Document:

bondpurchaseagreement.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    

    

    

    

    

    

    

    BOND
PURCHASE AGREEMENT

    

    

    among

    

    

    CONNECTICUT
DEVELOPMENT AUTHORITY,

    

    THE
CONNECTICUT WATER COMPANY

    

    and

    

    EDWARD D.
JONES & CO., L.P.

    

    

    Dated
December 2, 2009

    

    

    $20,000,000

    Connecticut
Development Authority

    5.10 %
Water Facilities Revenue Bonds

    (The
Connecticut Water Company Project – 2009A Series) (non AMT)

    

    

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    BOND PURCHASE
AGREEMENT

    

    AGREEMENT,
dated December 3, 2009, among the Connecticut Development Authority (the
“Authority”), The Connecticut Water Company (the "Company") and Edwards D. Jones
& Co., L.P. (the "Underwriter"), with respect to the sale and purchase of
the Authority’s $20,000,000 5.10 % Water Facilities Revenue Bonds (The
Connecticut Water Company Project – 2009A Series) (non-AMT) (the "Bonds") on the
terms and subject to the conditions herein set forth:

    

    1.           The
Company has previously filed with the Authority its application for the issuance
of the Bonds by the Authority, and the Authority has authorized the Bonds by a
resolution duly adopted October 21, 2009 (the “Resolution”).  The
Bonds will be special obligations of the Authority payable solely out of the
revenues or other receipts, funds or moneys pledged therefore, and from any
amounts otherwise available to the Trustee for the payment thereof under the
indenture referred to below.  The proceeds of the sale of the Bonds
will be loaned to the Company for use in the acquisition, construction and
installation of certain additions to the water system of the Company (the
“Project”) located in certain municipalities within the State of Connecticut
(the “State”).  All such projects are to be used for water facilities
purposes, all as more particularly described in the Loan Agreement (the
“Agreement”), dated as of December 1, 2009 by and between the Authority and the
Company.  Pursuant to the Agreement, the Company will execute and
deliver to the Authority the Company’s note (the “Note”) to evidence its
indebtedness thereunder.  Payments on the Note shall be applied to the
amounts due on the Bonds.

    

    The Bonds
shall be in all respects as described in, and shall be issued under and pursuant
to, an Indenture of Trust (the “Indenture”), dated as of December 1, 2009,
between the Authority and U.S. Bank National Association, as trustee (the
"Trustee").  In connection with the execution and delivery of the
Indenture, the Authority and the Trustee will execute and deliver a Letter of
Representation (the "Letter of Representation") to The Depository Trust Company
("DTC").  In order to assure the exclusion of interest on the Bonds
from gross income for purposes of federal income taxation, the Company, the
Authority and the Trustee will enter into a Tax Regulatory Agreement relating to
the Bonds, dated as of the date of issuance of the Bonds (the “Tax Regulatory
Agreement”).

    

    In this
Bond Purchase Agreement, the term "Financing Documents" (1) when used with
respect to the Company, means the Agreement, the Note, the Tax Regulatory
Agreement, the Continuing Disclosure Agreement dated as of December 1, 2009
between the Company and the Trustee, as dissemination agent (the “Disclosure
Agreement”), and the general certificate of the Company delivered in connection
with the issuance of the Bonds and (2) when used with respect to the Authority,
means any of the foregoing documents and agreements referred to in (1) above to
which the Authority is a direct party.  The Financing Documents when
such term is used with respect to the Company, do not include any documents or
agreements to which the Company is not a direct party, including the Bonds, the
Indenture or the Letter of Representation.

    

    2.           Subject
to the terms and conditions and upon the basis of the representations
hereinafter set forth, the Authority hereby agrees to sell the Bonds to the
Underwriter and the Underwriter hereby agrees to purchase the Bonds from the
Authority at the purchase price of $20,000,000.00.  The Bonds shall be
dated their date of delivery, shall mature on December 1, 2039 and shall bear
interest at a rate of 5.10 % per annum, payable on June 1 and December 1 in each
year, commencing June 1, 2010.  It will be a condition to the
Authority’s obligation to sell the Bonds to the Underwriter and the obligation
of the Underwriter to purchase the Bonds that all Bonds be sold and delivered by
the Authority and paid for by the Underwriter on the Closing Date, as
hereinafter defined.

    

    3.           The
date of delivery and payment for the Bonds (the "Closing Date") will be December
17, 2009 unless not later than the fifth day preceding such date the Authority,
the Company and the Underwriter agree that the Closing Date will be a specified
date not later than the thirtieth day subsequent to such date, in which event
the Closing Date will be the date so specified.  The Bonds shall be
available for inspection and packaging at least twenty-four hours before the
Closing Date.

    

    The
Authority will authorize the Trustee to authenticate and deliver the Bonds to
the Underwriter through the facilities of DTC, 55 Water Street, New York, New
York, utilizing the FAST System pursuant to which the Trustee will take custody
of the Bonds as agent for DTC, at approximately 11:00 A.M., New York City time
on the Closing Date, in typewritten form, bearing CUSIP numbers, duly executed
and authenticated, registered in the name of Cede & Co., as nominee for DTC,
against payment therefor by wire transfer or other manner payable in immediately
available funds to the Trustee for the account of the Authority.  The
payment for the Bonds to the Authority and the delivery thereof to the
Underwriter shall be made at the offices of Murtha Cullina LLP, City Place I,
185 Asylum Street, Hartford, Connecticut.  The Bonds will be delivered
in the form and denominations and shall be otherwise as described in the
Indenture.

    

    4.           The
Authority represents and warrants that:

    

    (a)           It
is 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 of Connecticut, particularly the State Commerce Act,
constituting Connecticut General Statutes, Sections 32-la through 32-23zz, as
amended (the “Act”).  The Authority is authorized to issue the Bonds
in accordance with the Act and to lend the proceeds thereof to the Company to
finance the improvements described in the Indenture.

     

    (b)           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
this Bond Purchase Agreement, the Bonds, the Resolution, the Indenture and the
Financing Documents, and to issue, sell and deliver the Bonds to the Underwriter
as provided herein.

     

    (c)           The
Resolution has been duly adopted by the Authority and is still in full force and
effect.  The Resolution has authorized the execution, delivery and due
performance of this Bond Purchase Agreement, 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 Bond Purchase Agreement, and all approvals
necessary in connection with the foregoing have been received, except the State
Treasurer’s approval.

     

    (d)           When
delivered to and paid for by the Underwriter in accordance with the terms of
this Bond Purchase Agreement, the Bonds will have been duly authorized,
executed, authenticated, issued and delivered and will constitute valid and
binding special obligations of the Authority payable solely from revenues or
other receipts, funds or moneys pledged therefor under the Indenture and from
any amounts otherwise available therefor under the Indenture, and will be
entitled to the benefit of the Indenture.  Neither the State nor any
municipality thereof will be 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.

     

    (e)           The
execution and delivery of this Bond Purchase Agreement, 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,
except the State Treasurer’s approval.

     

    (f)           Subject
to the provisions of the Agreement and the Indenture, the Authority will apply
the proceeds from the sale of the Bonds to the purposes specified in the
Indenture and the Financing Documents.

     

    (g)           To
the best knowledge of the Authority, 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
and by the Indenture, or which, in any way, would adversely affect the validity
of the Bonds, the  Resolution, the Indenture, the Financing Documents,
this Bond Purchase Agreement, 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 or the exemption
from taxation as set forth therein.

     

    (h)           The
representations and warranties of the Authority contained in Section 2.1 of the
Loan Agreement are true and correct as of the date hereof.

     

    (i)           Any
certificate signed by any Authorized Representative of the Authority under the
Resolution or this Bond Purchase Agreement and delivered to the Underwriter or
to the Trustee shall be deemed a representation and warranty by the Authority to
the Underwriter and the Company as to the statements made therein.

     

    (j)           The
information with respect to the Authority in the Official Statement of the
Authority, dated the date hereof, is correct and complete, except that none of
the representations and warranties herein apply to statements in or omissions
from the Official Statement made in reliance on or in conformity with
information furnished, to the Authority by the Company, or to information under
the headings “THE PROJECT”, “THE BONDS--Book-Entry Only System”, “TAX MATTERS”,
“LEGAL MATTERS” and “INDEPENDENT ACCOUNTANTS”, or to anything contained or
incorporated by reference in the appendices to the Official Statement or
otherwise with respect to the Company.  The Authority has authorized
the use of the Official Statement in both its preliminary and final forms and
delivered duly executed copies thereof in final form to the
Underwriter.

     

    It is
specifically understood and agreed that the Authority makes no representation as
to the financial position or business condition of the Company or any other
person and does not, with respect to the Official Statement or otherwise, except
to the extent the Authority deems the Preliminary Official Statement to be final
as provided in Section 9 hereof, represent or warrant as to any of the
statements, materials (financial or otherwise), representations or
certifications furnished or to be made and furnished by the Company or any other
person in connection with the sale of the Bonds, or as to the correctness,
completeness or accuracy of any of such statements, materials, representations
or certificates.

     

    5.          The
Company represents and warrants that:

    

    (a)          The
Company has been duly organized and validly exists as a corporation under the
laws of the State of Connecticut, having all requisite corporate power to carry
on its business as now constituted.

    

    (b)          The
execution and delivery by the Company of the Financing Documents and this Bond
Purchase Agreement, and all other agreements herein contemplated to be performed
by the Company, and the performance of the conditions herein contained and those
in each of such instruments to be performed are not in contravention of law and
will not conflict with or result in any breach of any of the terms, conditions
or provisions of, or constitute a default under any indenture, mortgage deed of
trust or other agreement or instrument to which the Company is a party, or the
Certificate of Incorporation and any special acts incorporated by reference
therein or Bylaws of the Company, or any order, rule or regulation applicable to
the Company of any court or of any federal or State regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or over any of its properties, or any statute, rule or regulation of any
jurisdiction applicable to the Company, or result in the creation or imposition
of any lien, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of any indenture, agreement or undertaking binding
upon it; and, to the extent required by law, the Connecticut Department of
Public Utility Control (the "DPUC") has approved or waived approval of all
matters relating to the Company’s participation in the transactions contemplated
in the Financing Documents which require such approval or waiver of approval;
such approval or waiver of approval remains in full force and effect in the form
issued; and, assuming that the Bonds are securities described in Section 3(a)(2)
of the Securities Act of 1933, as amended (the "Securities Act") and Section
3(a)(12) and (29) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), no other consent, approval, authorization or other order of any
regulatory body or administrative agency or other governmental body is legally
required for the Company’s participation in connection therewith, except as have
been obtained.

