the First Mortgage Bonds in the total
aggregate principal amount of $53,700,000. In order to secure the repayment of
the Bonds, simultaneously with the issuance and delivery of the Bonds, the
Authority through the Indenture shall assign its interests in the First Mortgage
Bonds to the Trustee, subject to its Reserved Rights. The form and nature of the
First Mortgage Bonds to be delivered by the Company are set forth and described
in Exhibit A attached hereto and the First Mortgage Bonds shall be in
substantially such form, with such variations in principal amounts, interest
rates, interest payment and maturity dates and prepayment or redemption
provisions as may be necessary to correspond to such provisions of the Bonds
issued by the Authority.

 

The First Mortgage Bonds shall:

 

(a)       be payable to the Trustee, registered in the name of the Trustee and
be non-transferable except to a successor Trustee;

 

(b)       be issued in the principal amount equal to the aggregate principal
amount of the Bonds;

 

(c)       provide for payments of interest equal to the payments of interest on
the Bonds except that the Company shall receive a cash credit against its
interest obligations equal to (i) accrued interest on the Bonds deposited with
the Trustee at the time of issuance of the Bonds, if any, and (ii) such other
moneys held at the time of such interest payment date by the Trustee in the Bond
Fund created under the Indenture and available for the payment of interest on
such Bonds;

 

(d)       require payments of principal, or principal plus a premium, equal to
the stated maturities on the Bonds;

 

(e)       contain redemption provisions, or provisions in respect of the
acceleration or prepayment of principal and premium, if any, equivalent to the
redemption provisions of the Bonds; and

 

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(f)       require all payments on such First Mortgage Bonds to be made one (1)
Business Day prior to the due date for the corresponding payment to be made on
the Bonds.

 

Section 3.03.       Conditions Precedent to Financing. The Authority shall not
be obligated to issue the Bonds until the conditions set forth in Section 2.06
of the Indenture have been satisfied.

 

Section 3.04.       Disbursements From Project Fund. The Authority authorizes
and directs the Trustee to make disbursements of (i) Bond Proceeds from the
Project Fund to pay Project Costs and to pay the costs of issuing the Bonds; and
(ii) moneys deposited in the Project Fund pursuant to the provisions of
paragraph 4.05 hereof to be used for any acquisition, construction,
reconstruction or improvement of the Project Facilities to Persons for work
performed on the Project Facilities or to reimburse the Company for any costs
incurred for the acquisition, construction, reconstruction or improvement of the
Project Facilities paid by it. Each disbursement shall be disbursed only after
delivery to the Trustee of the following by the Company:

 

(a)       A Requisition Form as provided in Exhibit D hereto signed by a Company
Representative. The Requisition Form shall state: (i) the requisition number;
(ii) the name and address of the Person to whom payment is to be made by the
Trustee or, if the payment is to be made to the Company for a reimbursable
advance, a summary of the Company's disbursements; (iii) the amount to be paid;
(iv) that each obligation for which payment is sought is a Proper Charge against
the Project Fund, is unpaid or unreimbursed, and has not been the basis of any
previously paid requisition; (v) that such payment does not include a
reimbursement to the Company for costs or expenses incurred by reason of work
performed or supervised by officers or employees of the Company or any of its
affiliates, (vi) that no Event of Default has occurred and is continuing under
this Agreement; and (vii) that the Company has received no written notice of any
lien, right to lien or attachment upon, or other claim affecting the right to
receive payment of, any of the moneys payable under such Requisition Form to any
of the Persons named therein or, if any of the foregoing has been received, it
has been released or discharged or will be released or discharged upon payment
of the Requisition Form.

 

(b)       In order to comply with the provisions of Sections 2.03(h) and (i),
the Company shall delivery such certificates as are required by the Authority to
evidence compliance with the Authority’s Affirmative Action Program and
Prevailing Wage Rate Provisions.

 

(c)       The Company shall not present the final request to the Trustee for a
disbursement from the Project Fund until the Company has executed and filed with
the Trustee a Company’s Tax Completion Certificate, duly completed and
substantially in form attached hereto as Exhibit C.

 

(d)       Delivery of such additional documents, affidavits, certificates and
opinions as the Authority or the Trustee may reasonably require to carry out the
terms of this Agreement, the Indenture or any other Loan Document; but the
Authority and the Trustee shall have no obligation to require any such
additional items.

 

 19

 

(f)       The Authority is hereby granted a security interest in the amounts on
deposit in the Project Fund as security for the payment of the Bonds; however,
notwithstanding such security interest, as long as there exists no Event of
Default, the Company shall have the right to require disbursement from the
Project Fund, to the extent of amounts then in the Project Fund, upon compliance
with the procedures set forth in this Section 3.04. Upon an Event of Default and
the acceleration of the obligations of the Company hereunder, the Trustee shall,
without the need for any other authorization, apply any amounts on deposit in
the Project Fund to prepay the amounts payable hereunder.

 

Section 3.05.       Establishment of Completion Date. The Project shall be
completed not later than ____ __, 2022. Completion of the Project shall be
evidenced by delivery to the Authority and the Trustee of the Company’s
Completion Certificate (attached hereto as Exhibit E) signed by a Company
Representative stating the date of completion of the Project and that, as of
such date, except for amounts retained by the Trustee at the Company’s direction
for any Project Cost not then due and payable or, if due and payable, not then
paid: (i) that portion of the Project Facilities to be financed with the
proceeds of the Bonds have been completed; (ii) the cost of all labor, services,
materials and supplies used in the Project have been paid, or will be paid from
amounts retained by the Trustee at the Company’s direction for any cost of the
Project Facilities not then due and payable or, if due and payable, not then
paid; (iii) the Project Facilities have been installed to the Company’s
satisfaction, such Project Facilities so installed are suitable and sufficient
for the efficient operation of the Project for the intended purposes and all
costs and expenses incurred in the acquisition and installation of such
equipment have been paid, or will be paid from amounts retained by the Trustee
at the Company’s direction for any cost of the Project not then due and payable
or, if due and payable, not then paid; (iv) the Project Facilities are being
operated as an authorized “project” under the Act and substantially as proposed
in the Application; and (v) the Company has required in all Construction
Contracts that wages paid to workers employed in the performance of such
Construction Contracts be paid, or determined that such workers were paid, at a
rate not less than the Prevailing Wage Rate. Upon receipt of such certificate by
the Trustee, the Company shall direct the Trustee in writing to transfer any
amounts remaining in the Project Fund (except for amounts therein sufficient to
cover costs of the Project not then due and payable or not then paid or the
holdback required to be retained in the Project Fund pursuant to the Affirmation
Action Regulations) to the Redemption Fund. Amounts transferred into the
Redemption Fund hereunder shall be used to prepay the amounts payable hereunder
prior to the full payment of the Bonds and to redeem the Bonds on the next
succeeding redemption date on which the Bonds can be redeemed without penalty or
premium, pursuant to the Indenture. The Company shall not cause amounts held in
the Redemption Fund to be invested at a Yield materially higher than the Yield
on the Series 2019 Bonds.

 

 20

 

 

Section 3.06.       Investment of Moneys. Any moneys held as a part of the Bond
Fund, the Redemption Fund or any other fund shall be invested or reinvested by
the Trustee, at the request of and as directed in writing by a Company
Representative, in any of the Permitted Investments, but in compliance with the
Tax Certificate. The Trustee shall be entitled to conclusively rely on the
Company’s directions and make investments at the written direction of the
Company Representative without determining whether such investments comply with
the Tax Certificate.

 

The Trustee may make such Permitted Investments through its own bond department
or the bond department of any entity under common control with the Trustee. All
such Permitted Investments shall at all times be a part of the fund (the
Redemption Fund, the Bond Fund, the Project Fund or such other fund, as the case
may be) from which the moneys used to acquire such Permitted Investments shall
have come, and all income and profits on such Permitted Investments shall be
credited to, and losses thereon shall be charged against, such funds. Such
Permitted Investments shall be made so as to mature or be subject to redemption
at the option of the holder thereof on or prior to the date or dates that the
Company anticipates that moneys therefrom will be required. Such Permitted
Investments shall be registered in the name of the Trustee or its nominee.

