Document:

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                                                                    EXHIBIT 4.14

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                        CONNECTICUT DEVELOPMENT AUTHORITY

                                       AND

                          THE CONNECTICUT WATER COMPANY

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

                                 LOAN AGREEMENT

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

                           DATED AS OF OCTOBER 1, 2003

                        CONNECTICUT DEVELOPMENT AUTHORITY
              $14,930,000 WATER FACILITIES REFUNDING REVENUE BONDS
             (THE CONNECTICUT WATER COMPANY PROJECT - 2003C SERIES)

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                                TABLE OF CONTENTS

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                                                                                                          PAGE
<S>                                                                                                       <C>
PREAMBLE        ..................................................................................         1
                                                  ARTICLE I
                                       DEFINITIONS AND INTERPRETATION
   Section 1.1. Definitions.......................................................................         3
   Section 1.2. Interpretation....................................................................         8
                                                 ARTICLE II
                                       REPRESENTATIONS AND WARRANTIES
   Section 2.1. Representations by the Authority..................................................        .9
   Section 2.2. Representations by the Borrower...................................................        10
                                                 ARTICLE III
                                                  THE LOAN
   Section 3.1. Loan Clauses......................................................................        12
   Section 3.2. Other Amounts Payable.............................................................        12
   Section 3.3. Manner of Payment.................................................................        13
   Section 3.4. Obligation Unconditional..........................................................        13
   Section 3.5. Securities Clauses................................................................        13
   Section 3.6. Issuance of Bonds.................................................................        13
   Section 3.7. Effective Date and Term...........................................................        13
   Section 3.8. No Additional Bonds...............................................................        14
                                                 ARTICLE IV
                                                 THE PROJECT
   Section 4.1. Completion of the Project.........................................................        15
   Section 4.2. Borrower Contribution.............................................................        15
   Section 4.3. No Warranty Regarding Condition, Suitability or Cost of Project...................        15
   Section 4.4. Taxes.............................................................................        15
   Section 4.5. Insurance.........................................................................        16
   Section 4.6. Compliance with Law...............................................................        16
   Section 4.7. Maintenance and Repair............................................................        16
   Section 4.8. Disposition of Project Realty by Borrower.........................................        17
   Section 4.9. Leasing of the Project Realty and the Project Equipment...........................        17
   Section 4.10. Project Equipment................................................................        17
                                                  ARTICLE V
                                     CONDEMNATION DAMAGE AND DESTRUCTION
   Section 5.1. No Abatement of Payments Hereunder................................................        18
   Section 5.2. Project Disposition Upon Condemnation, Damage or Destruction......................        18
   Section 5.3. Application of Net Proceeds of Insurance or Condemnation..........................        18
                                                 ARTICLE VI
                                                  COVENANTS
   Section 6.1. The Borrower to Maintain its Corporate Existence; Conditions under which
                  Exceptions Permitted.... .......................................................        19
   Section 6.2. Indemnification, Payment of Expenses, and Advances................................        19
   Section 6.3. Incorporation of Tax Regulatory Agreement; Payments Upon Taxability...............        21
   Section 6.4. Public Purpose Covenants..........................................................        22
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<S>                                                                                                       <C>
   Section 6.5. Further Assurances and Corrective Instruments.....................................        22
   Section 6.6. Covenant by Borrower as to Compliance with Indenture..............................        22
   Section 6.7. Assignment of Agreement or Note...................................................        22
   Section 6.8. Inspection........................................................................        23
   Section 6.9. Default Notification..............................................................        23
   Section 6.10.Covenant Against Discrimination...................................................        23
   Section 6.11.Covenant to Provide Disclosure....................................................        23
   Section 6.12.Covenant Against Issuing Additional Debt Secured by the Mortgage..................        23
   Section 6.13.Annual Reporting Requirements.....................................................        23
                                                 ARTICLE VII
                                       EVENTS OF DEFAULT AND REMEDIES
   Section 7.1. Events of Default.................................................................        24
   Section 7.2. Remedies on Default...............................................................        25
   Section 7.3. Remedies on Public Purpose Default................................................        26
   Section 7.4. No Duty to Mitigate Damages.......................................................        27
   Section 7.5. Remedies Cumulative...............................................................        27
                                                ARTICLE VIII
                                            PREPAYMENT PROVISIONS
   Section 8.1. Optional Prepayment...............................................................        28
   Section 8.2. Notices and Sources of Prepayment.................................................        29
   Section 8.3. Mandatory Prepayment on Taxability................................................        29
   Section 8.4. Mandatory Prepayment for Deceased Bondholder Redemption...........................        29
                                                 ARTICLE IX
                                                   GENERAL
   Section 9.1. Indenture.........................................................................        30
   Section 9.2. Benefit of and Enforcement by Bondholders.........................................        30
   Section 9.3. Force Majeure.....................................................................        30
   Section 9.4. Amendments........................................................................        30
   Section 9.5. Notices...........................................................................        30
   Section 9.6. Prior Agreements Superseded.......................................................        31
   Section 9.7. Execution of Counterparts.........................................................        31
   Section 9.8. Time 31
   Section 9.9. Separability of Invalid Provisions................................................        31
   Section 9.10.Third Party Beneficiaries.........................................................        31
   Section 9.11.Governing Law.....................................................................        31
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APPENDICES
         Appendix A - Form of Promissory Note
         Appendix B - Description of Project Realty
         Appendix C - Description of Project Equipment