    

    (c)          Except
as disclosed or incorporated by reference in the Official Statement, there is no
action, suit, proceeding, inquiry or investigation, at law or in equity, or
before or by any court, public board or body, pending, or to the knowledge of
the Company threatened, wherein an unfavorable decision, ruling or finding would
(i) in the opinion of the Company, involve the possibility of any judgment or
liability to the extent not covered by insurance which would result in any
material adverse change in the business, properties or operations of the
Company, (ii) materially adversely affect the transactions contemplated by this
Bond Purchase Agreement or (iii) materially adversely affect the validity or
enforceability of the Financing Documents or this Bond Purchase
Agreement.

    

    (d)          The
Company will not take or omit to take any action which action or omission will
in any way cause the proceeds from the sale of the Bonds to be applied in a
manner contrary to that provided in the Financing Documents.

    

    (e)          Except
as disclosed or incorporated by reference in the Official Statement, the Company
is not a party to or bound by any contract, agreement or other instrument, or
subject to any judgment, order, writ, injunction, decree, rule or regulation
which, in the Company’s opinion, materially adversely affects, or in the future
may, so far as the Company can now reasonably foresee, materially adversely
affect the business, operations, properties, assets or condition, financial or
otherwise, of the Company.

    

    (f)           Neither
this Bond Purchase Agreement, other than Section 4 hereof as to which no
representation is made, nor any other document, certificate or written statement
furnished to the Underwriter or the Authority by or on behalf of the Company,
when read together with the information disclosed or incorporated by reference
in the Official Statement, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading or incomplete.

    

    (g)           The
Company has not taken and will not take any action and knows of no action that
any 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.

    

    (h)           The
Company will deliver or cause to be delivered all opinions, certificates,
letters and other instruments and documents required to be delivered by the
Company pursuant to this Bond Purchase Agreement.

    

    (i)           The
Financing Documents and this Bond Purchase Agreement, when executed and
delivered, will be legal, valid, binding and enforceable obligations of the
Company, 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.

    

    (j)           The
Company has authorized and consents to the use of the Official Statement by the
Underwriter.  The information with respect to the Company included or
incorporated by reference in Appendix A to the Preliminary Official Statement
and the descriptions contained therein of the Indenture and the Financing
Documents and the Company’s participation in the transactions contemplated
thereby, with such additions or amendments as heretofore have been agreed upon
between the Authority, the Company and the Underwriter and which are reflected
in the Official Statement, are correct and do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of circumstances
under which they were made not misleading except that the Company makes no
representation as to (A) the information contained in Appendix D of each of the
Preliminary Official Statement and the Official Statement or the information
contained in each of the Preliminary Official Statement and the Official
Statement under the captions “INTRODUCTION - The Authority”, “THE AUTHORITY”,
“THE BONDS - Book Entry Only System”, “TAX MATTERS” and “UNDERWRITING” or (B)
the information with respect to DTC and its book-entry system.  The
financial statements included in Appendix B to each of the Preliminary Official
Statement and the Official Statement have been prepared in accordance with
generally accepted accounting principles as applied in the case of
rate-regulated public utilities, comply with the Uniform System of Accounts and
ratemaking practices prescribed by the DPUC (except as otherwise disclosed in
the notes to such financial statements) and fairly present the financial
position, results of operations, retained earnings and statements of cash flows
of the Company at the respective dates and for the respective periods
indicated.

     

    (k)           There
has been no material adverse change in the business, properties, operations or
financial condition of the Company, taking into account season revenue
fluctuations, from that shown or incorporated by reference in the Official
Statement.

    

    (l)           The
representations and warranties of the Company contained in Section 2.2 of the
Loan Agreement are true and correct as of the date hereof.

    

    (m)           The
Company has obtained all approvals required in connection with the execution and
delivery of, and performance by the Company of its obligations under, this Bond
Purchase Agreement and the Financing Documents.

    

    (n)           Any
certificate signed by an officer of the Company and delivered to the Underwriter
at the time of the purchase and sale of the Bonds shall be deemed a
representation and warranty by the Company to the Underwriter as to the
statements made therein.

    

    (o)           The
Company deems the Preliminary Official Statement to be final as of its date for
purposes of Rule 15c2-12 of the SEC.

    

    (p)           No
material event of default or event which, with notice or lapse of time or both,
would constitute a material event of default or default under any material
agreement or material instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject has occurred and is continuing.

    

    (q)           The
Company will undertake, pursuant to the Disclosure Agreement, to provide certain
annual financial information and notices of the occurrence of certain events, if
material.

    

    6.            The
Company agrees to indemnify and hold harmless the Authority, the Underwriter,
any member, officer, official, employee or agent of the Authority or the State
or the Underwriter, and each person, if any, who controls the Underwriter within
the meaning of Section 15 of the Securities Act, as amended (for purposes of
this paragraph, collectively the "Indemnified Parties"), to the extent permitted
under the applicable law, against any and all losses, claims, damages,
liabilities or expenses whatsoever, joint or several, caused by (1) any breach
of any representation or warranty made by the Company in this Bond Purchase
Agreement or the Financing Documents or (2) any untrue statement or misleading
statement or allegedly misleading statement of a material fact contained in the
Official Statement or caused by any omission or alleged omission from the
Official Statement of any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any such untrue or misleading statement or
omission or allegedly untrue or misleading statement or omission in the
information contained under the captions “INTRODUCTION - The Authority”, “THE
AUTHORITY”, “THE BONDS - Book Entry Only System”, “TAX MATTERS” and
“UNDERWRITING” or in Appendix D thereto (except to the extent that the
information set forth in such section is premised on facts and representations
made in writing by the Company); provided, however, that in the case of clause
(2) above such indemnity shall not inure to the benefit of the Underwriter (or
any person controlling the Underwriter or any officer or employee of the
Underwriter) if (i) the Company has caused to be delivered to the Underwriter on
a timely basis sufficient quantities of the Official Statement, as amended or
supplemented, and (ii) a copy of the Official Statement, as then so amended or
supplemented, was not sent or given by or on behalf of the Underwriter to the
person asserting such loss, claim, damage, liability or expense prior to or with
written confirmation of the sale of such Bonds to such person by the
Underwriter, and (iii) the receipt of the Official Statement, as then so
supplemented or amended, would have been a valid defense to the loss, claim,
damage, liability or expense asserted.  This indemnity agreement shall
not be construed as a limitation on any other liability which the Company may
otherwise have to any Indemnified Party.

    

    The Underwriter agrees to indemnify and
hold harmless the Authority and the Company, and each director, officer or
employee of the Authority and the Company, and each person who controls either
of them within the meaning of Section 15 of the Securities Act (for purposes of
this paragraph, an “Indemnified Party”) to the same extent as the foregoing
indemnity from the Company to the Underwriter, but only with reference to
written information furnished to the Authority or the Company by or on behalf of
the Underwriter specifically for inclusion in the Official Statement under the
caption “UNDERWRITING”.  This indemnity agreement shall not be
construed as a limitation on any other liability which the Underwriter may
otherwise have to any Indemnified Party.

    

    An
Indemnified Party will, promptly after receiving notice of the commencement of
any action against such Indemnified Party in respect of which indemnification
may be sought against the Company or the Underwriter, as the case may be (in any
case the "Indemnifying Party"), notify the Indemnifying Party in writing of the
commencement of the action, enclosing a copy of all papers served, but the
omission so to notify the Indemnifying Party of any such action shall not
relieve the Indemnifying Party of any liability which it may have to any
Indemnified Party otherwise than under this Section.  If such action
is brought against an Indemnified Party and such Indemnified Party notices the
Indemnifying Party of its commencement, the Indemnifying Party may, or if so
requested by the Indemnified Party shall, participate in it or assume its
defense, with counsel reasonably satisfactory to the Indemnified Party, and
after notice from the Indemnifying Party to the Indemnified Party of an election
to assume the defense, the Indemnifying Party will not be liable to the
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
other than reasonable costs of investigation subsequently incurred by the
Indemnified Party in connection with the defense thereof.  Until the
Indemnifying Party assumes the defense of any such action at the request of the
Indemnified Party, the Indemnifying Party may participate at its own expense in
the defense of the action. If the Indemnifying Party does not employ counsel to
have charge of the defense or if any Indemnified Party reasonably concludes that
there may be defenses available to it or them which are different from or in
addition to those available to the Indemnifying Party or the Indemnified Party
and the Indemnifying Parties may have conflicting interests which would make it
inappropriate for the same counsel to represent both of them, reasonable legal
and other expenses incurred by such Indemnified Party will be paid by the
Indemnifying Party and the Indemnifying Party shall not have the right to direct
the defense of such action on behalf of such Indemnified Party (it being
understood, however, that the Indemnifying Party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel)
approved by the Underwriter in the case of paragraph (a) representing all
Indemnified Parties who are parties to such action).  Any obligation
under this Section 5 of an Indemnifying Party to reimburse an Indemnified Party
for expenses includes the obligation to reimburse the Indemnified Party to cover
such expenses in reasonable amounts and at reasonable periodic intervals upon
receipt by the Indemnifying Party of an invoice for such expenses not more often
than monthly as requested by the Indemnifying Party.  Notwithstanding
the foregoing, the Indemnifying Party shall not be liable for any settlement of
any action or claim effected without its consent, which consent shall not be
unreasonably withheld.

    

    In order
to provide for just and equitable contribution in circumstances in which the
indemnification provided for above is due in accordance with its terms but is
for any reason held by a court to be unavailable from the Company or Underwriter
on grounds of policy or otherwise, the Company and the Underwriter shall
contribute to the total losses, claims, damages and liabilities (including
reasonable legal or other expenses of investigation or defense) to which they
may be subject (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Underwriter from the offering of the
Bonds or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Underwriter in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations.  The respective relative
benefits received by the Company and the Underwriter shall be deemed to be in
the same proportion as the proceeds from the sale (i.e., the principal amount of
the Bonds) bears to the discount or fee in connection with such sale received by
the Underwriter as an underwriting fee, as set forth in Section 12
hereof.  The relative fault of the Company and the Underwriter shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriter and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. However, no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.  For purposes of this
Section, each person who controls the Underwriter within the meaning of Section
15 of the Securities Act will have the same rights to contribution as the
Underwriter, and each person who controls the Company within the meaning of
Section 15 of the Securities Act and each officer and each director of the
Company will have the same rights to contribution as the Company, subject to the
foregoing sentence.  Any party entitled to contribution will, promptly
after receiving notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made under this
paragraph, notify each party from whom contribution may be sought, but the
omission to notify such party shall not relieve any party from whom contribution
may be sought from any other obligation it may have otherwise than pursuant to
this paragraph.

