EXHIBIT 4.14
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CONNECTICUT DEVELOPMENT AUTHORITY
AND
THE CONNECTICUT WATER COMPANY
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LOAN AGREEMENT
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DATED AS OF OCTOBER 1, 2003
CONNECTICUT DEVELOPMENT AUTHORITY
$14,930,000 WATER FACILITIES REFUNDING REVENUE BONDS
(THE CONNECTICUT WATER COMPANY PROJECT - 2003C SERIES)
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TABLE OF CONTENTS
PAGE
PREAMBLE .................................................................................. 1
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions....................................................................... 3
Section 1.2. Interpretation.................................................................... 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the Authority.................................................. .9
Section 2.2. Representations by the Borrower................................................... 10
ARTICLE III
THE LOAN
Section 3.1. Loan Clauses...................................................................... 12
Section 3.2. Other Amounts Payable............................................................. 12
Section 3.3. Manner of Payment................................................................. 13
Section 3.4. Obligation Unconditional.......................................................... 13
Section 3.5. Securities Clauses................................................................ 13
Section 3.6. Issuance of Bonds................................................................. 13
Section 3.7. Effective Date and Term........................................................... 13
Section 3.8. No Additional Bonds............................................................... 14
ARTICLE IV
THE PROJECT
Section 4.1. Completion of the Project......................................................... 15
Section 4.2. Borrower Contribution............................................................. 15
Section 4.3. No Warranty Regarding Condition, Suitability or Cost of Project................... 15
Section 4.4. Taxes............................................................................. 15
Section 4.5. Insurance......................................................................... 16
Section 4.6. Compliance with Law............................................................... 16
Section 4.7. Maintenance and Repair............................................................ 16
Section 4.8. Disposition of Project Realty by Borrower......................................... 17
Section 4.9. Leasing of the Project Realty and the Project Equipment........................... 17
Section 4.10. Project Equipment................................................................ 17
ARTICLE V
CONDEMNATION DAMAGE AND DESTRUCTION
Section 5.1. No Abatement of Payments Hereunder................................................ 18
Section 5.2. Project Disposition Upon Condemnation, Damage or Destruction...................... 18
Section 5.3. Application of Net Proceeds of Insurance or Condemnation.......................... 18
ARTICLE VI
COVENANTS
Section 6.1. The Borrower to Maintain its Corporate Existence; Conditions under which
Exceptions Permitted.... ....................................................... 19
Section 6.2. Indemnification, Payment of Expenses, and Advances................................ 19
Section 6.3. Incorporation of Tax Regulatory Agreement; Payments Upon Taxability............... 21
Section 6.4. Public Purpose Covenants.......................................................... 22
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Section 6.5. Further Assurances and Corrective Instruments..................................... 22
Section 6.6. Covenant by Borrower as to Compliance with Indenture.............................. 22
Section 6.7. Assignment of Agreement or Note................................................... 22
Section 6.8. Inspection........................................................................ 23
Section 6.9. Default Notification.............................................................. 23
Section 6.10.Covenant Against Discrimination................................................... 23
Section 6.11.Covenant to Provide Disclosure.................................................... 23
Section 6.12.Covenant Against Issuing Additional Debt Secured by the Mortgage.................. 23
Section 6.13.Annual Reporting Requirements..................................................... 23
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default................................................................. 24
Section 7.2. Remedies on Default............................................................... 25
Section 7.3. Remedies on Public Purpose Default................................................ 26
Section 7.4. No Duty to Mitigate Damages....................................................... 27
Section 7.5. Remedies Cumulative............................................................... 27
ARTICLE VIII
PREPAYMENT PROVISIONS
Section 8.1. Optional Prepayment............................................................... 28
Section 8.2. Notices and Sources of Prepayment................................................. 29
Section 8.3. Mandatory Prepayment on Taxability................................................ 29
Section 8.4. Mandatory Prepayment for Deceased Bondholder Redemption........................... 29
ARTICLE IX
GENERAL
Section 9.1. Indenture......................................................................... 30
Section 9.2. Benefit of and Enforcement by Bondholders......................................... 30
Section 9.3. Force Majeure..................................................................... 30
Section 9.4. Amendments........................................................................ 30
Section 9.5. Notices........................................................................... 30
Section 9.6. Prior Agreements Superseded....................................................... 31
Section 9.7. Execution of Counterparts......................................................... 31
Section 9.8. Time 31
Section 9.9. Separability of Invalid Provisions................................................ 31
Section 9.10.Third Party Beneficiaries......................................................... 31
Section 9.11.Governing Law..................................................................... 31
APPENDICES
Appendix A - Form of Promissory Note
Appendix B - Description of Project Realty
Appendix C - Description of Project Equipment
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CONNECTICUT DEVELOPMENT AUTHORITY
THE CONNECTICUT WATER COMPANY
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and dated as of October 1, 2003, by and
between the CONNECTICUT DEVELOPMENT AUTHORITY, a body corporate and politic
constituting a public instrumentality and political subdivision of the State of
Connecticut, and THE CONNECTICUT WATER COMPANY, a corporation organized and
existing under the laws of the State of Connecticut,
WITNESSETH THAT:
WHEREAS, the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23yy, as amended (the "Act"), declares that
there is a continuing need in the State (1) for industrial development and
activity to provide and maintain employment and tax revenues and to control,
▇▇▇▇▇ and prevent pollution to protect the public health and safety, (2) for the
development of recreation facilities to promote tourism, provide and maintain
employment and tax revenues, and promote the public welfare, (3) for the
development of commercial and retail sales and service facilities in urban areas
to provide and maintain construction and permanent employment and tax revenues,
to improve conditions of deteriorated physical development, slow economic growth
and eroded financial health of the public and private sectors in urban areas and
to revitalize the economy of urban areas, and (4) for assistance to public
service businesses providing transportation and utility services in the State,
and that the availability of financial assistance and suitable facilities are
important inducements to industrial and commercial enterprises to remain or
locate in the State and to provide industrial, recreation, urban and public
service projects; and
WHEREAS, the Act provides that (1) the term "project" as used therein
means any facility, plant, works, system, building, structure, utility, fixture
or other real property improvement located in the State, and the land on which
it is located or which is reasonably necessary in connection therewith, which is
of a nature or which is to be used or occupied by any person for purposes which
would constitute it as an economic development project, recreation project,
urban project, public service project or health care project, and any real
property improvement reasonably related thereto, and (2) a project may also
include or consist exclusively of machinery, equipment or fixtures; and
WHEREAS, the Act provides that the Authority shall have power to
determine the location and character of, and extend credit or make loans to any
person for the planning, designing, acquiring, improving and equipping of, a
project which may be secured by loan, lease or sale agreements, contracts and
other instruments, upon such terms and conditions as the Authority shall
determine to be reasonable, to require the inclusion in any contract, loan
agreement or other instrument of such provisions for the construction, use,
operation, maintenance and financing of the project as the Authority may deem
necessary or desirable, to issue its bonds for such purposes, subject to the
approval of the Treasurer of the State, and, as security for the payment of the
principal or redemption price, if any, of and interest on any such bonds, to
pledge or assign such a loan, lease or sale agreement and the revenues and
receipts derived by the Authority from such a project; and
WHEREAS, the Authority has heretofore issued and sold $15,000,000 of
its Water Facilities Refunding Revenue Bonds (The Connecticut Water Company
Project - 1992 Series) ($14,640,000 of which were outstanding as of the date of
this Loan Agreement) (the "Prior Obligations"), the proceeds of which were used
to refund in full the Authority's Water Facilities Revenue Bonds (The
Connecticut
Water Company Project - 1987 Series) (the "1987 Bonds"), the proceeds of which
were used to finance various capital improvements constituting a portion of the
Borrower's existing water system (the "Project"); and
WHEREAS, the Authority has by a resolution adopted June 18, 2003
authorized the issuance of $15,000,000 principal amount of its Water Facilities
Refunding Revenue Bonds (The Connecticut Water Company Project - 2003C Series)
for the purpose of refunding in full the Prior Obligations; and
WHEREAS, pursuant to such resolution the Bonds (as hereinafter defined)
are to be secured by an Indenture of Trust of even date herewith, by and between
the Authority and U.S. Bank National Association, as Trustee; and
WHEREAS, the Bonds shall be special obligations of the Authority,
payable solely from the revenues or other receipts, funds or monies to be
derived by the Authority under this Agreement or the Indenture and from any
amounts otherwise available under the Indenture for the payment of the Bonds;
and
WHEREAS, the Authority proposes with the proceeds of the Bonds to make
a loan to the Borrower and the Borrower proposes to borrow such proceeds from
the Authority for the purpose of refunding the Prior Obligations issued by the
Authority to refund the 1987 Bonds, which 1987 Bonds were issued to finance the
acquisition, construction and installation of the Project; and
WHEREAS, the Borrower acknowledges that the Authority is providing
refinancing for the Project in furtherance of the Authority's corporate purposes
under the Act, that the accomplishment of these purposes is dependent upon the
compliance of the Borrower with its covenants contained in this Agreement, that
the Authority has a resulting interest in the Project, and that the Borrower's
use of and interest in the Project as provided hereby are in furtherance of the
discharge of a public purpose; and
WHEREAS, the Connecticut Department of Public Utility Control (the
"DPUC") has approved the issuance of the Note;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, covenants and agreements herein set forth, the Authority and
the Borrower, each binding itself, its successors and assigns, do mutually
promise, covenant and agree as follows (provided that in the performance of the
agreements of the Authority herein contained, any obligation it may incur for
the payment of money shall not be an obligation, debt or liability of the State
or any municipality thereof and neither the State nor any municipality thereof
shall be liable on any obligation so incurred, but any such obligation shall be
payable solely out of the revenues or other receipts, funds or monies to be
derived by the Authority under this Agreement or the Indenture and from any
amounts otherwise available under the Indenture for the payment of the Bonds):
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS. For the purposes of this Agreement, the
following words and terms shall have the respective meanings set forth as
follows, and any capitalized word or term used but not defined herein is used as
defined in the Indenture:
"Act" means the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-la through 32-23yy, as amended.
"Agreement" means this Loan Agreement and any amendments and
supplements hereto.
"Authority" means the Connecticut Development Authority, a body
corporate and politic constituting a public instrumentality and political
subdivision of the State of Connecticut, duly organized and existing under the
laws of the State, and any body, board, authority, agency or other political
subdivision or instrumentality of the State which shall hereafter succeed to the
powers, duties and functions thereof.
"Authorized Representative" means, in the case of the Authority, the
Chairman or Vice Chairman, the President, any Executive Vice President, Deputy
Director or any Senior Vice President or any Vice President thereof and, in the
case of the Borrower, the Chairman, the President and Chief Executive Officer,
the Vice President-Chief Financial Officer and Treasurer, and any Vice
President, Assistant Treasurer or Secretary thereof and, when used with
reference to the performance of any act, the discharge of any duty or the
execution of any certificate or other document, any officer, employee or other
person authorized to perform such act, discharge such duty or execute such
certificate or other document.
"Beneficial Owner" shall have the meaning specified in Section 2.3(F)
of the Indenture. If any person claims to the Trustee to be a Beneficial Owner,
for purposes of Section 2.4(C) of the Indenture, such person shall prove such
claim to the satisfaction of the Trustee with such documentation and signature
guaranties as the Trustee may request.
"Bonds" means the $14,930,000 Water Facilities Refunding Revenue Bonds
(The Connecticut Water Company Project - 2003C Series) authorized and issued
pursuant to Section 2.3 of the Indenture.
"Bond Counsel" means Winston & ▇▇▇▇▇▇ LLP or such other nationally
recognized bond counsel selected by the Authority and reasonably satisfactory to
the Borrower and the Trustee.