 21

 

ARTICLE IV

LOAN PROCEEDS TO COMPANY; LOAN PROVISIONS;

PROVISIONS RELATING TO THE PROJECTS

 

Section 4.01.       Loan of Proceeds. The Authority agrees, upon the terms and
conditions contained in this Agreement, to lend to the Company the proceeds
received by the Authority from the sale of the Bonds. Such proceeds shall be
disbursed as provided in Section 3.01 hereof.

 

Section 4.02.       Amounts Payable.

(a)       The Company agrees to repay the principal of the loan on August 1,
2059 and on or before any other date fixed for redemption or maturity of any or
all of the Bonds pursuant to the Indenture, and to pay interest on the loan on
or before each Interest Payment Date, commencing January 1, 2020, and on or
before any other date fixed for redemption or maturity of any or all of the
Bonds pursuant to the Indenture, until the principal of and interest on the
Bonds shall have been fully paid or provision for the payment thereof shall have
been made in accordance with the Indenture, in an amount which, together with
other moneys available therefor in the Bond Fund, will enable the Trustee to pay
the amount payable on such date as principal of (whether at maturity or upon
redemption or acceleration or otherwise), and interest on the Bonds as provided
in the Indenture. Such payments shall be made in immediately available funds at
least one (1) Business Day in advance of the due date.

 

It is understood and agreed that all payments payable under this Section 4.02(a)
by the Company are assigned by the Authority to the Trustee for the benefit of
the holders of the Bonds. The Company hereby consents to such assignment. The
Authority hereby directs the Company, and the Company hereby agrees, to pay to
the Trustee at the Trustee’s corporate trust office all payments payable
pursuant to this Section 4.02(a).

(b)       The Company will also pay the expenses of the Authority as set forth
in Section 2.07, including attorneys’ fees, of the Authority related to the
issuance of the Bonds and incurred at or before the issuance and delivery
thereof and any fees and expenses, including attorneys’ fees, of the Authority
incurred hereafter.

 

(c)       The Company will also pay the reasonable fees and expenses of the
Trustee and any Paying Agents under the Indenture, such reasonable fees and
expenses to be paid directly to the Trustee or any Paying Agents for the
Trustee’s or any such Paying Agents’ own account as and when such reasonable
fees and expenses become due and payable, and any reasonable expenses in
connection with any redemption of the Bonds.

 

(d)       The Company shall also make any payments required under the Tax
Certificate.

 

(e)       If the Company should fail to make any of the payments required in
this Section 4.02, the item or installment so in Default shall continue as an
obligation of the Company until the amount in Default shall have been fully
paid, and the Company agrees to pay the same with interest thereon, to the
extent permitted by law, from the date thereof at the Late Payment Rate per
annum.

 

 22

 

Section 4.03.       Obligations of Company Hereunder Unconditional. The
obligations of the Company to make the payments required under the First
Mortgage Bonds and in Section 4.02 and other sections hereof and to perform and
observe the other agreements contained herein shall be absolute and
unconditional and shall not be subject to any defense or any right of setoff,
counterclaim or recoupment arising out of any breach by the Authority or the
Trustee of any obligation to the Company, whether hereunder or otherwise, or out
of any indebtedness or liability at any time owing to the Company by the
Authority or the Trustee and until such time as the principal of and interest on
the Bonds shall have been fully paid or provision for the payment thereof shall
have been made in accordance with the Indenture, the Company (a) will not
suspend or discontinue any payments provided for in Section 4.02 hereof, and
(b) except as provided in Article VIII hereof, will not terminate the Term of
Agreement for any cause, including, without limiting the generality of the
foregoing, the occurrence of any acts or circumstances that may constitute
failure of consideration, eviction or construction, eviction, destruction of or
damage to any portion of the Project Facilities, the taking by eminent domain of
title to or temporary use of any or all of the Project Facilities, commercial
frustration of purpose, any change in the tax or other laws of the United States
of America or of the State or any political subdivision of either thereof or any
failure of the Authority 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 this Agreement.

 

Section 4.04.       Preservation of Project Facilities. The Company shall pay
all operating costs, utility charges and other costs and expenses arising out of
ownership, possession, use or operation of the Project Facilities. The Authority
shall have no obligation and makes no warranties respecting the condition or
operation of the Project Facilities. The Company will not use as a basis for
contesting any assessment or levy of any tax the financing under this Agreement
or the issuance of the Bonds by the Authority and, if any administrative body or
court of competent jurisdiction shall hold for any reason that the Project
Facilities are exempt from taxation by reason of the financing under this
Agreement or issuance of the Bonds by the Authority or other Authority action in
respect thereto, the Company covenants to make payments in lieu of all such
taxes in an amount equal to such taxes and, if applicable, interest and
penalties.

 

Section 4.05.       Taxes and Governmental Charges. The Company will pay or
cause to be paid, during the Term of Agreement, as the same respectively become
due, all taxes and governmental charges of any kind whatsoever that may at any
time be lawfully assessed or levied against or with respect to its properties
and assets. The Company may, at the Company’s expense and in the Company’s name,
in good faith contest any such taxes, assessments and other charges and, in the
event of any such contest, may permit the taxes, assessments or other charges so
contested to remain unpaid during the period of such contest and any appeal
therefrom.

 

Section 4.06.       Limitation of Authority’s Liability. THE STATE IS NOT
OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE
IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR
INTEREST ON THE BONDS. THE BONDS ARE A SPECIAL, LIMITED OBLIGATION OF THE
AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS
OF THE AUTHORITY PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE
AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW
AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY.
THE AUTHORITY HAS NO TAXING POWER.

 

 23

 

Pursuant to the Act, neither the members of the Authority, nor any person
executing bonds for the Authority, shall be liable personally on said bonds by
reason of the issuance thereof.

 

Section 4.07.       Insurance Proceeds and Condemnation Awards.       (a) The
Company shall notify the Authority and the Trustee in writing promptly of the
occurrence of any damage to or destruction, condemnation or conveyance in lieu
of condemnation of all or any portion of the Project Facilities. All insurance
proceeds, condemnation award or other similar sums allocable to the Project
Facilities received as a result of any such occurrence shall be paid to the
Mortgage Trustee and applied in accordance with the provisions of the Mortgage
Indenture.

 

(b)       If the Mortgage Trustee determines any Project Facility shall have
been damaged or destroyed to such extent that the bonds issued under the
Mortgage Indenture, including the First Mortgage Bonds, shall be required to be
redeemed pursuant to subsection B of Section 4 of Article VIII of the Second
Supplemental Indenture dated October 1, 1939, it shall deliver a certificate of
the Company and the Mortgage Trustee to such effect to the Authority and the
Trustee, and the insurance proceeds, condemnation award or other similar sum
allocable to redemption or prepayment of the First Mortgage Bonds shall be paid
to the Trustee.

 

(c)       Moneys to be used for any reconstruction, replacement or repair
pursuant to subsection (a) above shall be deposited with the Mortgage Trustee
and shall be disbursed by the Mortgage Trustee in accordance with the terms of
the Mortgage Indenture.

 24

 

ARTICLE V

SPECIAL COVENANTS AND AGREEMENTS

 

Section 5.01.       No Warranty of Condition or Suitability by Authority. The
Authority makes no warranty, either express or implied, as to the Project
Facilities or the condition thereof, or that the Project Facilities will be
suitable for the purposes or needs of the Company.

 

Section 5.02.       Further Assurances and Corrective Instruments. (a) Subject
to the provisions of the Indenture, the Authority and the Company agree that
they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements and amendments hereto and
such further instruments as may reasonably be required for carrying out the
intention or facilitating the performance of this Agreement, the Mortgage
Indenture or the transactions contemplated hereby or thereby.