    

    7.           The
Company’s obligations hereunder, except those contained in Sections 6 and 12,
will be conditioned upon the approval by the DPUC of the issuance of the Note,
the loan under the Agreement and the transactions of the Company contemplated by
the Financing Documents; the purchase of and payment for the Bonds in accordance
herewith on the Closing Date; the performance of the obligations of the
Authority and the Underwriter not dependant on the performance of the Company;
and the delivery to the Authority of the approving opinion of Winston &
Strawn LLP, Bond Counsel, in form and substance substantially in the form set
forth as Appendix D to the Official Statement.

    

    8.           The
Authority’s obligation to deliver the Bonds and to accept payment therefor are
subject to the performance of the obligations of the Company and the Underwriter
not dependent on the performance of the Authority, and will be conditioned upon
the approval by the DPUC of the issuance of the Note, the loan under the
Agreement and the transactions of the Company contemplated by the Financing
Documents; the purchase of and payment for the Bonds in accordance herewith on
the Closing Date; the delivery by the Underwriter to the Authority of a
certificate substantially in the form of Schedule I to the Tax Regulatory
Agreement; and the delivery to the Authority of the approving opinion of Winston
& Strawn LLP, Bond Counsel, in form and substance substantially in the form
set forth as Appendix D to the Official Statement, and will be subject to the
further condition that all documents, certificates, opinions and other items to
be delivered at the closing pursuant hereto and as otherwise may reasonably be
requested by Bond Counsel not be unsatisfactory in form and substance to Bond
Counsel.

     

    9.           The
Underwriter’s obligations hereunder to purchase and pay for the Bonds will be
subject to (i) the approval by the DPUC of the issuance of the Note, the loan
under the Agreement and the transactions of the Company contemplated by the
Financing Documents, (ii) the performance by the Authority of its
obligations to be performed hereunder at or prior to the Closing Date,
(iii) the performance by the Company of its obligations to be performed
hereunder at or prior to the Closing Date, (iv) the continued accuracy in all
material respects of the representations and warranties of the Authority and the
Company contained herein and in the Agreement as of the date hereof and as of
the Closing Date, and (v) in the reasonable judgment of the Underwriter, the
following conditions:

    

    (a)           After
the date hereof, no litigation may be threatened or pending in any court (i)
seeking to restrain or enjoin the issuance or delivery of the Bonds or the
payment, collection or application of the proceeds thereof or moneys and
securities pledged or to be pledged under the Indenture, or (ii) in any way
questioning or affecting the validity of the Bonds or any provisions of the
Indenture, the Financing Documents or this Bond Purchase Agreement or any
proceedings taken by the Authority with respect to the foregoing, or (iii)
questioning the Authority’s creation, organization or existence or the titles to
office of any of its officers authorized under the Resolution, or its power to
lend or provide money in connection with the Project as referred to in the
Indenture and the Agreement, or (iv) questioning the Company’s power to enter
into and perform the Financing Documents or this Bond Purchase
Agreement;

    

    (b)           The
market value of the Bonds has not been adversely affected by reason of the fact
that between the date hereof and the Closing Date:

    

    
      	
              (1)

            	
              legislation
      has been enacted by the Congress or recommended to the Congress for
      passage by the President of the United States, or favorably reported for
      passage to either House of the Congress by any Committee of such House to
      which such legislation has been referred for consideration,
    or

            

    

    

    
      	
              (2)

            	
              a
      decision has been rendered by a Court of the United States, or the United
      States Tax Court, or

            

    

    

    
      	
              (3)

            	
              an
      order, ruling, regulation or official statement has been made by the
      Treasury Department of the United States or the Internal Revenue
      Service,

            

    

    

    with the
purpose or effect, directly or indirectly, of imposing federal income taxation
upon such revenues or other income as would be derived by the Authority under
the Agreement or such interest on the Bonds as would be received by the true
owners and holders thereof, other than a person who, within the meaning of
Section 147(a) of the Internal Revenue Code of 1986, as amended (the “Code”), is
a “substantial user” or “related person”;

    

    (c)           The
market value of the Bonds has not in the opinion of the Underwriter been
materially adversely affected by reason of the fact that between the date hereof
and the Closing Date any legislation, ordinance, rule or regulation has been
introduced in or enacted by any governmental body, department or agency in the
State, or a decision has been rendered by any court of competent jurisdiction
within the State with the purpose or effect, directly or indirectly, of imposing
state income taxation upon such revenues or other income as would be derived by
the Authority under the Agreement or such interest on the Bonds as would be
received by the true owners and holders thereof;

    

    (d)           No
stop order, ruling, regulation or official statement by, or on behalf of, the
Securities and Exchange Commission may have been issued or made after the date
hereof to the effect that the issuance, offering or sale of obligations of the
general character of the Bonds, or the Bonds, as contemplated hereby or by the
Official Statement, is in violation or would be in violation unless registered
or otherwise qualified under any provisions of the Securities Act of 1933, as
amended and as then in effect, or the Trust Indenture Act of 1939, as amended
and as then in effect;

    

    (e)           After
the date hereof, no legislation may have been introduced in or enacted by the
House of Representatives or the Senate or the Congress of the United States of
America, nor shall a decision by a court of the United States of America have
been rendered, or a ruling, regulation or official statement by or on behalf of
the Securities and Exchange Commission or other governmental agency having
jurisdiction of the subject matter have been made or proposed to the effect that
obligations of the general character of the Bonds, or the Bonds, are not exempt
from registration, qualification or other requirements of the Securities Act of
1933, as amended and as then in effect, or of the Securities Act of 1934, as
amended and then in effect, or of the Trust Indenture Act of 1939, as amended
and as then in effect;

    

    (f)           (i)
No event shall have occurred after the date hereof, which, in the opinion of the
Underwriter, makes untrue, incorrect or inaccurate, in any material respect, any
statement or information contained or incorporated by reference in the Official
Statement (including the Appendices thereto), or which is not reflected in the
Official Statement but should be reflected therein for the purpose for which the
Official Statement is to be used in order to make the statements and information
contained therein in light of the circumstances under which they were made not
misleading in any material respect, and (ii) there shall be no material adverse
change (not in the ordinary course of business) in the condition of the Company
from that set forth in or incorporated by reference in the Official Statement
and the Appendix A thereto;

    

    (g)           In
the judgment of the Underwriter, the market price of the Bonds, or the market
price generally of obligations of the general character of the Bonds, shall not
have been adversely affected because: (a) additional material restrictions not
in force as of the date hereof shall have been imposed upon trading in
securities generally by any governmental authority or by any national securities
exchange; (b) the New York Stock Exchange, Inc. or other national securities
exchange, or any governmental authority, shall impose, as to the Bonds or
similar obligations, any material restrictions not now in force, or increase
materially those now in force, with respect to the extension of credit by, or
the charge to the net capital requirements of, underwriters; (c) a general
banking moratorium shall have been established by federal, New York or
Connecticut authorities; or (d) a war involving the United States of America
shall have been declared, or any other national calamity shall have occurred, or
any conflict involving the armed forces of the United States of America has
escalated to such a magnitude as to materially adversely affect the
Underwriter’s ability to market the Bonds;

    

    (h)           All
matters relating to this Bond Purchase Agreement, the Bonds and the sale
thereof, the Indenture, the Financing Documents and the consummation of the
transactions contemplated by this Bond Purchase Agreement must be approved by
the Underwriter but such approval may not be unreasonably withheld;
and

    

    (i)           At
or prior to the Closing Date the Underwriter must have received the following
documents:

    

    (1)          Certified
copies of the executed Financing Documents and the Indenture.

    

    (2)          The
legal opinions of the following, dated the Closing Date, in the form and
substance satisfactory to Bond Counsel and the Underwriter:

    

    (A)           Murtha
Cullina LLP, counsel to the Company.

    

    (B)           Day
Pitney LLP, counsel to the Trustee.

    

    (C)           Winston
& Strawn LLP, Bond Counsel, substantially in the form set forth as Appendix
D to the Official Statement.

    

    (D)           Winston
& Strawn LLP, Bond Counsel, concerning supplementary matters.

    

    

    The
respective forms of such opinions above are subject, in each case, only to such
changes therein as counsel to the Underwriter approve;

    

     (3)          The
legal opinion of Shipman, Sosensky & Marks, LLC, counsel to the Underwriter,
addressed to the Underwriter in the form and substance satisfactory to the
Underwriter;

    

     (4)             A
certificate of an Authorized Representative of the Authority, dated the Closing
Date, to the effect that (i) on and as of the Closing Date, each of the
representations and warranties of the Authority set forth in Section 4 hereof is
true, accurate and complete and all agreements of the Authority herein provided
and contemplated to be performed on or prior to the Closing Date have been so
performed; (ii) the executed copies of the Financing Documents and the certified
copies of the Resolution authorizing the Bonds are true, correct and complete
copies of such documents and have not been modified, amended, superseded or
rescinded but remain in full force and effect as of the Closing Date; (iii) the
Bonds have been duly authorized, executed and delivered by the Authority; (iv)
this Bond Purchase Agreement, the Indenture and the Financing Documents and any
and all other agreements and documents required to be executed and delivered by
the Authority in order to carry out, give effect to and consummate the
transactions contemplated hereby and by the Indenture have each been duly
authorized, executed and delivered by the Authority, and as of the Closing Date
each is in full force and effect and substantially all right, title and interest
inuring to the Authority under the Agreement has been duly pledged, and the loan
payments thereunder assigned, to the Trustee under the Indenture for the benefit
of the holders of the Bonds; (v) no litigation is pending or threatened to
restrain or enjoin the issuance or sale of the Bonds or in any way contesting
the validity or affecting the authority for the issuance of the Bonds, the
authorization, execution or performance of the Indenture and the Financing
Documents, or the existence or powers of the Authority or the right of the
Authority to finance the Project; and (vi) the Treasurer of the State has
approved all matters and resolutions of the Authority required by the Act to be
approved by the Treasurer with respect to the issuance, sale and delivery of the
Bonds;

     

    (5)           A
certificate of the Chairman, President and Chief Executive Officer, Vice
President-Finance, Chief Financial Officer and Treasurer, any Vice President,
Assistant Treasurer or Secretary of the Company, dated the Closing Date, as to
the due incorporation, valid existence of the Company under the laws of the
State, and the due authorization, execution and delivery by the Company of this
Bond Purchase Agreement and the Financing Documents and annexing resolutions of
the Board of Directors or Executive Committee or both with respect to such
authorizations;