"Bond Insurance Policy" means the financial guaranty insurance policy
issued by the Bond Insurer insuring the payment when due of the principal of and
interest on the Bonds as provided therein.
"Bond Insurer" means XL Capital Assurance Inc., a financial guaranty
insurance company incorporated under the laws of the State of New York, and its
successors and assigns.
"Borrower" means (i) The Connecticut Water Company, a corporation
organized and existing under the laws of the State of Connecticut, and its
successors and assigns and (ii) any surviving, resulting or transferee
corporation as provided in Section 6.1 hereof.
"Business Day" means any day (i) that is not a Saturday or Sunday, (ii)
that is a day on which banks located in Hartford, Connecticut and New York, New
York are not required or authorized to remain closed, (iii) that is a day on
which banking institutions in all of the cities in which the principal offices
of
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the Trustee and the Paying Agent are located and are not required or authorized
to remain closed and (iv) that is a day on which the New York Stock Exchange,
Inc. is not closed.
"Code" means the Internal Revenue Code of 1986, as amended and
regulations promulgated thereunder.
"Debt Service Fund" means the special trust fund so designated,
established pursuant to Section 5.1 of the Indenture.
"DTC" or "The Depository Trust Company" shall mean the limited-purpose
trust company organized under the laws of the State of New York which shall act
as securities depository for the Bonds, and any successor thereto.
"Determination of Taxability" means with respect to the Bonds (1) a
ruling by the Internal Revenue Service, (2) the receipt by the owner of any of
the Bonds from the Internal Revenue Service of a notice of assessment and demand
for payment and (provided the Borrower has been afforded the opportunity to
participate at its own expense in all appeals and proceedings to which such
owner of the Bonds is a party relating to such assessment and demand for
payment) the expiration of the appeal period provided therein if no appeal is
taken or, if an appeal is taken by such owner as provided in Section 6.3 of this
Agreement within the applicable appeal period which has the effect of staying
the demand for payment, a final unappealable decision by a court of competent
jurisdiction, or (3) the admission in writing by the Borrower, in any case to
the effect that the interest on any Bonds is includable in the gross income for
federal income tax purposes (other than for purposes of any alternative minimum
tax, environmental tax or foreign branch profits tax) of an owner or former
owner thereof, other than for a period during which such owner or former owner
is or was a "Substantial User" of the Project financed by such Bonds or a
"Related Person" as such terms are defined in the Code. For purposes of this
definition, the term owner means the Beneficial Owner of the Bonds so long as
the Book-Entry System is in effect.
"DPUC" means the State Department of Public Utilities Control.
"Disclosure Agreement" means the agreement by and between the Borrower
and U.S. Bank National Association, as dissemination agent, dated the date of
the initial delivery of the Bonds, providing for the provision of certain
information subsequent to the issuance of the Bonds.
"Event of Default" means an Event of Default as defined in subsection
7.1 hereof.
"Favorable Opinion of Bond Counsel" means an opinion of Bond Counsel
addressed to the Authority, the Bond Insurer, the Bank and the Trustee to the
effect that the action proposed to be taken is not prohibited by the laws of the
State or the Indenture and will not adversely affect any exclusion of interest
on the Bonds from gross income for federal income tax purposes.
"Financing Documents" (1) when used with respect to the Borrower, means
this Agreement, the Tax Regulatory Agreement, the Note, the Disclosure Agreement
and the general certificate of the Borrower delivered in connection with the
issuance of the Bonds, but shall not include the Mortgage, and (2) when used
with respect to the Authority, means any of the foregoing documents and
agreements to which the Authority is a direct party. The Financing Documents do
not include any documents or agreements to which the Borrower is not a direct
party, including the Bonds or the Indenture.
"Indenture" means the Indenture of Trust relating to the Bonds, of even
date herewith, by and between the Authority and the Trustee, together with all
indentures supplemental thereto made and entered into in accordance therewith.
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"Interest Payment Date" shall mean March 1, 2004 and each March 1 and
September 1 thereafter on which interest is payable on the Bonds as provided in
the forms of the Bonds.
"Moody's" means ▇▇▇▇▇'▇ Investors Services, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and their assigns, and if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Authority, at the direction of the Borrower, by notice
to the Trustee and the Borrower.
"Mortgage" means the Indenture of Mortgage and Deed of Trust, dated as
of June 1, 1956, between the Borrower and U.S. Bank National Association
(successor to The Connecticut Bank and Trust Company), as Mortgage Bond
Indenture Trustee, as amended as of the date hereof and as may be amended
hereafter.
"Mortgage Bond Indenture Trustee" means U.S. Bank National Association,
acting as Mortgage Bond Indenture Trustee pursuant to the Mortgage.
"Net Proceeds" when used with respect to any insurance or condemnation
award, means the gross proceeds from such award less all expenses (including
attorney's fees and expenses and any extraordinary expenses) incurred by the
Trustee in the collection thereof.
"Note" means the promissory note of the Borrower to the Authority,
dated the date of initial delivery of the Bonds in the form attached as Appendix
A to this Agreement, and any amendments or supplements made in conformity with
this Agreement and the Indenture.
"Outstanding", when used with reference to a Bond or Bonds, as of any
particular date, means all Bonds which have been authenticated and delivered
under the Indenture, except:
(1) any Bonds canceled by the Trustee because of payment
or redemption prior to maturity or surrendered to the Trustee for
cancellation;
(2) any Bond (or portion of a Bond) paid or redeemed or
for the payment or redemption of which there has been separately set
aside and held in the Debt Service Fund either:
(a) monies in an amount sufficient to effect
payment of the principal or applicable Redemption Price
thereof, together with accrued interest on such Bond to the
payment or redemption date, which payment or redemption date
shall be specified in irrevocable instructions given to the
Trustee to apply such monies to such payment on the date so
specified; or
(b) obligations of the kind described in
subsection 12.1(B) of the Indenture in such principal amounts,
of such maturities, bearing such interest and otherwise having
such terms and qualifications as shall be necessary to provide
monies in an amount sufficient to effect payment of the
principal or applicable Redemption Price of such Bond,
together with accrued interest on such Bond to the payment or
redemption date, which payment or redemption date shall be
specified in irrevocable instructions given to the Trustee to
apply such obligations to such payment on the date so
specified; or
(c) any combination of (a) and (b) above;
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(3) Bonds in exchange for or in lieu of which other Bonds
shall have been authenticated and delivered under Article III of the
Indenture; and
(4) any Bond deemed to have been paid as provided in
subsection 12.1 of the Indenture.
"Paying Agent" means any paying agent for the Bonds appointed pursuant
to Section 9.10 of the Indenture (and may include the Trustee), and its
successor or successors and any other corporation which may at any time be
substituted in its place in accordance with the Indenture.
"Permitted Encumbrances" mean, as of any particular date, (i) the lien
of the Mortgage, (ii) liens and encumbrances permitted by the Mortgage, (iii)
liens for taxes not yet due and payable, (iv) any lien created by this Agreement
and the Indenture, (v) utility, access and other easements and rights-of-way,
that will not interfere with or impair the value or use of the Project as herein
provided, (vi) any mechanic's, laborer's, materialman's, supplier's or vendor's
lien or right in respect thereof if payment is not yet due and payable and for
which statutory lien rights exist, (vii) such minor defects, irregularities,
easements, and rights-of- way (including agreements with any railroad the
purpose of which is to service the railroad siding) as normally exist with
respect to property similar in character to the Project and which do not
materially impair the value or use of the property affected thereby for the
purpose for which it was acquired hereunder, and (viii) any mortgage, lien,
security interest or other encumbrance to which the Authority and the Bond
Insurer may consent as provided in Section 4.8 hereof.
"Principal User" means any principal user of the Project within the
meaning of Section 144(a)(2)(B) of the Code, including without limitation any
person who is a greater-than-10-percent-owner (or if none, the person(s) who
holds the largest ownership interest in the Project), lessee or user of more
than 10% of the Project measured either by occupiable space or fair rental value
under any formal or informal agreement or, under the particular facts and
circumstances, anyone who is a principal customer of the Project. The term
"principal customer" means any person, who purchases output of the Project under
a contract if the percentage of output taken or to be taken by such person,
multiplied by a fraction the numerator of which is the term of such contract and
the denominator of which is the economic life of the Project, exceeds 10%. In
the case of a person who purchases output of an electric or thermal energy, gas,
water or other similar facility, such person is a principal customer if the
total output purchased by such person during any one year period beginning with
the date the facility is placed in service is more than 10 percent of the
facility's output during each such period. Co-owners or co-lessees who are
shareholders in a corporation or who are collectively treated as a partnership
subject to subchapter K under section 761(a) of the Code are not treated as
Principal Users merely by reason of their ownership of corporate or partnership
interests.
"Prior Obligations" means the $14,640,000 aggregate principal amount of
the Authority's Water Facilities Refunding Revenue Bonds (The Connecticut Water
Company Project - 1992 Series).
"Project" means the Borrower's interest in the Project Realty and other
interests in the real property, and in all Project Equipment wherever located
and whether now owned or hereafter acquired or refinanced in whole or in part
with the proceeds of the Bonds and any additions and accessions thereto,
substitutions therefor and replacements, improvements, extensions and
restorations thereof, described in the appendices hereto, as amended from time
to time in accordance with this Agreement.
"Project Equipment" means all personal property, goods, leasehold
improvements, machinery, equipment, furnishings, furniture, fixtures, tools and
attachments wherever located and whether now owned or hereafter acquired,
refinanced in whole or in part with the proceeds of the Bonds, and any additions
and accessions thereto, substitutions therefor and replacements thereof,
including, without
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limitation the Project Equipment described in Appendix C hereto, as amended from
time to time in accordance herewith.
"Project Realty" means the realty and other interests in the real
property refinanced in whole or in part from the proceeds of the Bonds, together
with all replacements, improvements, extensions, substitutions, restorations and
additions thereto which are made pursuant hereto, including without limitation,
the Project Realty described in Appendix B, as amended from time to time in
accordance herewith.
"Redemption Price" means, when used with respect to a Bond or a portion
thereof, the principal amount of such Bond or portion thereof plus the
applicable premium, if any, payable upon redemption thereof pursuant to the
Indenture.
"Related Person" means, with respect to any Principal User, a person
which is a related person (as defined in Section 144(a)(3) of the Code, and by
reference to Sections 267, 707(b) and 1563(a) of the Code, except that 50% is to
be substituted for 80% in Section 1563(a)).
"S&P" means Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc., a corporation organized and existing under the laws of the State of
New York, its successors and their assigns, and, if such corporation or division
shall be dissolved, eliminated, reorganized, or liquidated or shall no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other nationally recognized securities rating agency designated by
the Authority at the direction of the Borrower, by notice to the Trustee and the
Borrower.
"State" means the State of Connecticut.
"Substantial User" means any substantial user of the Project within the
meaning of Section 147(a) of the Code.
"Supplemental Indenture" means any indenture supplemental to the
Indenture or amendatory of the Indenture, adopted by the Authority in accordance
with Article X of the Indenture.
"Tax Incidence Date" means the date as of which interest on the Bonds
becomes or became includable in the gross income of the recipient thereof (other
than the Borrower or another Substantial User or Related Person) for federal
income tax purposes for any cause, as determined by a Determination of
Taxability.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated as
of the date of initial issuance and delivery of the Bonds, among the Authority,
the Borrower and the Trustee, and any amendments and supplements thereto.
"Term", when used with reference to this Agreement, means the term of
this Agreement determined as provided in Article III hereof.
"Trustee" means U.S. Bank National Association, and its successor or
successors hereafter appointed in the manner provided in the Indenture.