 

(b)       The Company shall cause this Agreement, the Supplemental Mortgage
Indenture and all necessary UCC financing statements (including continuation
statements) to be recorded and filed in such manner and in such places as may be
required by law to fully preserve and protect the security of the holders and
the rights of the Trustee and to perfect the security interest created by the
Indenture and the Mortgage Indenture, except that the Mortgage Indenture
(including the Supplemental Mortgage Indenture) shall not be required to be
recorded in Cumberland County, New Jersey. The Company hereby represents and
warrants that: the only real estate owned by the Company in Cumberland County,
New Jersey consists of the following properties in Downe Township, which were
acquired by the Company by virtue of the merger in 2006 of the Company's
wholly-owned subsidiary, Bayview Water Company, into the Company: (i) 55-57
Virginia Ave, which is 0.41 acres of vacant land whose tax assessment is $1,000
and whose annual property tax is $12.00; (ii) Delaware Avenue along the Canal,
which is 1.72 acres of vacant land whose tax assessment is $1,000 and whose
annual property tax is $12.00; (iii) 150 New Jersey Avenue, which is 0.15 acres
of land improved with a pumping station, whose tax assessment is $76,000 and
whose annual property tax is $910.00; and (iv) 862 Downe Avenue, which is 0.17
acres of land improved with a pumping station, whose tax assessment is $76,000
and whose annual property tax is $910.00. The Company further represents and
warrants that (as indicated in the Company's most recent SEC Form 10-K) the
Bayview system is not physically interconnected with the Company's systems in
Middlesex County and Union County, New Jersey; and the Bayview system produced
less than one percent (1%) of the Company's 2018 consolidated operating
revenues.

 

Section 5.03.       Authority and Company Representatives. Whenever under the
provisions of this Agreement the approval of the Authority or the Company is
required or the Authority or the Company is required to take some action, such
approval or such request shall be given for the Authority by an Authority
Representative, for the Company by a Company Representative; and the Authority
and the Trustee and any party hereto shall be authorized to act on any such
approval or request.

 25

 

 

ARTICLE VI

INDEMNIFICATION AND REDEMPTION

 

Section 6.01.       [Intentionally Omitted.]

 

Section 6.02.       Indemnification Covenants.

 

(a)       The Company agrees to and does hereby indemnify and hold harmless
Indemnified Parties against any and all losses, claims, damages or liabilities
(including all costs, expenses and reasonable counsel fees incurred in
investigating or defending such claim) suffered by any of the Indemnified
Parties and caused by, relating to, arising out of, resulting from, or in any
way connected with (i) the condition, use, possession, conduct, management,
planning, design, acquisition, construction, reconstruction or improvement of
the Project Facilities or any part thereof including the payment of rebate to
the federal government; or (ii) any untrue statement of a material fact
contained in information provided by the Company with respect to the
transactions contemplated hereby; (iii) any omission of a material fact
necessary to be stated therein in order to make such statement not misleading or
incomplete; or (iv) the acceptance or administration by the Authority of its
duties under the Trust Indenture (other than those caused by the gross
negligence or willful misconduct of the Authority); or (v) the acceptance or
administration or performance by the Trustee of its duties under the Trust
Indenture (other than those caused by the negligence or willful misconduct of
the Trustee). In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect to which
indemnity may be sought against the Company, such Indemnified Party shall
promptly notify the Company in writing, and except where the Company is the
claimant the Company shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party, the payment of all
costs and expenses and the right to negotiate and consent to settlement. Any one
or more of the Indemnified Parties shall have the right to employ separate
counsel at the Company’s expense in any such action and to participate in the
defense thereof if, in the reasonable opinion of the Indemnified Party, a
conflict of interest could arise out of the representation of the parties by the
same counsel. The Company shall not be liable for any settlement of any such
action effected without the Company’s consent, but if settled with the consent
of the Company, or if there is a final judgment for the claimant on any such
action, the Company agrees to indemnify and hold harmless the Indemnified
Parties from and against any loss or liability by reason of such settlement of
judgment.

 

(b)       The Company agrees to and does hereby indemnify and hold harmless the
Indemnified Parties against any and all losses, claims, damages or liabilities
(including all costs, expenses, and reasonable counsel fees incurred in
investigating or defending such claim) suffered by any of the Indemnified
Parties and caused by relating to, arising out of, resulting from, or in any way
connected to an examination, investigation or audit of the Bonds by the Internal
Revenue Service (the “IRS”). In the event of such examination, investigation or
audit, the Indemnified Parties shall have the right to employ counsel at the
Company’s expense. In such event, the Company shall assume the primary role in
responding to and negotiating with the IRS, but shall inform the Indemnified
Parties of the status of the investigation. In the event the Company fails to
respond adequately and promptly to the IRS, the Authority shall have the right
to assume the primary role in responding to and negotiating with the IRS and
shall have the right to enter into a closing agreement, for which Company shall
be liable.

 

 26

 

(c)       Notwithstanding anything in this Agreement to the contrary which may
limit recourse to the Company or may otherwise purport to limit the Company’s
liability, the provisions of this Section shall control the Company’s
obligations and shall survive repayment of the Bonds.

 

Section 6.03.       Assignment of Interest in This Agreement by Authority. Any
assignment or pledge by the Authority to the Trustee pursuant to the Indenture
of any interest in this Agreement or any moneys receivable under this Agreement
shall be subject and subordinate to this Agreement.

 

Section 6.04.       Optional Redemption of Bonds. The Company shall have and is
hereby granted the option to prepay from time to time the amounts payable under
this Agreement in sums sufficient to redeem or to pay or cause to be paid all or
part of the Bonds in accordance with the provisions of Section 3.01 of the
Indenture. On or before the date set for redemption in the Company's notice of
redemption, the Company shall pay to the Trustee an amount equal to the then
applicable redemption price for the First Mortgage Bonds or as a prepayment of
the First Mortgage Bonds, plus interest accrued to the redemption date. Upon the
agreement of the Company to deposit moneys in the Bond Fund in an amount
sufficient to redeem Bonds subject to redemption, the Authority, at the request
of the Company, shall forthwith take all steps (other than the payment of the
money required for such redemption) necessary under the applicable redemption
provisions of the Indenture to effect redemption of all or part of the then
Outstanding Bonds, as may be specified by the Company, on the date established
for such redemption.

 

Section 6.05.       References to Bonds Ineffective After Bonds Paid. Upon
payment in full of the Bonds (or provision for payment thereof having been made
in accordance with the provisions of the Indenture) and all fees and charges of
the Trustee and the Authority, all references in this Agreement to the Bonds and
the Trustee shall be ineffective, and neither the Trustee nor the holders of any
of the Bonds shall thereafter have any rights hereunder, saving and excepting
those that shall have theretofore vested.

 

Section 6.06.       Authority To Grant Security Interest to Trustee. The parties
hereto agree that pursuant to the Indenture, the Authority shall assign to the
Trustee in order to secure payment of the Bonds all of the Authority’s right,
title and interest in this Agreement subject to the Reserved Rights.