    

    (6)           A
certificate of the Chairman, President and Chief Executive Officer, Vice
President-Finance, Chief Financial Officer and Treasurer, any Vice President,
Assistant Treasurer or Secretary of the Company, dated the Closing Date,
certifying severally that (i) the Company does not have any material contingent
obligations or any material contractual agreements which are not disclosed or
incorporated by reference in the Official Statement, including Appendix B
thereto (ii) so far as is known to the Company, there are no material pending or
threatened legal proceedings to which the Company is or may be made a party or
to which any of its property is or may become subjugated, which has not been
fully disclosed or incorporated by reference in the Official Statement, (iii)
there is no action or proceeding pending, or to its best knowledge threatened,
looking toward the dissolution or liquidation of the Company and there is no
action or proceeding pending, or to its best knowledge threatened, by or against
the Company affecting the validity and enforceability of the terms of the
Financing Documents or this Bond Purchase Agreement, (iv) since December 31,
2008 there has been no material adverse change in the financial condition of the
Company, taking into account seasonal revenue fluctuations, not disclosed or
incorporated by reference in the Official Statement, and (v) the representations
and warranties of the Company contained herein are true, complete and correct as
of the Closing Date, with the same effect as if those representations and
warranties had been made on and as of such date;

    

    (7)           A
certificate, satisfactory in form and substance to the Underwriter, of one or
more duly authorized officers of the Trustee, dated the Closing Date, as to the
due execution and delivery of the Indenture and the Disclosure Agreement by the
Trustee and the due authentication and delivery of the Bonds by the Trustee
thereunder;

    

    (8)           Letters
from Standard & Poor’s Ratings Service, the rating agency, indicating that
the rating for the Bonds is no less than "A";

    

    (9)           A
letter from PricewaterhouseCoopers LLP, independent auditors for the Company,
dated the Closing Date and addressed to the Underwriter;

     

    (10)             A
copy of the order of the DPUC approving the issuance of the Bonds and the
transactions of the Company contemplated by the Financing
Documents;

    

    (11)           Certificates
evidencing that the insurance required to be obtained pursuant to the Agreement
is in place;

     

    (12)           A
letter or other written evidence satisfactory to Bond Counsel that the State
Treasurer has approved the issuance of the Bonds in accordance with the
Act;

     

    (13)           A
letter or other written evidence satisfactory to Bond Counsel that an elected
official has approved the issuance of the Bonds in accordance with the
applicable provisions of the Code; and

     

    (14)           Such
additional certificates, instruments or other documents as the Underwriter may
reasonably require to evidence the accuracy, as of the Closing Date, of the
representations and warranties herein contained, and the due performance and
satisfaction by the Company at or prior to such time of all agreements then to
be performed and all conditions then to be satisfied by any one or all of them
in connection with this Bond Purchase Agreement, the Financing Documents or the
Indenture.

    

    In
addition:

    

    The
Authority hereby represents that the Preliminary Official Statement, with such
additions and amendments as have been heretofore agreed upon between the
Authority and the Underwriter, is deemed final as of the date thereof, except
for the omission of offering prices, interest rates, selling compensation,
aggregate principal amount, principal amount per maturity, delivery dates,
ratings and other terms of the Bonds depending on such matters.  Such
representation is made in reliance upon the Company’s representation herein that
material relating to the Company included in the Preliminary Official Statement
is true and correct.  The Company has contracted with a printer
acceptable to the Underwriter for the delivery to the Underwriter at Company’s
expense of the number of copies requested by the Underwriter of the Official
Statement and will cooperate with the Underwriter to secure the delivery thereof
with reasonable promptness and within seven business days.  The
Underwriter agrees to file a copy of such Official Statement with a nationally
recognized municipal securities information repository within five (5) days
after such final Official Statements are made available to the Underwriter and
to advise the Authority as to the location and time of such
filing.  Should the Underwriter require additional copies of the
Official Statement, the Authority agrees to cooperate with the Underwriter in
obtaining such copies at Company’s expense if such request is made within 90
days from the date hereof and at the Underwriter’s expense if such request is
made thereafter.  The Underwriter has taken and will continue to take
action to comply with the Securities Exchange Commission Municipal Securities
Disclosure Rule, 17 C.F.R. §240.15c2-12 and the provisions of this paragraph
shall survive the expiration hereof to the extent necessary for such
purpose.

     

    Except as
provided in Sections 6 and 12 hereof, if the Authority or the Company shall fail
or be unable to satisfy the conditions of their obligations contained in this
Bond Purchase Agreement, or if the Underwriter’s obligations hereunder shall be
terminated for any reason permitted by this Bond Purchase Agreement, this Bond
Purchase Agreement shall terminate and neither the Authority nor the Underwriter
nor the Company shall be under any further obligation hereunder.

     

    SIMULTANEOUSLY
WITH OR BEFORE DELIVERY OF THE BONDS, THE UNDERWRITER SHALL FURNISH TO THE
AUTHORITY A CERTIFICATE SUBSTANTIALLY IN FORM ATTACHED TO THE TAX REGULATORY
AGREEMENT ACCEPTABLE TO BOND COUNSEL TO THE EFFECT THAT (I) THE UNDERWRITER HAS
MADE A BONA
FIDE PUBLIC
OFFERING OF THE BONDS TO THE PUBLIC AT INITIAL OFFERING PRICES NOT GREATER THAN
THE RESPECTIVE PRICES SHOWN ON THE COVER OF THE OFFICIAL STATEMENT, OR IN THE
CASE OF DISCOUNT OBLIGATIONS SOLD ON A YIELD BASIS, AT YIELDS NO LOWER THAN
THOSE SHOWN ON THE COVER, INCLUDING INTEREST ACCRUED ON THE BONDS FROM THE DATE
THEREOF, AND (II) A SUBSTANTIAL AMOUNT OF THE FINAL AMOUNT OF EACH MATURITY OF
THE BONDS WAS SOLD TO THE FINAL PURCHASER THEREOF (NOT INCLUDING BOND HOUSES AND
BROKERS OR SIMILAR PERSONS OR ORGANIZATIONS ACTING IN THE CAPACITY OF
UNDERWRITER OR WHOLESALERS) AT PRICES NOT GREATER THAN SUCH OFFERING PRICES OR
YIELDS.  Bond Counsel advises that (i) such certificate must be made
on the best knowledge, information and belief of the Underwriter, (ii) the sale
to the public of 10% or more of each maturity of the Bonds at prices or yields
not greater than the Initial Offering Prices or Yields would be sufficient for
the purpose of certifying as to the sale of a substantial amount of the Bonds,
and (iii) reliance on other facts as a basis for such certification would
require evaluation by Bond Counsel to assure compliance with the statutory
requirement.

     

    10.           The
Authority and the Company agree that all representations, warranties and
covenants made by them herein, and in certificates or other instruments
delivered pursuant hereto or in connection herewith, shall be deemed to have
been relied upon by the Underwriter notwithstanding any investigation heretofore
or hereafter made by the Underwriter on its behalf, and that all
representations, warranties and covenants made by the Authority and the Company
herein and therein and all of the Underwriter’s rights hereunder and thereunder
shall survive the delivery of the Bonds.

     

    11.                      The
Authority shall pay, but only from proceeds of the Bonds or moneys to be
provided by the Company, any expenses incident to the performance of its
obligations hereunder including but not limited to (a) the cost of the
preparation and printing (for distribution on or prior to the date hereof) of
the Financing Documents, the Indenture, the Preliminary Official Statement and
the final Official Statement (in such numbers as the Authority, the Company and
the Underwriter shall mutually agree upon), and this Bond Purchase Agreement;
(b) the cost of the preparation and printing of the Bonds; (c) the fees and
disbursements of Winston & Strawn LLP, Bond Counsel; (d) the fees of any
other attorneys, experts or consultants retained by the Authority; and (e) any
fee to the rating agencies.

     

    The
Underwriter shall pay (a) the cost of the preparation and printing of the Blue
Sky Survey, if any; (b) all advertising expenses in connection with the public
offering of the Bonds; (c) the fees and disbursements of Shipman, Sosensky &
Marks, LLC, counsel to the Underwriter, subject to reimbursement by the Company;
and (d) all other expenses incurred by the Underwriter in connection with their
public offering and distribution of the Bonds, including the fees and
disbursements of all attorneys, experts and consultants retained by
them.

    

    On or
prior to the Closing Date, the Company shall pay the Underwriter’s fee of
$600,000 and shall reimburse the Underwriter for the fees and disbursements of
Shipman, Sosensky & Marks, LLC, counsel to the Underwriter of
$15,300.

    

    12.           All
communications hereunder shall be in writing and, unless otherwise directed in
writing, shall be addressed as follows: if to the Authority at 999 West Street,
Rocky Hill, Connecticut 06067, Attention: Executive Director; if to the Company
at 93 West Main Street, Clinton, Connecticut 06413, Attention: Vice
President-Finance, Chief Financial Officer and Treasurer; if to the Underwriter
at 12555 Manchester Road, St. Louis, Missouri 63131, Attention:  Tom
Lally, Director.

    

    13.           This
Bond Purchase Agreement shall be construed and enforceable in accordance with
the laws of the State of Connecticut.

    

    14.           All
terms used but not defined herein shall have the meanings set forth in the
Official Statement.

    

    15.           This
Bond Purchase Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered shall be an original; but such
counterparts shall together constitute but one and the same Bond Purchase
Agreement.

    

    16.           In
case any one or more of the provisions contained in this Bond Purchase Agreement
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 Bond Purchase Agreement, but this Bond Purchase
Agreement shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein.

    

    17.           This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Underwriter, the Authority and the Company. This Agreement may be
signed in several counterparts each of which shall be an original and all of
which shall constitute but one and the same instrument.

