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 Exhibit 10.41

LOAN AGREEMENT

BY AND BETWEEN

NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST

AND

MIDDLESEX WATER COMPANY

DATED AS OF DECEMBER 1, 2010

 
 

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TABLE OF CONTENTS

   
Page
ARTICLE I
     
DEFINITIONS
     
SECTION 1.01.
Definitions.
2
     
ARTICLE II
     
REPRESENTATIONS AND COVENANTS OF BORROWER
     
SECTION 2.01.
Representations of Borrower
6
SECTION 2.02.
Particular Covenants of Borrower.
10
     
ARTICLE III
     
LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS
     
SECTION 3.01.
Loan; Loan Term
19
SECTION 3.02.
Disbursement of Loan Proceeds.
19
SECTION 3.03.
Amounts Payable.
20
SECTION 3.03A.
Amounts on Deposit in Project Loan Account After Completion of Project Draws.
21
SECTION 3.04.
Unconditional Obligations
22
SECTION 3.05.
Loan Agreement to Survive Bond Resolution and Trust Bonds
23
SECTION 3.06.
Disclaimer of Warranties and Indemnification.
24
SECTION 3.07.
Option to Prepay Loan Repayments
25
SECTION 3.08.
Priority of Loan and Fund Loan.
25
SECTION 3.09.
Approval of the New Jersey State Treasurer
26
     
ARTICLE IV
     
ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND
     
SECTION 4.01.
Assignment and Transfer by Trust.
27
SECTION 4.02.
Assignment by Borrower
27
     
ARTICLE V
     
EVENTS OF DEFAULT AND REMEDIES
     
SECTION 5.01.
Events of Default
28
SECTION 5.02.
Notice of Default
29
SECTION 5.03.
Remedies on Default
29

 
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TABLE OF CONTENTS

   
Page
     
SECTION 5.04.
Attorneys’ Fees and Other Expenses
29
SECTION 5.05.
Application of Moneys
29
SECTION 5.06.
No Remedy Exclusive; Waiver; Notice
30
SECTION 5.07.
Retention of Trust’s Rights
30
     
ARTICLE VI
     
MISCELLANEOUS
     
SECTION 6.01.
Notices
31
SECTION 6.02.
Binding Effect
31
SECTION 6.03.
Severability
31
SECTION 6.04.
Amendments, Supplements and Modifications.
31
SECTION 6.05.
Execution in Counterparts
32
SECTION 6.06.
Applicable Law and Regulations
32
SECTION 6.07.
Consents and Approvals
32
SECTION 6.08.
Captions
32
SECTION 6.09.
Benefit of Loan Agreement; Compliance with Bond Resolution
32
SECTION 6.10.
Further Assurances
32
     
SCHEDULE A
Certain Additional Loan Agreement Provisions
S-1
EXHIBIT A
(1) Description of Project and Environmental Infrastructure System
A-1
 
(2) Description of Loan
A-2
EXHIBIT B
Basis for Determination of Allowable Project Costs
B-1
EXHIBIT C
Estimated Disbursement Schedule
C-1
EXHIBIT D
Specimen Borrower Bond
D-1
EXHIBIT E
Opinions of Borrower's Bond Counsel and General Counsel
E-1
EXHIBIT F
Additional Covenants and Requirements
F-1
EXHIBIT G
General Administrative Requirements for the State
   
Environmental Infrastructure Financing Program
G-1
EXHIBIT H
Form of Continuing Disclosure Agreement
H-1

 
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NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST LOAN AGREEMENT

THIS LOAN AGREEMENT, made and entered into as of December 1, 2010, by and
between the NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST, a public body
corporate and politic with corporate succession, and the Borrower (capitalized
terms used in this Loan Agreement shall have, unless the context otherwise
requires, the meanings ascribed thereto in Section 1.01 hereof);

WITNESSETH THAT:

WHEREAS, the Trust, in accordance with the Act, the Bond Resolution and a
financial plan approved by the State Legislature in accordance with Sections 22
and 22.1 of the Act, will issue its Trust Bonds on or prior to the Loan Closing
for the purpose of making the Loan to the Borrower and the Loans to the
Borrowers from the proceeds of the Trust Bonds to finance a portion of the Costs
of Environmental Infrastructure Facilities;

WHEREAS, the Borrower has, in accordance with the Act and the Regulations, made
timely application to the Trust for a Loan to finance a portion of the Costs of
the Project;

WHEREAS, the State Legislature, in accordance with Sections 20 and 20.1 of the
Act, has in the form of an appropriations act approved a project priority list
that includes the Project and that authorizes an expenditure of proceeds of the
Trust Bonds to finance a portion of the Costs of the Project;

WHEREAS, the Trust has approved the Borrower’s application for a Loan from
available proceeds of the Trust Bonds to finance a portion of the Costs of the
Project;

WHEREAS, in accordance with the applicable Bond Act (as defined in the Fund Loan
Agreement), and the Regulations, the Borrower has been awarded a Fund Loan for a
portion of the Costs of the Project; and

WHEREAS, the Borrower, in accordance with the Act, the Regulations, the Business
Corporation Law and all other applicable law, will issue a Borrower Bond to the
Trust evidencing said Loan at the Loan Closing.

NOW, THEREFORE, for and in consideration of the award of the Loan by the Trust,
the Borrower agrees to complete the Project and to perform under this Loan
Agreement in accordance with the conditions, covenants and procedures set forth
herein and attached hereto as part hereof, as follows:

 
 

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ARTICLE I

DEFINITIONS

SECTION 1.01.Definitions.

(a)           The following terms as used in this Loan Agreement shall, unless
the context clearly requires otherwise, have the following meanings:

“Act” means the “New Jersey Environmental Infrastructure Trust Act”,
constituting Chapter 334 of the Pamphlet Laws of 1985 of the State (codified at
N.J.S.A. 58:11B-1 et seq.), as the same may from time to time be amended and
supplemented.

“Administrative Fee” means that portion of Interest on the Loan or Interest on
the Borrower Bond payable hereunder as an annual fee of up to four-tenths of one
percent (.40%) of the initial principal amount of the Loan or such lesser
amount, if any, as may be authorized by any act of the State Legislature and as
the Trust may approve from time to time.

“Authorized Officer” means, in the case of the Borrower, any person or persons
authorized pursuant to a resolution of the board of directorsof the Borrower to
perform any act or execute any document relating to the Loan, the Borrower Bond
or this Loan Agreement.

“Bond Counsel” means a law firm appointed or approved by the Trust, as the case
may be, having a reputation in the field of municipal law whose opinions are
generally acceptable by purchasers of municipal bonds.

"Borrower" means the corporation that is a party to and is described in Schedule
A to this Loan Agreement, and its successors and assigns

“Borrower Bond” means the general obligation bond, note, debenture or other
evidence of indebtedness, authorized, executed, attested and delivered by the
Borrower to the Trust and, if applicable, authenticated on behalf of the
Borrower to evidence the Loan, a specimen of which is attached hereto as Exhibit
D and made a part hereof.

“Borrowers” means any other Local Government Unit or Private Entity (as such
terms are defined in the Regulations) authorized to construct, operate and
maintain Environmental Infrastructure Facilities that have entered into Loan
Agreements with the Trust pursuant to which the Trust will make Loans to such
recipients from moneys on deposit in the Project Fund, excluding the Project
Loan Account.

“Business Corporation Law” means the “New Jersey Business Corporation Act”,
constituting Chapter 263 of the Pamphlet Laws of 1968 of the State (codified at
N.J.S.A. 14A:1-1, et seq.), as the same may from time to time be amended and
supplemented.

“Code” means the Internal Revenue Code of 1986, as the same may from time to
time be amended and supplemented, including any regulations promulgated
thereunder, any successor code thereto and any administrative or judicial
interpretations thereof.

 
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“Costs” means those costs that are eligible, reasonable, necessary, allocable to
the Project and permitted by generally accepted accounting principles, including
Allowances and Building Costs (as defined in the Regulations), as shall be
determined on a project-specific basis in accordance with the Regulations as set
forth in Exhibit B hereto, as the same may be amended by subsequent eligible
costs as evidenced by a certificate of an authorized officer of the Trust.

“Debt Service Reserve Fund” means the Debt Service Reserve Fund, if any, as
defined in the Bond Resolution.

“Department” means the New Jersey Department of Environmental Protection

“Environmental Infrastructure Facilities” means Water Supply Facilities (as such
terms are defined in the Regulations).

“Environmental Infrastructure System” means the Environmental Infrastructure
Facilities of the Borrower, including the Project, described in Exhibit A-1
attached hereto and made a part hereof for which the Borrower is borrowing the
Loan under this Loan Agreement.

“Event of Default” means any occurrence or event specified in Section 5.01
hereof.

“Excess Project Funds” shall have the meaning set forth in Section 3.03A hereof.

“Fund Loan” means the loan made to the Borrower by the State, acting by and
through the Department, pursuant to the Fund Loan Agreement dated as of December
1, 2010 by and between the Borrower and the State, acting by and through the
Department, to finance or refinance a portion of the Costs of the Project.

“Fund Loan Agreement” means the loan agreement dated as of December 1, 2010 by
and between the Borrower and the State, acting by and through the Department,
regarding the terms and conditions of the Fund Loan.

“Interest on the Loan” or “Interest on the Borrower Bond” means the sum of (i)
the Interest Portion, (ii) the Administrative Fee, and (iii) any late charges
incurred hereunder.

“Interest Portion” means that portion of Interest on the Loan or Interest on the
Borrower Bond payable hereunder that is necessary to pay the Borrower’s
proportionate share of interest on the Trust Bonds (i) as set forth in Exhibit
A-2 hereof under the column heading entitled “Interest”, or (ii) with respect to
any prepayment of Trust Bond Loan Repayments in accordance with Section 3.07 or
5.03 hereof, to accrue on any principal amount of Trust Bond Loan Repayments to
the date of the optional redemption or acceleration, as the case may be, of the
Trust Bonds allocable to such prepaid or accelerated Trust Bond Loan Repayment.

“Loan” means the loan made by the Trust to the Borrower to finance or refinance
a portion of the Costs of the Project pursuant to this Loan Agreement, as
further described in Schedule A attached hereto.

 
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“Loan Agreement” means this Loan Agreement, including Schedule A and the
Exhibits attached hereto, as it may be supplemented, modified or amended from
time to time in accordance with the terms hereof and of the Bond Resolution.

“Loan Agreements” means any other loan agreements entered into by and between
the Trust and one or more of the Borrowers pursuant to which the Trust will make
Loans to such Borrowers from moneys on deposit in the Project Fund, excluding
the Project Loan Account, financed with the proceeds of the Trust Bonds.

“Loan Closing” means the date upon which the Trust shall issue and deliver the
Trust Bonds and the Borrower shall deliver its Borrower Bond, as previously
authorized, executed, attested and, if applicable, authenticated, to the Trust.

“Loan Repayments” means the sum of (i) Trust Bond Loan Repayments, (ii) the
Administrative Fee, and (iii) any late charges incurred hereunder.

“Loan Term” means the term of this Loan Agreement provided in Sections 3.01 and
3.03 hereof and in Exhibit A-2 attached hereto and made a part hereof.

“Loans” means the loans made by the Trust to the Borrowers under the Loan
Agreements from moneys on deposit in the Project Fund, excluding the Project
Loan Account.

“Master Program Trust Agreement” means that certain Master Program Trust
Agreement, dated as of November 1, 1995, by and among the Trust, the State,
United States Trust Company of New York, as Master Program Trustee thereunder,
The Bank of New York (NJ), in several capacities thereunder, and First Fidelity
Bank, N.A. (predecessor to Wachovia Bank, National Association), in several
capacities thereunder, as supplemented by that certain Agreement of Resignation
of Outgoing Master Program Trustee, Appointment of Successor Master Program
Trustee and Acceptance Agreement, dated as of November 1, 2001, by and among
United States Trust Company of New York, as Outgoing Master Program Trustee,
State Street Bank and Trust Company, N.A. (predecessor to U.S. Bank Trust
National Association), as Successor Master Program Trustee, and the Trust, as
the same may be amended and supplemented from time to time in accordance with
its terms.

“Official Statement” means the Official Statement relating to the issuance of
the Trust Bonds.

“Preliminary Official Statement” means the Preliminary Official Statement
relating to the issuance of the Trust Bonds.

“Prime Rate” means the prevailing commercial interest rate announced by the
Trustee from time to time in the State as its prime lending rate.