 27

 

 

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

 

Section 7.01.       Events of Default Defined. The following shall be “Events of
Default” under this Agreement and the terms “Event of Default” and “Default”
shall mean, whenever they are used in this Agreement, any one or more of the
following events:

 

(a)       default in the payment of any installment of the principal or interest
on the First Mortgage Bonds on the date when due after giving effect to any
applicable grace period; or

 

(b)       the occurrence of an “event of default” under the Mortgage Indenture
other than an event of default resulting from a default in the payment of any
installment of the principal or interest on the First Mortgage Bonds on the date
when due, and the acceleration of the First Mortgage Bonds as a result of such
“event of default”; or

 

(c)       if any material representation or warranty by, or by an authorized
representative of the Company on behalf of, the Company made herein or in any
report, certificate, financial statement or other instrument furnished in
connection with this Agreement shall prove to be false or misleading in any
material respect when made; or

 

(d)       default in the performance, or breach, of any covenant or warranty of
the Company in this Agreement or any other Loan Document with respect to (other
than a default in the performance, or breach, of a covenant or warranty where
such performance or breach is elsewhere in this Section 7.01 specifically dealt
with or which has expressly been included in this Agreement), and continuance of
such default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company and the Mortgage Trustee by the
Trustee, or to the Company, the Mortgage Trustee and the Trustee by the Holders
of at least 25% in principal amount of the Bonds Outstanding, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” hereunder; or

 

(e)       default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company (or the payment of which is guaranteed by the
Company), if that default is caused by a failure to pay principal at its stated
maturity after giving effect to any applicable grace period, or results in the
acceleration of such indebtedness prior to its stated maturity and, in each
case, the principal amount of such indebtedness, together with the principal
amount of any other indebtedness under which there has been a payment default
after stated maturity or the maturity of which has been so accelerated,
aggregates $25,000,000 or more; or

 

(f)       the Company (i) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

 

 28

 

(g)       a court or Governmental Authority of competent jurisdiction enters an
order appointing, without consent by the Company, as the case may be, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company, or any such petition shall be filed
against the Company and such petition shall not be dismissed within sixty (60)
days; or

 

(h)       a final judgment or judgments for the payment of money in an aggregate
amount (to the extent not paid or insured) in excess of $25,000,000 are rendered
against the Company and which judgments are not, within sixty (60) days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within sixty (60) days after the expiration of such stay; or

 

(i)       the occurrence of an Event of Default under the Indenture.

 

The provisions of subsection (b) of this Section are subject to the following
limitation: if by reason of force majeure the Company is unable in whole or in
part to carry out any of its agreements contained herein (other than its
obligations contained in Sections 4.01, 4.02 and 4.03 hereof and any other
Reserved Right), the Company shall not be deemed in Default during the
continuance of such inability. The term “force majeure” as used herein shall
mean, without limitation, the following: acts of God; strikes, lockouts or other
industrial disturbances; acts of public enemies; orders or restraints of any
kind of the government of the United States of America or of the State or of any
of their departments, agencies or officials, or of any civil or military
authority; insurrections; riots; landslides; earthquakes; fires; storms;
droughts; floods; explosions; breakage or accident to machinery, transmission
pipes or canals; and any other cause or event not reasonably within the control
of the Company. The Company agrees, however, to remedy with all reasonable
dispatch the cause or causes preventing it from carrying out such agreement,
provided that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the Company, and it
shall not be required to make settlement of strikes, lockouts and other
industrial disturbances by acceding to the demands of the opposing party or
parties when such course is in its judgment unfavorable to it.

 

Section 7.02.       Remedies on Default. Whenever any Event of Default referred
to in Section 7.01 hereof shall have happened and be continuing, the Trustee may
take one or any combination of the following remedial steps:

 

(a)       By written notice to the Company, declare an amount equal to all
amounts then due and payable on the Bonds, whether by acceleration of maturity
(as provided in the Indenture) or otherwise, to be immediately due and payable,
whereupon the same shall become immediately due and payable;

 

 29

 

(b)       The First Mortgage Bonds may be redeemed, together with interest then
due thereon, by delivery of written notice of the Authority's or the Trustee's
exercise of such option to the Trustee and the Company, such payments to be
immediately due and payable, subject to the terms and conditions of the Mortgage
Indenture, or the First Mortgage Bonds may be sold in conformity with the
provisions of the New Jersey Uniform Commercial Code (provided the same is in
compliance with all securities laws);

 

(c)       Have reasonable access to and inspect, examine and make copies of the
books and records of the Company relating to the Projects; or

 

(d)       Take whatever action at law or in equity may appear necessary or
desirable to collect the amounts then due and thereafter to become due, or to
enforce performance and observance of any obligation, agreement or covenant of
the Company under this Agreement or the Mortgage Indenture.

 

Any amounts collected pursuant to action taken under this Section 7.02 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture.

Section 7.03.       No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity. No delay or omission to exercise any
right or power accruing upon any Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right or power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Authority to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice, other than such notice as may be
required in this Article. Such rights and remedies as are given the Authority
hereunder shall also extend to the Trustee, and the Trustee and the holders of
the Bonds, subject to the provisions of the Indenture, shall be entitled to the
benefit of all covenants and agreements herein contained.

 

Section 7.04.       Agreement To Pay Attorneys’ Fees and Expenses. In the event
the Company should default under any of the provisions of this Agreement and the
Authority or the Trustee should employ attorneys or reasonably incur other
expenses for the collection of payments required hereunder or the enforcement of
performance or observance of any obligation or agreement on the part of the
Company herein contained, the Company agrees that it will within thirty
(30) days after demand therefor pay to the Authority or the Trustee, as the case
may be, the reasonable fee of such attorneys and such other expenses so
incurred.

 

Section 7.05.       No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by any party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.

 

Section 7.06.       Additional Remedies. In addition to the above remedies, if
the Company commits a breach, or threatens to commit a breach of this Agreement,
or of any other document executed by the Company in connection therewith, the
Authority shall have the right and remedy, without posting bond or other
security, to have the provisions of this Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause immediate and irreparable injury to the
Authority and that money damages will not provide an adequate remedy therefor.

 

 30

 

Section 7.07.       Waiver. Upon the occurrence and during the continuance of an
Event of Default, to the extent that such rights may then lawfully be waived,
neither the Company, nor anyone claiming through or under it, shall set up,
claim or seek to take advantage of any appraisement, valuation, stay, extension
or redemption laws of any jurisdiction now or hereafter in force, in order to
prevent or hinder the enforcement of this Agreement, and the Company, for itself
and all who may claim through or under it, hereby waives, to the extent that it
lawfully may do so, the benefit of all such laws.

 

 31

 

 

ARTICLE VIII

OPTIONS; PREPAYMENT OF LOAN

Section 8.01.       Option To Terminate at Any Time. The Company shall have, and
is hereby granted, the option to terminate the Term of Agreement at any time
prior to full payment of the Bonds (or provision for payment thereof having been
made in accordance with the provisions of Article VIII of the Indenture) (a) by
paying to the Trustee an amount which, when added to the amount on deposit in
the Bond Fund, will be sufficient to pay, retire and redeem all the Outstanding
Bonds in accordance with the Indenture (including, without limiting the
generality of the foregoing, principal of and interest to maturity or applicable
redemption date, as the case may be, expenses of redemption and the Authority’s,
the Trustee’s and the Paying Agents’ fees and expenses) and any other amounts
described in the last full paragraph of Section 8.02 hereof, and, in case of
redemption, by making arrangements satisfactory to the Trustee for the giving of
the required notice of redemption and (b) by giving the Authority notice in
writing of such termination, and such termination shall forthwith become
effective.