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SECTION 1.2. INTERPRETATION. IN THIS AGREEMENT:
(1) The terms "hereby", "hereof", "hereto", "herein",
"hereunder" and any similar terms, as used in this Agreement, refer to
this Agreement, and the term "hereafter" means after, and the term
"heretofore" means before, the date of this Agreement.
(2) Words of the masculine gender mean and include
correlative words of the feminine and neuter genders and words
importing the singular number mean and include the plural number and
vice versa.
(3) Words importing persons include firms, associations,
partnerships (including limited partnerships), trusts, corporations and
other legal entities, including public bodies, as well as natural
persons.
(4) Any headings preceding the texts of the several
Articles and Sections of this Agreement, and any table of contents
appended to copies hereof, shall be solely for convenience of reference
and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
(5) Nothing contained in this Agreement shall be
construed to cause the Borrower to become the agent for the Authority
or the Trustee for any purpose whatsoever, nor shall the Authority or
the Trustee be responsible for any shortage, discrepancy, damage, loss
or destruction of any part of the Project wherever located or for
whatever cause.
(6) All approvals, consents and acceptances required to
be given or made by any person or party hereunder shall be at the sole
discretion of the party whose approval, consent or acceptance is
required.
(7) All notices to be given hereunder shall be given in
writing within a reasonable time unless otherwise specifically
provided.
(8) If any provision of this Agreement shall be ruled
invalid by any court of competent jurisdiction, the invalidity of such
provision shall not affect any of the remaining provisions hereof.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS BY THE AUTHORITY.
The Authority represents and warrants that:
(1) It is a body corporate and politic constituting a
public instrumentality and political subdivision of the State, duly
organized and existing under the laws of the State including the Act.
The Authority is authorized to issue the Bonds in accordance with the
Act and to use the proceeds thereof to refund in full the Prior
Obligations and refinance the Project.
(2) The Authority has complied with the provisions of the
Act and has full power and authority pursuant to the Act to consummate
all transactions contemplated by the Bonds, the Indenture and the
Financing Documents.
(3) By resolution duly adopted by the Authority and still
in full force and effect, the Authority has authorized the execution,
delivery and due performance of the Bonds, the Indenture and the
Financing Documents, and the taking of any and all action as may be
required on the part of the Authority to carry out, give effect to and
consummate the transactions contemplated by this Agreement and the
Indenture, and all approvals necessary in connection with the foregoing
have been received.
(4) The Bonds have been duly authorized, executed,
authenticated, issued and delivered, constitute valid and binding
special obligations of the Authority payable solely from revenues or
other receipts, funds or monies pledged therefor under the Indenture
and from any amounts otherwise available under the Indenture, and are
entitled to the benefit of the Indenture. Neither the State nor any
municipality thereof is obligated to pay the Bonds or the interest
thereon. Neither the faith and credit nor the taxing power of the State
nor any municipality thereof is pledged for the payment of the
principal, and premium, if any, of and interest on the Bonds.
(5) The execution and delivery of the Bonds, the
Indenture and the Financing Documents and compliance with the
provisions thereof, will not conflict with or constitute on the part of
the Authority a violation of, breach of or default under its by-laws or
any statute, indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Authority is a party or by
which the Authority is bound, or, to the knowledge of the Authority,
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Authority or any of its activities or
properties, and all consents, approvals, authorizations and orders of
governmental or regulatory authorities which are required for the
consummation by the Authority of the transactions contemplated thereby
have been obtained.
(6) Subject to the provisions of this Agreement and the
Indenture, the Authority will apply the proceeds of the Bonds to the
purposes specified in the Indenture and the Financing Documents.
(7) There is no action, suit, proceeding or investigation
at law or in equity before or by any court, public board or body
pending or threatened against or affecting the Authority, or to the
best knowledge of the Authority, any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the
transactions contemplated hereby or by the Indenture, or which, in any
way, would adversely affect the validity of the Bonds, or the validity
of or
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enforceability of the Indenture or the Financing Documents, or any
agreement or instrument to which the Authority is a party and which is
used or contemplated for use in consummation of the transactions
contemplated hereby and by the Indenture.
(8) It has not made any commitment or taken any action
which will result in a valid claim for any finders or similar fees or
commitments in respect of the transactions contemplated by this
Agreement.
(9) The representations of the Authority set forth in the Tax
Regulatory Agreement are by this reference incorporated in this
Agreement as though fully set forth herein.
SECTION 2.2. REPRESENTATIONS BY THE BORROWER.
The Borrower represents and warrants that:
(1) The Borrower has been duly incorporated and validly
exists as a corporation under the laws of the State of Connecticut, is
not in violation of any provision of its certificate of incorporation
or its by-laws, has corporate power to enter into and perform the
Financing Documents, and by proper corporate action has duly authorized
the execution and delivery of the Financing Documents.
(2) The Financing Documents constitute valid and legally
binding obligations of the Borrower, enforceable in accordance with
their respective terms, except to the extent that such enforceability
may be limited by bankruptcy or insolvency or other laws affecting
creditors' rights generally or by general principles of equity.
(3) Neither the execution and delivery of the Financing
Documents, the consummation of the transactions contemplated thereby,
nor the fulfillment by the Borrower of or compliance by the Borrower
with the terms and conditions thereof is prevented or limited by or
conflicts with or results in a breach of, or default under the terms,
conditions or provisions of any contractual or other restriction of the
Borrower, evidence of its indebtedness or agreement or instrument of
whatever nature to which the Borrower is now a party or by which it is
bound, or constitutes a material default under any of the foregoing. No
event has occurred and no condition exists which, upon the execution
and delivery of any Financing Documents, constitutes an Event of
Default hereunder or an Event of Default thereunder or, but for the
lapse of time or the giving of notice, would constitute an Event of
Default hereunder or an Event of Default thereunder.
(4) There is no action or proceeding pending or, to the
knowledge of the Borrower, threatened against the Borrower before any
court, administrative agency or arbitration board that may materially
and adversely affect the ability of the Borrower to perform its
obligations under the Financing Documents and all authorizations,
consents and approvals of governmental bodies or agencies required in
connection with the execution and delivery of the Financing Documents
and in connection with the performance of the Borrower's obligations
hereunder or thereunder have been obtained.
(5) The execution, delivery and performance of the
Financing Documents and any other instrument delivered by the Borrower
pursuant to the terms hereof or thereof are within the corporate powers
of the Borrower and have been duly authorized and approved by the board
of directors of the Borrower and are not in contravention of law or of
the Borrower's certificate of incorporation or by-laws, as amended to
date, or of any undertaking or agreement to which the Borrower is a
party or by which it is bound.
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(6) The Borrower represents that it has not made any
commitment or taken any action which will result in a valid claim for
any finders' or similar fees or commitments in respect of the
transactions described in this Agreement other than the fees to various
parties to the transactions contemplated hereby which have been
heretofore paid or provided.
(7) The Project is included within the definition of a
"project" in the Act. The Borrower intends the Project to continue to
be an authorized project under the Act during the Term of this
Agreement.
(8) All amounts shown in Schedule D of the Tax Regulatory
Agreement are eligible costs of a project financed by bonds issued by
the Authority under the Act, and may be refinanced by amounts in the
Refunding Fund under the Indenture. None of the proceeds of the Bonds
will be used directly or indirectly as working capital or to finance
inventory.
(9) The Project is in material compliance with all
applicable federal, State and local laws and ordinances (including
rules and regulations) relating to zoning, building, safety and
environmental quality.
(10) The availability of financial assistance from the
Authority, among other factors, has induced the Borrower to locate the
Project in the State. The Borrower does not presently intend to lease
the Project.
(11) The Borrower will not take or omit to take any action
which action or omission will in any way cause the proceeds of the
Bonds to be applied in a manner contrary to that provided in the
Indenture and the Financing Documents as in force from time to time.
(12) The Borrower has not taken and will not take any
action and knows of no action that any other person, firm or
corporation has taken or intends to take, which would cause interest on
the Bonds to be includable in the gross income of the recipients
thereof for federal income tax purposes. The representations,
certifications and statements of reasonable expectation made by the
Borrower in the Tax Regulatory Agreement and relating to Project
description, composite issues, bond maturity and average asset economic
life, use of Bond proceeds, arbitrage and related matters are hereby
incorporated by this reference as though fully set forth herein.
(13) The Borrower has good and marketable title in fee
simple to the Project Realty subject only to Permitted Encumbrances and
to irregularities or defects in title which may exist which do not
materially impair the use of such properties in the Borrower's
business.
(14) The Borrower has good and merchantable title to the
Project Equipment owned by the Borrower as of the date hereof, free and
clear of liens and encumbrances, other than Permitted Encumbrances.
(15) As of the date of hereof, except for the Mortgage,
neither the Borrower, nor to its knowledge anyone acting on behalf of
the Borrower, has entered into negotiations with any person for the
purpose of undertaking any borrowing concurrently with or subsequent to
the issuance of the Bonds and to be secured wholly or partially by a
lien or encumbrance on the Project or any part thereof, and the
Borrower has no present intention of undertaking any such borrowing.
(16) The Borrower will use all of the proceeds of the
Bonds to refund in full the Prior Obligations and to pay a portion of
the costs of issuance of the Bonds.
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ARTICLE III
THE LOAN
SECTION 3.1. LOAN CLAUSES. (A) Subject to the conditions and in
accordance with the terms of this Agreement, the Authority agrees to make a loan
to the Borrower from the proceeds of the Bonds in the amount of $14,930,000 and
the Borrower agrees to borrow such amount from the Authority.
(B) The loan shall be made at the time of delivery of the Bonds
and receipt of payment therefor by the Authority against receipt by the
Authority of the Note duly executed and delivered to evidence the pecuniary
indebtedness of the Borrower hereunder. As and for the loan the Authority shall
apply the proceeds of the Bonds as provided in the Indenture on the terms and
conditions therein prescribed.
(C) On or before the third Business Day immediately preceding each
due date for the payment of the principal of or interest on the Bonds, until the
principal or Redemption Price, if any, of and interest on the Bonds shall have
been fully paid or provision for the payment thereof shall have been made in
accordance with the Indenture, the Borrower shall make loan payments to the
Trustee for the account of the Authority in an amount which, when added to any
moneys then on deposit in the Debt Service Fund and available therefor, shall be
equal to the amount payable on such due date with respect to the Bonds as
provided in Section 5.3 of the Indenture, including amounts due for the payment
of the principal of and interest on the Bonds. In addition, the Borrower shall
pay to the Trustee, as and when the same shall become due, all other amounts due
under the Financing Documents, together with interest thereon at the then
applicable rate as set forth herein in Section 6.2(G). The Borrower shall have
the option to prepay its loan obligation in whole or in part at the times and in
the manner provided in Article VIII hereof.
(D) Anything herein to the contrary notwithstanding any amount at
any time held in the Principal and Interest Account of the Debt Service Fund by
the Trustee pursuant to this Section shall be credited against the next
succeeding loan payment obligation of the Borrower as provided in subsection
3.1(C) hereof. If, on any due date for payments with respect to the Bonds, the
balance in the Debt Service Fund is insufficient to make such payments, the
Borrower agrees forthwith to pay to the Trustee by no later than 11:00 a.m. on
such due date the amount of the deficiency. If at any time the amount held by
the Trustee in the Debt Service Fund shall be sufficient to pay or provide for
the payment of the Bonds in accordance with Section 12.1 of the Indenture, the
Borrower shall not be obligated to make any further payments under the foregoing
provisions.