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                        CONNECTICUT DEVELOPMENT AUTHORITY

                          THE CONNECTICUT WATER COMPANY

                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT, made and dated as of October 1, 2003, by and
between the CONNECTICUT DEVELOPMENT AUTHORITY, a body corporate and politic
constituting a public instrumentality and political subdivision of the State of
Connecticut, and THE CONNECTICUT WATER COMPANY, a corporation organized and
existing under the laws of the State of Connecticut,

                                WITNESSETH THAT:

         WHEREAS, the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23yy, as amended (the "Act"), declares that
there is a continuing need in the State (1) for industrial development and
activity to provide and maintain employment and tax revenues and to control,
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, the Authority has heretofore issued and sold $15,000,000 of
its Water Facilities Refunding Revenue Bonds (The Connecticut Water Company
Project - 1992 Series) ($14,640,000 of which were outstanding as of the date of
this Loan Agreement) (the "Prior Obligations"), the proceeds of which were used
to refund in full the Authority's Water Facilities Revenue Bonds (The
Connecticut

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Water Company Project - 1987 Series) (the "1987 Bonds"), the proceeds of which
were used to finance various capital improvements constituting a portion of the
Borrower's existing water system (the "Project"); and

         WHEREAS, the Authority has by a resolution adopted June 18, 2003
authorized the issuance of $15,000,000 principal amount of its Water Facilities
Refunding Revenue Bonds (The Connecticut Water Company Project - 2003C Series)
for the purpose of refunding in full the Prior Obligations; and

         WHEREAS, pursuant to such resolution the Bonds (as hereinafter defined)
are to be secured by an Indenture of Trust of even date herewith, by and between
the Authority and U.S. Bank National Association, as Trustee; and

         WHEREAS, the Bonds shall be special obligations of the Authority,
payable solely from the revenues or other receipts, funds or monies to be
derived by the Authority under this Agreement or the Indenture and from any
amounts otherwise available under the Indenture for the payment of the Bonds;
and

         WHEREAS, the Authority proposes with the proceeds of the Bonds to make
a loan to the Borrower and the Borrower proposes to borrow such proceeds from
the Authority for the purpose of refunding the Prior Obligations issued by the
Authority to refund the 1987 Bonds, which 1987 Bonds were issued to finance the
acquisition, construction and installation of the Project; and

         WHEREAS, the Borrower acknowledges that the Authority is providing
refinancing for the Project in furtherance of the Authority's corporate purposes
under the Act, that the accomplishment of these purposes is dependent upon the
compliance of the Borrower with its covenants contained in this Agreement, that
the Authority has a resulting interest in the Project, and that the Borrower's
use of and interest in the Project as provided hereby are in furtherance of the
discharge of a public purpose; and

         WHEREAS, the Connecticut Department of Public Utility Control (the
"DPUC") has approved the issuance of the Note;

         NOW, THEREFORE, in consideration of the premises and of the mutual
representations, covenants and agreements herein set forth, the Authority and
the Borrower, each binding itself, its successors and assigns, do mutually
promise, covenant and agree as follows (provided that in the performance of the
agreements of the Authority herein contained, any obligation it may incur for
the payment of money shall not be an obligation, debt or liability of the State
or any municipality thereof and neither the State nor any municipality thereof
shall be liable on any obligation so incurred, but any such obligation shall be
payable solely out of the revenues or other receipts, funds or monies to be
derived by the Authority under this Agreement or the Indenture and from any
amounts otherwise available under the Indenture for the payment of the Bonds):

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                                   ARTICLE I
                         DEFINITIONS AND INTERPRETATION

         SECTION 1.1. DEFINITIONS. For the purposes of this Agreement, the
following words and terms shall have the respective meanings set forth as
follows, and any capitalized word or term used but not defined herein is used as
defined in the Indenture:

         "Act" means the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-la through 32-23yy, as amended.