    

     

    18.            As
provided in Connecticut General Statutes (“CGS”) Section 4a-60, as amended, and
to the extent required by Connecticut law, the Company and the Underwriter each
(1) agrees and warrants that in the performance of this agreement it will not
discriminate or permit discrimination against any person or group of persons on
the grounds of race, color, religious creed, age, marital status, national
origin, ancestry, sex, mental retardation, mental disability or physical
disability, including, but not limited to, blindness, unless it is shown that
such disability prevents performance of the work involved, in any manner
prohibited by the laws of the United States or of the State of
Connecticut,  (2) agrees to take affirmative action to insure that
applicants with job-related qualifications are employed and that employees are
treated when employed without regard to their race, color, religious creed, age,
marital status, national origin, ancestry, sex, mental retardation, mental
disability or physical disability, including, but not limited to, blindness,
unless it is shown by it that such disability prevents performance of the work
involved; (3) agrees in all solicitations or advertisements for employees placed
by or on behalf of it, to state that it is an "affirmative action-equal
opportunity employer" in accordance with regulations adopted by the Commission
on Human Rights and Opportunities (“CHRO”), (4) agrees to provide each labor
union or representative of workers with which it has a collective bargaining
agreement or other agreement or understanding and each vendor with which it has
an agreement or understanding, a notice to be provided by CHRO advising the
labor union or workers' representative of its commitments under CGS Section
4a-60, and to post copies of the notice in conspicuous places available to
employees and applicants for employment, (5) agrees to comply with each
provision of CGS Sections 4a-60, 46a-68e and 46a-68f and with each regulation or
relevant order issued by CHRO pursuant to CGS Sections 46a-56, 46a-68e and
46a-68f, (6) agrees to provide the CHRO with such information requested by the
commission, and permit access to pertinent books, records and accounts,
concerning the employment practices and procedures of it as relate to the
provisions of CGS Sections 4a-60 and 46a-56.  This provision is
qualified in its entirety by the following proviso: provided the State
of Connecticut laws are not in conflict with the Defense of Marriage Act
(“DOMA”) and provided further that this provision does not apply to any such
policies, practices or plans governed by the Employee Retirement Income Security
Act of 1974 (“ERISA”).      
     

     

     

    As
provided in CGS Section 4a-60a, as amended, and to the extent required by
Connecticut law, the Company and the Underwriter each (1) agrees and warrants
that in the performance of this agreement it will not discriminate or permit
discrimination against any person or group of persons on the grounds of sexual
orientation, in any manner prohibited by the laws of the United States or of the
State of Connecticut, and that employees are treated when employed without
regard to their sexual orientation; (2) agrees to provide each labor union or
representative of workers with which it has a collective bargaining agreement or
other agreement or understanding and each vendor with which it has an agreement
or understanding, a notice to be provided by the CHRO advising the labor union
or workers' representative of its commitments under CGS Section 4a-60a, and to
post copies of the notice in conspicuous places available to employees and
applicants for employment; (3) agrees to comply with each provision of CGS
Section 4a-60a and with each regulation or relevant order issued by CHRO
pursuant to CGS Sections 4a-60a and 46a-56; (4) agrees to provide the CHRO with
such information requested by CHRO, and permit access to pertinent books,
records and accounts, concerning the employment practices and procedures of it
which relate to the provisions of CGS Sections 4a-60a and
46a-56.  This provision is qualified in its entirety by the following
proviso: provided the
State of Connecticut laws are not in conflict with the Defense of Marriage Act
(“DOMA”) and provided further that this provision does not apply to any such
policies, practices or plans governed by the Employee Retirement Income Security
Act of 1974 (“ERISA”).

     

     

     
 

     

    

    

    

    

    CONNECTICUT DEVELOPMENT
AUTHORITY

    

    

    

    By:                                                                           

    Authorized Representative

    

    

    

    

    

    

    

    

    

    THE CONNECTICUT WATER
COMPANY

    

    

    

    By:  /s/  David
C. Benoit

    David C.
Benoit, Vice President-Finance, CFO and Treasurer

    

    

    EDWARD D. JONES & CO,
L.P.

    

    

    

    By:  /s/  Tom
Lally

    Tom
Lally, Directorloanagreement.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      [EXECUTION
COPY]

    

    
      

       

      

       

      

    

    
      

       

      

    

    
      

       

      

    

    

     

    CONNECTICUT
DEVELOPMENT AUTHORITY

     

    and

     

    THE
CONNECTICUT WATER COMPANY

     

    __________________

     

    LOAN
AGREEMENT

    __________________

    

    

    Dated
as of December 1, 2009

     

    Connecticut
Development Authority

    $20,000,000
Water Facilities Revenue Bonds

    (The
Connecticut Water Company Project - 2009A Series)

     

    

     

    
      

       

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    Page

     

    PREAMBLE                       1

     

    ARTICLE
I                       DEFINITIONS
AND INTERPRETATION 

     

    
      	
               
      

            	
              Section
      1.1.

            	
              Definitions 

            	
               

            

    

    
      	
               
      

            	
              Section
      1.2.

            	
              Interpretation 

            	
               

            

    

    ARTICLE
II                       REPRESENTATIONS
AND WARRANTIES 

     

    
      	
               
      

            	
              Section
      2.1.

            	
              Representations
      by the Authority 

            	
               

            

    

    
      	
               
      

            	
              Section
      2.2.

            	
              Representations
      by the Borrower 

            	
               

            

    

     

    ARTICLE
III                       THE
LOAN 

     

    
      	
               
      

            	
              Section
      3.1.

            	
              Loan
      Clauses 

            	
            

    

    
      	
               
      

            	
              Section
      3.2.

            	
              Other
      Amounts Payable 

            	
               

            

    

    
      	
               
      

            	
              Section
      3.3.

            	
              Manner
      of Payment 

            	
            

    

    
      	
               
      

            	
              Section
      3.4.

            	
              Obligation
      Unconditional 

            	
               

            

    

    
      	
               
      

            	
              Section
      3.5.

            	
              Securities
      Clauses 

            	
               

            

    

    
      	
               
      

            	
              Section
      3.6.

            	
              Issuance
      of Bonds 

            	
               

            

    

    
      	
               
      

            	
              Section
      3.7.

            	
              Effective
      Date and Term 

            	
               

            

    

    
      	
               
      

            	
              Section
      3.8.

            	
              No
      Additional Bonds 

            	
               

            

    

     

    ARTICLE
IV                       THE
PROJECT 

     

    
      	
               
      

            	
              Section
      4.1.

            	
              Completion
      of the Project 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.2.

            	
              Payment
      of Additional Project Costs by Borrower 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.3.

            	
              Completion
      Certificate 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.4.

            	
              No
      Warranty Regarding Condition, Suitability or Cost of
      Project 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.5.

            	
              Taxes 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.6.

            	
              Insurance 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.7.

            	
              Compliance
      with Law 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.8.

            	
              Maintenance
      and Repair 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.9.

            	
              Reserved 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.10.

            	
              Leasing
      of the Project 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.11.

            	
              Disposition
      of the Project 

            	
               

            

    

    
      	
               
      

            	
              Section
      4.12.

            	
              Borrower
      Contribution 

            	
               

            

    

     

    ARTICLE
V                       CONDEMNATION
DAMAGE AND DESTRUCTION 

     

    
      	
               
      

            	
              Section
      5.1.

            	
              No
      Abatement of Payments Hereunder 

            	
               

            

    

    
      	
               
      

            	
              Section
      5.2.

            	
              Project
      Disposition Upon Condemnation, Damage or Destruction 

            	
               

            

    

    
      	
               
      

            	
              Section
      5.3.

            	
              Application
      of Net Proceeds of Insurance or Condemnation 

            	
               

            

    

     

    ARTICLE
VI                       COVENANTS 

     

    
      	
               
      

            	
              Section
      6.1.

            	
              The
      Borrower to Maintain its Corporate Existence; Conditions under which
      Exceptions Permitted 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.2.

            	
              Indemnification,
      Payment of Expenses, and Advances 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.3.

            	
              Incorporation
      of Tax Regulatory Agreement; Payments Upon
  Taxability

            

    

    
      	
               
      

            	
              Section
      6.4.

            	
              Public
      Purpose Covenants 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.5.

            	
              Further
      Assurances and Corrective Instruments 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.6.

            	
              Covenant
      by Borrower as to Compliance with Indenture 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.7.

            	
              Assignment
      of Agreement or Note 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.8.

            	
              Inspection 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.9.

            	
              Default
      Notification 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.10.

            	
              Covenant
      Against Discrimination 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.11.

            	
              Covenant
      to Provide Disclosure 

            	
               

            

    

    
      	
               
      

            	
              Section
      6.12.

            	
              Negative
      Pledge 

            	
               

            

    

     

    ARTICLE
VII                                                                                                                                          EVENTS
OF DEFAULT AND REMEDIES 

     

    
      	
               
      

            	
              Section
      7.1.

            	
              Events
      of Default 

            	
               

            

    

    
      	
               
      

            	
              Section
      7.2.

            	
              Remedies
      on Default 

            	
               

            

    

    
      	
               
      

            	
              Section
      7.3.

            	
              Remedies
      on Public Purpose Default 

            	
               

            

    

    
      	
               
      

            	
              Section
      7.4.

            	
              No
      Duty to Mitigate Damages 

            	
               

            

    

    
      	
               
      

            	
              Section
      7.5.

            	
              Remedies
      Cumulative 

            	
               

            

    

     

    ARTICLE
VIII                                                                                                                                          PREPAYMENT
PROVISIONS 

     

    
      	
               
      

            	
              Section
      8.1.

            	
              Optional
      Prepayment 

            	
               

            

    

    
      	
               
      

            	
              Section
      8.2.

            	
              Notices
      of Prepayment 

            	
               

            

    

    
      	
               
      

            	
              Section
      8.3.

            	
              Mandatory
      Prepayment on Taxability and Receipt of Request for Redemption of a
      Deceased Holder’s Bonds 

            	
               

            

    

     

    ARTICLE
IX                       GENERAL 

     

    
      	
               
      

            	
              Section
      9.1.

            	
              Indenture 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.2.

            	
              Benefit
      of and Enforcement by Bondholders 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.3.

            	
              Force
      Majeure 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.4.

            	
              Amendments 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.5.

            	
              Notices 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.6.

            	
              Compliance
      with C 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.7.

            	
              Prior
      Agreements Superseded 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.8.

            	
              Execution
      of Counterparts 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.9.

            	
              Time 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.10.

            	
              Separability
      of Invalid Provisions 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.11.

            	
              Third
      Party Beneficiaries 

            	
               

            

    

    
      	
               
      

            	
              Section
      9.12.