SECTION 3.2. OTHER AMOUNTS PAYABLE. (A) The Borrower hereby further
expressly agrees to pay to the Trustee as and when the same shall become due,
(i) an amount equal to the initial and annual fees of the Trustee for the
ordinary services of the Trustee rendered and its ordinary expenses incurred
under the Indenture, including fees and expenses as Paying Agent and the
reasonable fees and expenses of Trustee's counsel, including fees and expenses
as registrar and in connection with preparation and delivery of new Bonds upon
exchanges or transfers, (ii) the reasonable fees and expenses of the Trustee and
any Paying Agents on the Bonds for acting as paying agents as provided in the
Indenture, including reasonable fees and expenses of its counsel, (iii) the
reasonable fees and charges of the Trustee for extraordinary services rendered
by it and extraordinary expenses incurred by it under the Indenture, including
reasonable counsel fees and expenses, and (iv) reasonable fees and expenses of
Bond Counsel and the Authority for any future action requested of either.
(B) The Borrower also agrees to pay all amounts payable by it
under the Financing Documents at the time and in the manner therein provided.
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(C) The Borrower agrees to pay all Rebatable Arbitrages (and
penalties, if any) due to the United States of America pursuant to Section 148
(f) of the Code.
(D) The Borrower also agrees to pay directly to the Authority on
the date of issuance and delivery of the Bonds and on the second anniversary
date of the date of issuance and delivery of the Bonds and each anniversary date
thereafter, a fee equal to 1/8th of 1% of the principal amount of the Bonds
Outstanding, such fee to be payable without notice, demand or invoice of any
kind at the Authority's address as set forth herein or at such other address and
to the attention of such other person, or to such account as the Authority may
stipulate by written notice to the Borrower.
SECTION 3.3. MANNER OF PAYMENT. The payments provided for in Section
3.1 hereof shall be made by any reasonable method providing immediately
available funds at the time and place of payment directly to the Trustee for the
account of the Authority and shall be deposited in the Debt Service Fund. The
additional payments provided for in Section 3.2 shall be made in the same manner
directly to the entitled party or to the Trustee for its own use or disbursement
to the Paying Agents, as the case may be.
SECTION 3.4. OBLIGATION UNCONDITIONAL. The obligations of the Borrower
under the Financing Documents shall be absolute and unconditional, irrespective
of any defense or any rights of setoff, recoupment or counterclaim it might
otherwise have against the Authority or the Trustee. The Borrower will not
suspend or discontinue any such payment or terminate this Agreement (other than
in the manner provided for hereunder) for any cause, including, without limiting
the generality of the foregoing, any acts or circumstances that may constitute
failure of consideration, failure of title, or commercial frustration of
purpose, or any damage to or destruction of the Project, or the taking by
eminent domain of title to or the right of temporary use of all or any part of
the Project, or any change in the tax or other laws of the United States, the
State or any political subdivision of either thereof, or any failure of the
Authority or the Trustee to perform and observe any agreement or covenant,
whether expressed or implied, or any duty, liability or obligation arising out
of or connected with the Financing Documents.
SECTION 3.5. SECURITIES CLAUSES. The Authority hereby notifies the
Borrower and the Borrower acknowledges that, among other things, the Borrower's
loan payments and all of the Authority's right, title and interest under the
Financing Documents to which it is a party (except its rights under Sections
6.2, 6.4, 7.2(A)(2) and 7.3 hereof) are being concurrently with the execution
and delivery hereof endorsed, pledged and assigned without recourse by the
Authority to the Trustee as security for the Bonds as provided in the Indenture.
SECTION 3.6. ISSUANCE OF BONDS. The Authority has concurrently with the
execution and delivery hereof sold and delivered the Bonds under and pursuant to
a resolution adopted by the Authority on June 18, 2003, authorizing their
issuance under and pursuant to the Indenture. The proceeds of sale of the Bonds
shall be applied as provided in Articles IV and V of the Indenture.
SECTION 3.7. EFFECTIVE DATE AND TERM. (A) This Agreement shall become
effective upon its execution and delivery by the parties hereto, shall remain in
full force from such date and, subject to the provisions hereof (including
particularly Articles VII and VIII), shall expire on such date as the Indenture
shall be discharged and satisfied in accordance with the provisions of
subsection 12.1(A) thereof. The Borrower's obligations under Sections 6.2 and
6.3 hereof, however, shall survive the expiration of this Agreement in
accordance with the provisions of such Sections.
(B) Within 60 days of such expiration the Authority shall deliver
to the Borrower any documents and take or cause the Trustee, at the Borrower's
expense, to take any such reasonable actions as may be necessary to effect the
cancellation, release and satisfaction of the Indenture and the Financing
Documents.
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SECTION 3.8. NO ADDITIONAL BONDS. No Additional Bonds on a parity with
the Bonds may be issued under the Indenture.
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ARTICLE IV
THE PROJECT
SECTION 4.1. COMPLETION OF THE PROJECT. (A) The Borrower represents and
warrants that the Project has been completed and that all costs and expenses
incurred in connection with the Project have been paid.
(B) The Borrower affirms that it shall bear all of the costs and
expenses in connection with the preparation of the Financing Documents and the
Indenture, the preparation and delivery of any legal instruments and documents
necessary in connection therewith and their filing and recording, if required,
and all taxes and charges payable in connection with any of the foregoing. Such
costs shall be paid by the Borrower in the manner and to the extent provided in
the Indenture.
SECTION 4.2. BORROWER CONTRIBUTION. The Borrower agrees to deposit with
the Trustee on the date of issuance of the Bonds a contribution in the amount of
$499,250.56 ($210,246.67 of which represents the amount of interest to accrue on
the Prior Obligations from September 1, 2003 to November 29, 2003 and
$289,003.89 of which shall be applied to the payment of the costs of refunding
the Prior Obligations, including, but not limited to, all expenses incurred in
connection with the issuance, execution and sale of the Bonds, including
compensation and expenses of the Trustee, legal, accounting and consulting
expenses and fees, costs of printing and engraving, underwriting expenses and
recording and filing fees), which amount shall be deposited by the Trustee in
the Refunding Fund established pursuant to Section 5.1 of the Indenture.
SECTION 4.3. NO WARRANTY REGARDING CONDITION, SUITABILITY OR COST OF
PROJECT. Neither the Authority, nor the Trustee, nor any Bondholder makes any
warranty, either expressed or implied, as to the Project or its condition or
that it will be suitable for the Borrower's purposes or needs, or that the
insurance required hereunder will be adequate to protect the Borrower's business
or interest.
SECTION 4.4. TAXES. (A) The Borrower will pay when due all material (1)
taxes, assessments, water rates and sewer use or rental charges, (2) payments in
lieu thereof which may be required by law, and (3) governmental charges and
impositions of any kind whatsoever which may now or hereafter be lawfully
assessed or levied upon the Project Realty and the Project Equipment or any part
thereof, or upon the rents, issues, or profits thereof, whether directly or
indirectly. With respect to special assessments or other governmental charges
that may lawfully be paid in installments over a period of years, the Borrower
shall be obligated to pay only such installments as are required to be paid
during the Term.
(B) The Borrower may, at its expense and in its own name, in good
faith contest any such taxes, assessments and other charges and payments in lieu
of taxes including assessments and, in the event of such contest, may permit the
taxes, assessments or other charges or payments in lieu of taxes, including
assessments so contested to remain unpaid, provided either (1) prior written
notice thereof has been given to the Authority and the Trustee and reserves
satisfactory to the Authority are maintained during the period of such contest
and any appeal therefrom, or (2) such contest is conducted in full compliance
with Connecticut General Statutes Chapter 203 unless, in either case, by
nonpayment of such taxes, assessments or other charges or payments, the Project
or any part thereof will be subject to loss or forfeiture, and as a result
thereof a lien or charge will be placed upon any payment pursuant to this
Agreement or the value or operation of the Project Realty and the Project
Equipment will be materially impaired, in which event such taxes, assessments or
other charges or payments shall be paid forthwith. Nothing herein shall preclude
the Borrower, at its expense and in its own name and behalf, from applying for
any tax exemption allowed by the federal government, the State or any political
or taxing subdivision thereof under any existing or future provision of law
which grants or may grant such tax exemption.
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SECTION 4.5. INSURANCE. (A) The Borrower shall insure the Project
Realty and the Project Equipment against loss or damage by fire, flood,
lightning, windstorm, vandalism and malicious mischief and other hazards,
casualties, contingencies and extended coverage risks in such amounts and in
such manner as is required by the Mortgage while the Mortgage is in effect and
thereafter as is customary with companies in the same or similar business, and
shall pay when due the premiums thereon. In the event of loss or damage to the
Project Realty or Project Equipment the Net Proceeds of any insurance provided
under this subsection shall be deposited with the Mortgage Bond Indenture
Trustee as required by the Mortgage while the Mortgage is in effect and
thereafter shall be applied to the manner set forth in Article V hereof. Any
excess proceeds of insurance remaining after application as required by this
Section shall be paid to the Borrower, but only if the Borrower is not in
default under this Agreement. At least ten days prior to the expiration of any
policy required under this Section the Borrower shall furnish evidence
satisfactory to the Authority and the Trustee that such policy has been renewed
or replaced.
(B) The Borrower further agrees that it will at all times carry
public liability insurance with respect to the Project Realty and the Project
Equipment to the extent required by the Mortgage while the Mortgage is in
effect, and, thereafter, in a minimum amount of $5,000,000 with provisions for a
deductible amount not in excess of five percent of the amount of coverage
thereunder. In the event of a public liability occurrence, the Net Proceeds of
the insurance provided under this subsection shall be applied to satisfy or
extinguish the liability, subject to the Mortgage.
(C) As an alternative to the hazard insurance and public liability
insurance requirements of subsections (A) or (B) above the Borrower may, to the
extent permitted by the Mortgage, self-insure against hazard or public liability
risks if (1) self-insurance is the Borrower's customary method of insurance
against such risks in similar circumstances, and (2) the Borrower maintains
self-insurance reserves adequate and available to meet such risks, subject to
the terms of the Mortgage while the Mortgage is in effect. Amounts available
under any such self-insurance arrangement upon the occurrence of an insured
event shall be applied in the same manner as the Net Proceeds of any insurance
maintained pursuant to such subsections would have been applied.
(D) The insurance coverage required by this Section may be
effected under overall blanket or excess coverage policies of the Borrower or
any affiliate and may be carried with any insurer other than an unauthorized
insurer under the Connecticut Unauthorized Insurers Act. The Borrower shall
furnish evidence satisfactory to the Authority or the Trustee, promptly upon the
request of either, that the required insurance coverage is valid and in force.
SECTION 4.6. COMPLIANCE WITH LAW. The Borrower will observe and comply
with all material laws, regulations, ordinances, rules, and orders (including
without limitation those relating to zoning, land use, environmental protection,
air, water and land pollution, wetlands, health, equal opportunity, minimum
wages, worker's compensation and employment practices) of any federal, state,
municipal or other governmental authority relating to the Project Realty and the
Project Equipment except during any period during which the Borrower at its
expense and in its name shall be in good faith contesting its obligation to
comply therewith.
SECTION 4.7. MAINTENANCE AND REPAIR. At its own expense, the Borrower
will keep and maintain or cause the Project Realty and the Project Equipment to
be kept and maintained in accordance with sound water utility operating practice
and in good condition, working order and repair, will not commit or suffer any
waste thereon, and will make all material repairs and replacements thereto which
may be required in connection therewith. Nothing in this Section 4.7 shall (1)
apply to any portion of the Project beyond its useful or economic life or (2)
apply to the use and disposition by the Borrower of any part of the Project in
the ordinary course of its business.
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SECTION 4.8. DISPOSITION OF PROJECT REALTY BY BORROWER. (A) The
Borrower shall not sell, assign, encumber (other than Permitted Encumbrances),
convey or otherwise dispose of its interest in the Project Realty or any part
thereof during the Term without the prior written consent of the Authority and
the Bond Insurer, except as permitted hereby or by the Mortgage while the
Mortgage is in effect.