“Project” means the Environmental Infrastructure Facilities of the Borrower
described in Exhibit A-1 attached hereto and made a part hereof, which
constitutes a project for which the Trust is permitted to make a loan to the
Borrower pursuant to the Act, the Regulations and the Bond Resolution, all or a
portion of the Costs of which is financed or refinanced by the Trust through the
making of the Loan under this Loan Agreement and which may be identified under

 
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either the Drinking Water or Clean Water Project Lists with the Project Number
specified in Exhibit A-1 attached hereto.

“Project Fund” means the Project Fund as defined in the Bond Resolution.

“Project Loan Account” means the project loan account established on behalf of
the Borrower in the Project Fund in accordance with the Bond Resolution to
finance all or a portion of the Costs of the Project.

“Regulations” means the rules and regulations, as applicable, now or hereafter
promulgated under N.J.A.C. 7:22-3 et seq., 7:22-4 et seq., 7:22-5 et seq.,
7:22-6 et seq., 7:22-7 et seq., 7:22-8 et seq., 7:22-9 et seq. and 7:22-10 et
seq., as the same may from time to time be amended and supplemented.

“State” means the State of New Jersey.

“Trust” means the New Jersey Environmental Infrastructure Trust, a public body
corporate and politic with corporate succession duly created and validly
existing under and by virtue of the Act.

“Trust Bond Loan Repayments” means the repayments of the principal amount of the
Loan plus the payment of any premium associated with prepaying the principal
amount of the Loan in accordance with Section 3.07 hereof plus the Interest
Portion.

“Trust Bonds” means bonds authorized by Section 2.03 of the Bond Resolution,
together with any refunding bonds authenticated, if applicable, and delivered
pursuant to Section 2.04 of the Bond Resolution, in each case issued in order to
finance (i) the portion of the Loan deposited in the Project Loan Account, (ii)
the portion of the Loans deposited in the balance of the Project Fund, (iii) any
capitalized interest related to such bonds, (iv) a portion of the costs of
issuance related to such bonds, and (v) that portion of the Debt Service Reserve
Fund (to the extent the Trust establishes a Debt Service Reserve Fund pursuant
to the Bond Resolution), if any, allocable to the Loan or Loans, as the case may
be, a portion of which includes the funding of reserve capacity, if applicable,
for the Environmental Infrastructure Facilities of the Borrower or Borrowers, as
the case may be, or to refinance any or all of the above.

“Trustee” means, initially, U.S. Bank National Association, the Trustee
appointed by the Trust and its successors as Trustee under the Bond Resolution,
as provided in Article X of the Bond Resolution.

(b)           In addition to the capitalized terms defined in subsection (a) of
this Section 1.01, certain additional capitalized terms used in this Loan
Agreement shall, unless the context clearly requires otherwise, have the
meanings ascribed to such additional capitalized terms in Schedule A attached
hereto and made a part hereof.

(c)           Except as otherwise defined herein or where the context otherwise
requires, words importing the singular number shall include the plural number
and vice versa, and words importing persons shall include firms, associations,
corporations, agencies and districts.  Words importing one gender shall include
the other gender.

 
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ARTICLE II

REPRESENTATIONS AND COVENANTS OF BORROWER

SECTION 2.01.           Representations of Borrower.  The Borrower represents
for the benefit of the Trust, the Trustee and the holders of the Trust Bonds as
follows:

(a)           Organization and Authority.

(i)           The Borrower is a corporation duly created and validly existing
under and pursuant to the Constitution and statutes of the State, including the
Business Corporation Law.

(ii)           The acting officers of the Borrower who are contemporaneously
herewith performing or have previously performed any action contemplated in this
Loan Agreement either are or, at the time any such action was performed, were
the duly appointed or elected officers of such Borrower empowered by applicable
State law and, if applicable, authorized by resolution of the Borrower to
perform such actions.  To the extent any such action was performed by an officer
no longer the duly acting officer of such Borrower, all such actions previously
taken by such officer are still in full force and effect.

(iii)           The Borrower has full legal right and authority and all
necessary licenses and permits required as of the date hereof to own, operate
and maintain its Environmental Infrastructure System, to carry on its activities
relating thereto, to execute, attest and deliver this Loan Agreement and the
Borrower Bond, to authorize the authentication of the Borrower Bond, to sell the
Borrower Bond to the Trust, to undertake and complete the Project and to carry
out and consummate all transactions contemplated by this Loan Agreement.

(iv)           The proceedings of the Borrower’s board of directors approving
this Loan Agreement and the Borrower Bond, authorizing the execution,
attestation and delivery of this Loan Agreement and the Borrower Bond,
authorizing the sale of the Borrower Bond to the Trust, authorizing the
authentication of the Borrower Bond on behalf of the Borrower and authorizing
the Borrower to undertake and complete the Project, including, without
limitation, the Borrower Bond Resolution (collectively, the “Proceedings”), have
been duly and lawfully adopted in accordance with the Business Corporation Law
and other applicable State law at a meeting or meetings that were duly called
and held in accordance with the Borrower By-Laws and at which quorums were
present and acting throughout.

(v)           By official action of the Borrower taken prior to or concurrent
with the execution and delivery hereof, including, without limitation, the
Proceedings, the Borrower has duly authorized, approved and consented to all
necessary action to be taken by the Borrower for:  (A) the execution,
attestation, delivery and performance of this Loan Agreement and the
transactions contemplated hereby; (B) the issuance of the Borrower Bond and the
sale thereof to the Trust upon the terms set forth herein; (C) the

 
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approval of the inclusion, if such inclusion is deemed necessary in the sole
discretion of the Trust, in the Preliminary Official Statement and the Official
Statement of all statements and information relating to the Borrower set forth
in “APPENDIX B” thereto (the “Borrower Appendices”) and any amendment thereof or
supplement thereto; and (D) the execution, delivery and due performance of any
and all other certificates, agreements and instruments that may be required to
be executed, delivered and performed by the Borrower in order to carry out, give
effect to and consummate the transactions contemplated by this Loan Agreement,
including, without limitation, the designation of the Borrower Appendices
portion of the Preliminary Official Statement, if any, as “deemed final” for the
purposes and within the meaning of Rule 15c2-12 (“Rule 15c2-12”) of the
Securities and Exchange Commission (“SEC”) promulgated under the Securities
Exchange Act of 1934, as amended or supplemented, including any successor
regulation or statute thereto.

(vi)           This Loan Agreement and the Borrower Bond have each been duly
authorized by the Borrower and duly executed, attested and delivered by
Authorized Officers of the Borrower, and the Borrower Bond has been duly sold by
the Borrower to the Trust, duly authenticated by the trustee or paying agent, if
applicable, under the Borrower Bond Resolution and duly issued by the Borrower
in accordance with the terms of the Borrower Bond Resolution; and assuming that
the Trust has all the requisite power and authority to authorize, execute,
attest and deliver, and has duly authorized, executed, attested and delivered,
this Loan Agreement, and assuming further that this Loan Agreement is the legal,
valid and binding obligation of the Trust, enforceable against the Trust in
accordance with its terms, each of this Loan Agreement and the Borrower Bond
constitutes a legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its respective terms, except as the
enforcement thereof may be affected by bankruptcy, insolvency or other laws or
the application by a court of legal or equitable principles affecting creditors'
rights; and the information contained under “Description of Loan” in Exhibit A-2
attached hereto and made a part hereof is true and accurate in all respects.

(b)           Full Disclosure.  There is no fact that the Borrower has not
disclosed to the Trust in writing on the Borrower’s application for the Loan or
otherwise that materially adversely affects or (so far as the Borrower can now
foresee) that will materially adversely affect the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, or the ability of the Borrower to make all
Loan Repayments and any other payments required under this Loan Agreement or
otherwise to observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement and the Borrower Bond.

(c)           Pending Litigation.  There are no proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower in any
court or before any governmental authority or arbitration board or tribunal
that, if adversely determined, would materially adversely affect (i) the
undertaking or completion of the Project, (ii) the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, (iii) the ability of the Borrower to make
all Loan Repayments or any other payments required under this Loan Agreement,
(iv) the authorization, execution, attestation or

 
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delivery of this Loan Agreement or the Borrower Bond, (v) the issuance of the
Borrower Bond and the sale thereof to the Trust, (vi) the adoption of the
Borrower Bond Resolution, or (vii) the Borrower’s ability otherwise to observe
and perform its duties, covenants, obligations and agreements under this Loan
Agreement and the Borrower Bond, which proceedings have not been previously
disclosed in writing to the Trust either in the Borrower’s application for the
Loan or otherwise.

(d)           Compliance with Existing Laws and Agreements.  (i) The
authorization, execution, attestation and delivery of this Loan Agreement and
the Borrower Bond by the Borrower, (ii) the authentication of the Borrower Bond
by the trustee or paying agent under the Borrower Bond Resolution, as the case
may be, and the sale of the Borrower Bond to the Trust, (iii) the adoption of
the Borrower Bond Resolution, (iv) the observation and performance by the
Borrower of its duties, covenants, obligations and agreements hereunder and
thereunder, (v) the consummation of the transactions provided for in this Loan
Agreement, the Borrower Bond Resolution and the Borrower Bond, and (vi) the
undertaking and completion of the Project will not (A) other than the lien,
charge or encumbrance created hereby, by the Borrower Bond, by the Borrower Bond
Resolution and by any other outstanding debt obligations of the Borrower that
are at parity with the Borrower Bond as to lien on, and source and security for
payment thereon from, the revenues of the Borrower’s Environmental
Infrastructure System, result in the creation or imposition of any lien, charge
or encumbrance upon any properties or assets of the Borrower pursuant to, (B)
result in any breach of any of the terms, conditions or provisions of, or (C)
constitute a default under, any existing resolution, outstanding debt or lease
obligation, trust agreement, indenture, mortgage, deed of trust, loan agreement
or other instrument to which the Borrower is a party or by which the Borrower,
its Environmental Infrastructure System or any of its properties or assets may
be bound, nor will such action result in any violation of the provisions of the
charter or other document pursuant to which the Borrower was established or any
laws, ordinances, injunctions, judgments, decrees, rules, regulations or
existing orders of any court or governmental or administrative agency, authority
or person to which the Borrower, its Environmental Infrastructure System or its
properties or operations is subject.

(e)           No Defaults.  No event has occurred and no condition exists that,
upon the authorization, execution, attestation and delivery of this Loan
Agreement and the Borrower Bond, the issuance of the Borrower Bond and the sale
thereof to the Trust, the adoption of the Borrower Bond Resolution or the
receipt of the amount of the Loan, would constitute an Event of Default
hereunder.  The Borrower is not in violation of, and has not received notice of
any claimed violation of, any term of any agreement or other instrument to which
it is a party or by which it, its Environmental Infrastructure System or its
properties may be bound, which violation would materially adversely affect the
properties, activities, prospects or condition (financial or otherwise) of the
Borrower or its Environmental Infrastructure System or the ability of the
Borrower to make all Loan Repayments, to pay all other amounts due hereunder or
otherwise to observe and perform its duties, covenants, obligations and
agreements under this Loan Agreement and the Borrower Bond.

(f)           Governmental Consent.  The Borrower has obtained all permits and
approvals required to date by any governmental body or officer for the
authorization, execution, attestation and delivery of this Loan Agreement and
the Borrower Bond, for the issuance of the Borrower Bond and the sale thereof to
the Trust, for the adoption of the Borrower Bond Resolution, for the

 
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making, observance and performance by the Borrower of its duties, covenants,
obligations and agreements under this Loan Agreement and the Borrower Bond and
for the undertaking or completion of the Project and the financing or
refinancing thereof, including, but not limited to, if required, the approval by
the New Jersey Board of Public Utilities (the  “BPU”) of the issuance by the
Borrower of the Borrower Bond to the Trust, as required by Section 9a of the
Act, and any other approvals required therefor by the BPU; and the Borrower has
complied with all applicable provisions of law requiring any notification,
declaration, filing or registration with any governmental body or officer in
connection with the making, observance and performance by the Borrower of its
duties, covenants, obligations and agreements under this Loan Agreement and the
Borrower Bond or with the undertaking or completion of the Project and the
financing or refinancing thereof.  No consent, approval or authorization of, or
filing, registration or qualification with, any governmental body or officer
that has not been obtained is required on the part of the Borrower as a
condition to the authorization, execution, attestation and delivery of this Loan
Agreement and the Borrower Bond, the issuance of the Borrower Bond and the sale
thereof to the Trust, the undertaking or completion of the Project or the
consummation of any transaction herein contemplated.

(g)           Compliance with Law.  The Borrower:

(i)           is in compliance with all laws, ordinances, governmental rules and
regulations to which it is subject, the failure to comply with which would
materially adversely affect (A) the ability of the Borrower to conduct its
activities or to undertake or complete the Project, (B) the ability of the
Borrower to make the Loan Repayments and to pay all other amounts due hereunder,
or (C) the condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System; and

(ii)           has obtained all licenses, permits, franchises or other
governmental authorizations presently necessary for the ownership of its
properties or for the conduct of its activities that, if not obtained, would
materially adversely affect (A) the ability of the Borrower to conduct its
activities or to undertake or complete the Project, (B) the ability of the
Borrower to make the Loan Repayments and to pay all other amounts due hereunder,
or (C) the condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System.