            	
              Governing
      Law 

            	
               

            

    

    

    APPENDICES

    Appendix
A - Form of Promissory Note

    Appendix
B – Project Description

    

    
      
        
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    Connecticut
Development Authority

     

    The
Connecticut Water Company

     

    LOAN
AGREEMENT

     

    THIS LOAN AGREEMENT, made and
dated as of December 1, 2009, 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 32-23zz,
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, abate 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, by resolution adopted
on May 20, 2009, in furtherance of the purposes of the Act, the Authority has
accepted the application of The Connecticut Water Company (the “Borrower”) for
assistance in the financing of various capital projects located in the State of
Connecticut; and

     

    WHEREAS, the Borrower
currently owns certain existing facilities within certain municipalities in the
State and at this time requests assistance in the design, acquisition,
installation, improvement and construction of certain facilities consisting of
water treatment and storage facilities, transmission and distribution mains,
service lines, meters, hydrants and pumping equipment for the purpose of
supplying safe potable water to the general public within its service area;
and

     

    WHEREAS, the Authority has by
a further resolution adopted on October 21, 2009 authorized the issuance of not
to exceed $20,000,000 principal amount of its Water Facilities Revenue Bonds
(The Connecticut Water Company Project - 2009A Series) for the purpose of
providing funds for the Projects; 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
financing the acquisition, construction and installation of the Project;
and

     

    WHEREAS, the Borrower
acknowledges that the Authority is providing financing 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 beneficial 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):

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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 32-23zz, 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-Finance, 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 $20,000,000 Water Facilities Revenue Bonds (The Connecticut Water
Company Project - 2009A Series) authorized and issued pursuant to Section 2.3 of
the Indenture.

     

    “Bond
Counsel” means Winston & Strawn LLP or such other nationally recognized bond
counsel selected by the Authority and reasonably satisfactory to the Borrower
and the Trustee.

     

     “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 the cities in which the principal offices of 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.

     

    “Completion
Date” means the date of completion of the Project as specified and established
in accordance with Section 4.3 hereof.

     

    “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 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.

     

    “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, 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.

     

    “Fitch”
means Fitch 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, “Fitch” 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.

     

    “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.

     

    “Interest
Payment Date” shall mean June 1, 2010 and each December 1 and June 1 thereafter
on which interest is payable on the Bonds as provided in the forms of the
Bonds.

     

    “Moody’s”
means Moody’s 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.

     

    “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;

     

    (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) liens for taxes not yet due
and payable, (ii) any lien created by this Agreement and the Indenture, (iii)
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, (iv) 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, (v) 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 (vi) any mortgage, lien, security interest or other
encumbrance to which the Authority may consent as provided in Section 4.9
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.

     

    “Project”
means the realty and other interests in the real property, if any ,and all
personal property, goods, leasehold improvements, machinery, equipment,
furnishings, furniture, fixtures, tools and attachments wherever located and
whether now owned or hereafter acquired, financed in whole or in part with the
proceeds of the Bonds, and any additions and accessions thereto, substitutions
therefor and replacements thereof, including, without limitation the project
components described in Appendix B hereto, as amended from time to time in
accordance herewith.

     

    “Rating
Agency” shall mean S&P, Moody's and Fitch, or, in each case, if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, 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.

     

    “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.

     

    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 finance
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
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.

     

    (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
financed by amounts in the various Accounts of the Project 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
Borrower intends to proceed with due diligence to complete the Project pursuant
to Section 4.1 hereof.  The Borrower has obtained, or will obtain, or
will cause to be obtained, all necessary material approvals from any and all
governmental agencies requisite to the Project, and has also obtained or will
cause to be obtained, all material occupancy permits and authorizations from
appropriate authorities authorizing the occupancy and use of the Project for the
purposes contemplated hereby.  The Borrower further represents and
warrants that it will complete the Project, or cause the Project to be
completed, in accordance with all material federal, State and local laws,
ordinances and regulations applicable thereto.

     

    (11)           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.

     

    (12)           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.

     

    (13)           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.

     

    (14)           The
Borrower has good and merchantable title to the Project 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, 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 finance the Project
Costs.

    
      
        
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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 $20,000,000 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 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.

     

    (C)           The
Borrower agrees to pay all Rebatable Arbitrage (as such term is defined in the
Tax Regulatory Agreement) (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 October 21, 2009, 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.

     

    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 agrees that it
will undertake and complete the Project for the purposes and in the manner
intended hereby and by the Borrower’s application for assistance to the
Authority and that it will cause such improvements to be made to the Project as
are necessary for the operation thereof in the manner herein
provided.

     

    (B)           The
Borrower may modify, alter and amend the plans for the Project from time to time
and at any time, provided that such modifications, alterations and amendments do
not materially impair the operation of the Project as water facilities under the
Act and provided that no material modifications, alterations or amendments shall
be made unless the Borrower shall have theretofore delivered to the Trustee an
opinion of Bond Counsel to the effect that such amendment, modification or
alteration and the expenditure of amounts from the Project Fund in connection
therewith will not cause interest on the Bonds to be subject to federal income
taxation, together with any written representations or certifications of fact
made by or on behalf of the Borrower upon which such counsel has relied in
rendering such opinion.

     

    (C)           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 and all other costs of the Project shall be paid by the Borrower in the
manner and to the extent provided in the Indenture.

     

    (D)           The
Borrower hereby agrees that in order to effectuate the purposes of the Financing
Documents, it will make, execute, acknowledge and deliver any contracts, orders,
receipts, writings and instructions with any other persons, firms, or
corporations and in general do all things which may be requisite or proper, all
for the purpose of carrying out and completing the Project.  The
Borrower will use its best efforts to complete the Project, or cause the Project
to be completed, with all reasonable dispatch.  If for any reason the
completion of such work is delayed, there shall be no liability on the part of
the Authority and no diminution in or postponement of the payments required in
Section 3.1 hereof to be paid by the Borrower.

     

    (E)           The
Borrower has obtained or shall obtain all necessary material approvals from any
and all governmental agencies requisite to the undertaking and completion of the
Project and in compliance with all federal, State and local laws, ordinances and
regulations applicable thereto.  Upon completion of the Project, the
Borrower shall obtain all material required permits and authorizations from
appropriate authorities, if any be required, authorizing the operation and uses
of the Project for the purposes contemplated hereby, where failure to obtain
such approvals, permits and authorizations would have a material adverse effect
on the transactions contemplated hereby.

     

    (F)           The
Borrower covenants that it will take, or cause to be taken, such action and
institute such proceedings within its power and authority as shall be necessary
to cause and require all contractors and material suppliers to complete their
contracts diligently in accordance with the terms of the contracts, including,
without limitation, the correcting of any defective work.

     

    (G)           Upon
the occurrence of a default by any contractor or subcontractor or supplier under
any contract made by it in connection with the Project, the Borrower will
promptly proceed, to the extent it deems appropriate in the circumstances,
either separately or in conjunction with others, to exhaust the remedies of the
Borrower against any such contractor or subcontractor or supplier for the
performance of such contract.

     

    Section
4.2. Payment
of Additional Project Costs by Borrower.  In the event that
moneys in the Project Fund are not sufficient to pay Project Costs in full, the
Borrower shall nonetheless complete the Project, or cause the Project to be
completed, and shall pay that portion of the Project Costs as may be in excess
of the moneys available therefor in the Project Fund and shall not be entitled
to any reimbursement therefor from the Authority or from the Trustee or from the
holders of any of the Bonds, nor shall it be entitled to any diminution of the
amounts payable under the Financing Documents.

     

    Section
4.3. Completion
Certificate.  The date of completion of the Project shall be
evidenced to the Trustee by the certificate of an Authorized Representative of
the Borrower stating that the Project has been completed in accordance with the
Agreement and in accordance with the plans and specifications
therefor.  Notwithstanding the foregoing, such certificate shall state
(1) that it is given without prejudice to any rights of the Borrower against
third parties which exist at the date of such certificate or which may
subsequently come into being, (2) that it is given only for the purpose of this
Section and (3) that no person other than the Trustee or the Authority may
benefit therefrom.

     

    Section
4.4. 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, or that the proceeds of the Bonds will be
sufficient to complete the Project.

     

    Section
4.5. 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 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, or cause to be paid,
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 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.

     

    Section
4.6. Insurance.  (A)  The
Borrower shall insure the Project 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 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, the Net Proceeds of any insurance provided under this
subsection 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.  If the Borrower is
in default under this Agreement, such amounts shall be applied as provided in
Article VIII of the Indenture.  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 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.

     

    (C)           As
an alternative to the hazard insurance and public liability insurance
requirements of subsections (A) or (B) above the Borrower may 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. 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.  The Borrower shall also give the Trustee not less than ten
(10) days prior written notice of the expiration of any insurance coverage
required by this Section then in effect.

     

    Section
4.7. 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 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
4.8. Maintenance
and Repair.  At its own expense, the Borrower will keep and
maintain the Project in accordance with sound 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 4.8
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.

     

    Section
4.9. Reserved.

     

    Section
4.10. Leasing
of the Project.  The Borrower may not lease the Project or any
portion thereof to any person during the Term of this Agreement without the
prior written consent of the Authority.  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
4.11. Disposition
of the Project.  (A)  The Borrower shall have the
right to install, operate, use, remove and dispose of any components of the
Project in the normal and ordinary course of its business operations, and shall
not be required to replace any item of the Project 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 without prior notice to and the consent
of the Authority, unless such components of the Project are replaced by property
of similar value and utility.

     

    (B)           The
Borrower may, however, without the consent of the Authority, grant such rights
of way or easements over, across, or under, the Project as shall be necessary or
convenient for the operation or use of the Project, including but not limited to
easements or rights-of-way for utility, roadway, railroad or similar purposes in
connection with the Project, 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.  In addition, the Borrower may sell or
assign, or cause to be sold or assigned, a portion of the Project or development
rights in the Project to the State, a municipality within the State or a
conservation organization, but only if such sale or assignment shall not
materially or adversely affect the value or operation of the
Project.

     

    (C)           In
the event any disposition of the Borrower’s interest in the Project, the
proceeds of the disposition shall be deposited in the Redemption Account of the
Debt Service Fund for the redemption of the Bonds under the Indenture unless the
Borrower shall deliver to the Authority and the Trustee an opinion of Bond
Counsel to the effect that the failure to deposit the proceeds of such
disposition will not adversely affect the exclusion from gross income of the
interest on the Bonds for federal income tax purposes.  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.

     

    (D)           The
Borrower shall maintain with the Trustee separate and reasonably detailed
descriptions of each item of property constituting the
Project.  Without limiting the foregoing, the Project 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 disbursement for
Project from the Project Fund and any replacement of material items of Project
under this Section or under Section 5.2 hereof.

     

    Section
4.12. Borrower
Contribution.  The Borrower agrees to deposit with the Trustee
on the date of issuance of the Bonds a contribution in the amount of $358,354.05
(which will be applied to the payment of certain costs and expenses incurred in
connection with the issuance, execution and sale of the Bonds for which the
Borrower is responsible, including compensation and expenses of the Trustee,
bond insurance premium, 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 Costs of Issuance
Account of the Project Fund established pursuant to Section 5.1 of the
Indenture.