(B) The Borrower may, however, grant such rights of way or
easements over, across, or under, the Project Realty as shall be necessary or
convenient for the operation or use of the Project Realty, including but not
limited to easements or rights-of-way for utility, roadway, railroad or similar
purposes in connection with the Project Realty, or for the use of the real
property adjacent to or near the Project and owned by or leased to the Borrower,
but only if such rights-of-way or easements shall not materially or adversely
affect the value and operation of the Project Realty.
(C) In the event the Authority consents to any disposition of the
Borrower's interest in the Project Realty, the proceeds of the disposition shall
be deposited with the Mortgage Bond Indenture Trustee while the Mortgage is in
effect and thereafter in the Redemption Account of the Debt Service Fund for the
redemption of the Bonds under the Indenture. No conveyance or release effected
under the provisions of this Section shall entitle the Borrower to any abatement
or diminution of the amounts payable hereunder or under the Note, or relieve the
Borrower of the obligation to perform all of its covenants and agreements under
the Financing Documents.
SECTION 4.9. LEASING OF THE PROJECT REALTY AND THE PROJECT EQUIPMENT.
The Borrower may not lease the Project Realty or the Project Equipment to any
person during the Term of this Agreement without the prior written consent of
the Authority, except as may be permitted by the Mortgage while the Mortgage is
in effect. No lease shall relieve the Borrower from primary liability for any of
its obligations hereunder, and in the event of any such lease the Borrower shall
continue to remain primarily liable for payment of the applicable amounts
specified in Article III hereof and for performance and observance of the other
agreements on its part herein provided to be performed and observed by it to the
same extent as though no lease had been made.
SECTION 4.10. PROJECT EQUIPMENT. (A) The Borrower shall have the right
to install, operate, use, remove and dispose of the Project Equipment in the
normal and ordinary course of its business operations, and shall not be required
to replace any item of Project Equipment which is discarded or sold for scrap.
The Borrower shall not, however, either in one transaction or a series of
transactions sell, convey, transfer, remove or otherwise dispose of more than
20% by value of the Project Equipment without prior notice to and the consent of
the Authority, unless such Project Equipment is replaced by property of similar
value and utility, provided that such dispositions may be made as permitted by
the Mortgage while the Mortgage is in effect.
(B) The Borrower shall maintain with the Trustee separate and
reasonably detailed descriptions of each item of property constituting the
Project Equipment. Without limiting the foregoing, the Project Equipment list
appended hereto at the date of execution and delivery of this Agreement shall be
modified to the extent required by this Section in connection with any
replacement of material items of Project Equipment under this Section or under
Section 5.2 hereof.
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ARTICLE V
CONDEMNATION DAMAGE AND DESTRUCTION
SECTION 5.1. NO ABATEMENT OF PAYMENTS HEREUNDER. If the Project Realty
or Project Equipment shall be damaged or either partially or totally destroyed,
or if title to or the temporary use of the whole or any part thereof shall be
taken or condemned by a competent authority for any public use or purpose, there
shall be no abatement or reduction in the amounts payable by the Borrower
hereunder and the Borrower shall continue to be obligated to make such payments.
In any such case the Borrower shall promptly give written notice thereof to the
Authority and the Trustee.
SECTION 5.2. PROJECT DISPOSITION UPON CONDEMNATION, DAMAGE OR
DESTRUCTION. In the event of any such condemnation, damage or destruction the
Borrower, except as otherwise permitted or required by the Mortgage while the
Mortgage is in effect shall:
(1) At its own cost, repair, restore or reconstruct the
Project Realty and Project Equipment to substantially its condition
immediately prior to such event or to a condition of at least
equivalent value, regardless of whether or not the proceeds of any and
all policies of insurance covering such damage or destruction, or the
amount of the award or compensation or damages recovered on account of
such taking or condemnation, shall be available or sufficient to pay
the cost thereof;
(2) At its own cost, replace or relocate the Project
Realty and Project Equipment at its site in such fashion as to render
the replacement or relocated structures, improvements and items,
machinery, equipment or other property of equivalent value to the
Project Realty and Project Equipment immediately prior to such event;
or
(3) If and as permitted by Section 8.1 hereof, exercise
its option to prepay its loan obligation in full.
SECTION 5.3. APPLICATION OF NET PROCEEDS OF INSURANCE OR CONDEMNATION.
(A) The Net Proceeds from any insurance or condemnation award with respect to
the Project Realty or Project Equipment shall be deposited with the Mortgage
Bond Indenture Trustee while the Mortgage is in effect and thereafter shall be
deposited either (1) in the Renewal Fund and applied to pay for the cost of
making such repairs, restorations, reconstructions, replacements or relocations,
or to reimburse the Borrower, the Authority or the Trustee for payment therefor
from time to time as provided in the Indenture or (2) if prepayment of the loan
is then permitted and the Borrower exercises its option to prepay the loan, in
the Debt Service Fund and applied to the payment of the Note and redemption of
the Bonds.
(B) Notwithstanding the provisions of subsection (A) of this
Section, any insurance or condemnation proceeds attributable to improvements,
machinery, equipment and other property installed in or about the Project Realty
and the Project Equipment, but which do not constitute a portion of the Project
Realty and the Project Equipment, shall be paid directly to the Mortgage Bond
Indenture Trustee while the Mortgage is in effect and thereafter as the Borrower
may direct. The Trustee and the Authority agree to execute such documents as may
be reasonably necessary to accomplish the purposes of this subsection.
(C) Subject to the applicable requirements of the Mortgage, the
Borrower, the Authority and the Trustee shall cooperate and consult with each
other in all matters pertaining to the settlement or adjustment of any and all
claims and demands for damages on account of any taking or condemnation of the
Project Realty or the Project Equipment or pertaining to the settlement,
compromising or arbitration of any claim on account of any damage or destruction
thereof.
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ARTICLE VI
COVENANTS
SECTION 6.1. THE BORROWER TO MAINTAIN ITS CORPORATE EXISTENCE;
CONDITIONS UNDER WHICH EXCEPTIONS PERMITTED. (A) The Borrower covenants and
agrees that, during the Term of this Agreement it will maintain its corporate
existence, will continue to be a corporation either organized under the laws of
or duly qualified to do business as a foreign corporation in the State and in
all jurisdictions necessary in the operation of its business, will not dissolve
or otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it, except as permitted by the
Mortgage while the Mortgage is in effect.
(B) The Borrower may, however, without violating the agreements
contained in this Section, consolidate with or merge into another corporation or
permit one or more other corporations to consolidate with or merge into it, or
sell or otherwise transfer to another corporation all or substantially all of
its assets as an entity and thereafter liquidate or dissolve, if (a) the
Borrower is the surviving, resulting or transferee corporation, as the case may
be, or (b) in the event the Borrower is not the surviving, resulting or
transferee corporation, as the case may be, such corporation (i) is a solvent
corporation either organized under the laws of or duly qualified to do business
as a foreign corporation subject to service of process in the State and (ii)
assumes in writing all of the obligations of the Borrower herein, and under the
Note.
SECTION 6.2. INDEMNIFICATION, PAYMENT OF EXPENSES, AND ADVANCES. (A)
The Borrower agrees to protect, defend and hold harmless the Authority, the
State, agencies of the State, members, servants, agents, directors, officers and
employees, now or forever, of the Authority or the State (each an "Authority
Indemnified Party"), the Trustee and the Paying Agent, agents, directors,
officers and employees, now or forever, of the Trustee and the Paying Agent
(each an "Indemnified Party"), from any claim, demand, suit, action or other
proceeding and any liabilities, costs, and expenses whatsoever by any person or
entity whatsoever, arising or purportedly arising from or in connection with the
Financing Documents, the Indenture, the Bonds, or the transactions contemplated
thereby or actions taken thereunder by any person (including without limitation
the filing of any information, form or statement with the Internal Revenue
Service, if applicable), except for any willful and material misrepresentation,
willful misconduct or gross negligence on the part of the Indemnified Party or
the Authority Indemnified Party or any bad faith on the part of any indemnitee
other than an Authority Indemnified Party.
The Borrower agrees to indemnify and hold harmless any Indemnified
Party against any and all claims, demands, suits, actions or other proceedings
and all liabilities, costs and expenses whatsoever caused by any untrue
statement or misleading statement or alleged untrue statement or alleged
misleading statement of a material fact contained in the written information
provided by the Borrower in connection with the issuance of the Bonds or
incorporated by reference therein or caused by any omission or alleged omission
from such information of any material fact relating to the Borrower or the
Project required to be stated therein or necessary in order to make the
statements made therein in the light of the circumstances under which they were
made, not misleading.
(B) The Authority and the Trustee shall not be liable for any
damage or injury to the persons or property of the Borrower or its members,
directors, officers, agents, servants or employees, or any other person who may
be about the Project due to any act or omission of any person other than the
Authority or the Trustee, respectively, or their respective members, directors,
officers, agents, servants and employees.
(C) The Borrower releases each Indemnified Party from, agrees that
no Indemnified Party shall be liable for, and agrees to hold each Indemnified
Party harmless against, any reasonable attorney
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fees and expenses, expenses or damages incurred because of any investigation,
review or lawsuit commenced by the Trustee or the Authority in good faith with
respect to the Financing Documents, the Indenture, the Bonds and the Project and
the Authority or the Trustee, as the case may be, shall promptly give written
notice to the Borrower with respect thereto.
(D) All covenants, stipulations, promises, agreements and
obligations of the Authority and the Trustee contained herein shall be deemed to
be the covenants, stipulations, promises, agreements and obligations of the
Authority and the Trustee and not of any member, director, officer or employee
of the Authority or the Trustee in its individual capacity, and no recourse
shall be had for the payment of the Bonds or for any claim based thereon or
hereunder against any member, director, officer or employee of the Authority or
the Trustee or any natural person executing the Bonds.
(E) In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect of which
indemnity may be sought against the Borrower, such Indemnified Party shall
promptly notify the Borrower in writing, enclosing a copy of all papers served,
but the omission so to notify the Borrower of any such action shall not relieve
it of any liability which it may have to any Indemnified Party otherwise than
under this Section 6.2. In case any such action shall be brought against any
Indemnified Party and it shall notify the Borrower of the commencement thereof,
the Borrower shall be entitled to participate in and, to the extent that it
shall wish, to assume the defense thereof with counsel satisfactory to such
Indemnified Party, and after notice from the Borrower to such Indemnified Party
of the Borrower's election so to assume the defense thereof, the Borrower shall
not be liable to such Indemnified Party for any subsequent legal or other
expenses attributable to such defense, except as set forth below, other than
reasonable costs of investigation subsequently incurred by such Indemnified
Party in connection with the defense thereof. The Indemnified Party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the employment of counsel by such Indemnified Party has been
authorized by the Borrower, (ii) the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Borrower and the
Indemnified Party in the conduct of the defense of such action (in which case
the Borrower shall not have the right to direct the defense of such action on
behalf of the Indemnified Party); or (iii) the Borrower shall not in fact have
employed counsel satisfactory to the Indemnified Party to assume defense of such
action.
(F) The Borrower also agrees to pay all reasonable or necessary
out-of-pocket expenses of the Authority and the Trustee in connection with the
issuance of the Bonds, the administration of the Financing Documents and the
enforcement of its rights thereunder, including without limitation the costs of
preparation and distribution of closing transcripts relating thereto.
(G) In the event the Borrower fails to pay any amount or perform
any act under the Financing Documents, the Trustee or the Authority may pay the
amount or perform the act, in which event the costs, disbursements, expenses and
reasonable counsel fees and expenses thereof, together with interest thereon
from the date the expense is paid or incurred at the prime interest rate
publicly announced from time to time by the Trustee as a commercial bank plus 1%
shall be an additional obligation hereunder payable upon demand by the Authority
or the Trustee.