(h)           Use of Proceeds.  The Borrower will apply the proceeds of the Loan
from the Trust as described in Exhibit B attached hereto and made a part hereof
(i) to finance or refinance a portion of the Costs of the Borrower’s Project;
and (ii) where applicable, to reimburse the Borrower for a portion of the Costs
of the Borrower’s Project, which portion was paid or incurred in anticipation of
reimbursement by the Trust and is eligible for such reimbursement under and
pursuant to the Regulations, the Code and any other applicable law.  All of such
costs constitute Costs for which the Trust is authorized to make Loans to the
Borrower pursuant to the Act and the Regulations.

(i)           Official Statement.  The descriptions and information set forth in
the Borrower Appendices, if any, contained in the Official Statement relating to
the Borrower, its operations and the transactions contemplated hereby, as of the
date of the Official Statement, were and, as of the date of delivery hereof, are
true and correct in all material respects, and did not and do not

 
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contain any untrue statement of a material fact or omit to state a material fact
that is necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.

(j)           Preliminary Official Statement.  As of the date of the Preliminary
Official Statement, the descriptions and information set forth in the Borrower
Appendices, if any, contained in the Preliminary Official Statement relating to
the Borrower, its operations and the transactions contemplated hereby (i) were
“deemed final” by the Borrower for the purposes and within the meaning of Rule
15c2-12 and (ii) were true and correct in all material respects, and did not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.

SECTION 2.02.           Particular Covenants of Borrower.

(a)           Promise to Pay.  The Borrower unconditionally and irrevocably
promises in accordance with the terms of and to the extent provided in the
Borrower Bond Resolution, to make punctual payment of the principal and
redemption premium, if any, of the Loan and the Borrower Bond, the Interest on
the Loan, the Interest on the Borrower Bond and all other amounts due under this
Loan Agreement and the Borrower Bond according to their respective terms.

(b)           Performance Under Loan Agreement; Rates.  The Borrower covenants
and agrees (i) to comply with all applicable state and federal laws, rules and
regulations in the performance of this Loan Agreement; (ii) to maintain its
Environmental Infrastructure System in good repair and operating condition;
(iii) to cooperate with the Trust in the observance and performance of the
respective duties, covenants, obligations and agreements of the Borrower and the
Trust under this Loan Agreement; and (iv) to establish, levy and collect rents,
rates and other charges for the products and services provided by its
Environmental Infrastructure System, which rents, rates and other charges shall
be at least sufficient to comply with all covenants pertaining thereto contained
in, and all other provisions of, any bond resolution, trust indenture or other
security agreement, if any, relating to any bonds, notes or other evidences of
indebtedness issued or to be issued by the Borrower, including without
limitation rents, rates and other charges, together with other available moneys,
sufficient to pay the principal of and Interest on the Borrower Bond, plus all
other amounts due hereunder.

(c)           Borrower Bond; No Prior Liens.  Except for (i) the Borrower Bond,
(ii) any bonds or notes at parity with the Borrower Bond and currently
outstanding or issued on the date hereof, (iii) any future bonds or notes of the
Borrower issued under the Borrower Bond Resolution at parity with the Borrower
Bond, and (iv) any Permitted Encumbrances (as defined in the Borrower Bond
Resolution), the assets of the Borrower that are subject to the Borrower Bond
Resolution are and will be free and clear of any pledge, lien, charge or
encumbrance thereon or with respect thereto prior to, or of equal rank with, the
Borrower Bond, and all corporate or other action on the part of the Borrower to
that end has been and will be duly and validly taken.

(d)           Completion of Project and Provision of Moneys Therefor.  The
Borrower covenants and agrees (i) to exercise its best efforts in accordance
with prudent environmental

 
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infrastructure utility practice to complete the Project and to accomplish such
completion on or before the estimated Project completion date set forth in
Exhibit G hereto and made a part hereof; (ii) to comply with the terms and
provisions contained in Exhibit G hereto; and (iii) to provide from its own
fiscal resources all moneys, in excess of the total amount of loan proceeds it
receives under the Loan and Fund Loan, required to complete the Project.

(e)           See Section 2.02(e) as set forth in Schedule A attached hereto,
made a part hereof and incorporated in this Section 2.02(e) by reference as if
set forth in full herein.

(f)           Exclusion of Interest from Federal Gross Income and Compliance
with Code.

(i)           The Borrower covenants and agrees that it shall not take any
action or omit to take any action that would result in the loss of the exclusion
of the interest on any Trust Bonds now or hereafter issued from gross income for
purposes of federal income taxation as that status is governed by Section 103(a)
of the Code.

(ii)           The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds (or amounts replaced with such proceeds)
or any other funds or take any action or omit to take any action that would
cause the Trust Bonds (assuming solely for this purpose that the proceeds of the
Trust Bonds loaned to the Borrower represent all of the proceeds of the Trust
Bonds) to be “arbitrage bonds” within the meaning of Section 148(a) of the Code.

(iii)           The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds to pay the principal of or the interest
or redemption premium on or any other amount in connection with the retirement
or redemption of any issue of state or local governmental obligations
(“refinancing of indebtedness”), unless the Borrower shall (A) establish to the
satisfaction of the Trust, prior to the issuance of the Trust Bonds, that such
refinancing of indebtedness will not adversely affect the exclusion from gross
income for federal income tax purposes of the interest on the Trust Bonds, and
(B) provide to the Trust an opinion of Bond Counsel to that effect in form and
substance satisfactory to the Trust.

(iv)           The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds to reimburse the Borrower for an
expenditure with respect to a Costs of the Borrower’s Project paid by the
Borrower prior to the issuance of the Trust Bonds, unless (A) the allocation by
the Borrower of the proceeds of the Trust Bonds to reimburse such expenditure
complies with the requirements of Treasury Regulations Sec.1.150-2 necessary to
enable the reimbursement allocation to be treated as an expenditure of the
proceeds of the Trust Bonds for purposes of applying Sections 103 and 141-150,
inclusive, of the Code, or (B) such proceeds of the Trust Bonds will be used for
refinancing of indebtedness that was used to pay Costs of the Borrower’s Project
or to reimburse the Borrower for expenditures with respect to Costs of the
Borrower’s Project paid by the Borrower prior to the issuance of such
indebtedness in accordance with a reimbursement allocation for such expenditures
that complies with the requirements of Treasury Regulations Sec.1.150-2.

 
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(v)           The Borrower shall not directly or indirectly use or permit the
use of any proceeds of the Trust Bonds to pay any costs which are not Costs of
the Borrower’s Project that constitute a “capital expenditure” within the
meaning of Treasury Regulations Sec.1.150-1.

(vi)           The Borrower shall not use the proceeds of the Trust Bonds
(assuming solely for this purpose that the proceeds of the Trust Bonds loaned to
the Borrower represent all of the proceeds of the Trust Bonds) in any manner
that would cause the Trust Bonds to be considered “federally guaranteed” within
the meaning of Section 149(b) of the Code or “hedge bonds” within the meaning of
Section 149(g) of the Code.

(vii)           The Borrower shall not issue any debt obligations that (A) are
sold at substantially the same time as the Trust Bonds and finance or refinance
the Loan made to the Borrower, (B) are sold pursuant to the same plan of
financing as the Trust Bonds and finance or refinance the Loan made to the
Borrower, and (C) are reasonably expected to be paid out of substantially the
same source of funds as the Trust Bonds and finance or refinance the Loan made
to the Borrower.

(viii)           Neither the Borrower nor any “related party” (within the
meaning of Treasury Regulations Sec.1.150-1) shall purchase Trust Bonds in an
amount related to the amount of the Loan.

(ix)           The Borrower will not issue or permit to be issued obligations
that will constitute an “advance refunding” of the Borrower Bond within the
meaning of Section 149(d)(5) of the Code without the express written consent of
the Trust, which consent may only be delivered by the Trust after the Trust has
received notice from the Borrower of such contemplated action no later than
sixty (60) days prior to any such contemplated action, and which consent is in
the sole discretion of the Trust.

(x)           See Section 2.02(f)(xi) as set forth in Schedule A attached
hereto, made a part hereof and incorporated in this Section 2.02(f)(xi) by
reference as if set forth in full herein.

(xi)           No “gross proceeds” of the Trust Bonds held by the Borrower
(other than amounts in a “bona fide debt service fund”) will be held in a
“commingled fund” (as such terms are defined in Treasury Regulations
Sec.1.148-1(b)).

(xii)           Based upon all of the objective facts and circumstances in
existence on the date of issuance of the Trust Bonds used to finance the
Project, (A) within six months of the date of issuance of the Trust Bonds used
to finance the Project, the Borrower will incur a substantial binding obligation
to a third party to expend on the Project at least five percent (5%) of the “net
sale proceeds” (within the meaning of Treasury Regulations Sec.1.148-1) of the
Loan used to finance the Project (treating an obligation as not being binding if
it is subject to contingencies within the control of the Borrower, the Trust or
a “related party” (within the meaning of Treasury Regulations Sec.1.150-1)), (B)
completion of the Project and the allocation to expenditures of the “net sale
proceeds” of

 
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the Loan used to finance the Project will proceed with due diligence, and (C)
all of the proceeds of the Loan used to finance the Project (other than amounts
deposited into the Debt Service Reserve Fund (to the extent the Trust
establishes a Debt Service Reserve Fund pursuant to the Bond Resolution)
allocable to that portion of the Loan used to finance reserve capacity, if any)
and investment earnings thereon will be spent prior to the period ending three
(3) years subsequent to the date of issuance of the Trust Bonds used to finance
the Project.  Accordingly, the proceeds of the Loan deposited in the Project
Loan Account used to finance the Project will be eligible for the 3-year
arbitrage temporary period since the expenditure test, time test and due
diligence test, as set forth in Treasury Regulations Sec.1.148-2(e)(2), will be
satisfied.

(xiii)           The weighted average maturity of the Loan does not exceed 120%
of the average reasonably expected economic life of the Project financed or
refinanced with the Loan, determined in the same manner as under Section 147(b)
of the Code.  Accordingly, the term of the Loan will not be longer than is
reasonably necessary for the governmental purposes of the Loan within the
meaning of Treasury Regulations Sec.1.148-1(c)(4).

(xiv)           The Borrower shall, within 30 days of date the Borrower
concludes that no additional proceeds of the Loan will be required to pay costs
of the Project, provide to the Trust a certificate of the Borrower evidencing
such conclusion.

For purposes of this subsection and subsection (h) of this Section 2.02, quoted
terms shall have the meanings given thereto by Section 148 of the Code,
including, particularly, Treasury Regulations Sec.Sec.1.148-1 through 1.148-11,
inclusive, as supplemented or amended, to the extent applicable to the Trust
Bonds, and any successor Treasury Regulations applicable to the Trust Bonds.

(g)           Operation and Maintenance of Environmental Infrastructure
System.  The Borrower covenants and agrees that it shall, in accordance with
prudent environmental infrastructure utility practice, (i) at all times operate
the properties of its Environmental Infrastructure System and any business in
connection therewith in an efficient manner, (ii) maintain its Environmental
Infrastructure System in good repair, working order and operating condition, and
(iii) from time to time make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements with respect to its
Environmental Infrastructure System so that at all times the business carried on
in connection therewith shall be properly and advantageously conducted.

(h)           Records and Accounts.

(i)           The Borrower shall keep accurate records and accounts for its
Environmental Infrastructure System (the “System Records”) separate and distinct
from its other records and accounts (the “General Records”).  Such System
Records shall be audited annually by an independent certified public accountant,
which may be part of the annual audit of the General Records of the
Borrower.  Such System Records and General Records shall be made available for
inspection by the Trust at any reasonable time upon prior written notice, and a
copy of such annual audit(s) therefor, including all written comments and
recommendations of such accountant, shall be furnished to the Trust

 
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within 150 days of the close of the fiscal year being so audited or, with the
consent of the Trust, such additional period as may be provided by law.