     

    
      
        
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    ARTICLE
V

     

    CONDEMNATION
DAMAGE AND DESTRUCTION

     

    Section
5.1. No
Abatement of Payments Hereunder.  If any portion of the Project
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
shall:

     

    (1)           At
its own cost, repair, restore or reconstruct, or cause to be repaired, restored
or reconstructured, the Project, or any portion thereof,  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, or cause to be replaced or relocated, the
Project, or any portion thereof, 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 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, or any component
thereof, 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 Redemption Account of 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, but which do not constitute a portion of the
Project, shall be paid 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)           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, or any portion thereof, 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.

     

    (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 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 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.

     

    (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 authorized projects 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 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.

     

    (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, or any portion
thereof, 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 agrees to comply with all of the Borrower’s safety and security
policies then in effect in connection with any such inspections.  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, or
any portion thereof.

     

    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. Negative
Pledge.  During the term
of this Agreement, except for Permitted Encumbrances, the Borrower will not
permit, create, assume or suffer to be created or to exist any mortgage, lien,
security interest, or encumbrance of any kind upon, or pledge of, any of the
Borrower’s properties of any character, including real, personal, tangible and
intangible properties and revenues, now owned or hereafter acquired, to secure
any indebtedness without providing that the Bonds have the same
security.

     

    
      
        
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    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.

     

    (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) days.

     

    (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(F) 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(F)
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.

     

    (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 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(F)
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 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 [December 1, 2014] 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 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.

     

    In
addition, the Borrower may prepay all or a portion of its loan obligation in
order to preserve the tax-exempt status of interest on the Bonds in accordance
with the provisions of Section 2.4(G) of the Indenture.

     

    Section
8.2. Notices
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 and Receipt of Request for Redemption of a Deceased
Holder’s Bonds.   The Borrower shall pay or cause the
prepayment of all or a portion of its loan obligation, as circumstances and the
provisions of Section 2.4 of the Indenture shall warrant, following (i) a
Determination of Taxability in the manner provided in Section 6.3 of this
Agreement, and (ii) receipt by the Trustee of a request for redemption of a
deceased owners’ Bonds in accordance with Section 2.4(D) of the
Indenture.

     

    
      
        
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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
999 West Street, Rocky Hill, Connecticut 06067, Attention: Program Manager -
Loan Administration; if to the Borrower, 93 West Main Street, Clinton,
Connecticut 06413 Attention: Vice President-Finance; if to the Paying Agent,
Goodwin Square, 225 Asylum Street, Hartford, Connecticut 06103, Attention:
Corporate Trust Department; and if to the Trustee, Goodwin Square, 225 Asylum
Street, Hartford, Connecticut 06103, Attention: Corporate Trust
Administration.  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.  The Authority, the
Borrower, the Paying Agent and the Trustee 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. Compliance
with C.G.S. Sections 4a-60 and 4a-60a.  (A)  CGS
Section 4a-60.  In accordance with Connecticut General Statutes Section
4a-60(a)(1), as amended by Connecticut Public Act 07-142, and to the extent
required by Connecticut law, the Borrower agrees and warrants as follows: (1) in
the performance of this Agreement it will not discriminate or permit
discrimination against any person or group of persons on the grounds of race,
color, religious creed, age, marital or civil union status, national origin,
ancestry, sex, mental retardation or physical disability, including, but not
limited to, blindness, unless it is shown by the Borrower that such disability
prevents performance of the work involved, in any manner prohibited by the laws
of the United States or of the State of Connecticut and further to take
affirmative action to insure that applicants with job-related qualifications are
employed and that employees are treated when employed without regard to their
race, color, religious creed, age, marital or civil union status, national
origin, ancestry, sex, mental retardation, or physical disability, including,
but not limited to, blindness, unless it is shown by the Borrower that such
disability prevents performance of the work involved; (2) in all solicitations
or advertisements for employees placed by or on behalf of the Borrower, to state
that it is an “affirmative action-equal opportunity employer” in accordance with
regulations adopted by the Commission on Human Rights and Opportunities (the
“CHRO”); (3) to provide each labor union or representative of workers with which
the Borrower  has a collective bargaining agreement or other contract or
understanding and each vendor with which the Borrower has a contract or
understanding, a notice to be provided by the CHRO advising the labor union or
workers’ representative of the Borrower’s commitments under Connecticut General
Statutes Section 4a-60, and to post copies of the notice in conspicuous places
available to employees and applicants for employment; (4) to comply with each
provision of Connecticut General Statutes Sections 4a-60, 46a-68e and 46a-68f
and with each regulation or relevant order issued by the CHRO pursuant to
Connecticut General Statutes Sections 46a-56, 46a-68e and 46a-68f; (5) to
provide the CHRO with such information requested by the CHRO, and permit access
to pertinent books, records and accounts, concerning the employment practices
and procedures of the Borrower as relate to the provisions of Connecticut
General Statutes Sections 4a-60a and 46a-56.

     

    (B)           CGS
Section 4a-60a.  In accordance with Connecticut General Statutes Section
4a-60a(a)(1), as amended by Connecticut Public Act 07-142, and to the extent
required by Connecticut law, the Borrower agrees and warrants as follows: (1)
that in the performance of this Agreement, the Borrower  will not
discriminate or permit discrimination against any person or group of persons on
the grounds of sexual orientation, in any manner prohibited by the laws of the
United States or of the State of Connecticut, and that employees are treated
when employed without regard to their sexual orientation; (2) to provide each
labor union or representative of workers with which the Borrower has a
collective bargaining agreement or other contract or understanding and each
vendor with which the Borrower has a contract or understanding, a notice to be
provided by the CHRO advising the labor union or workers’ representative of the
Borrower’s commitments under Connecticut General Statutes Section 4a-60a, and to
post copies of the notice in conspicuous places available to employees and
applicants for employment; (3) to comply with each provision of Connecticut
General Statutes Section 4a-60a and with each regulation or relevant order
issued by the CHRO pursuant to Connecticut General Statutes Section 46a-56; (4)
to provide the CHRO with such information requested by the CHRO, and permit
access to pertinent books, records and accounts, concerning the employment
practices and procedures of the Borrower which relate to the provisions of
Connecticut General Statutes Sections 4a-60a and 46a-56; and (5) to include
provisions (1) through (4) this section in every subcontract or purchase order
entered into by the Borrower  in order to fulfill any obligation of this
Agreement, and such provisions shall be binding on a subcontractor, vendor or
manufacturer unless exempted by regulations or orders of the CHRO and take such
action with respect to any such subcontract or purchase order as the CHRO may
direct as a means of enforcing such provisions in accordance with Connecticut
General Statutes Section 4a-60a.

     

    Section
9.7. 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
9.8. 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
9.9. Time.  All
references to times of day in this Agreement are references to New York City
time.

     

    Section
9.10. 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
9.11. Third
Party Beneficiaries.  The Authority and the Borrower agree that
the Trustee and the Paying Agent 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 or the Paying Agent.

     

    Section
9.12. 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  /s/  Karin
A. Lawrence

    Name:
Karin A. Lawrence

    Authorized
Representative

    

    

    

    THE
CONNECTICUT WATER COMPANY

    

    

    

    By  /s/  David
C. Benoit

    Name:  David
C. Benoit

    Title:  Vice
President - Finance and

    Chief Financial Officer

    

    
      
        
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    APPENDIX
A

     

    THE
CONNECTICUT WATER COMPANY

    

    FORM
OF

    PROMISSORY
NOTE

    2009A
SERIES

    

    

    

    No.
1 $20,000,000

     

    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 $20,000,000.00 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 December
1, 2009, 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 $20,000,000 Water Facilities Revenue Bonds (The Connecticut
Water Company Project - 2009A 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 December 1, 2009 (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.

     

    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 December
__, 2009.

     

    
      	
               
      

            	
              THE
      CONNECTICUT WATER COMPANY

            

    

     

    By:  /s/  David
C. Benoit

    Name:  David
C. Benoit

    Authorized
Representative

    
      
        
          A-

          1002708.3

        

         

      

      
         

        
          

        

      

      
         

      

    

    AUTHORITY
ENDORSEMENT

     

    Pay to
the order of U.S. Bank National Association, as Trustee, without
recourse.

    

    

    

    CONNECTICUT
DEVELOPMENT AUTHORITY

    

    

    

    By:  /s/  Karin
A. Lawrence

    Name:  Karin
A. Lawrence

    Authorized
Representative

    
      
        
          A-

        

         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
B

     

    PROJECT
DESCRIPTION

    

    The
Project shall consist of various improvements to certain of the Borrower’s water
systems each of which collects, treats, stores, transmits and distributes water
for residential, commercial, industrial and fire protection services in certain
cities, towns and communities within Connecticut.  The Borrower’s
systems are operationally separate and are organized into
regions.  Those systems affected by the improvements and the regions
to which they are allocated are as follows: (1) Shoreline Region, consisting of
the Guilford System, the Chester System, the Point O' Woods System and the Sound
View System; (2) the Naugatuck Region, consisting of the Central System, the
Collinsville System, the Unionville System and the Terryville System; (3) the
Northern Region, consisting of the Western System and the Stafford
System; and (4) the Eastern Region, consisting of the Crystal System, the
Gallup System and the Plainfield System.

     

    
      	
              Description

            	
              Location

            
	
              Shoreline
      Region

            	 
      
	
              Improvements to Elementary
      School, Chester - Replace approximately 3300 feet of 6” cast iron
      main on Rte. 148 and Ridge Road with 12” DIP to improve flow to Chester
      Elementary School. Project scope includes the replacement of services and
      hydrant(s), as appropriate.

            	
              Main
      Street from Water Street to Ridge Road and Ridge Road from Main to
      Elementary School driveway, Chester, CT.

            
	
              Comstock Ave, Essex -
      Replacement of 2900’ of 6” cast iron with 8” DIP. Project scope includes
      the replacement of services and hydrant(s).

            	
              Comstock
      Avenue, Essex, CT

            
	
              Dudley Ave, Madison -
      Replacement of 4500’ of 2” galvanized and 6” transite with 8” DIP. Project
      scope includes the replacement of services and hydrant(s).

            	
              Dudley
      Ave., North Lane, South Lane, East Lane, 1st Street, 2nd Street, Madison,
      CT.

            
	
              Glenwood Rd to Rte 81 to North
      High St, Clinton - This project involves the cleaning and lining of
      approximately 10,000 feet of 14-inch cast iron main.

            	
              Glenwood
      Road, Clinton, from Rte 81 to North High Street, Clinton,
    CT

            
	
              Westbrook Tank (Lee
      Company)  Construction of one million gallon water storage tank
      to improve system supply storage capacity.