 

Section 8.02.       Option To Prepay Loan Upon the Occurrence of Certain Events.
The Company shall have, and is hereby granted, the option or right to terminate
the Term of Agreement and prepay the amounts payable hereunder prior to the full
payment of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture) at any time and if any of the
events set forth below shall occur:

 

(a)       Any Project shall have been damaged or destroyed to such extent that
the First Mortgage Bonds shall be required to be redeemed pursuant to subsection
B of Section 4 of Article VIII of the Second Supplemental Indenture dated
October 1, 1939;

 

(b)       Title to, or the use, of all or a portion of any Project Facility,
shall have been taken under the exercise of the power of eminent domain, or
shall be purchased, by, any governmental body or by any person, firm or
corporation acting under governmental authority and the same shall require the
First Mortgage Bonds to be redeemed pursuant to subsection B of Section 4 of
Article VIII of the Second Supplemental Indenture dated October 1, 1939;

 

(c)       Changes which the Company cannot reasonably control or overcome in the
economic availability of materials, supplies, labor, equipment and other
properties and things necessary for the efficient operation or of the Project
Facilities for the purpose contemplated by this Agreement shall have occurred,
or technological or other changes shall have occurred which, in the opinion of
the Company expressed in a certificate of the Company Representative filed with
the Authority and the Trustee, render the continued operation of the Project
Facilities uneconomical for such purposes;

 

(d)       As a result of any changes in the Constitution of the State or the
Constitution of the United States of America or of legislative or administrative
action (whether state or federal) or by final decree, judgment or order of any
court or administrative body (whether state or federal) entered after the
contest thereof by the Company in good faith, this Agreement shall have become
void or unenforceable or impossible of performance in accordance with the intent
and purposes of the parties as expressed in this Agreement, or unreasonable
burdens or excessive liabilities shall have been imposed on the Company in
respect to the Project Facilities, including, without limitation, federal, state
or other ad valorem, property, income or other taxes not being imposed on the
date of this Agreement; or

 

 32

 

(e)       The Company files a certificate of the Company Representative with the
Authority and the Trustee stating that as a result of circumstances unforeseen
at the time the Bonds were issued, the Company has decided to discontinue
operation of the Project Facilities.

 

To exercise such prepayment option, the Company shall, within 90 days following
the event authorizing such prepayment, give written notice to the Authority and
to the Trustee and shall specify therein the date of prepaying the loan, which
date shall be not less than 50 days nor more than 90 days from the date such
notice is mailed, and shall make arrangements satisfactory to the Trustee for
the giving of the required notice of redemption. The prepayment amount payable
by the Company in the event of its prepayment pursuant to this Section shall be
the sum of the following:

(i)       An amount of money which, when added to the amount then on deposit and
available in the Bond Fund, will be sufficient to pay, retire and redeem all the
Outstanding Bonds pursuant to the terms of the Indenture, including, without
limitation, the principal amount thereof, all interest to accrue to said
redemption date and expenses, plus

(ii)       An amount of money equal to the Trustee’s and Paying Agents’ fees and
expenses under the Indenture accrued and to accrue until such final payment and
redemption of the Bonds, plus

(iii)       An amount of money equal to the Authority’s fees and expenses under
this Agreement accrued and to accrue until such final payment and redemption of
the Bonds, plus

(iv)       All other liabilities and payment obligations of the Company accrued
and to accrue under this Agreement until such final payment and redemption of
the Bonds.

 33

 

 

ARTICLE IX

OBLIGATION TO PREPAY LOAN IN CERTAIN EVENTS

Section 9.01.       Determination of Taxability. The Company shall be obligated
to prepay the amounts payable hereunder, and accordingly cause redemption of the
Bonds pursuant to Section 3.01(a)(ii) of the Indenture, within one hundred
eighty (180) days after a Determination of Taxability (as defined below) shall
have occurred by prepaying an amount equal to, when added to other funds on
deposit in the Bond Fund, (a) 100% of the aggregate principal amount of Bonds
Outstanding at the time of a Determination of Taxability plus accrued interest
to the redemption date, plus (b) an amount of money equal to the Trustee’s and
Paying Agent’s fees and expenses under the Indenture accrued and to accrue until
such prepayment and redemption of the Bonds, plus (c) an amount of money equal
to all sums due to the Authority under this Agreement.

A “Determination of Taxability” shall have been deemed to occur if, as a result
of an Event of Taxability, a final decree or judgment of any federal court or a
final action of the Internal Revenue Service determines that interest paid or
payable on any Bond is or was includable in the gross income of a holder,
Beneficial Owner, former holder or former Beneficial Owner of the Bonds for
federal income tax purposes under Section 103 (or a successor provision to
Section 103) of the Code (other than a holder who is or was a substantial user
or related person within the meaning of Section 147(a) of the Code). However, no
such decree or action will be considered final for this purpose unless the
Company has been given written notice and, if it is so desired and is legally
allowed, has been afforded the opportunity to contest the same, either directly
or in the name of any holder, Beneficial Owner, former holder or former
Beneficial Owner of a Bond, provided that in the event the Company contests such
decree or action in the name of a holder, Beneficial Owner, former holder or
former Beneficial Owner of a Bond, the Company agrees to pay all expenses of
such contest and offers such holder, Beneficial Owner, former holder or former
Beneficial Owner indemnity with respect to such expenses, and until conclusion
of any appellate review, if sought. If the Trustee receives written notice from
any such holder, Beneficial Owner, former holder or former Beneficial Owner
stating that (a) the holder, Beneficial Owner, former holder or former
Beneficial Owner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on any Bond in the gross income of such
holder, Beneficial Owner, former holder or former Beneficial Owner for the
reasons described herein or any other proceeding has been instituted against
such holder, Beneficial Owner, former holder or former Beneficial Owner which
may lead to a final decree or action as described herein and (b) such holder,
Beneficial Owner, former holder or former Beneficial Owner will afford the
Company the opportunity to contest the same, either directly or in the name of
such holder, Beneficial Owner, former holder or former Beneficial Owner,
provided that in the event the Company contests such decree or action in the
name of a holder, Beneficial Owner, former holder or former Beneficial Owner of
a Bond, the Company agrees to pay all expenses of such contest and offers such
holder, Beneficial Owner, former holder or former Beneficial Owner indemnity
with respect to such expenses, and until a conclusion of any appellate review,
if sought, and the Trustee is satisfied that such information is accurate, then
the Trustee shall promptly give written notice thereof to the Company and the
Authority and to each such holder, Beneficial Owner, former holder or former
Beneficial Owner and to all other registered owners of the Bonds. The Trustee
shall thereafter coordinate any similar requests or notices it may have received
from other holders, Beneficial Owners, former holders or former Beneficial
Owners and shall keep them informed of the progress of any administrative
proceedings or litigation. If a final decree or action as described above
thereafter occurs, the Trustee shall make the required demand for prepayment of
the amounts payable hereunder and redemption of the Bonds and give notice of the
redemption of the Bonds at the earliest practical date, but not later than the
date specified in this Article, and in the manner provided by Section 3.02 of
the Indenture.

 34

 

An “Event of Taxability” shall mean the failure of the Company to observe any
covenant, agreement or representation herein, which failure results in a
Determination of Taxability.

The prepayment amount shall be applied, together with other available moneys in
the Bond Fund, to the redemption of the Bonds on the earliest possible date
after notice as provided in the Indenture, whether or not such date is an
Interest Payment Date, and to the payment of the Trustee’s and Paying Agents’
fees and expenses under the Indenture accrued to such prepayment and redemption
of the Bonds, and to all sums due to the Authority under this Agreement.

Section 9.02.       Public Purpose Covenant Violations. The Company shall prepay
the First Mortgage Bonds in full, together with interest accrued and to accrue
to the redemption date upon the occurrence of one of the following events: (a)
the Company ceases to operate any Project Facility or to cause any Project
Facility to be operated as an authorized project under the Act for twelve (12)
consecutive months, without first obtaining the prior written consent of the
Authority, or (b) any material representation or warranty made by the Company in
the Agreement or in any document furnished in connection with the Agreement
proves to have been false or misleading in any material respect when made. The
Authority shall give notice to the Company and the Trustee of such occurrence;
whereupon the Trustee shall give notice to the Bondholders of the redemption of
the Bonds pursuant to Sections 3.01 and 3.02 of the Indenture and will set a
redemption date according to Section 3.01 of the Indenture, but in no event
later than sixty (60) days after the Authority gives notice to the Trustee of
the occurrence. The prepayment of the First Mortgage Bonds shall be due and
payable on the second Business Day preceding the redemption date. Payment on the
First Mortgage Bonds by the Company pursuant to this Section shall be in an
amount sufficient, together with other funds on deposit with the Trustee which
are available for such purpose, to redeem the Bonds then Outstanding, and to pay
(i) all administrative expenses accrued and to accrue through the redemption
date and (ii) any other expenses and fees required to satisfy and discharge the
Indenture.