(ii)           Within 30 days following receipt of any Loan proceeds, including
without limitation the “Allowance for Administrative Costs” or the “Allowance
for Planning and Design” set forth in Exhibit B hereto, the Borrower shall
allocate such proceeds to an expenditures in a manner that satisfies the
requirements of Treasury Regulation Sec.1.148-6(d) and transmit a copy of each
such allocation to the Trust.  No portion of the Allowance for Administrative
Costs will be allocated to a cost other than a cost described in N.J.A.C.
7:22-5.11(a) 3, 4 or 6.  No portion of the Allowance for Planning and Design
will be allocated to a cost other than a cost described N.J.A.C. 7:22-5.12, or
other costs of the Borrower’s Environmental Infrastructure System which are
“capital expenditures,” within the meaning of Treasury Regulations
Sec.1.150-1.  The Borrower shall retain records of such allocations for at least
until the date that is three years after the scheduled maturity date of the
Trust Bonds.  The Borrower shall make such records available to the Trust within
15 days of any request by the Trust.

(iii)           Unless otherwise advised in writing by the Trust, in furtherance
of the covenant of the Borrower contained in subsection (f) of this Section 2.02
not to cause the Trust Bonds to be arbitrage bonds, the Borrower shall keep, or
cause to be kept, accurate records of each investment it makes in any
“nonpurpose investment” acquired with, or otherwise allocated to, “gross
proceeds” of the Trust Bonds not held by the Trustee and each “expenditure” it
makes allocated to “gross proceeds” of the Trust Bonds.  Such records shall
include the purchase price, including any constructive “payments” (or in the
case of a “payment” constituting a deemed acquisition of a “nonpurpose
investment” (e.g., a “nonpurpose investment” first allocated to “gross proceeds”
of the Trust Bonds after it is actually acquired because it is deposited in a
sinking fund for the Trust Bonds)), the “fair market value” of the “nonpurpose
investment” on the date first allocated to the “gross proceeds” of the Trust
Bonds, nominal interest rate, dated date, maturity date, type of property,
frequency of periodic payments, period of compounding, yield to maturity, amount
actually or constructively received on disposition (or in the case of a
“receipt” constituting a deemed disposition of a “nonpurpose investment” (e.g.,
a “nonpurpose investment” that ceases to be allocated to the “gross proceeds” of
the Trust Bonds because it is removed from a sinking fund for the Trust Bonds)),
the “fair market value” of the “nonpurpose investment” on the date it ceases to
be allocated to the “gross proceeds” of the Trust Bonds, the purchase date and
disposition date of the “nonpurpose investment” and evidence of the “fair market
value” of such property on the purchase date and disposition date (or deemed
purchase or disposition date) for each such “nonpurpose investment”.  The
purchase date, disposition date and the date of determination of “fair market
value” shall be the date on which a contract to purchase or sell the “nonpurpose
investment” becomes binding, i.e., the trade date rather than the settlement
date.  For purposes of the calculation of purchase price and disposition price,
brokerage or selling commissions, administrative expenses or similar expenses
shall not increase the purchase price of an item and shall not reduce the amount
actually or constructively received upon disposition of an item, except to the
extent such costs constitute “qualified administrative costs”.

 
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(iv)           Within thirty (30) days of the last day of the fifth and each
succeeding fifth “bond year” (which, unless otherwise advised by the Trust,
shall be the five-year period ending on the date five years subsequent to the
date immediately preceding the date of issuance of the Trust Bonds and each
succeeding fifth “bond year”) and within thirty (30) days of the date the last
bond that is part of the Trust Bonds is discharged (or on any other periodic
basis requested in writing by the Trust), the Borrower shall (A) calculate, or
cause to be calculated, the “rebate amount” as of the “computation date” or
“final computation date” attributable to any “nonpurpose investment” made by the
Borrower and (B) remit the following to the Trust:  (1) an amount of money that
when added to the “future value” as of the “computation date” of any previous
payments made to the Trust on account of rebate equals the “rebate amount”, (2)
the calculations supporting the “rebate amount” attributable to any “nonpurpose
investment” made by the Borrower allocated to “gross proceeds” of the Trust
Bonds, and (3) any other information requested by the Trust relating to
compliance with Section 148 of the Code (e.g., information related to any
“nonpurpose investment” of the Borrower for purposes of application of the
“universal cap”).

(v)           The Borrower covenants and agrees that it will account for “gross
proceeds” of the Trust Bonds, investments allocable to the Trust Bonds and
expenditures of “gross proceeds” of the Trust Bonds in accordance with Treasury
Regulations Sec.1.148-6.  All allocations of “gross proceeds” of the Trust Bonds
to expenditures will be recorded on the books of the Borrower kept in connection
with the Trust Bonds no later than 18 months after the later of the date the
particular Costs of the Borrower’s Project is paid or the date the portion of
the project financed by the Trust Bonds is placed in service.  All allocations
of proceeds of the Trust Bonds to expenditures will be made no later than the
date that is 60 days after the fifth anniversary of the date the Trust Bonds are
issued or the date 60 days after the retirement of the Trust Bonds, if
earlier.  Such records and accounts will include the particular Costs paid, the
date of the payment and the party to whom the payment was made.

(vi)           From time to time as directed by the Trust, the Borrower shall
provide to the Trust a written report demonstrating compliance by the Borrower
with the provisions of Section 2.02(f) of this Loan Agreement, each such written
report to be submitted by the Borrower to the Trust in the form of a full and
complete written response to a questionnaire provided by the Trust to the
Borrower.  Each such questionnaire shall be provided by the Trust to the
Borrower not less than fourteen (14) days prior to the date established by the
Trust for receipt from the Borrower of the full and complete written response to
the questionnaire.

(i)           Inspections; Information.  The Borrower shall permit the Trust and
the Trustee and any party designated by any of such parties, at any and all
reasonable times during construction of the Project and thereafter upon prior
written notice, to examine, visit and inspect the property, if any, constituting
the Project and to inspect and make copies of any accounts, books and records,
including (without limitation) its records regarding receipts, disbursements,
contracts, investments and any other matters relating thereto and to its
financial standing, and shall supply such reports and information as the Trust
and the Trustee may reasonably require in connection therewith.

 
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(j)           Insurance.  The Borrower shall maintain or cause to be maintained,
in force, insurance policies with responsible insurers or self-insurance
programs providing against risk of direct physical loss, damage or destruction
of its Environmental Infrastructure System at least to the extent that similar
insurance is usually carried by utilities constructing, operating and
maintaining Environmental Infrastructure Facilities of the nature of the
Borrower’s Environmental Infrastructure System, including liability coverage,
all to the extent available at reasonable cost but in no case less than will
satisfy all applicable regulatory requirements.

(k)           Costs of Project.  The Borrower certifies that the building cost
of the Project, as listed in Exhibit B hereto and made a part hereof, is a
reasonable and accurate estimation thereof, and it will supply to the Trust a
certificate from a licensed professional engineer authorized to practice in the
State stating that such building cost is a reasonable and accurate estimation
and that the useful life of the Project exceeds the maturity date of the
Borrower Bond.

(l)           Delivery of Documents.  Concurrently with the delivery of this
Loan Agreement (as previously authorized, executed and attested) at the Loan
Closing, the Borrower will cause to be delivered to the Trust and the Trustee
each of the following items:

(i)           an opinion of the Borrower’s bond counsel substantially in the
form of Exhibit E hereto; provided, however, that the Trust may permit portions
of such opinion to be rendered by general counsel to the Borrower and may permit
variances in such opinion from the form set forth in Exhibit E if, in the
opinion of the Trust, such variances are not to the material detriment of the
interests of the holders of the Trust Bonds;

(ii)           counterparts of this Loan Agreement as previously executed and
attested by the parties hereto;

(iii)           copies of those resolutions finally adopted by the board of
directors of the Borrower and requested by the Trust, including, without
limitation, (A) the resolution of the Borrower authorizing the execution,
attestation and delivery of this Loan Agreement, (B) the Borrower Bond
Resolution, as amended and supplemented as of the date of the Loan Closing,
authorizing the execution, attestation, authentication, sale and delivery of the
Borrower Bond to the Trust, (C) the resolution of the Borrower, if any,
confirming the details of the sale of the Borrower Bond to the Trust, (D) the
resolution of the Borrower, if any, declaring its official intent to reimburse
expenditures for the Costs of the Project from the proceeds of the Trust Bonds,
each of said resolutions of the Borrower being certified by an Authorized
Officer of the Borrower as of the date of the Loan Closing, (E) the resolution
of the BPU approving the issuance by the Borrower of the Borrower Bond to the
Trust and setting forth any other approvals required therefor by the BPU, if
applicable, and (F) any other Proceedings;

(iv)           if the Loan is being made to reimburse the Borrower for all or a
portion of the Costs of the Borrower’s Project or to refinance indebtedness or
reimburse the Borrower for the repayment of indebtedness previously incurred by
the Borrower to finance all or a portion of the Costs of the Borrower’s Project,
an opinion of Bond Counsel, in form and substance satisfactory to the Trust, to
the effect that such

 
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reimbursement or refinancing will not adversely affect the exclusion from gross
income for federal income tax purposes of the interest on the Trust Bonds; and

(v)           the certificates of insurance coverage as required pursuant to the
terms of Section 3.06(d) hereof and such other certificates, documents, opinions
and information as the Trust may require in Exhibit F hereto, if any.

(m)           Execution and Delivery of Borrower Bond.  Concurrently with the
delivery of this Loan Agreement at the Loan Closing, the Borrower shall also
deliver to the Trust the Borrower Bond, as previously executed, attested and, if
applicable, authenticated, upon the receipt of a written certification of the
Trust that a portion of the net proceeds of the Trust Bonds shall be deposited
in the Project Loan Account simultaneously with the delivery of the Borrower
Bond.

(n)           Notice of Material Adverse Change.  The Borrower shall promptly
notify the Trust of any material adverse change in the properties, activities,
prospects or condition (financial or otherwise) of the Borrower or its
Environmental Infrastructure System, or in the ability of the Borrower to make
all Loan Repayments and otherwise to observe and perform its duties, covenants,
obligations and agreements under this Loan Agreement and the Borrower Bond.

(o)           Continuing Representations.  The representations of the Borrower
contained herein shall be true at the time of the execution of this Loan
Agreement and at all times during the term of this Loan Agreement.

(p)           Continuing Disclosure Covenant.  To the extent that the Trust, in
its sole discretion, determines, at any time prior to the termination of the
Loan Term, that the Borrower is a material “obligated person”, as the term
“obligated person” is defined in Rule 15c2-12, with materiality being determined
by the Trust pursuant to criteria established, from time to time, by the Trust
in its sole discretion and set forth in a bond resolution or official statement
of the Trust, the Borrower hereby covenants that it will authorize and provide
to the Trust, for inclusion in any preliminary official statement or official
statement of the Trust, all statements and information relating to the Borrower
deemed material by the Trust for the purpose of satisfying Rule 15c2-12 as well
as Rule 10b-5 promulgated pursuant to the Securities Exchange Act of 1934, as
amended or supplemented, including any successor regulation or statute thereto
(“Rule 10b-5”), including certificates and written representations of the
Borrower evidencing its compliance with Rule 15c2-12 and Rule 10b-5; and the
Borrower hereby further covenants that the Borrower shall execute and deliver
the Continuing Disclosure Agreement, in substantially the form attached hereto
as Exhibit H, with such revisions thereto prior to execution and delivery
thereof as the Trust shall determine to be necessary, desirable or convenient,
in its sole discretion, for the purpose of satisfying Rule 15c2-12 and the
purposes and intent thereof, as Rule 15c2-12, its purposes and intent may
hereafter be interpreted from time to time by the SEC or any court of competent
jurisdiction; and pursuant to the terms and provisions of the Continuing
Disclosure Agreement, the Borrower shall thereafter provide on-going disclosure
with respect to all statements and information relating to the Borrower in
satisfaction of the requirements set forth in Rule 15c2-12 and Rule 10b-5,
including, without limitation, the provision of certificates and written
representations of the Borrower evidencing its compliance with Rule 15c2-12 and
Rule 10b-5.

 
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(q)           Additional Covenants and Requirements.  (i) No later than the Loan
Closing and, if necessary, in connection with the Trust’s issuance of the Trust
Bonds or the making of the Loan, additional covenants and requirements have been
included in Exhibit F hereto and made a part hereof.  Such covenants and
requirements may include, but need not be limited to the maintenance of
specified levels of Environmental Infrastructure System rates, the issuance of
additional debt of the Borrower, the use by or on behalf of the Borrower of
certain proceeds of the Trust Bonds as such use relates to the exclusion from
gross income for federal income tax purposes of the interest on any Trust Bonds,
the transfer of revenues and receipts from the Borrower’s Environmental
Infrastructure System, compliance with Rule 15c2-12, Rule 10b-5 and any other
applicable federal or state securities laws, and matters in connection with the
appointment of the Trustee under the Bond Resolution and any successors
thereto.  The Borrower hereby agrees to observe and comply with each such
additional covenant and requirement, if any, included in Exhibit F hereto as if
the same were set forth herein in its entirety.  (ii) Additional defined terms,
covenants, representations and requirements have been included in Schedule A
attached hereto and made a part hereof.  Such additional defined terms,
covenants, representations and requirements are incorporated in this Loan
Agreement by reference thereto as if set forth in full herein and the Borrower
hereby agrees to observe and comply with each such additional term, covenant,
representation and requirement included in Schedule A as if the same were set
forth in its entirety where reference thereto is made in this Loan Agreement.

