Article II - Representations and Warranties

3176897NJAW Proposal Mark-Up

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE BOROUGH

Section 2.1. REPRESENTATIONS AND WARRANTIES OF THE BOROUGH. Except as set forth in the disclosure schedule accompanying this Agreement and initialed by the Parties (the “Disclosure Schedule”), which is attached as Exhibit H, the Borough represents and warrants to the Buyer that the statements contained in this Article II are correct and complete as of the date of this Agreement. The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered paragraphs contained in this Article II.

(A)

Organization of the Borough. The Borough is a public body corporate and politic in Somerset County in the State of New Jersey.

(B)

Authorization of Transaction. The Borough has full right and authority to execute and deliver this Agreement and to perform its obligations hereunder.

(C)

Title to Real Property. The Borough is the sole owner and has good and marketable title to each fee parcel of real property included in the Wastewater System, and leasehold interest, license or easement in all other real property necessary for ownership and operation of the Wastewater System. A detailed listing of all such interests in real property is set forth on Schedule I to Exhibit F.

(D)

Assets. The Borough has clear, good and marketable title to all of the assets comprising the Wastewater System, free and clear of all encumbrances. None of the assets are leased or on loan by the Borough to a third party. The Wastewater System constitutes all of the assets and property that, together with the rights granted in the Transaction Documents, are necessary for the ownership and operation of the Wastewater System. Upon Closing, Buyer shall continue to be vested with good title in the Wastewater System

(E)

No Litigation. To the best of the Borough’s knowledge, there is no litigation, either at law or in equity, nor any proceedings before any commission or regulatory body pending, or threatened against the Borough, in any way that would adversely affect its ability to perform its obligations under the Agreement.

(F)

No Default. To the best of the Borough’s knowledge, the Borough is not in default of any provisions of law, charter, by-laws, contract, franchise, rules or regulations of any governmental agency or any instrument to which it is a party and which in any way affects the Wastewater System.

(G)

No Reimbursement Obligations. To the best of the Borough’s knowledge, the Borough is not party to any wastewater extension agreement or other contract which, if assigned to the Buyer, would obligate the Buyer by rebate, reimbursement, or other payment to return moneys to third parties by reason of installation of some portion of the Wastewater System.