(H) The Borrower shall defend, indemnify, and hold the Authority,
its agents, members, officers and employees, and the Trustee and its agents,
directors, officers and employees, harmless from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs, or expenses
of whatever kind or nature, known or unknown, contingent or otherwise, related
to or in connection with the Project, arising out of, or in any way related to,
(i) the presence, disposal, release, or threatened release of any hazardous
materials, asbestos, petroleum or petroleum by-products which are on, from, or
affecting the soil, water, vegetation, buildings, personal property, persons,
animals, or otherwise, except in
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compliance with all applicable federal, State and local laws or regulations;
(ii) any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to hazardous materials, asbestos, petroleum
or petroleum by-products; (iii) any lawsuit brought or threatened, settlement
reached, or government order relating to such hazardous materials, asbestos,
petroleum or petroleum by-products and/or (iv) any violation of laws, orders,
regulations, requirements or demand of government authorities or any policies or
requirements of the Authority which are based upon or in any way related to such
hazardous materials, asbestos, petroleum or petroleum by-products including,
without limitation, reasonable attorney and consultant fees, investigation and
laboratory fees, court costs, and litigation expenses. Notwithstanding the
foregoing, the Borrower shall have no obligation to defend, indemnify and hold
harmless the Authority or the Trustee or their respective agents, members,
officers or employees under this Section 6.2(H) in the event and to the extent
that any such claims, demands, penalties, fines, liabilities, settlements,
damages, costs or other expenses arise out of or result from the willful
misconduct or gross negligence of the Authority or the Trustee or their
respective agents, members, officers or employees. The provisions of this
paragraph shall be in addition to any and all other obligations and liabilities
the Borrower may have to the Authority or the Trustee at common law, and shall
survive the termination of this Agreement.
(I) Any obligation of the Borrower to the Authority under this
Section shall be separate from and independent of the other obligations of the
Borrower hereunder, and may be enforced directly by the Authority against the
Borrower, irrespective of any action taken by or on behalf of the owners of the
Bonds.
(J) The obligations of the Borrower under this section,
notwithstanding any other provisions contained in the Financing Documents, shall
survive the termination of this Agreement and shall be recourse to the Borrower,
and for the enforcement thereof any Indemnified Party shall have recourse to the
general credit of the Borrower.
SECTION 6.3. INCORPORATION OF TAX REGULATORY AGREEMENT; PAYMENTS UPON
TAXABILITY. (A) For purpose of this Section, the term owner means the Beneficial
Owner of the Bonds so long as the Book-Entry System is in effect.
(B) The representations, warranties, covenants and statements of
expectation of the Borrower set forth in the Tax Regulatory Agreement are by
this reference incorporated in this Agreement as though fully set forth herein.
(C) If any owner of the Bonds receives from the Internal Revenue
Service a notice of assessment and demand for payment with respect to interest
on any Bond (except a notice and demand based upon the assertion that the owner
of the Bonds is a Substantial User or Related Person), an appeal may be taken by
the owner of the Bonds at the option of either the owner of the Bonds or the
Borrower. In either case all expenses of the appeal including reasonable counsel
fees and expenses shall be paid by the party taking such appeal, and the owner
of the Bonds and the Borrower shall cooperate and consult with each other in all
matters pertaining to any such appeal, except that no owner of the Bonds shall
be required to disclose or furnish any non-publicly disclosed information,
including, without limitation, financial information and tax returns.
(D) Not later than 180 days following a Determination of
Taxability, the Borrower shall pay to the Trustee an amount sufficient, when
added to the amount then in the Debt Service Fund and available for such
purpose, to retire and redeem all Bonds then Outstanding, in accordance with
Section 2.4 of the Indenture.
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(E) The obligation of the Borrower to make the payments provided
for in this Section shall be absolute and unconditional, and the failure of the
Authority or the Trustee to execute or deliver or cause to be executed or
delivered any documents or to take any action required under this Agreement or
otherwise shall not relieve the Borrower of its obligation under this Section.
Notwithstanding any other provision of this Agreement or the Indenture, the
Borrower's obligations under this Section shall survive the termination of this
Agreement and the Indenture.
(F) The occurrence of a Determination of Taxability shall not be
an Event of Default hereunder but shall require only the performance of the
obligations of the Borrower stated in this Section, the breach of which shall
constitute an Event of Default as provided in Section 7.1 hereof.
SECTION 6.4. PUBLIC PURPOSE COVENANTS. (A) The Borrower covenants that
it will operate the Project for the purposes and in a manner consistent with its
application for assistance to the Authority. The Borrower further covenants and
agrees that it will, throughout the term of this Agreement, (1) comply with all
applicable laws, regulations, ordinances, rules, and orders relating to the
Project as provided in the Financing Documents, (2) maintain the Project in
accordance with the Financing Documents, (3) not cause or permit the Project to
become or remain a public nuisance, (4) not allow any change in the nature of
the occupancy, use or operation of the Project which is substantially
inconsistent with the Borrower's application for assistance to the Authority,
except that the Borrower may, after notice to the Authority, permit any such
change which does not disqualify the Project as an authorized project under the
Act as in effect on the date hereof, and (5) except as permitted hereunder, not
sell, assign, convey, further lease, sublease or otherwise dispose of title to
the Project without the prior written consent of the Authority. Nothing in this
Section is intended to require the Borrower to operate the Project in such
manner as, in the good faith judgment of the Borrower, shall materially and
adversely impair the use and operation of the Project.
(B) A breach of any covenant contained in this Section shall
constitute an Event of Default but, in order to relieve the Authority of the
consequences of unanticipated failure of consideration, shall permit only the
exercise by the Authority of the remedies provided in Section 7.3 hereof.
SECTION 6.5. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. The
Authority and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
Realty or Project Equipment or for carrying out the intention of or facilitating
the performance of this Agreement.
SECTION 6.6. COVENANT BY BORROWER AS TO COMPLIANCE WITH INDENTURE. The
Borrower covenants and agrees that it will comply with the provisions of the
Indenture with respect to the Borrower and that the Trustee and the Bondholders
shall have the power and authority provided in the Indenture. The Borrower
further agrees to aid in the furnishing to the Authority or the Trustee of
opinions that may be required under the Indenture. The Borrower covenants and
agrees that the Trustee shall be entitled to and shall have all the rights,
including the right to enforce against the Borrower the provisions of the
Financing Documents, pertaining to the Trustee notwithstanding the fact that the
Trustee is not a party to the Financing Documents.
SECTION 6.7. ASSIGNMENT OF AGREEMENT OR NOTE. (A) The Borrower may not
assign its rights, interests or obligations hereunder or under the Note except
as may be permitted pursuant to Section 6.1(B) hereof.
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(B) The Authority agrees that it will not assign or transfer any
of the Financing Documents or the revenues and other receipts, funds and monies
to be received thereunder during the Term except to the Trustee as provided in
this Agreement and the Indenture.
SECTION 6.8. INSPECTION. The Authority and its duly authorized agents
shall have (1) the right at all reasonable times, and upon notice sufficient to
permit the Borrower to take actions necessary to comply with any security
regulations then in effect at the Project, to enter upon and to examine and
inspect the Project Realty and the Project Equipment and (2) such rights of
access thereto as may be reasonably necessary for the proper maintenance and
repair thereof in the event of failure by the Borrower to perform its
obligations under this Agreement. The Authority and the Trustee shall also be
permitted, at all reasonable times, to examine the books and records of the
Borrower with respect to the Project Realty and the Project Equipment.
SECTION 6.9. DEFAULT NOTIFICATION. Upon becoming aware of any condition
or event which constitutes, or with the giving of notice or the passage of time
would constitute, an Event of Default, the Borrower shall deliver to the
Authority and the Trustee a notice stating the existence and nature thereof and
specifying the corrective steps, if any, the Borrower is taking with respect
thereto.
SECTION 6.10. COVENANT AGAINST DISCRIMINATION. (A) The Borrower in the
performance of this Agreement will not discriminate or permit discrimination
against any person or group of persons on the grounds of race, color, religion,
national origin, age, sex, sexual orientation, marital status, physical or
learning disability, political beliefs, mental retardation or history of mental
disorder in any manner prohibited by the laws of the United States or of the
State.
(B) The Borrower will comply with the provisions of the resolution
adopted by the Authority on June 14, 1977, as amended, and the policy of the
Authority implemented pursuant thereto concerning the promotion of equal
employment opportunity through affirmative action plans. The resolution requires
that all borrowers receiving financial assistance from the Authority adopt and
implement an affirmative action plan prior to the closing of the loan. The plan
shall be updated annually as long as the Bonds remain Outstanding.
SECTION 6.11. COVENANT TO PROVIDE DISCLOSURE. The Borrower hereby
covenants and agrees that it will execute, comply with and carry out all of the
provisions of the Disclosure Agreement. Notwithstanding any other provision of
this Agreement, failure of the Borrower to comply with the provisions of the
Disclosure Agreement shall not be considered an Event of Default hereunder;
however, the Trustee may, subject to the provisions of Article IX of the
Indenture (and, at the request of the underwriter for the Bonds or the Holders
of at least 25% aggregate principal amount in Outstanding Bonds, shall), or any
Bondholder or Beneficial Owner may take such actions as may be necessary and
appropriate, including seeking mandamus or specific performance by court order,
to cause the Borrower to comply with its obligations under this Section 6.11.
For purposes of this Section, "Beneficial Owner" means any person which (a) has
the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as the owner
of any Bonds for federal income tax purposes.
SECTION 6.12. COVENANT AGAINST ISSUING ADDITIONAL DEBT SECURED BY THE
MORTGAGE. The Borrower shall not issue any additional debt secured by the
Mortgage unless the Bonds are equally and ratably secured by the Mortgage.
SECTION 6.13. ANNUAL REPORTING REQUIREMENTS. (A) The Borrower shall
provide to the Bond Insurer as soon as available, but not later than 120 days
after the end of the respective party's fiscal year, (i) the annual audited
financial statements of Connecticut Water Service, Inc.; (ii) the annual budget
for
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the succeeding year for Connecticut Water Service, Inc.; and (iii) the annual
(unaudited) financial statements of the Borrower.
(B) Simultaneously with the delivery of the Borrower's annual
(unaudited) financial statements, the Borrower shall also deliver to the Bond
Insurer a statement of:
(i) the number of system users as of the end of the fiscal year;
(ii) notification of the withdrawal of any system user comprising
5% or more of the system sales measured in terms of revenue dollars since the
last reporting date;
(iii) any significant plant retirements or expansions planned or
undertaken since the last reporting date;
(iv) maximum and average daily usage for the fiscal year;
(v) updated capital plans for expansion and improvement projects;
and
(vi) results of annual engineering inspections, if any, occurring
at the end of the fiscal year.
(C) The Borrower will permit the Bond Insurer to discuss the
affairs, finances and accounts of the Borrower or any information the Bond
Insurer may reasonably request regarding the security for the Bonds with
appropriate officers of the Borrower. The Borrower will permit the Bond Insurer
to have access to the Project and have access to and make copies of all books
and records relating to the Bonds at any reasonable time.
(D) The Borrower shall provide the Bond Insurer with such
additional information as the Bond Insurer may reasonably request.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(1) Any material representation or warranty made by the
Borrower in the Financing Documents or any certificate, statement, data
or information furnished in writing to the Authority or the Trustee by
the Borrower in connection with the closing of the Bonds or included by
the Borrower in its application to the Authority for assistance proves
at any time to have been incorrect in any material respect when made.
(2) Failure by the Borrower to pay any interest,
principal or premium, if any, that has become due and payable with
respect to the Bonds and the continuance of such failure for more than
five (5) Business Days.