 
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ARTICLE III

LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS

SECTION 3.01. Loan; Loan Term.  The Trust hereby agrees to make the Loan as
described in Exhibit A-2 hereof and to disburse proceeds of the Loan to the
Borrower in accordance with Section 3.02 and Exhibit C hereof, and the Borrower
hereby agrees to borrow and accept the Loan from the Trust upon the terms set
forth in Exhibit A-2 attached hereto and made a part hereof; provided, however,
that the Trust shall be under no obligation to make the Loan if (a) at the Loan
Closing, the Borrower does not deliver to the Trust a Borrower Bond and such
other documents required under Section 2.02(l) hereof, or (b) an Event of
Default has occurred and is continuing under the Bond Resolution or this Loan
Agreement.  Although the Trust intends to disburse proceeds of the Loan to the
Borrower at the times and up to the amounts set forth in Exhibit C to pay a
portion of the Costs of the Project, due to unforeseen circumstances there may
not be a sufficient amount on deposit in the Project Fund on any date to make
the disbursement in such amount.  Nevertheless, the Borrower agrees that the
amount actually deposited in the Project Loan Account at the Loan Closing plus
the Borrower’s allocable share of (i) certain costs of issuance and
underwriter’s discount for all Trust Bonds issued to finance the Loan; (ii)
capitalized interest during the Project construction period, if applicable; and
(iii) that portion of the Debt Service Reserve Fund (to the extent the Trust
establishes a Debt Service Reserve Fund pursuant to the Bond Resolution)
attributable to the cost of funding reserve capacity for the Project, if
applicable, shall constitute the initial principal amount of the Loan (as the
same may be adjusted downward in accordance with the definition thereof), and
neither the Trust nor the Trustee shall have any obligation thereafter to loan
any additional amounts to the Borrower.

The Borrower shall use the proceeds of the Loan strictly in accordance with
Section 2.01(h) hereof.

The payment obligations created under this Loan Agreement and the obligations to
pay the principal of the Borrower Bond, Interest on the Borrower Bond and other
amounts due under the Borrower Bond are direct, general irrevocable and
unconditional obligations of the Borrower payable from any source legally
available to the Borrower in accordance with the terms of and to the extent
provided in the Borrower Bond Resolution.

SECTION 3.02.           Disbursement of Loan Proceeds.

(a)           The Trustee, as the agent of the Trust, shall disburse the amounts
on deposit in the Project Loan Account to the Borrower upon receipt of a
requisition executed by an Authorized Officer of the Borrower, and approved by
the Trust, in a form meeting the requirements of Section 5.02(3) of the Bond
Resolution.

(b)           The Trust and Trustee shall not be required to disburse any Loan
proceeds to the Borrower under this Loan Agreement, unless:

(i)           the proceeds of the Trust Bonds shall be available for
disbursement, as determined solely by the Trust;

 
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(ii)           in accordance with the Bond Act, and the Regulations, the
Borrower shall have timely applied for, shall have been awarded and, prior to or
simultaneously with the Loan Closing, shall have closed a Fund Loan for a
portion of the Allowable Costs (as defined in such Regulations) of the Project
in an amount not in excess of the amount of Allowable Costs of the Project
financed by the Loan from the Trust;

(iii)           the Borrower shall have on hand moneys to pay for the greater of
(A) that portion of the total Costs of the Project that is not eligible to be
funded from the Fund Loan or the Loan, or (B) that portion of the total Costs of
the Project that exceeds the actual amounts of the loan commitments made by the
State and the Trust, respectively, for the Fund Loan and the Loan; and

(iv)           no Event of Default nor any event that, with the passage of time
or service of notice or both, would constitute an Event of Default shall have
occurred and be continuing hereunder.

SECTION 3.03.           Amounts Payable.

(a)           The Borrower shall repay the Loan in installments payable to the
Trustee as follows:

(i)           the principal of the Loan shall be repaid annually on the
Principal Payment Dates, in accordance with the schedule set forth in Exhibit
A-2 attached hereto and made a part hereof, as the same may be amended or
modified by any credits applicable to the Borrower as set forth in the Bond
Resolution;

(ii)           the Interest Portion described in clause (i) of the definition
thereof shall be paid semiannually on the Interest Payment Dates, in accordance
with the schedule set forth in Exhibit A-2 attached hereto and made a part
hereof, as the same may be amended or modified by any credits applicable to the
Borrower as set forth in the Bond Resolution; and

(iii)           the Interest Portion described in clause (ii) of the definition
thereof shall be paid upon the date of optional redemption or acceleration, as
the case may be, of the Trust Bonds allocable to any prepaid or accelerated
Trust Bond Loan Repayment.

The obligations of the Borrower under the Borrower Bond shall be deemed to be
amounts payable under this Section 3.03.  Each Loan Repayment, whether satisfied
through a direct payment by the Borrower to the Trustee or (with respect to the
Interest Portion) through the use of Trust Bond proceeds and income thereon on
deposit in the Interest Account (as defined in the Bond Resolution) to pay
interest on the Trust Bonds, shall be deemed to be a credit against the
corresponding obligation of the Borrower under this Section 3.03 and shall
fulfill the Borrower’s obligation to pay such amount hereunder and under the
Borrower Bond.  Each payment made to the Trustee pursuant to this Section 3.03
shall be applied first to the Interest Portion then due and payable, second to
the principal of the Loan then due and payable, third to the payment of the
Administrative Fee, and finally to the payment of any late charges hereunder.

 
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(b)           The Interest on the Loan described in clause (iii) of the
definition thereof shall (i) consist of a late charge for any Trust Bond Loan
Repayment that is received by the Trustee later than the tenth (10th) day
following its due date and (ii) be payable immediately thereafter in an amount
equal to the greater of twelve percent (12%) per annum or the Prime Rate plus
one half of one percent per annum on such late payment from its due date to the
date it is actually paid; provided, however, that the rate of Interest on the
Loan, including, without limitation, any late payment charges incurred
hereunder, shall not exceed the maximum interest rate permitted by law.

(c)           The Borrower shall receive, as a credit against its semiannual
payment obligations of the Interest Portion, the amounts certified by the Trust
pursuant to Section 5.10 of the Bond Resolution.  Such amounts shall represent
the Borrower’s allocable share of the interest earnings on certain funds and
accounts established under the Bond Resolution, calculated in accordance with
Section 5.10 of the Bond Resolution.

(d)           In accordance with the provisions of the Bond Resolution, the
Borrower shall receive, as a credit against its Trust Bond Loan Repayments, the
amounts set forth in the certificate of the Trust filed with the Trustee
pursuant to Section 5.02(4) of the Bond Resolution.

(e)           The Interest on the Loan described in clause (ii) of the
definition thereof shall be paid by the Borrower in the amount of one-half of
the Administrative Fee, if any, to the Trustee semiannually on each February 1
and August 1, commencing August 1, 2011.

(f)           The Borrower hereby agrees to pay to the Trust at the Loan Closing
a “Security Review Fee” in the amount necessary to reimburse the Trust for all
of its costs and expenses incurred in connection with reviewing the additional
security securing the Trust Loan as set forth in Exhibit F hereto, if any,
including without limitation the fees and expenses of any professional advisers
hired by the Trust in connection therewith.

SECTION 3.03A.           Amounts on Deposit in Project Loan Account After
Completion of Project Draws.

(a)           If, on the date which is thirty (30) days following the final date
for which a disbursement of Loan proceeds is scheduled to be made pursuant to
Exhibit C hereto, any amounts remain on deposit in the Borrower’s Project Loan
Account, the Borrower must provide to the Trust and the Department a certificate
of an Authorized Officer of the Borrower (i) stating that the Borrower has not
yet completed the Project, (ii) stating that the Borrower intends to complete
the Project, (iii) setting forth the amount of remaining Loan Proceeds required
to complete the Project, and (iv) providing a revised draw schedule, in a form
similar to Exhibit C hereto and approved by the Department.

(b)           If, on the date which is thirty (30) days following the final date
for which a disbursement of Loan proceeds is scheduled to be made pursuant to a
revised draw schedule certified to the Trust and the Department in accordance
with Section 3.03A(a) hereof, any amounts remain on deposit in the Borrower’s
Project Loan Account, the Borrower must provide to the Trust and the Department
a certificate of an Authorized Officer of the Borrower (i) stating that the
Borrower has not yet completed the Project, (ii) stating that the Borrower
intends to

 
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complete the Project, (iii) setting forth the amount of remaining Loan Proceeds
required to complete the Project, and (iv) providing a revised draw schedule, in
a form similar to Exhibit C hereto and approved by the Department.

(c)           If, on the date which the Borrower has completed the Project, any
amounts remain on deposit in the Borrower’s Project Loan Account, the Borrower
must within thirty (30) days following such date provide to the Trust and the
Department a certificate (i) stating that the Project is complete and (ii)
setting forth the remaining costs, if any, of the Project for which a
disbursement of Loan will be required.

(d)           If the Borrower fails to provide the certificate described in
paragraphs (a), (b) or (c) of this Section 3.03A, when due, or if such
certificate states that the Borrower does not require all or any portion of the
amount on deposit in the Project Loan Account to complete the Project, such
amounts on deposit in the Project Loan Account which are not certified by an
Authorized Officer of the Borrower as being required to complete the Project
(“Excess Project Funds”) shall be applied as follows:

(i)           If Trust Bonds can be redeemed within sixty (60) days of the date
the Borrower is required to provide the certificate described in paragraphs (a),
(b) or (c) of this Section 3.03A, the Excess Project Funds shall be used by the
Trust within such sixty (60) day period to redeem Trust Bonds, including payment
of any pre-payment premium.  The Trust Bonds shall be redeemed in inverse order
of their maturity.  The amount of any maturity redeemed shall not exceed the
same proportion as the Loan bears to all Loans made from proceeds of the Trust
Bonds rounded down to whole denominations or any integral multiple.  The
aggregate amount of Trust Bonds so redeemed shall not be less than the amount of
nonqualified bonds allocable to the Borrower under Treasury Regulations
Sec.1.142-12.  The Excess Project Funds used to redeem Trust Bonds shall be
applied by the Trust as a prepayment of the Borrower’s Loan Repayments with
respect to the redeemed bonds.  Any excess shall be held by Trust invested at a
yield which does not exceed the yield on the Trust Bonds.

(ii)           If Trust Bonds can not be redeemed within sixty (60) days of the
date the Borrower is required to provide the certificate described in paragraphs
(a), (b) or (c) of this Section 3.03A, the Trust shall, within such sixty (60)
day period, (A) deposit all of the Excess Project Funds in a defeasance escrow
established to defease Trust Bonds in inverse order of their maturity, in the
same proportion as the Loan bears to all Loans made from proceeds of the Trust
Bonds, (B) provide the notice to the Internal Revenue Service required pursuant
to Treasury Regulations Sec.1.142-2(c)(2), or any successor income tax
regulations, and (C) apply the Excess Project Funds as a prepayment of the
Borrower’s Loan Repayments for the defeased Trust Bonds.  The aggregate amount
of Trust Bonds so defeased shall not be less than the amount of nonqualified
bonds allocable to the Borrower under Treasury Regulations Sec.1.142-12

SECTION 3.04.           Unconditional Obligations.  The obligation of the
Borrower to make the Loan Repayments and all other payments required hereunder
and the obligation to perform and observe the other duties, covenants,
obligations and agreements on its part contained herein shall be absolute and
unconditional, and shall not be abated, rebated, set-off,

 
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reduced, abrogated, terminated, waived, diminished, postponed or otherwise
modified in any manner or to any extent whatsoever while any Trust Bonds remain
outstanding or any Loan Repayments remain unpaid, for any reason, regardless of
any contingency, act of God, event or cause whatsoever, including (without
limitation) any acts or circumstances that may constitute failure of
consideration, eviction or constructive eviction, the taking by eminent domain
or destruction of or damage to the Project or Environmental Infrastructure
System, commercial frustration of the purpose, any change in the laws of the
United States of America or of the State or any political subdivision of either
or in the rules or regulations of any governmental authority, any failure of the
Trust or the Trustee to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
the Project, this Loan Agreement or the Bond Resolution, or any rights of
set-off, recoupment, abatement or counterclaim that the Borrower might otherwise
have against the Trust, the Trustee or any other party or parties; provided,
however, that payments hereunder shall not constitute a waiver of any such
rights.  The Borrower shall not be obligated to make any payments required to be
made by any other Borrowers under separate Loan Agreements or the Bond
Resolution.