 35

 

 

ARTICLE X

MISCELLANEOUS

 

Section 10.01.       Term of Agreement. This Agreement shall remain in full
force and effect from the date hereof until all of the Bonds, the First Mortgage
Bonds and the fees and expenses of the Authority, the Trustee and any Paying
Agents shall have been fully paid or provision made for such payments.

 

Section 10.02.       Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or three days after having been mailed, by registered or certified mail, postage
prepaid, addressed as follows:

 

if to the Authority:              New Jersey Economic Development Authority

36 West State Street

P.O. Box 990

Trenton, New Jersey 08625

Attention: Managing Director, Post Closing Financial Services

 

if to the Company:               Middlesex Water Company

485 C Route 1 South, Suite 400

Iselin, New Jersey 08830

Attention: A. Bruce O’Connor

Senior Vice President and Chief Financial Officer

 

if to the Trustee:                   The Bank of New York Mellon

385 Rifle Camp Road, 3rd Floor

Woodland Park, NJ 07424

Attention: Corporate Trust Department

 

if to the Underwriters:          PNC Capital Markets LLC

1600 Market Street, 21st Floor

Philadelphia, Pa. 19103

 

A duplicate copy of each notice, certificate or other communication given
hereunder by the Authority or the Company shall also be given to the Trustee and
the Underwriters. The Authority, the Company, the Trustee and the Underwriters
may, by written notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.

Section 10.03.       Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Authority, the Company, the Trustee, the
Bondholders and their respective successors and assigns, subject, however, to
the limitations contained in Sections 2.03(d), 6.01 and 6.03 hereof.

 

 36

 

Section 10.04.       Severability. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.

 

Section 10.05.       Amounts Remaining in Bond Fund. It is agreed by the parties
hereto that any amounts remaining in the Bond Fund upon expiration or earlier
termination of the Term of Agreement, as provided in this Agreement, after
payment in full of the Bonds (or provision for payment thereof having been made
in accordance with the provisions of the Indenture) and the fees and expenses of
the Trustee and any Paying Agents in accordance with the Indenture, shall belong
to and be paid to the Company by the Trustee as the return of an overpayment of
the amounts payable hereunder.

 

Section 10.06.       Amendments, Changes and Modifications. Subsequent to the
issuance of Bonds and prior to their payment in full (or provision for the
payment thereof having been made in accordance with the provisions of the
Indenture), and except as otherwise herein expressly provided, this Agreement
may not be amended or terminated without the written consent of the Trustee and,
to the extent provided in Article XII of the Indenture, in accordance with the
provisions of the Indenture.

 

Section 10.07.       No Personal Liability of Company Officials. No covenant or
agreement contained in the Bonds or in this Agreement shall be deemed to be the
covenant or agreement of any officer, director, agent or employee of the Company
in his or her individual capacity. No recourse shall be had for the payment of
the principal of and interest on any of the Bonds or for any claim based thereon
or upon any obligation, covenant or agreement contained in this Agreement
against any past, present or future officer, director, agent or employee of the
Company, or any incorporator, officer, employee, director or agent of any
successor corporation, as such, either directly or through the Company or any
successor corporation of the Company, under any rule of law or equity, statute
or constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such incorporator, officer, employee, director or
agent as such is hereby expressly waived and released as a condition of and
consideration for the execution of this Agreement.

 

Section 10.08.       Authority Not Liable. The Authority shall not be obligated
to pay the principal of or interest on the Bonds, except from receipts and
revenues actually received by the Authority or the Trustee under this Agreement.
The Company hereby acknowledges that the Authority’s sole source of moneys to
repay the Bonds will be provided by the loan payments made by the Company
pursuant to this Agreement, together with other revenues, including investment
income on certain funds and accounts held by the Trustee under the Indenture and
the proceeds of the Bonds, and hereby agrees that if the payments to be made
hereunder shall ever prove insufficient to pay all principal of and interest on
the Bonds, as the same shall become due (whether by maturity, redemption,
acceleration or otherwise), then upon notice from the Trustee, the Company shall
pay such amounts as are required from time to time to make up any deficiency or
default in the payment of such principal or interest, including, but not limited
to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the
part of the Trustee, the Company, the Authority or any third party; provided,
however, that such payment shall not constitute a waiver of any right or remedy
which the Company may possess to recover such payment from any party whose acts,
omissions, nonfeasance or malfeasance has caused or contributed to such
deficiency.

 

 37

 

Section 10.09.       Delegation of Duties by Authority. It is agreed that, under
the terms of this Agreement and also under the terms of the Indenture, the
Authority has delegated certain of its duties hereunder to the Company and to
the Trustee. The fact of such delegation shall be deemed sufficient compliance
by the Authority to satisfy the duties so delegated, and the Authority shall not
be liable in any way by reason of acts done or omitted by the Company, any
Company Representative or the Trustee. The Authority shall have the right at all
times to act in reliance upon the authorization, representation or certification
of any Company Representative or the Trustee.

 

Section 10.10.       Execution in Counterparts. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.

 

Section 10.11.       Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State (without regard to the
State’s conflicts of laws principles).

 

Section 10.12.       Captions. The captions and headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or Sections of this Agreement.

 

Section 10.13.       Application of New Jersey Contractual Liability Act.
Notwithstanding anything to the contrary contained herein, the forgoing is
subject to the limitations of the provisions of the New Jersey Contractual
Liability Act, N.J. S. A. 59:13-1, et seq. and the New Jersey Tort Claims Act,
N.J.S.A. 59:2-1, et seq. While the New Jersey Contractual Liability Act,
N.J.S.A. 59:13-1, et seq. is not applicable by its terms to claims arising under
contracts with the Authority, the Underwriters and the Company hereby agree that
such statute (except N.J.S.A. 59:13-9) shall be applicable to all claims arising
against the Authority under this agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 38

 

IN WITNESS WHEREOF, the Authority has caused this Agreement to be executed in
its corporate name and attested by its duly authorized officials, and the
Company has caused this Agreement to be executed in its corporate name and
attested by its duly authorized officers, all as of the date first above
written.

  NEW JERSEY ECONOMIC DEVELOPMENT   AUTHORITY               By: /s/David A.
Lawyer     David A. Lawyer     Managing Director - Underwriting

 

ATTEST:

 

 

 

/s/Richard T. LoCascio

Richard T. LoCascio

Assistant Secretary

 

[AUTHORITY SIGNATURE PAGE TO LOAN AGREEMENT]

 39

 

  MIDDLESEX WATER COMPANY                     By /s/A. Bruce O’Connor     A.
Bruce O’Connor     Senior Vice President, Treasurer and Chief     Financial
Officer

 

ATTEST:

 

 

 

By  /s/Jay L. Kooper   Jay L. Kooper   Vice President, General Counsel    and
Secretary

 

 

 

 

[COMPANY SIGNATURE PAGE TO LOAN AGREEMENT]

 

 40

 

EXHIBIT A

Form of First Mortgage Bonds

 

 

 

 

 

 

 

 

 

 

 

 A-1

 

EXHIBIT b

ANNUAL COMPLIANCE CERTIFICATE
OF

MIDDLESEX WATER COMPANY

 

(To be filed on or before AUGUST 1st of each year)

The undersigned, [Name], [Title] of Middlesex Water Company (the “Company”), on
behalf of the Company and pursuant to the Loan Agreement dated as of August 1,
2019 (the “Agreement”) by and between the New Jersey Economic Development
Authority (the “NJEDA”) and the Company, relating to the Authority’s Water
Facilities Revenue Bonds (Middlesex Water Company Project) Series 2019 (the
“Bonds”) DOES HEREBY CERTIFY to the NJEDA as follows:

1.       I have reviewed the Agreement executed by the Company and am familiar
with the various covenants, including the tax covenants, contained in such
Agreement.