(3) Failure by the Borrower to pay any amount, other than
principal interest or premium with respect to the Bonds, that has
become due and payable with respect to the Bonds or any other amount
due and payable pursuant to the Financing Documents and the continuance
of such failure for more than thirty (30) Business Days.
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(4) Failure by the Borrower to comply with the default
notification provisions of Section 6.9 hereof.
(5) The occurrence of an "Event of Default" under Section
8.1(A) of the Indenture.
(6) Failure by the Borrower to observe or perform any
covenant, condition or agreement hereunder or under the Financing
Documents (other than the Disclosure Agreement) (except those referred
to above and except as provided in Section 6.3(G) hereof with respect
to the occurrence of a Determination of Taxability which, in and of
itself, shall not constitute an Event of Default hereunder but shall
require only the performance of the obligations of the Borrower stated
in Section 6.3(G) hereof, the breach of which shall constitute an Event
of Default hereunder) and (a) continuance of such failure for a period
of sixty (60) days after receipt by the Borrower of written notice
specifying the nature of such failure or (b) if by reason of the nature
of such failure the same cannot be remedied within the sixty-day
period, the Borrower fails to proceed with reasonable diligence after
receipt of the notice to cure the failure.
(7) The Borrower shall (a) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or the like
of itself or of its property, (b) admit in writing its inability to pay
its debts generally as they become due, (c) make a general assignment
for the benefit of creditors, (d) be adjudicated a bankrupt or
insolvent, or (e) commence a voluntary case under the federal
bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with
creditors or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material allegations of
a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding; or corporate action shall be taken by it for the
purpose of effecting any of the foregoing; or if without the
application, approval or consent of the Borrower, a proceeding shall be
instituted in any court of competent jurisdiction, seeking in respect
of the Borrower an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or the like of the Borrower or of all
or any substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding
is being contested by the Borrower in good faith, the same shall
continue undismissed, or pending and unstayed, for any period of 75
consecutive days.
(8) Failure by the Borrower to make when due any payment
of principal or interest required under the provisions of any loan
agreement (after the expiration of any applicable grace periods) to
which the Authority and the Borrower are parties.
SECTION 7.2. REMEDIES ON DEFAULT. (A) Except as provided in Section
6.4(B) hereof, whenever any Event of Default shall have occurred, the Trustee,
or the Authority where so provided herein, may take any one or more of the
following actions:
(1) The Trustee, as and to the extent provided in Article
VIII of the Indenture, may cause all amounts payable under the
Financing Documents to be immediately due and payable without notice or
demand of any kind, whereupon the same shall become immediately due and
payable.
(2) The Authority, without the consent of the Trustee or
any Bondholder, may proceed to enforce the obligations of the Borrower
to the Authority under this Agreement.
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(3) The Trustee may take whatever action at law or in
equity it may have to collect the amounts then due and thereafter to
become due, or to enforce the performance or observance of the
obligations, agreements, and covenants of the Borrower under the
Financing Documents.
(4) The Trustee may exercise any and all rights it may
have under the Financing Documents.
(B) In the event that any Event of Default or any proceeding taken
by the Authority (or by the Trustee on behalf of the Authority) thereon shall be
waived or determined adversely to the Authority, then the Event of Default shall
be annulled and the Authority and the Borrower shall be restored to their former
rights hereunder, but no such waiver or determination shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 7.3. REMEDIES ON PUBLIC PURPOSE DEFAULT. (A) If the Borrower
shall default in the performance of any of the covenants contained in Section
6.4 hereof, and in the event that such default shall also constitute an Event of
Default under Section 7.1 hereof, such Event of Default shall continue for
thirty (30) days without the Trustee or Bondholders instituting the remedial
steps provided for in subsection 7.2(A)(1) hereof or subsection 8.1(B) of the
Indenture, then, in either case, the Authority may, so long as such Event of
Default is continuing, send a notice to the Trustee calling for the acceleration
of all of the Borrower's obligations under the Financing Documents and for the
redemption of all of the Bonds then Outstanding. Any such notice shall set forth
in reasonable detail the default by the Borrower giving rise thereto and shall
specify the date upon which (1) notice of Bond redemption is to be given by the
Trustee (which shall be not less than one hundred twenty days from the date of
the Authority's determination notice) and (2) the redemption of the Bonds is to
occur (which shall be at least thirty (30) days after notice of redemption is
given by the Trustee). Within thirty (30) days following receipt of the notice,
the Trustee shall forward a copy thereof to the Borrower and each registered
Bondholder, together with a copy of Sections 6.4 and 7.3 of this Agreement.
(B) If, within sixty (60) days after the mailing of notice by the
Trustee to the Borrower and the Bondholders, the Trustee receives no objection
(as hereinbelow provided) to such redemption, the Trustee shall give such notice
and effect the acceleration of the Borrower's obligations and the redemption of
all Outstanding Bonds in accordance with the Authority's notice and pursuant to
Section 2.4 (D) of the Indenture. If, however, the Borrower or any Bondholder
disputes the existence of such Event of Default, the Borrower or such Bondholder
shall mail a notice to the Authority and the Trustee containing a statement of
such person's belief with respect to the claimed default. The receipt of such
notice by the Trustee shall serve to suspend the proceedings for redemption of
Bonds initiated by the Authority's notice of default.
(C) If upon receipt of such notice from the Borrower or any
Bondholder, the Authority determines to affirm its earlier determination, either
the Borrower or any Bondholder shall have the right to bring an action in any
court of competent jurisdiction to enjoin the proceedings for the redemption of
such Bonds, and during the pendency of any such action the redemption
proceedings shall be suspended. Neither the Authority, the Borrower nor any
Bondholder shall be responsible for any costs, fees, expenses, or reasonable
counsel fees incurred by any other party in connection with any such action,
other than the Trustee (whose costs, fees and expenses shall be paid by the
Borrower). In the event the Authority is successful in such a proceeding, and a
final judgment is rendered which is not appealable or appealed within sixty (60)
days thereafter finding the Borrower in default under Section 6.4 hereof, the
Trustee shall, promptly upon receipt of notice from the Authority of the entry
of the decision, give notice of the redemption of all Outstanding Bonds under
Section 6.3 of the Indenture, and redeem all such Bonds upon the date fixed for
redemption in the notice (which shall be no more than thirty-five (35) days
after the notice is given). In the event the Borrower or such Bondholders are
successful in such a
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proceeding, and a final judgment is rendered which is not appealable or appealed
within sixty (60) days thereafter finding the Borrower not to be in default
under Section 6.4 hereof, all proceedings for the redemption of Bonds commenced
under this Section shall be terminated. No such judgment, however, shall
prejudice the exercise of the Authority's rights under this Section upon the
occurrence of such subsequent failure of performance under Section 6.4 hereof.
(D) Within fifteen (15) days of the date the Trustee gives notice
of any redemption of Bonds pursuant to Section 7.3(B) above and subject to the
last sentence of Section 7.3(B) above, the Borrower shall pay as a final loan
payment a sum sufficient, together with other funds on deposit with the Trustee
and available for such purpose, to redeem all Bonds then Outstanding under the
Indenture at 100% of the principal amount thereof plus accrued interest to the
redemption date. The Borrower shall also pay or provide for all reasonable and
necessary fees and expenses of the Trustee and any Paying Agent accrued and to
accrue through the date of redemption of all such Bonds.
(E) Nothing contained in this Section shall be deemed to prevent
the Authority or the Borrower from seeking equitable relief if it asserts or
disputes, as the case may be, the existence of an event of a public purpose
default.
SECTION 7.4. NO DUTY TO MITIGATE DAMAGES. Unless otherwise required by
law, neither the Authority, the Trustee nor any Bondholder shall be obligated to
do any act whatsoever or exercise any diligence whatsoever to mitigate the
damages to the Borrower if an Event of Default shall occur.
SECTION 7.5. REMEDIES CUMULATIVE. No remedy herein conferred upon or
reserved to the Authority or the Trustee is intended to be exclusive of any
other available remedy or remedies but each and every such remedy shall be
cumulative and shall be in addition to every remedy given under this Agreement
or now or hereafter existing at law or in equity or by statute. Delay or
omission to exercise any right or power accruing upon any default or failure by
the Authority or the Trustee to insist upon the strict performance of any of the
covenants and agreements herein set forth or to exercise any rights or remedies
upon default by the Borrower hereunder shall not impair any such right or power
or be considered or taken as a waiver or relinquishment for the future of the
right to insist upon and to enforce, by injunction or other appropriate legal or
equitable remedy, strict compliance by the Borrower with all of the covenants
and conditions hereof, or of the right to exercise any such rights or remedies,
if such default by the Borrower be continued or repeated.
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ARTICLE VIII
PREPAYMENT PROVISIONS
SECTION 8.1. OPTIONAL PREPAYMENT. (A) The Borrower shall have, and is
hereby granted, the option to prepay its loan obligation at any time, and from
time to time, on or after September 1, 2008 and to cause the corresponding
optional redemption of the Bonds pursuant to Section 2.4(A) of the Indenture at
such times, in such amounts, and with such premium, if any, for such optional
redemption as set forth in the form of the Bond, by delivering a written notice
to the Trustee in accordance with Section 8.2 hereof, with a copy to the
Authority, setting forth the amount to be prepaid, the amount of Bonds requested
to be redeemed with the proceeds of such prepayment, and the date on which such
Bonds are to be redeemed. Such prepayment must be sufficient to provide monies
for the payment of interest and Redemption Price in accordance with the terms of
the Bonds requested to be redeemed with such prepayment and all other amounts
then due under the Financing Documents. In the event of any complete prepayment
of its loan obligation, the Borrower shall, at the time of such prepayment, also
pay or provide for the payment of all reasonable or necessary fees and expenses
of the Authority, the Trustee and the Paying Agent accrued and to accrue through
the final payment of all the Bonds. Any such prepayments shall be applied to the
redemption of Bonds in the manner provided in Section 6.2 of the Indenture, and
credited against payments due hereunder in the same manner.
(B) The Borrower shall have, and is hereby granted, the option to
prepay its loan obligation in full at any time without premium if any of the
following events shall have occurred, as evidenced in each case by the filing
with the Trustee of a certificate of an Authorized Representative of the
Borrower to the effect that one of such events has occurred and is continuing,
and describing the same:
(1) The Project shall have been damaged or destroyed to
such extent that (a) the Project cannot be reasonably restored within a
period of six (6) months from the date of such damage or destruction to
the condition thereof immediately preceding such damage or destruction,
or (b) the Borrower is thereby prevented or likely to be prevented from
carrying on its normal operation of the Project for a period of six (6)
months from the date of such damage or destruction.
(2) Title to or the temporary use of all or substantially
all of the Project shall have been taken or condemned by a competent
authority, which taking or condemnation results or is likely to result
in the Borrower being thereby prevented or likely to be prevented from
carrying on its normal operation of the Project for a period of six (6)
months.
(3) A change in the Constitution of the State or of the
United States of America or legislative or executive action (whether
local, state, or federal) or a final decree, judgment or order of any
court or administrative body (whether local, state, or federal) that
causes this Agreement to become void or unenforceable or impossible of
performance in accordance with the intent and purpose of the parties as
expressed herein or, imposes unreasonable burdens or excessive
liabilities upon the Borrower with respect to the Project or the
operation thereof.
(4) The operation of any of the Project shall have been
enjoined or shall otherwise have been prohibited by any order, decree,
rule or regulation of any court or of any local, state, or federal
regulatory body, administrative agency or other governmental body for a
period of not less than six months.
(5) Changes in the economic availability of raw
materials, operating supplies or facilities necessary for the operation
of the Project or technological or other changes shall have occurred
which the Borrower cannot reasonably overcome or control and which in
the
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Borrower's reasonable judgment renders the Project unsuitable or
uneconomic for the purposes herein specified or any tax shall be levied
upon payments due under the Note in an amount which the Borrower in its
reasonable judgment believes imposes an unreasonable burden upon the
Borrower.