The Borrower acknowledges that payment of the Trust Bonds by the Trust,
including payment from moneys drawn by the Trustee from the Debt Service Reserve
Fund (to the extent the Trust establishes a Debt Service Reserve Fund pursuant
to the Bond Resolution), does not constitute payment of the amounts due under
this Loan Agreement and the Borrower Bond.  If at any time the amount in the
Debt Service Reserve Fund shall be less than the Debt Service Reserve
Requirement as the result of any transfer of moneys from the Debt Service
Reserve Fund to the Debt Service Fund (as all such terms are defined in the Bond
Resolution) as the result of a failure by the Borrower to make any Trust Bond
Loan Repayments required hereunder, the Borrower agrees to replenish (i) such
moneys so transferred and (ii) any deficiency arising from losses incurred in
making such transfer as the result of the liquidation by the Trust of Investment
Securities (as defined in the Bond Resolution) acquired as an investment of
moneys in the Debt Service Reserve Fund, by making payments to the Trust in
equal monthly installments for the lesser of six (6) months or the remaining
term of the Loan at an interest rate to be determined by the Trust necessary to
make up any loss caused by such deficiency.

The Borrower acknowledges that payment of the Trust Bonds from moneys that were
originally received by the Trustee from repayments by the Borrowers of loans
made to the Borrowers by the State, acting by and through the Department,
pursuant to loan agreements dated as of December 1, 2010 by and between the
Borrowers and the State, acting by and through the Department, to finance or
refinance a portion of the Costs of the Environmental Infrastructure Facilities
of the Borrowers, and which moneys were upon such receipt by the Trustee
deposited in the Trust Bonds Security Account (as defined in the Bond
Resolution) does not constitute payment of the amounts due under this Loan
Agreement and the Borrower Bond.

SECTION 3.05. Loan Agreement to Survive Bond Resolution and Trust Bonds.  The
Borrower acknowledges that its duties, covenants, obligations and agreements
hereunder shall survive the discharge of the Bond Resolution applicable to the
Trust Bonds and shall survive the payment of the principal and redemption
premium, if any, of and the interest on the Trust Bonds until the Borrower can
take no action or fail to take any action that could adversely affect the
exclusion from gross income of the interest on the Trust Bonds for purposes of
federal

 
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income taxation, at which time such duties, covenants, obligations and
agreements hereunder shall, except for those set forth in Sections 3.06(a) and
(b) hereof, terminate.

SECTION 3.06.           Disclaimer of Warranties and Indemnification.

(a)           The Borrower acknowledges and agrees that (i) neither the Trust
nor the Trustee makes any warranty or representation, either express or implied,
as to the value, design, condition, merchantability or fitness for particular
purpose or fitness for any use of the Environmental Infrastructure System or the
Project or any portions thereof or any other warranty or representation with
respect thereto; (ii) in no event shall the Trust or the Trustee or their
respective agents be liable or responsible for any incidental, indirect, special
or consequential damages in connection with or arising out of this Loan
Agreement or the Project or the existence, furnishing, functioning or use of the
Environmental Infrastructure System or the Project or any item or products or
services provided for in this Loan Agreement; and (iii) to the fullest extent
permitted by law, the Borrower shall indemnify and hold the Trust and the
Trustee harmless against, and the Borrower shall pay any and all, liability,
loss, cost, damage, claim, judgment or expense of any and all kinds or nature
and however arising and imposed by law, which the Trust and the Trustee may
sustain, be subject to or be caused to incur by reason of any claim, suit or
action based upon personal injury, death or damage to property, whether real,
personal or mixed, or upon or arising out of contracts entered into by the
Borrower, the Borrower’s ownership of the Environmental Infrastructure System or
the Project, or the acquisition, construction or installation of the Project.

(b)           It is mutually agreed by the Borrower, the Trust and the Trustee
that the Trust and its officers, agents, servants or employees shall not be
liable for, and shall be indemnified and saved harmless by the Borrower in any
event from, any action performed under this Loan Agreement and any claim or suit
of whatsoever nature, except in the event of loss or damage resulting from their
own negligence or willful misconduct.  It is further agreed that the Trustee and
its directors, officers, agents, servants or employees shall not be liable for,
and shall be indemnified and saved harmless by the Borrower in any event from,
any action performed pursuant to this Loan Agreement, except in the event of
loss or damage resulting from their own negligence or willful misconduct.

(c)           The Borrower and the Trust agree that all claims shall be subject
to and governed by the provisions of the New Jersey Contractual Liability Act,
N.J.S.A. 59:13-1 et seq. (except for N.J.S.A. 59:13-9 thereof), although such
Act by its express terms does not apply to claims arising under contract with
the Trust.

(d)           In connection with its obligation to provide the insurance
required under Section 2.02(j) hereof:  (i) the Borrower shall include, or cause
to be included, the Trust and its directors, employees and officers as
additional “named insureds” on (A) any certificate of liability insurance
procured by the Borrower (or other similar document evidencing the liability
insurance coverage procured by the Borrower) and (B) any certificate of
liability insurance procured by any contractor or subcontractor for the Project,
and from the later of the date of the Loan Closing or the date of the initiation
of construction of the Project until the date the Borrower receives the written
certificate of Project completion from the Trust, the Borrower shall maintain
said liability insurance covering the Trust and said directors, employees and
officers in good standing; and (ii)

 
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the Borrower shall include the Trust as an additional “named insured” on any
certificate of insurance providing against risk of direct physical loss, damage
or destruction of the Environmental Infrastructure System, and during the Loan
Term the Borrower shall maintain said insurance covering the Trust in good
standing.

The Borrower shall provide the Trust with a copy of each of any such original,
supplemental, amendatory or reissued certificates of insurance (or other similar
documents evidencing the insurance coverage) required pursuant to this Section
3.06(d).

SECTION 3.07.           Option to Prepay Loan Repayments.  The Borrower may
prepay the Trust Bond Loan Repayments, in whole or in part (but if in part, in
the amount of $100,000 or any integral multiple thereof), upon prior written
notice to the Trust and the Trustee not less than ninety (90) days in addition
to the number of days’ advance notice to the Trustee required for any optional
redemption of the Trust Bonds, and upon payment by the Borrower to the Trustee
of amounts that, together with investment earnings thereon, will be sufficient
to pay the principal amount of the Trust Bond Loan Repayments to be prepaid plus
the Interest Portion described in clause (ii) of the definition thereof on any
such date of redemption; provided, however, that, with respect to any prepayment
other than those required by Section 3.03A hereof, any such full or partial
prepayment may only be made (i) if the Borrower is not then in arrears on its
Fund Loan, (ii) if the Borrower is contemporaneously making a full or partial
prepayment of the Fund Loan such that, after the prepayment of the Loan and the
Fund Loan, the Trust, in its sole discretion, determines that the interests of
the owners of the Trust Bonds are not adversely affected by such prepayments,
and (iii) upon the prior written approval of the Trust.  In addition, if at the
time of such prepayment the Trust Bonds may only be redeemed at the option of
the Trust upon payment of a premium, the Borrower shall add to its prepayment of
Trust Bond Loan Repayments an amount, as determined by the Trust, equal to such
premium allocable to the Trust Bonds to be redeemed as a result of the
Borrower’s prepayment.  Prepayments shall be applied first to the Interest
Portion that accrues on the portion of the Loan to be prepaid until such
prepayment date as described in clause (ii) of the definition thereof and then
to principal payments (including premium, if any) on the Loan in inverse order
of their maturity.

SECTION 3.08.           Priority of Loan and Fund Loan.

(a)           The Borrower hereby acknowledges that, to the extent allowed by
law or the Borrower Bond Resolution, any Loan Repayments then due and payable on
the Loan shall be satisfied by the Trustee before any loan repayments on the
Borrower’s Fund Loan shall be satisfied by the Trustee.  The Borrower agrees not
to interfere with any such action by the Trustee.

(b)           The Borrower hereby acknowledges that in the event the Borrower
fails or is unable to pay promptly to the Trust in full any Trust Bond Loan
Repayments under this Loan Agreement when due, then any (i) Administrative Fee
paid hereunder, (ii) late charges paid hereunder, and (iii) loan repayments paid
by the Borrower on its Fund Loan under the related loan agreement therefor, any
of which payments shall be received by the Trustee during the time of any such
Trust Bond Loan Repayment deficiency, shall be applied by the Trustee first to
satisfy such Trust Bond Loan Repayment deficiency as a credit against the
obligations of the Borrower to make payments of the Interest Portion under the
Loan and the Borrower Bond,

 
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second, to the extent available, to make Trust Bond Loan Repayments of principal
hereunder and payments of principal under the Borrower Bond, third, to the
extent available, to pay the Administrative Fee, fourth, to the extent
available, to pay any late charges hereunder, fifth, to the extent available, to
satisfy the repayment of the Borrower’s Fund Loan under its related loan
agreement therefor, and finally, to the extent available, to satisfy the
repayment of the administrative fee under any such related loan agreement.

(c)           The Borrower hereby further acknowledges that any loan repayments
paid by the Borrower on its Fund Loan under the related loan agreement therefor
shall be applied according to the provisions of the Master Program Trust
Agreement.

SECTION 3.09.           Approval of the New Jersey State Treasurer.  The
Borrower and the Trust hereby acknowledge that prior to or simultaneously with
the Loan Closing the New Jersey State Treasurer, in satisfaction of the
requirements of Section 9a of the Act, issued the “Certificate of the New Jersey
State Treasurer Regarding the Approval of the Trust Loan and the Fund Loan” (the
“Treasurer’s Certificate”).  Pursuant to the terms of the Treasurer’s
Certificate, the New Jersey State Treasurer approved the Loan and the terms and
conditions thereof as established by the provisions of this Loan Agreement.
 
 
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ARTICLE IV

ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND

SECTION 4.01.           Assignment and Transfer by Trust.

(a)           The Borrower hereby expressly acknowledges that, other than the
provisions of Section 2.02(d)(ii) hereof, the Trust’s right, title and interest
in, to and under this Loan Agreement and the Borrower Bond have been assigned to
the Trustee as security for the Trust Bonds as provided in the Bond Resolution,
and that if any Event of Default shall occur, the Trustee or any Bond Insurer
(as such term may be defined in the Bond Resolution), if applicable, pursuant to
the Bond Resolution, shall be entitled to act hereunder in the place and stead
of the Trust.  The Borrower hereby acknowledges the requirements of the Bond
Resolution applicable to the Trust Bonds and consents to such assignment and
appointment.  This Loan Agreement and the Borrower Bond, including, without
limitation, the right to receive payments required to be made by the Borrower
hereunder and to compel or otherwise enforce observance and performance by the
Borrower of its other duties, covenants, obligations and agreements hereunder,
may be further transferred, assigned and reassigned in whole or in part to one
or more assignees or subassignees by the Trustee at any time subsequent to their
execution without the necessity of obtaining the consent of, but after giving
prior written notice to, the Borrower.

The Trust shall retain the right to compel or otherwise enforce observance and
performance by the Borrower of its duties, covenants, obligations and agreements
under Section 2.02(d)(ii) hereof; provided, however, that in no event shall the
Trust have the right to accelerate the Borrower Bond in connection with the
enforcement of Section 2.02(d)(ii) hereof.

(b)           The Borrower hereby approves and consents to any assignment or
transfer of this Loan Agreement and the Borrower Bond that the Trust deems to be
necessary in connection with any refunding of the Trust Bonds or the issuance of
additional bonds under the Bond Resolution or otherwise, all in connection with
the pooled loan program of the Trust.

SECTION 4.02.           Assignment by Borrower.  Neither this Loan Agreement nor
the Borrower Bond may be assigned by the Borrower for any reason, unless the
following conditions shall be satisfied:  (i) the Trust and the Trustee shall
have approved said assignment in writing; (ii) the assignee shall have expressly
assumed in writing the full and faithful observance and performance of the
Borrower’s duties, covenants, obligations and agreements under this Loan
Agreement and, to the extent permitted under applicable law, the Borrower Bond;
(iii) immediately after such assignment, the assignee shall not be in default in
the observance or performance of any duties, covenants, obligations or
agreements of the Borrower under this Loan Agreement or the Borrower Bond; and
(iv) the Trust shall have received an opinion of Bond Counsel to the effect that
such assignment will not adversely affect the security of the holders of the
Trust Bonds or the exclusion of the interest on the Trust Bonds from gross
income for purposes of federal income taxation under Section 103(a) of the Code.