         "Agreement" means this Loan Agreement and any amendments and
supplements hereto.

         "Authority" means the Connecticut Development Authority, a body
corporate and politic constituting a public instrumentality and political
subdivision of the State of Connecticut, duly organized and existing under the
laws of the State, and any body, board, authority, agency or other political
subdivision or instrumentality of the State which shall hereafter succeed to the
powers, duties and functions thereof.

         "Authorized Representative" means, in the case of the Authority, the
Chairman or Vice Chairman, the President, any Executive Vice President, Deputy
Director or any Senior Vice President or any Vice President thereof and, in the
case of the Borrower, the Chairman, the President and Chief Executive Officer,
the Vice President-Chief Financial Officer and Treasurer, and any Vice
President, Assistant Treasurer or Secretary thereof and, when used with
reference to the performance of any act, the discharge of any duty or the
execution of any certificate or other document, any officer, employee or other
person authorized to perform such act, discharge such duty or execute such
certificate or other document.

         "Beneficial Owner" shall have the meaning specified in Section 2.3(F)
of the Indenture. If any person claims to the Trustee to be a Beneficial Owner,
for purposes of Section 2.4(C) of the Indenture, such person shall prove such
claim to the satisfaction of the Trustee with such documentation and signature
guaranties as the Trustee may request.

         "Bonds" means the $14,930,000 Water Facilities Refunding Revenue Bonds
(The Connecticut Water Company Project - 2003C Series) authorized and issued
pursuant to Section 2.3 of the Indenture.

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

         "Bond Insurance Policy" means the financial guaranty insurance policy
issued by the Bond Insurer insuring the payment when due of the principal of and
interest on the Bonds as provided therein.

         "Bond Insurer" means XL Capital Assurance Inc., a financial guaranty
insurance company incorporated under the laws of the State of New York, and its
successors and assigns.

         "Borrower" means (i) The Connecticut Water Company, a corporation
organized and existing under the laws of the State of Connecticut, and its
successors and assigns and (ii) any surviving, resulting or transferee
corporation as provided in Section 6.1 hereof.

         "Business Day" means any day (i) that is not a Saturday or Sunday, (ii)
that is a day on which banks located in Hartford, Connecticut and New York, New
York are not required or authorized to remain closed, (iii) that is a day on
which banking institutions in all of the cities in which the principal offices
of

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the Trustee and the Paying Agent are located and are not required or authorized
to remain closed and (iv) that is a day on which the New York Stock Exchange,
Inc. is not closed.

         "Code" means the Internal Revenue Code of 1986, as amended and
regulations promulgated thereunder.

         "Debt Service Fund" means the special trust fund so designated,
established pursuant to Section 5.1 of the Indenture.

         "DTC" or "The Depository Trust Company" shall mean the limited-purpose
trust company organized under the laws of the State of New York which shall act
as securities depository for the Bonds, and any successor thereto.

         "Determination of Taxability" means with respect to the Bonds (1) a
ruling by the Internal Revenue Service, (2) the receipt by the owner of any of
the Bonds from the Internal Revenue Service of a notice of assessment and demand
for payment and (provided the Borrower has been afforded the opportunity to
participate at its own expense in all appeals and proceedings to which such
owner of the Bonds is a party relating to such assessment and demand for
payment) the expiration of the appeal period provided therein if no appeal is
taken or, if an appeal is taken by such owner as provided in Section 6.3 of this
Agreement within the applicable appeal period which has the effect of staying
the demand for payment, a final unappealable decision by a court of competent
jurisdiction, or (3) the admission in writing by the Borrower, in any case to
the effect that the interest on any Bonds is includable in the gross income for
federal income tax purposes (other than for purposes of any alternative minimum
tax, environmental tax or foreign branch profits tax) of an owner or former
owner thereof, other than for a period during which such owner or former owner
is or was a "Substantial User" of the Project financed by such Bonds or a
"Related Person" as such terms are defined in the Code. For purposes of this
definition, the term owner means the Beneficial Owner of the Bonds so long as
the Book-Entry System is in effect.

         "DPUC" means the State Department of Public Utilities Control.

         "Disclosure Agreement" means the agreement by and between the Borrower
and U.S. Bank National Association, as dissemination agent, dated the date of
the initial delivery of the Bonds, providing for the provision of certain
information subsequent to the issuance of the Bonds.