            	
              In
      Easement located 4,000 feet off of the end of the
      existing  road,  Pequot Park Road Extension, on Lee
      Company property.  Pequot Park Road Extension is located off of
      Route 145, Westbrook, CT.

            
	
              Westbrook Tank (Lee Company)
      Connecting Main  - to connect new storage facility to
      distribution main.

            	
              In
      Easement located 4,000 feet off of the end of the
      existing  road,  Pequot Park Road Extension, on Lee
      Company property.  Pequot Park Road Extension is located off of
      Route 145, Westbrook, CT.

            
	
              Clinton Well Greensand
      Filter – add third greensand filter vessel to treatment
      facility.

            	
              Clinton
      Well Field, 93 Glenwood Road, Clinton, CT.

            
	 
      	 
      
	
              Naugatuck
      Region

            	 
      
	
              Roosevelt/Beach,
      Terryville  - Replacement of 1700’ -4” cast iron with 8”
      DIP main.  Project scope includes the replacement of services
      and hydrant(s), as appropriate.

               

            	
              Roosevelt
      and Beach Roads, Terryville, CT

            
	
              Webster Street,
      Unionville - Replacement of 2000’ of 6-inch cast iron with 8” DIP
      main in conjunction with town roadway project.  Project scope
      includes the replacement of services and hydrant(s), as
      appropriate.

            	
              Webster
      Street, from River Road to Plainville Avenue (Route 177), Unionville,
      CT

            
	
              High Street, Naugatuck -
      Replace 3000’ -8” cast iron main with 12” DIP to eliminate hydraulic
      bottle neck. Project scope includes the replacement of services and
      hydrant(s), as appropriate.

            	
              North
      Main Street to Calvin Street. – Calvin to High Street. – High to May
      Street. – May to Johnson Street, Naugatuck, CT.

            
	
              Mountain Spring Road,
      Farmington - Replacement of 3000’-6” cast iron main due to
      conflicts and relocation of state roadway project. Project scope includes
      the replacement of services and hydrant(s), as appropriate.

               

            	
              From
      Route 4 (Farmington Avenue), Farmington, CT North to end of existing main,
      3000’ .

            
	
              Spring St, Naugatuck -
      Replacement of 2300’ of 6” cast iron with 8” DIP. Project scope includes
      the replacement of services and hydrant(s).

            	
              Spring
      Street from Bridge Street to Porter Avenue, Naugatuck,
  CT.

            
	
              Scott Swamp Rd./Cook St./Rte
      10, Farmington - Replacement of 3800’ of 6” cast iron of 12” DIP.
      Project scope includes the replacement of services and
      hydrant(s).

               

            	
              Route
      10 (Main Street) from Scott Swamp Road to Hawthorne Lane, and Cooke Street
      from Hawthorne to existing main, Farmington, CT.

            
	
              Mohawk/Keene/Pickett,
      Unionville - Replacement of 5000’ of 6” cast iron with 8” DIP.
      Project scope includes the replacement of services and
      hydrant(s).

               

            	
              Keene
      Place from Plainville Ave (Rte 177) to Brittany Lane, Mohawk Drive from
      Keene Place to West District Rd, Pickett Lane to cul-de-sac, Batt Court
      Loop, Unionville, CT.

            
	
              Farmington Ave-Garden to High
      St, Unionville - Replacement of 1500’ of 6” cast iron with 12” DIP.
      Project scope includes the replacement of services and
      hydrant(s).

               

            	
              Farmington
      Avenue  (Rte. 4) from Garden Street to High Street, Farmington,
      CT.

            
	
              Prospect Street, Vernon
      - Replace 2800’ of 10” cast iron with 12” DIP main in conjunction with
      town roadway project. Project scope includes the replacement of services
      and hydrant(s), as appropriate.

            	
              Prospect
      Street from Gaynor Place to Union Street, Vernon, CT.

            
	
              Ellsworth Estates, East Windsor
      -  Replace 6800’ of plastic distribution system and
      services, remove existing pressure reducing valve required due to
      condition of existing pipe and causing flow restriction.

            	
              Includes
      all or part of Rye Street, Petticoat Lane, Omelia Road, Ellsworth Road,
      Allen Street, East Windsor, CT.

            
	
              High St., Enfield -
      Involves the replacement of 2200' of existing cast iron water main.
      Project scope includes the replacement of services and hydrant(s), as
      appropriate.

            	
               High
      Street, entire length from Route 5 to Prospect Street, Enfield,
      CT.

            
	
              Chestnut Street, Windsor
      Locks - Involves replacement of existing 10" transite water mains
      on Chestnut Street in conjunction with Town restoration project. Project
      scope includes the replacement of services and hydrant(s), as
      appropriate.

               

            	
              Chestnut
      Street, entire length from Spring Street to Route 159 (Main Street),
      Windsor Locks, CT.

            
	
              Prospect Hill Phase I&II,
      East Windsor - Replacement of 7500’ of 6” transite main with 8-inch
      DIP in conjunction with town reconstruction work.  Project scope
      includes the replacement of services and hydrant(s). Original main
      installed 1950s.

               

            	
              Streets
      include Prospect Hill, Cricket, Broadview and Button, East Windsor,
      CT

            
	
              Road Restoration, South
      Windsor - Involves replacement of existing cast iron and transite
      water mains in conjunction with Town restoration project(s). Project scope
      includes the replacement of services and hydrant(s), as
      appropriate.

               

            	
              Brewster,
      Gray and Arnold Streets, South Windsor, CT

            
	
              Rte. 31 / 275, Coventry
      - Replacement of 4500’ of existing 6 & 4 inch cast iron distribution
      pipe in conjunction with DOT road reconstruction of Rte. 275 and Rte.
      31.

               

            	
              Rte.
      31 from Rte. 275 (Stonehouse Road) to Armstrong Road, Coventry,
      CT.

            
	
              Mountain Road, Suffield
      - Replacement of 7500’ of 10 and 4” cast iron main with 12” DIP. Project
      scope includes the replacement of services and hydrant(s).

            	
              Mountain
      Road (Rte. 168) from Rte. 75 to Plantation Drive, Suffield,
      CT.

            
	
              Gardener and Pleasant St, East
      Windsor - Replacement of 2400’ of 6&4” cast iron main with 8”
      DIP. Project scope includes the replacement of services and
      hydrant(s)..

               

            	
              Gardener
      Street and Pleasant Street from Gardener to North Main Street., East
      Windsor, CT.

            
	
              Whiton, West & Wicklow,
      Windsor Locks - Replacement of 4500 of 4” cast iron with 8” DIP in
      conjunction with town roadway project. Project scope includes the
      replacement of services and hydrant(s), as appropriate.

            	
              Whiton
      and Wicklow Streets, West Street from North to Spring Street, Windsor
      Locks, CT.

            
	
              Talcottville/Old Main,
      Vernon - Replacement of 11,000 feet of 6&4” transite main with
      8” DIP. Project scope includes the replacement of services and
      hydrant(s).

            	
              Streets
      include Hartl [Sp?],  Taylor,
      Lorraine, Welles, Acorn and Allison, Vernon, CT.

            
	
              Road Restoration,
      Enfield - Involves replacement of existing cast iron and/or
      transite water mains, in conjunction with Town restoration project(s).
      Project scope includes the replacement of services and hydrant(s), as
      appropriate.

            	
              Alden,
      Lafayette, and Jim Streets, Enfield, CT.

            
	
              Road Restoration, South Windsor
      – Involves replacement of existing cast iron and/or transite water
      mains the Avery Heights area in conjunction with Town restoration
      project(s). Project scope includes the replacement of services and
      hydrant(s), as appropriate.

            	
              Spruce
      Lane and Benedict Drive, South Windsor, CT.

            
	
              Rockville Water Treatment Plant
      Sludge Lagoon, Pump Station, and Sedimentation Basins
      -  Construction of booster pump station, clarifier sludge
      lagoons, and installation of piping from booster to
    lagoons.

            	
              Plant
      is located on Snipsic Street, Rockville, sludge lagoons will be located on
      Company property along Collins Stage Road, Rockville,
  CT.

            
	
              Lakewood Well Treatment
      Addition –  Expansion of treatment building to serve area
      at an increased capacity.

            	
              Edgewater
      Drive, Coventry, CT.

            
	
              Interconnection with Manchester
      Water – Interconnect with adjoining system to serve new development
      in South Windsor, expansion of Evergreen Walk.

            	
              Buckland
      Drive near Lowe’s, Manchester, CT.

            
	
              Ellington Acres Interconnection
      – Field/Egypt Road, Somers.  Install approximately 8100
      lf 12" DIP water main to interconnect Northern Western system from Somers
      to Ellington Acres system

            	
              Field
      Road from New England Tractor Trailer Training School
      to  Billings Road, Egypt Road from Billings to existing main at
      Town Garage,  Somers, CT

            
	
              Eastern
      Region

            	 
      
	
              Wauregan Village Imp. - Phase
      III -  Completion of system upgrade requires installation
      of 1800’ – 8” DIP to replace the balance of the 6’ & <=2” pipe
      located on private property. Project scope includes the replacement of
      services and hydrant(s), as appropriate.

               

            	
              North
      Chestnut Street., North Walnut Street., Grove Street., North Cross Street.
      and Fountain Street, Wauregan, CT.

            
	
              Ballouville Rd., Ballouville -
      Involves replacement of 6000' of existing 6" cast iron main.
      Project scope includes replacement of services and fire hydrant(s), as
      appropriate.

               

            	
              Ballouville
      Road from Attawagan Crossing Road to Chestnut Hill Road, Killingly,
      CT.

            
	
              Onion Hill neighborhood,
      Plainfield -   Replace 2650’ – 4” cast iron with 8”
      DIP main.  Project scope includes the replacement of services
      and hydrant(s), as appropriate.

               

            	
              Laurel
      Street, North . Pleasant Street, Ashley, Dougherty and Rte. 14A,
      Plainfield, CT.

            
	
              Maple St Area,
      Brooklyn/Danielson - Replacement of 2000’of cast iron and
      galvanized main, <=4”.. Project scope includes the replacement of
      services and hydrant(s).

               

            	
              Williams,
      Cave, Adelaide, Fredrick, Griffin, Leander, Middle Streets, Danielson,
      CT.

            
	
              Westchester Village Well
      Station – Develop new well to supply residential complex,
      construction of pump station building and treatment.

            	
              Shailor
      Hill Road, Colchester, CT.

            

    

     
 

     

    

     

    

     

    

    
      
        
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