 
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ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

SECTION 5.01.           Events of Default.  If any of the following events
occur, it is hereby defined as and declared to be and to constitute an “Event of
Default”:

(a)           failure by the Borrower to pay, or cause to be paid, any Trust
Bond Loan Repayment required to be paid hereunder when due, which failure shall
continue for a period of fifteen (15) days;

(b)           failure by the Borrower to make, or cause to be made, any required
payments of principal, redemption premium, if any, and interest on any bonds,
notes or other obligations of the Borrower issued under the Borrower Bond
Resolution (other than the Loan and the Borrower Bond) or otherwise secured by
all or a portion of the property pledged under the Borrower Bond Resolution,
after giving effect to the applicable grace period;

(c)           failure by the Borrower to pay, or cause to be paid, the
Administrative Fee or any late charges incurred hereunder or any portion thereof
when due or to observe and perform any duty, covenant, obligation or agreement
on its part to be observed or performed under this Loan Agreement, other than as
referred to in subsection (a) of this Section 5.01 or other than the obligations
of the Borrower contained in Section 2.02(d)(ii) hereof and in Exhibit F hereto,
which failure shall continue for a period of thirty (30) days after written
notice, specifying such failure and requesting that it be remedied, is given to
the Borrower by the Trustee, unless the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, that if the
failure stated in such notice is correctable but cannot be corrected within the
applicable period, the Trustee may not unreasonably withhold its consent to an
extension of such time up to 120 days from the delivery of the written notice
referred to above if corrective action is instituted by the Borrower within the
applicable period and diligently pursued until the Event of Default is
corrected;

(d)           any representation made by or on behalf of the Borrower contained
in this Loan Agreement, or in any instrument furnished in compliance with or
with reference to this Loan Agreement or the Loan, is false or misleading in any
material respect;

(e)           a petition is filed by or against the Borrower under any federal
or state bankruptcy or insolvency law or other similar law in effect on the date
of this Loan Agreement or thereafter enacted, unless in the case of any such
petition filed against the Borrower such petition shall be dismissed within
thirty (30) days after such filing and such dismissal shall be final and not
subject to appeal; or the Borrower shall become insolvent or bankrupt or shall
make an assignment for the benefit of its creditors; or a custodian (including,
without limitation, a receiver, liquidator or trustee of the Borrower or any of
its property shall be appointed by court order or take possession of the
Borrower or its property or assets if such order remains in effect or such
possession continues for more than thirty (30) days;

(f)           the Borrower shall generally fail to pay its debts as such debts
become due; and

 
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(g)           failure of the Borrower to observe or perform such additional
duties, covenants, obligations, agreements or conditions as are required by the
Trust and specified in Exhibit F attached hereto and made a part hereof.

SECTION 5.02.           Notice of Default.  The Borrower shall give the Trustee
and the Trust prompt telephonic notice of the occurrence of any Event of Default
referred to in Section 5.01(d) or (e) hereof and of the occurrence of any other
event or condition that constitutes an Event of Default at such time as any
senior administrative or financial officer of the Borrower becomes aware of the
existence thereof.

SECTION 5.03.           Remedies on Default.  Whenever an Event of Default
referred to in Section 5.01 hereof shall have occurred and be continuing, the
Borrower acknowledges the rights of the Trustee and of any Bond Insurer to
direct any and all remedies in accordance with the terms of the Bond Resolution,
and the Borrower also acknowledges that the Trust shall have the right to take,
or to direct the Trustee to take, any action permitted or required pursuant to
the Bond Resolution and to take whatever other action at law or in equity may
appear necessary or desirable to collect the amounts then due and thereafter to
become due hereunder or to enforce the observance and performance of any duty,
covenant, obligation or agreement of the Borrower hereunder.

In addition, if an Event of Default referred to in Section 5.01(a) hereof shall
have occurred and be continuing, the Trust shall, to the extent allowed by
applicable law and to the extent and in the manner set forth in the Bond
Resolution, have the right to declare, or to direct the Trustee to declare, all
Loan Repayments and all other amounts due hereunder (including, without
limitation, payments under the Borrower Bond) together with the prepayment
premium, if any, calculated pursuant to Section 3.07 hereof to be immediately
due and payable, and upon notice to the Borrower the same shall become due and
payable without further notice or demand.

SECTION 5.04.           Attorneys’ Fees and Other Expenses.  The Borrower shall
on demand pay to the Trust or the Trustee the reasonable fees and expenses of
attorneys and other reasonable expenses (including, without limitation, the
reasonably allocated costs of in-house counsel and legal staff) incurred by
either of them in the collection of Trust Bond Loan Repayments or any other sum
due hereunder or in the enforcement of the observation or performance of any
other duties, covenants, obligations or agreements of the Borrower upon an Event
of Default.

SECTION 5.05.           Application of Moneys.  Any moneys collected by the
Trust or the Trustee pursuant to Section 5.03 hereof shall be applied (a) first
to pay any attorneys’ fees or other fees and expenses owed by the Borrower
pursuant to Section 5.04 hereof, (b) second, to the extent available, to pay the
Interest Portion then due and payable, (c) third, to the extent available, to
pay the principal due and payable on the Loan, (d) fourth, to the extent
available, to pay the Administrative Fee, any late charges incurred hereunder or
any other amounts due and payable under this Loan Agreement, and (e) fifth, to
the extent available, to pay the Interest Portion and the principal on the Loan
and other amounts payable hereunder as such amounts become due and payable.

 
-29-

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SECTION 5.06.           No Remedy Exclusive; Waiver; Notice.  No remedy herein
conferred upon or reserved to the Trust or the Trustee is intended to be
exclusive, and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Loan Agreement or now or hereafter existing
at law or in equity.  No delay or omission to exercise any right, remedy or
power accruing upon any Event of Default shall impair any such right, remedy or
power or shall be construed to be a waiver thereof, but any such right, remedy
or power may be exercised from time to time and as often as may be deemed
expedient.  In order to entitle the Trust or the Trustee to exercise any remedy
reserved to it in this Article V, it shall not be necessary to give any notice
other than such notice as may be required in this Article V.

SECTION 5.07.           Retention of Trust’s Rights. Notwithstanding any
assignment or transfer of this Loan Agreement pursuant to the provisions hereof
or of the Bond Resolution, or anything else to the contrary contained herein,
the Trust shall have the right upon the occurrence of an Event of Default to
take any action, including (without limitation) bringing an action against the
Borrower at law or in equity, as the Trust may, in its discretion, deem
necessary to enforce the obligations of the Borrower to the Trust pursuant to
Section 5.03 hereof.

 
-30-

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ARTICLE VI

MISCELLANEOUS

SECTION 6.01.           Notices.  All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when hand delivered or mailed by registered or certified mail, postage prepaid,
to the Borrower at the address specified in Exhibit A-1 attached hereto and made
a part hereof and to the Trust and the Trustee at the following addresses:

(a)           Trust:

New Jersey Environmental Infrastructure Trust
3131 Princeton Pike
Building 6, Suite 201
Lawrenceville, New Jersey  08648
Attention:  Executive Director

(b)           Trustee:

U.S. Bank National Association
21 South Street, 3rd Floor
Morristown, New Jersey  07960
Attention:  Corporate Trust Department

Any of the foregoing parties may designate any further or different addresses to
which subsequent notices, certificates or other communications shall be sent by
notice in writing given to the others.

SECTION 6.02.           Binding Effect.  This Loan Agreement shall inure to the
benefit of and shall be binding upon the Trust and the Borrower and their
respective successors and assigns.

SECTION 6.03.           Severability.  In the event any provision of this Loan
Agreement shall be held illegal, invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate, render unenforceable
or otherwise affect any other provision hereof.

SECTION 6.04.           Amendments, Supplements and Modifications.

(a)           Except as otherwise provided in this Section 6.04, this Loan
Agreement may not be amended, supplemented or modified without the prior written
consent of the Trust and the Borrower and without the satisfaction of all
conditions set forth in Section 11.12 of the Bond Resolution.  Notwithstanding
the conditions set forth in Section 11.12 of the Bond Resolution, (i) Section
2.02(p) hereof may be amended, supplemented or modified upon the written consent
of the Trust and the Borrower and without the consent of the Trustee, any Bond
Insurer or any holders of the Trust Bonds, and (ii) Exhibit H hereto may be
amended, supplemented or modified prior to the execution and delivery thereof as
the Trust, in its sole discretion, shall determine to be necessary, desirable or
convenient for the purpose of satisfying Rule 15c2-12

 
-31-

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and the purpose and intent thereof as Rule 15c2-12, its purpose and intent may
hereafter be interpreted from time to time by the SEC or any court of competent
jurisdiction, and such amendment, supplement or modification shall not require
the consent of the Borrower, the Trustee, any Bond Insurer or any holders of the
Trust Bonds.

SECTION 6.05.           Execution in Counterparts.  This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.

SECTION 6.06.           Applicable Law and Regulations.  This Loan Agreement
shall be governed by and construed in accordance with the laws of the State,
including the Act and the Regulations, which Regulations are, by this reference
thereto, incorporated herein as part of this Loan Agreement.

SECTION 6.07.           Consents and Approvals.  Whenever the written consent or
approval of the Trust shall be required under the provisions of this Loan
Agreement, such consent or approval may only be given by the Trust unless
otherwise provided by law or by rules, regulations or resolutions of the Trust
or unless expressly delegated to the Trustee and except as otherwise provided in
Section 6.09 hereof.

SECTION 6.08.           Captions.  The captions or headings in this Loan
Agreement are for convenience only and shall not in any way define, limit or
describe the scope or intent of any provisions or sections of this Loan
Agreement.

SECTION 6.09.           Benefit of Loan Agreement; Compliance with Bond
Resolution.  This Loan Agreement is executed, among other reasons, to induce the
purchase of the Trust Bonds.  Accordingly, all duties, covenants, obligations
and agreements of the Borrower herein contained are hereby declared to be for
the benefit of and are enforceable by the Trust, the holders of the Trust Bonds
and the Trustee.  The Borrower covenants and agrees to observe and comply with,
and to enable the Trust to observe and comply with, all duties, covenants,
obligations and agreements contained in the Bond Resolution.

SECTION 6.10.           Further Assurances.  The Borrower shall, at the request
of the Trust, authorize, execute, attest, acknowledge and deliver such further
resolutions, conveyances, transfers, assurances, financing statements and other
instruments as may be necessary or desirable for better assuring, conveying,
granting, assigning and confirming the rights, security interests and agreements
granted or intended to be granted by this Loan Agreement and the Borrower Bond.

 
-32-

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IN WITNESS WHEREOF, the Trust and the Borrower have caused this Loan Agreement
to be executed, sealed and delivered as of the date first above written.

   
NEW JERSEY ENVIRONMENTAL
INFRASTRUCTURE TRUST
 
[SEAL]
 
By:
/s/Robert A. Briant, Sr.
     
Robert A. Briant, Sr.
Chairman
ATTEST:
 
             
/s/David E. Zimmer
     
David E. Zimmer
Executive Director
         
 
MIDDLESEX WATER COMPANY
 
[SEAL]
                 
By:
/s/ A. Bruce O’Connor 
ATTEST:
   
A. Bruce O’Connor
      Vice President & CFO /s/ Kenneth J. Quinn      
Kenneth J. Quinn, Secretary
     

 
[signature page]

 
 

--------------------------------------------------------------------------------

 

SCHEDULE A

Certain Additional Loan Agreement Provisions
In addition to the terms defined in subsection (a) of Section 1.01 of this Loan
Agreement, certain additional capitalized terms used in this Loan Agreement
shall, unless the context clearly requires otherwise, have the meanings ascribed
to such additional capitalized terms in this Schedule A.

Additional Definitions:

“Borrower” means Middlesex Water Company, a corporation duly created and validly
existing under the laws of the State of New Jersey.

“Bond Resolution” means the “Environmental Infrastructure Trust Bond Resolution,
Series 2010C”, as adopted by the Board of Directors of the Trust on or about
October 21, 2010, authorizing the issuance of the Trust Bonds, and all further
amendments and supplements thereto adopted in accordance with the provisions
thereof.

“Borrower Bond Resolution” means the indenture of the Borrower entitled
“Indenture of Mortgage” dated as of April 1, 1927, as amended and supplemented
from time to time, in particular by a supplemental indenture detailing the terms
of the Borrower Bond, dated as of December 1, 2010 and entitled “Thirty-NINTH
Supplemental Indenture” (the “Supplemental Indenture”), pursuant to which the
Borrower Bond has been issued.

“Interest Payment Dates” means February 1 and August 1 of each year, commencing
on August 1, 2011.