2.       I am familiar with the use and operation of Project Facilities financed
with the proceeds of the Bonds and I have undertaken such examination and
investigation as is necessary for purposes of making this certification.

3.       To the best of my knowledge, I confirm that the Company is in
compliance with all the covenants contained in the Agreement.

4.       The Company is not aware of any condition, event or act which
constitutes an Event of Default, or which would constitute an Event of Default
with the giving of notice or passage of time, or both, under any of the Loan
Documents.

5.       The present uses of the Project Facilities are the furnishing of water
to the general public in the Company’s service area [add a description of any
anticipated material change in the use of the Project or in the number of
employees employed at the Project].

6.       There are no other entities performing services, leasing or managing
the Project Facilities [alternatively-attached is a report from every entity
that leases or manages the Project Facilities, or is performing services at the
Project Facilities, indicating the number of persons the entity employs at the
Project Facilities].

7.       Submitted herewith are insurance certificates required under the
insurance provisions contained in Section 2.08 of the Agreement, the Company is
in compliance with such insurance requirements.

8.       [All of the Bond proceeds have not been fully disbursed as of the date
hereof.] [The Company complied with the [six-month] [eighteen month] exception
to the arbitrage rebate requirement set forth in Section 148(f)(4)(B) of the
Code.][The Company did not comply with either the six-month or eighteen month
exception to the arbitrage rebate requirement set forth in Section 148(f)(4)(B)
of the Code and, accordingly, will cause a rebate report to be prepared and
submitted to the Trustee and the Authority on each fifth Bond Year, accompanied
by Form 8038-T (or such other form required by the Internal Revenue Service),
prepared by the Company, a Rebate Expert or Bond Counsel.]

 B-1

 

9.       The Company is in compliance with the Continuing Disclosure Agreement.

 

 

WITNESS my hand this ___day of _____________

 

  MIDDLESEX WATER COMPANY         By:       Name:     Title:

 

 B-2

 

EXHIBIT C

 

TAX COMPLETION CERTIFICATE

OF

MIDDLESEX WATER COMPANY

 

The undersigned, [Name], [Title] of Middlesex Water Company (the “Company”), on
behalf of the Company and pursuant to Section 3.04 of the Loan Agreement dated
as of August 1, 2019 by and between the New Jersey Economic Development
Authority (the “NJEDA”) and the Company, and Section 4.02 of the Trust Indenture
by and between the NJEDA and The Bank of New York Mellon, as Trustee, relating
to the Authority’s Water Facilities Revenue Bonds (Middlesex Water Company
Project) Series 2019 (the “Series 2019 Bonds”) DOES HEREBY CERTIFY to the NJEDA
as follows:

 

1.       This certificate constitutes the Company’s Tax Completion Certificate,
required under Section 3.02 of the Loan Agreement and Section 5.07 of the
Indenture. Capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed thereto in the Loan Agreement or the Company’s
Tax Certificate (the “Tax Certificate”) dated the date of issue of the Series
2019 Bonds and delivered as part of the record of proceedings for the Series
2019 Bonds. The undersigned has consulted with its accountants, attorneys and
Bond Counsel to the extent necessary to complete this Certificate and the
accompanying Schedule.

 

2.       The Project was substantially completed, or is anticipated to be
completed, on_________ __, 201__, for purposes of determining the final date on
which remedial action can be taken with respect to Bond Proceeds that have not
been spent. With the final requisition, all of the Proceeds on deposit in the
Project Fund have been expended on the Project, other than the amount of
$____________which we have directed to be deposited to the Redemption Fund to be
applied to the redemption or defeasance of a portion of the Series 2019 Bonds.

 

3.       Attached hereto is a Completion Schedule summarizing the allocation of
Net Proceeds of the Series 2019 Bonds to the costs of the Project Facilities.
This Schedule demonstrates that:

 

(a)       Investment Proceeds were earned from the investment of the Bond
Proceeds of the Series 2019 Bonds during the acquisition, construction,
reconstruction or improvement of the Project in the amount of $________ and were
included in Net Proceeds of the Series 2019 Bonds.

 

(b)       The Costs of Issuance financed by the Proceeds of the Series 2019
Bonds did not exceed 2 percent (2%) of the Bond Proceeds of the Series 2019
Bonds.

 

(c)       At least ninety-five percent (95%) of the Net Proceeds of the Series
2019 Bonds were spent on Qualified Costs of the Project. For purposes of this
provision, “Qualified Costs” means costs that are Capital Expenditures and de
minimis working capital expenditures within the meaning of Treas. Reg.
§1.148-6(d)(3)(ii). Unless the cost was the payment of a prior loan, the
proceeds of which were used to fund capital expenditures for the Projects or a
Preliminary Expenditure, no amount of Net Proceeds of the Series 2019 Bonds used
to reimburse a cost paid before the date of issue of the Series 2019 Bonds will
be treated as a Qualified Cost if (i) the cost was paid more than (A) 60 days
before the adoption by the Authority of a declaration of intent to reimburse
costs of the Project (i.e. February 19, 2019), or (B) 3 years before the date of
issue of the Series 2019 Bonds; or (ii) the cost relates to a Project Facility
that was placed in service more than 18-months before the date of issue of the
Series 2019 Bonds.

 

 C-1

 

(d)       Interest was paid with the Net Proceeds of the Series 2019 Bonds for a
period not longer than the construction period for the Projects, plus one year.

 

4.       There has been no change in the scope or nature of the Projects from
that which was described in the notice of hearing published in connection with
the NJEDA’s public approval hearing.

 

5.       There has been no change in the components of the Project Facilities
that would result in a reduction of the average economic life for the Project
Facilities from what was described in the Tax Certificate.

 

6.       There is no change in the expected use of the Project Facilities in the
exempt purpose of the Company from what was expected at the date of issuance of
the Series 2019 Bonds, as described in the Tax Certificate.

 

[7.       The Series 2019 Bonds met the [6-month/18-month] spending exception to
rebate. Therefore no deposit is required to the Rebate Fund.]

 

[8.       The Series 2019 Bonds do not meet an exception to Rebate. The Rebate
Fund is fully funded and no deposit to the Rebate Fund is required.]

 

WITNESS my hand this __ day of __________, 201_.

 

 

  MIDDLESEX WATER COMPANY         By:       Name:     Title:]

 C-2

 

COMPLETION SCHEDULE

WATER FACILITIES Revenue Bonds

(MIDDLESEX WATER COMPANY Project) Series 2019

[Date]

Sale Proceeds of the Bond $ Plus Investment Earnings   Total Proceeds   Less
Original Issue Discount   Net Proceeds $

 

Cost Qualified Cost Non-Qualified Costs

Architect &

Engineering

   

Construction Costs

 

   

Equipment & Materials

 

   

Other (specify)

 

   

Interest During

Construction

 

   

Post-Construction

Interest/

 

   

Costs of Issuance

 

   

Total

 

   

 

Total Qualified Costs, $______       , are equal to___       % of Net Proceeds.

In the case of an exempt facility bond, Post-Construction Interest allocable to
Bonds that financed Qualified Costs for a period of not more than one year after
completion of the Project is a Qualified Cost.       

 C-3

 

EXHIBIT D

 

Form of Requisition

TO:         The Bank of New York Mellon

385 Rifle Camp Road, 3rd Floor

Woodland Park, NJ 07424

REQUISITION NO. ___

 

The undersigned, an Authorized Company Representative of Middlesex Water Company
(the “Company”), pursuant to the Loan Agreement by and between the New Jersey
Economic Development Authority (the “Authority”) and the Company, dated as of
August 1, 2019 (the “Loan Agreement”) makes the following requisition for
payment from the Project Fund established pursuant to the Loan Agreement entered
into with regard to Middlesex Water Company 2019 Project.