In any such case the final loan payment shall be a sum sufficient, together with
other funds deposited with Trustee and available for such purpose, to redeem all
Bonds then Outstanding under the Indenture at the redemption price of 100% of
the principal amount thereof plus accrued interest to the redemption date and
all other amounts then due under the Financing Documents, and the Borrower shall
also pay or provide for all reasonable or necessary fees and expenses of the
Authority, the Trustee and Paying Agent accrued and to accrue through final
payment for the Bonds. The Borrower shall deliver a written notice to the
Trustee, with a copy to the Authority, requesting the redemption of the Bonds
under the Indenture, which notice shall have attached thereto the applicable
certificate of the Authorized Representative of the Borrower.
SECTION 8.2. NOTICES AND SOURCES OF PREPAYMENT. To exercise any options
granted in this Article, or to consummate the acceleration of the loan payments
as set forth in this Article, the written notice to the Trustee shall be signed
by an Authorized Representative of the Borrower and shall specify therein the
date of prepayment, which date shall be not less than thirty-five days nor more
than ninety days from the date the notice is mailed. A duplicate copy of any
written notice hereunder shall also be filed with the Authority by the Borrower.
SECTION 8.3. MANDATORY PREPAYMENT ON TAXABILITY. The Borrower shall pay
or cause the prepayment of its loan obligation following a Determination of
Taxability in the manner provided in Section 6.3 of this Agreement.
SECTION 8.4. MANDATORY PREPAYMENT FOR DECEASED BONDHOLDER REDEMPTION.
The Borrower is unconditionally obligated, upon its receipt of notice from the
Trustee pursuant to Section 2.4(D) of the Indenture, to prepay its loan
obligation in amounts sufficient to permit redemption of Bonds eligible for
redemption as specified in Section 2.4(D) of the Indenture. Any such prepayments
shall be made not later than the date of such redemption and applied to the
redemption of Bonds in the manner provided in Section 2.4(D) of the Indenture,
and credited against payments due hereunder.
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ARTICLE IX
GENERAL
SECTION 9.1. INDENTURE. (A) Monies received from the sale of the Bonds
and all loan payments made by the Borrower and all other monies received by the
Authority or the Trustee under the Financing Documents shall be applied solely
and exclusively in the manner and for the purposes expressed and specified in
the Indenture and in the Bonds and as provided in this Agreement.
(B) The Borrower shall have and may exercise all the rights,
powers and authority given the Borrower in the Indenture and in the Bonds, and
the Indenture and the Bonds shall not be modified, altered or amended in any
manner which adversely affects such rights, powers and authority or otherwise
adversely affects the Borrower without the prior written consent of the
Borrower.
SECTION 9.2. BENEFIT OF AND ENFORCEMENT BY BONDHOLDERS. The Authority
and the Borrower agree that this Agreement is executed in part to induce the
purchase by others of the Bonds and for the further securing of the Bonds, and
accordingly that all covenants and agreements on the part of the Authority and
the Borrower as to the amounts payable with respect to the Bonds hereunder are
hereby declared to be for the benefit of the holders from time to time of the
Bonds and may be enforced as provided in the Indenture on behalf of the
Bondholders by the Trustee.
SECTION 9.3. FORCE MAJEURE. In case by reason of force majeure either
party hereto shall be rendered unable wholly or in part to carry out its
obligations under this Agreement, then except as otherwise expressly provided in
this Agreement, if such party shall give notice and full particulars of such
force majeure in writing to the other party within a reasonable time after
occurrence of the event or cause relied on, the obligations of the party giving
such notice, other than the obligation of the Borrower to make the payments
required under the terms hereof or of the Note, so far as they are affected by
such force majeure, shall be suspended during the continuance of the inability
then claimed which shall include a reasonable time for the removal of the effect
thereof, but for no longer period, and such parties shall endeavor to remove or
overcome such inability with all reasonable dispatch. The term "force majeure",
as employed herein, means acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, orders of any kind of the Government of
the United States, of the State or any civil or military authority,
insurrections, riots, epidemics, landslides, lightning, earthquakes, volcanoes,
fires, hurricanes, tornadoes, storms, floods, washouts, droughts, arrests,
restraining of government and people, civil disturbances, explosions, partial or
entire failure of utilities, shortages of labor, material, supplies or
transportation, or any other similar or different cause not reasonably within
the control of the party claiming such inability. It is understood and agreed
that the settlement of existing or impending strikes, lockouts or other
industrial disturbances shall be entirely within the discretion of the party
having the difficulty and that the above requirements that any force majeure
shall be reasonably beyond the control of the party and shall be remedied with
all reasonable dispatch shall be deemed to be fulfilled even though such
existing or impending strikes, lockouts and other industrial disturbances may
not be settled and could have been settled by acceding to the demands of the
opposing person or persons.
SECTION 9.4. AMENDMENTS. This Agreement may be amended only with the
concurring written consent of the Trustee and, if required by the Indenture, of
the owners of the Bonds given in accordance with the provisions of the
Indenture.
SECTION 9.5. NOTICES. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or when mailed by registered or certified mail, postage prepaid, addressed as
follows: if to the Authority, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Program Manager - Loan Administration; if to the Borrower, ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Vice President-Chief Financial
Officer and Treasurer; if to
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the Paying Agent, ▇▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Department; if to the Trustee, ▇▇▇▇▇▇▇ Square,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration; and if to the Bond Insurer, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance. A duplicate copy of each notice,
certificate or other communication given hereunder by either the Authority or
the Borrower to the other shall also be given to the Trustee and the Bond
Insurer. In addition, copies of all amendments to this Agreement which are
consented to by the Bond Insurer shall be sent to S&P. The Authority, the
Borrower, the Paying Agent, the Trustee and the Bond Insurer may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
SECTION 9.6. PRIOR AGREEMENTS SUPERSEDED. This Agreement, together with
all agreements executed by the parties concurrently herewith or in conjunction
with the sale of the Bonds, shall completely and fully supersede all other prior
understandings or agreements, both written and oral, between the Authority and
the Borrower relating to the lending of money and the Project, including those
contained in any commitment letter executed in anticipation of the issuance of
the Bonds but excluding agreements entered into in connection with the financing
of the Project with other bonds previously issued by the Authority.
SECTION 9.7. EXECUTION OF COUNTERPARTS. This Agreement may be executed
simultaneously in several counterparts each of which shall be an original and
all of which shall constitute but one and the same instrument.
SECTION 9.8. TIME. All references to times of day in this Agreement are
references to New York City time.
SECTION 9.9. SEPARABILITY OF INVALID PROVISIONS. In case any one or
more of the provisions contained in this Agreement or in the Note shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.
SECTION 9.10. THIRD PARTY BENEFICIARIES. The Authority and the Borrower
agree that the Trustee, the Paying Agent and the Bond Insurer shall be third
party beneficiaries of this Agreement to the extent that any of the provisions
hereof relate to or provide rights to the Trustee, the Paying Agent or the Bond
Insurer.
SECTION 9.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
reference to its choice of law principles.
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IN WITNESS WHEREOF, the Authority has caused this Agreement to
be executed in its corporate name by a duly Authorized Representative, and the
Borrower has caused this Agreement to be executed in its corporate name by its
duly authorized officer all as of the date first above written.
CONNECTICUT DEVELOPMENT AUTHORITY
By__________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Authorized Representative
THE CONNECTICUT WATER COMPANY
By__________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Finance and
Chief Financial Officer
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APPENDIX A
THE CONNECTICUT WATER COMPANY
FORM OF
PROMISSORY NOTE
2003C SERIES
No. 1 $14,930,000
The Connecticut Water Company, a corporation organized and existing
under the laws of the State of Connecticut (the "Borrower"), for value received,
hereby promises to pay to the order of the Connecticut Development Authority
(the "Authority"), the principal sum of $14,930,000.00 together with interest on
the unpaid principal balance thereof from the date hereof until fully and
finally paid, on the applicable Interest Payment Dates together with all taxes
levied or assessed on this Note or the debt evidenced hereby against the holder
hereof. This Note shall bear interest at the rate of interest borne by the Bonds
referred to below.
This Note has been executed under and pursuant to a Loan Agreement,
dated as of October 1, 2003, between the Authority and the Borrower (the
"Agreement"). This Note is issued to evidence the obligation of the Borrower
under the Agreement to repay the loan made by the Authority from the proceeds of
its $14,930,000 Water Facilities Refunding Revenue Bonds (The Connecticut Water
Company Project - 2003C Series) (the "Bonds"), together with interest thereon
and all other amounts, fees, penalties, premiums, adjustments, expenses,
reasonable counsel fees and other payments of any kind required to be paid by
the Borrower under the Agreement. The Agreement includes provision for mandatory
and optional prepayment of this Note as a whole or in part. Advances made
pursuant to Section 6.2 of the Agreement shall bear interest at the rate
specified in accordance therewith.
The Agreement and this Note (hereinafter, together with the Tax
Regulatory Agreement, collectively referred to as the "Financing Documents")
have been assigned to U.S. Bank National Association (the "Trustee") acting
pursuant to an Indenture of Trust, dated as of October 1, 2003 (the
"Indenture"), between the Authority and the Trustee. Such assignment is made as
security for the payment of the Bonds issued by the Authority pursuant to the
Indenture.
As provided in the Agreement and subject to the provisions thereof,
payments hereon are to be made at the corporate trust office of U.S. Bank
National Association in Hartford, Connecticut, or at the office designated for
such payment by any successor trustee in an amount which, together with other
moneys available therefor pursuant to the Indenture, will equal the amount
payable as principal or Redemption Price, if any, of and interest on the Bonds
outstanding under the Indenture on each such due date.
The Borrower shall make payments on this Note on the dates and in the
amounts specified herein and in the Agreement and in addition shall make such
other payments as are required pursuant to the Financing Documents, the
Indenture and the Bonds. Upon the occurrence of an Event of Default, as defined
in any of the Financing Documents, the principal of and interest on this Note
may be declared immediately due and payable as provided in the Agreement. Upon
any such declaration the Borrower shall pay all cost, disbursements, expenses
and reasonable counsel fees of the Authority and the Trustee in seeking to
enforce their rights under any of the Financing Documents.
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THE BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER HEREOF
MAY DESIRE TO USE. The Borrower further (1) waives diligence, demand,
presentment for payment, notice of nonpayment, protest and notice of protest,
notice of any renewals or extension of this Note, and all rights under any
statute of limitations, (2) agrees that the time for payment of this Note may be
changed and extended in accordance with the provisions of the Indenture, and (3)
consents to the release of all or any part of the security for the payment
thereof at the discretion of the Trustee or the release of any party liable for
this obligation without affecting the liability of the other parties hereto. Any
delay on the part of the Authority or the Trustee in exercising any right
hereunder shall not operate as a waiver of any such right, and any waiver
granted with respect to one default shall not operate as a waiver in the event
of any subsequent default.
IN WITNESS WHEREOF, The Connecticut Water Company has caused this Note
to be executed in its corporate name by its duly authorized officer, dated
October 30, 2003.
THE CONNECTICUT WATER COMPANY
By:_________________________________
Name:
Authorized Representative
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AUTHORITY ENDORSEMENT
Pay to the order of ▇.▇.▇▇▇▇ National Association, as Trustee, without recourse.
CONNECTICUT DEVELOPMENT AUTHORITY
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Authorized Representative
-▇▇-
▇▇▇▇▇▇▇▇ ▇
DESCRIPTION OF PROJECT REALTY
[TO COME]
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APPENDIX C
DESCRIPTION OF PROJECT EQUIPMENT
[TO COME]
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