“Loan” means the loan made by the Trust to the Borrower to finance or refinance
a portion of the Cost of the Project pursuant to this Loan Agreement.  For all
purposes of this Loan Agreement, the amount of the Loan at any time shall be the
initial aggregate principal amount of the Borrower Bond  (which amount equals
the amount actually deposited in the Project Loan Account at the Loan Closing
plus the Borrower's allocable share of certain costs of issuance, and
underwriter's discount for all Trust Bonds issued to finance the Loan), less any
amount of such principal amount that has been repaid by the Borrower under this
Loan Agreement and less any adjustment made pursuant to the provisions of the
Bond Resolution, including, without limitation, Section 5.02(4) thereof,
N.J.A.C. 7:22-4.26 and the appropriations act of the State Legislature
authorizing the expenditure of Trust Bond proceeds to finance a portion of the
Costs of the Project.

“Principal Payment Dates” means August 1 of each year, commencing on August 1,
2012.

SECTION 2.02(e)

Disposition of Environmental Infrastructure System.  The Borrower shall not
permit the disposition of all or substantially all of its Environmental
Infrastructure System, directly or

 
S-1

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indirectly, including, without limitation, by means of sale, lease, abandonment,
sale of stock, statutory merger or otherwise (collectively, a “Disposition”),
except on ninety (90) days' prior written notice to the Trust, and, in any
event, shall not permit a Disposition unless the following conditions are
met:  (i) the Borrower shall, in accordance with Section 4.02 hereof, assign
this Loan Agreement and the Borrower Bond and its rights and interests hereunder
and thereunder to the purchaser or lessee of the Environmental Infrastructure
System, and such purchaser or lessee shall assume all duties, covenants,
obligations and agreements of the Borrower under this Loan Agreement and the
Borrower Bond; and (ii) the Trust shall by appropriate action determine, in its
sole discretion, that such sale, lease, abandonment or other disposition will
not adversely affect (A) the Trust's ability to meet its duties, covenants,
obligations and agreements under the Bond Resolution, (B) the value of this Loan
Agreement or the Borrower Bond as security for the payment of Trust Bonds and
the interest thereon, or (C) the excludability from gross income for federal
income tax purposes of the interest on Trust Bonds then outstanding or that
could be issued in the future.

SECTION 2.02(f)(x)
The Borrower will not have a reserve or replacement fund (within the meaning of
Section 148(d)(1) of the Code) allocable to the Borrower Bond evidencing the
Loan.

 
-2-

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EXHIBIT A-1

Description of Project and Environmental Infrastructure System

 
A-1

--------------------------------------------------------------------------------

 

Middlesex Water Company
1225001-012

EXHIBIT A-1

1) 
Name and Address of Local Unit:

Middlesex Water Company
1500 Ronson Road
Iselin, New Jersey 08830-0452

Attention: Richard M. Risoldi. Vice President - Operations

2) 
Description of the Project:

The proposed project will involve cleaning/relining and spot replacement of
water mains, hydrants, service lines, and valves.  Approximately forty five
thousand feet of 4, 6, 8, 10, 12, 16 and 20-inch diameter water mains will be
relined.  The project will occur in the City of South Amboy. Additional work may
also be performed on an as needed basis in the Townships of Edison, and
Woodbridge, and the Boroughs of Metuchen, South Plainfield and Carteret.

3) 
Description of the Water Treatment System:

The Middlesex Water Company is an investor-owned water utility that provides
water service to retail customers primarily in eastern Middlesex County.  Water
services are now furnished to approximately 58,000 retail customers located in
an area of approximately 55 square miles of New Jersey in Woodbridge Township,
the Boroughs of Metuchen and Carteret, portions of Edison Township and the
Borough of South Plainfield and the City of South Amboy in Middlesex County, and
a portion of the Township of Clark in Union County.
 
The Middlesex Water Company obtains water from both surface and groundwater
sources; however, the principal source of supply is the Delaware and Raritan
Canal, owned by the State of New Jersey and operated as a water resource by the
New Jersey Water Supply Authority.

 
 

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EXHIBIT A-2

Description of Loan
 
See Schedule to Specimen Borrower Bond (Exhibit D hereto)

 
A-2

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EXHIBIT B

Basis for Determination of Allowable Project Costs

 
B-1

--------------------------------------------------------------------------------

 

Middlesex Water Company
1225001-012

EXHIBIT B

Basis for the Determination of Allowable Costs

The determination of the costs allowable for assistance from the New Jersey
Environmental Infrastructure Financing Program is presented below:

Cost Classification
 
Application Amount
   
Allowable Amount
 
1.  Administrative Expenses
  $ 99,000     $ 97,900  
2.  Other Costs
  $ …0     $ …0  
3.  Engineering Fees
  $ 160,000     $ 160,000  
4.  Building Costs
  $ 3,300,000     $ 3,263,330  
5.  Contingencies
  $ 165,000     $ 138,770  
6.  Allowance for Planning and Design
  $ 276,000     $ 276,000  
7.  Sub-Total
  $ 4,000,000     $ 3,936,000  
8.  DEP Fee (Financed Portion (50%))
          $ 39,360  
9.  Total Project Costs
  $ 4,000,000     $ 3,975,360                    
A.  Fund Loan (50% of Sub-Total)
          $ 1,968,000  
B.  Trust Loan (50% of Sub-Total)
          $ 1,968,000  
C.  DEP Fee (Financed Portion (50%))
          $ 39,360  

As a result of the review by the New Jersey Department of Environmental
Protection, various line items may have been revised resulting in a change of
the allowable costs for this project.  The basis for the determination of the
allowable costs is as follows:

1.
Administrative Expenses:

The total amount requested for this line item on the application was
$99,000.  The allowable administrative expense is authorized to be 3% of the
total allowable building costs (Line Item No. 4).  Therefore, the amount for the
administrative line item is $3,263,330 X 0.03 = $97,900.

Allowable Administrative Expenses are $97,900.

2.
Other Costs:

The amount requested for this line item on the application was $0.  Therefore,
the total allowable amount for this line item is $   0.

Allowable Other Costs are $0.

 
 

--------------------------------------------------------------------------------

 
 
Middlesex Water Company
1225001-012
 

3.
Engineering Fees:

The amount requested for this line item on the application was $160,000.

Allowable Engineering Fees are $160,000.

4.
Building Costs:

The amount requested for this line item on the application was $3,300,000.  Due
to the limit of local authorization amount, the Sub-Total line item is limited
to $3,936,000. This amount is therefore reduced to $3,263,330.

Allowable Building Costs are $3,263,330.

5.
Contingencies:

The amount requested for this line item on the application was $165,000.  The
allowable amount is authorized to be 5% of the allowable building
cost.  Therefore, the allowable amount for this line item is $3,263,330 X 0.05 =
$163,167.  However, this line item is reduced to $138,770 due to the limit of
local authorization amount.

Allowable Contingencies are $138,770.

6.
Allowance for Planning and Design:

The amount requested for this line item on the application was $276,000.. The
allowable amount for this line item based on the allowable building costs and
the planning and design allowance as per N.J.A.C. 7:22-5.12 is as follows:

$250,000 + 0.12(3,263,330 – 1,000,000) = $521,600
At the request of the applicant the amount is reduced to $276,000.

Allowable Planning and Design Allowance is $276,000.

7.
Sub-Total:

The total amount applied for was $4,000,000.  The subtotal line item amount is
$3,936,000.

 
 

--------------------------------------------------------------------------------

 
 
Middlesex Water Company
1225001-012
 

8.
DEP Fee:

This item represents the DEP Loan Surcharge or Loan Origination Fee imposed by
DEP as a portion of the cost of the project of the borrower.  This DEP Loan
Surcharge or Loan Origination Fee is a portion of the cost of the project that
has been incurred for engineering and environmental services provided by DEP for
the borrower in connection with, and as a condition precedent to, the inclusion
of the project of the borrower in the 2010 Financing Program of the Trust, 50%
of which will be financed for the Borrower as part of the Trust Loan made by the
Trust to the Borrower from the proceeds of the Trust bonds sold as part of the
2010 Financing Program, 50% of which will be imposed as an annual administrative
fee upon the Borrower by DEP (pursuant to the terms of the Fund Loan agreement
and invoices evidencing such obligation to be submitted to the Borrower by or on
behalf of DEP), and paid semi-annually by the Borrower to DEP in eight (8) equal
installments commencing September 1, 2011 (regardless of the date of
commencement of Fund Loan principal amortization).  Upon the issuance of the
Trust bonds, the Trust shall direct the Trustee for the Trust bonds to transfer
to DEP from the Project Fund that portion (50%) of the DEP Loan Surcharge or
Loan Origination Fee financed thereby and allocable to the Borrower.  The DEP's
authority to assess a Loan Surcharge or Loan Origination Fee was established
pursuant to P.L. 2002, c.34 approved on July 1, 2002.

DEP Fee = $3,936,000 x 2% = $78,720.

$78,720 x .50 = $39,360 (financed through the Trust Loan and paid to DEP upon
closing of the Trust Loan)

$78,720 x .50 = $39,360 (paid as an annual administrative fee to DEP in 8 equal
semiannual installments, commencing September 1, 2011).

9.
Total Project Costs:

The total project costs are (Sub-Total + DEP Fee) $3,975,360.

I.      Disbursement to Borrower is $3,936,000.

Fund Share is $1,968,000 (50%)
Trust Share is $1,968,000 (50%)

II.           Disbursement to DEP is $39,360.

 
 

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EXHIBIT C

Estimated Disbursement Schedule

 
C-1

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Middlesex Water Company
1225001-012

EXHIBIT C
1. Disbursement Schedule

The following is a schedule of the estimated disbursements for this
loan.  Disbursements to the Borrower for any given month shall not exceed the
amounts indicated below plus any undisbursed from the previous months.

Year
Month
 
Fund Share (50%) Borrower Disbursement ($)
   
Trust Share (50%) Borrower Disbursement ($)
   
Trust Share
DEP
Disbursement ($)
   
Total
   
 
 
 
   
 
   
 
   
 
 
2010
December
                *39,360       *39,360                                  
2011
January
                             
February
                             
March
    75,000       75,000             $ 150,000    
April
    250,000       250,000             $ 500,000    
May
    325,000       325,000             $ 650,000    
June
    325,000       325,000             $ 650,000    
July
    350,000       350,000             $ 700,000    
August
    350,000       350,000             $ 700,000    
September
    200,000       200,000             $ 400,000    
October
    93,000       93,000             $ 186,000                                  
                                       
Total
    $ 1,968,000     $ 1,968,000     $ 39,360     $ 3,975,360  

* This represents that portion (50%) of the DEP Loan Surcharge or Loan
Origination Fee that has been financed for the Borrower through the Trust
Loan.  No action is required on the part of the Borrower.  The Trust will make a
single transfer to DEP, through the Trust’s Trustee, on behalf of each Borrower
in 2010 Financing Program for purposes of implementing this disbursement.

 
 

--------------------------------------------------------------------------------

 

Middlesex Water Company
1225001-012

2. Project Schedule

The Borrower shall expeditiously initiate and complete the project in accordance
with the project schedule which was submitted as part of the loan application
repeated below.  Failure to promptly initiate and complete the Project may
result in the imposition of sanctions under N.J.A.C. 7:22-3.40 through 3.44 and
N.J.A.C. 7:22-4.40 through 4.44.  In addition, failure to promptly award all
subagreement(s) for building the Project within 12 months of the date of this
loan may result in a limitation on allowable costs as provided by N.J.A.C.
7:22-5.4 (d) 4.  This limitation provides that costs incurred under contracts
awarded after 12 months from the date of this loan are unallowable unless a
specific extension has been granted by the Department, in the case of a Fund
Loan, and the Trust, in the case of a Trust Loan.

EVENT
DATE
   
Advertisement:
 
Water Mains
October 10, 2010
   
Bid Receipt:
 
Water Mains
January 11, 2011
   
Award:
 
Water Mains
February 11, 2011
   
Issuance of Notice to Proceed:
 
Water Mains
March 11, 2011
   
Completion of Construction:
 
Water Mains
October 11, 2011
   
Initiation of Operation:
 
Water Mains
October 11, 2011
   
Project Peformance Certification:
 
Water Mains
October 11, 2012

 
 

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EXHIBIT D

Specimen Borrower Bond

 
D-1

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EXHIBIT E

Opinions of Borrower’s Bond Counsel and General Counsel

 
E-1

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EXHIBIT F

Additional Covenants and Requirements

None.

 
F-1

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EXHIBIT G

General Administrative Requirements for the
State Environmental Infrastructure Financing Program

INSERT NJDEP Exhibit G

 
G-1

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EXHIBIT H

Form of Continuing Disclosure Agreement

INSERT Form of Continuing Disclosure Agreement
 
 
 H-1

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