Payment to:       

 

Amount:       $

 

Reason for Payment:       

 

If this requisition is for payment to be made for the costs related to the
issuance of the Bonds, attached hereto is Schedule A containing a summary of the
costs to be paid from the Project Fund.

 

If this requisition is for payment to be made for the costs related to the
acquisition, construction, reconstruction or improvement of the Project
Facilities being financed with the proceeds of the Bonds, attached hereto is
Schedule A containing a summary of the costs to be paid from the Project Fund.

 

If this requisition is for payment to be made for the reconstruction,
replacement or repair of the Project Facilities following the damage or
destruction of a Project Facility, attached hereto as Schedule A is a summary of
the Company’s disbursements.

 

We hereby certify that (a) the obligation to make such payment was incurred by
the Company in connection with a Proper Charge (as defined in the Loan
Agreement), is unpaid or unreimbursed, and has not been the basis for any prior
requisition which has been paid; (b) the Company has received no written notice
of any lien, right to lien or attachment upon, or claim affecting the right of
such payee to receive payment of, any of the money payable under this
requisition to any of the persons, firms or corporations named herein, or if any
notice of any such lien, attachment or claim has been received, such lien,
attachment or claim has been released, discharged or will be released or
discharged upon payment of this requisition; (c) this requisition contains no
items representing payment on account of any retained percentages which the
Company are required to retain at this date; (d) the payment of this requisition
will not result in less than ninety-five percent (95%) of the proceeds of the
Bonds (determined by adding to the purchase price paid for the Bonds any
investment earnings on said proceeds) to be expended under this requisition and
under all prior requisitions having been used for the acquisition, construction,
reconstruction or improvement of land or property of a character subject to the
allowance for depreciation provided by Section 167 of the Code within the
meaning of Treas. Reg. 1.103-10(b)(1)(ii) and may by a proper election under the
Code (or may, but for a proper election under the Code to deduct such item), be
capitalized for Federal income tax purposes on the books of the Company; (e) the
payment of this requisition will not result in issuance costs equal to more than
two percent (2%) of the aggregate face amount of the Bonds being financed from
the proceeds of the Bonds (including any investment earnings on said proceeds);
(f) this requisition contains no items which are to be paid from the proceeds of
the Bonds representing payment of any amounts paid or incurred more than 60 days
prior to February 19, 2019 or preliminary expenditures permitted by Section
1.150-2(f)(2) of the Treasury Regulations; (g) costs of issuance of the Bonds,
attorneys' fees, printing costs, Authority fees, agent's fees and similar
expenses; (h) the amount requisitioned hereby is being expended in a manner
consistent in all material respects with the representations and warranties of
the Company set forth in the Loan Agreement and (i) no Event of Default (as
defined in the Loan Agreement) or event of default which after notice or lapse
of time or both would constitute an Event of Default has occurred and not been
waived.

 

 D-1

 

If this requisition is for payment to the Company to reimburse it for costs or
expenses incurred by reason of work performed or supervised by officers or
employees of the Company or any of its affiliates, the amount to be paid does
not exceed the actual cost thereof to the Company or any of its affiliates.

 

The following paragraph is to be completed when any requisition and certificate
includes any item for payment for labor, for indicated items of equipment or to
contractors, builders or materialmen:

 

I hereby certify that insofar as the amount covered by the above requisition
includes payments to be made for labor or to contractors, builders or
materialmen, including payment for equipment, materials or supplies, in
connection with the acquisition of the Project: (i) all obligations to make such
payments have been properly incurred, (ii) any such labor was actually performed
and any such equipment, materials or supplies were actually furnished or
installed on or about the Project and are a proper charge against the Costs of
Acquisition of the Project, (iii) such equipment, materials or supplies either
are not subject to any lien or security interest or, if the same are so subject,
such lien or security interest will be released or discharged upon payment of
this requisition. I hereby certify that the Amount of this Requisition set forth
above represents 100% of the amount due on account of a payment to a Contractor
or Subcontractor on account of a Construction Contract (as such terms are
defined in the Agreement), less the holdback required by the Authority's
Affirmation Action Regulations (copies of the Affirmation Action Regulations
were available on the Authority's Internet web page at: www.n
jeda.com/affirmativeaction or by contacting: New Jersey Economic Development
Authority - Internal Process Management - 24 Commerce St., Suite, 301, Newark,
N.J. 07102; Phone 973-855-3450, fax 973-622-1576 or e-mail: affirmativeaction@n
jeda.com).

 

IN WITNESS WHEREOF, I have hereunto set my hand this ______ day of ____________,
20__.

 

 

  MIDDLESEX WATER COMPANY   By:       Authorized Company Representative

 D-2

 

EXHIBIT E

 

 

TO:         The Bank of New York Mellon

385 Rifle Camp Road, 3rd Floor

Woodland Park, NJ 07424

 

COMPANY'S COMPLETION CERTIFICATE

 

 

Pursuant to Section 3.05 of the Loan Agreement by and between the Authority and
the Middlesex Water Company (the “Company”) dated as of August 1, 2019 (the
“Loan Agreement”), the undersigned, an Authorized Company Representative (all
undefined terms used herein shall have the same meaning ascribed to them in the
Loan Agreement), as of the date hereof, certifies that:

 

(i)that portion of the Project Facilities acquired or constructed with the
proceeds of the Series 2019 Bonds were completed as of ______________________,
20___;

 

(ii)the cost of all labor, services, materials and supplies used in the
acquisition and construction of the Project Facilities have been paid, or will
be paid from amounts retained by the Trustee, at the Company's direction for any
cost of the acquisition and construction of the Project Facilities not now due
and payable or, if due and payable, not presently paid;

 

(iii)the Project Facilities necessary for the Project, if any, have been
acquired, constructed and expanded to the Company's satisfaction; such Project
Facilities so installed are suitable and sufficient for the efficient operation
of the Project Facilities for the intended purposes and all costs and expenses,
if any, incurred in the acquisition, construction and expansion of such Project
Facilities have been paid, or will be paid from amounts retained by the Trustee
at the Company's direction for any such cost not now due and payable or, if due
and payable, not presently paid;

 

(iv)the Project Facilities are being operated as an authorized “project” under
the Act and substantially as proposed in the Application of the Company.

 

(v)for that portion of the Project involving the construction of the Project
Facilities (a) the Company has reviewed the Contractor's Completion Certificate
and the Company has no knowledge or information that the representations
contained therein are false or misleading and (b) the Company required in all
Construction Contracts that wages paid to workers employed in the performance of
Construction Contracts be paid at a rate not less than the Prevailing Wage Rate.

 

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I acknowledge that any amount hereafter remaining in the Project Fund (except
amounts therein sufficient to cover costs of the acquisition and construction of
the Project Facilities not now due and payable or not presently paid and except
for interest or other income earned from the investment of the moneys held in
the Project Fund, if any,) shall be transferred into the Bond Redemption Fund
and shall be used to redeem Bonds on the next succeeding redemption date on
which Bonds can be redeemed without penalty or premium. Amounts held in the Bond
Redemption Fund shall not be invested at a yield materially higher than the
yield on the Bonds.

 

This certificate is given without prejudice to any rights against third parties
which exist on the date hereof or which may subsequently come into being.

 

  MIDDLESEX WATER COMPANY       By:       Authorized Company Representative

 

 

Dated:       _______________________, 20__

 

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SCHEDULE A

 

LIST OF PROJECT MUNICIPALITIES

 

 

Municipality County Woodbridge, Township of Middlesex Edison, Township of
Middlesex Old Bridge, Township of Middlesex Carteret, Borough of Middlesex
Metuchen, Borough of Middlesex South Plainfield, Borough of Middlesex
Sayreville, Borough of Middlesex Highland Park, Borough of Middlesex New
Brunswick, City of Middlesex

 

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