         "Event of Default" means an Event of Default as defined in subsection
7.1 hereof.

         "Favorable Opinion of Bond Counsel" means an opinion of Bond Counsel
addressed to the Authority, the Bond Insurer, the Bank and the Trustee to the
effect that the action proposed to be taken is not prohibited by the laws of the
State or the Indenture and will not adversely affect any exclusion of interest
on the Bonds from gross income for federal income tax purposes.

         "Financing Documents" (1) when used with respect to the Borrower, means
this Agreement, the Tax Regulatory Agreement, the Note, the Disclosure Agreement
and the general certificate of the Borrower delivered in connection with the
issuance of the Bonds, but shall not include the Mortgage, and (2) when used
with respect to the Authority, means any of the foregoing documents and
agreements to which the Authority is a direct party. The Financing Documents do
not include any documents or agreements to which the Borrower is not a direct
party, including the Bonds or the Indenture.

         "Indenture" means the Indenture of Trust relating to the Bonds, of even
date herewith, by and between the Authority and the Trustee, together with all
indentures supplemental thereto made and entered into in accordance therewith.

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         "Interest Payment Date" shall mean March 1, 2004 and each March 1 and
September 1 thereafter on which interest is payable on the Bonds as provided in
the forms of the Bonds.

         "Moody's" means 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.

         "Mortgage" means the Indenture of Mortgage and Deed of Trust, dated as
of June 1, 1956, between the Borrower and U.S. Bank National Association
(successor to The Connecticut Bank and Trust Company), as Mortgage Bond
Indenture Trustee, as amended as of the date hereof and as may be amended
hereafter.

         "Mortgage Bond Indenture Trustee" means U.S. Bank National Association,
acting as Mortgage Bond Indenture Trustee pursuant to the Mortgage.

         "Net Proceeds" when used with respect to any insurance or condemnation
award, means the gross proceeds from such award less all expenses (including
attorney's fees and expenses and any extraordinary expenses) incurred by the
Trustee in the collection thereof.

         "Note" means the promissory note of the Borrower to the Authority,
dated the date of initial delivery of the Bonds in the form attached as Appendix
A to this Agreement, and any amendments or supplements made in conformity with
this Agreement and the Indenture.

         "Outstanding", when used with reference to a Bond or Bonds, as of any
particular date, means all Bonds which have been authenticated and delivered
under the Indenture, except:

                  (1)      any Bonds canceled by the Trustee because of payment
         or redemption prior to maturity or surrendered to the Trustee for
         cancellation;

                  (2)      any Bond (or portion of a Bond) paid or redeemed or
         for the payment or redemption of which there has been separately set
         aside and held in the Debt Service Fund either:

                           (a)      monies in an amount sufficient to effect
                  payment of the principal or applicable Redemption Price
                  thereof, together with accrued interest on such Bond to the
                  payment or redemption date, which payment or redemption date
                  shall be specified in irrevocable instructions given to the
                  Trustee to apply such monies to such payment on the date so
                  specified; or

                           (b)      obligations of the kind described in
                  subsection 12.1(B) of the Indenture in such principal amounts,
                  of such maturities, bearing such interest and otherwise having
                  such terms and qualifications as shall be necessary to provide
                  monies in an amount sufficient to effect payment of the
                  principal or applicable Redemption Price of such Bond,
                  together with accrued interest on such Bond to the payment or
                  redemption date, which payment or redemption date shall be
                  specified in irrevocable instructions given to the Trustee to
                  apply such obligations to such payment on the date so
                  specified; or

                           (c)      any combination of (a) and (b) above;

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                  (3)      Bonds in exchange for or in lieu of which other Bonds
         shall have been authenticated and delivered under Article III of the
         Indenture; and

                  (4)      any Bond deemed to have been paid as provided in
         subsection 12.1 of the Indenture.

         "Paying Agent" means any paying agent for the Bonds appointed pursuant
to Section 9.10 of the Indenture (and may include the Trustee), and its
successor or successors and any other corporation which may at any time be
substituted in its place in accordance with the Indenture.

         "Permitted Encumbrances" mean, as of any particular date, (i) the lien
of the Mortgage, (ii) liens and encumbrances permitted by the Mortgage, (iii)
liens for taxes not yet due and payable, (iv) any lien created by this Agreement
and the Indenture, (v) utility, access and other easements and rights-of-way,
that will not interfere with or impair the value or use of the Project as herein
provided, (vi) any mechanic's, laborer's, materialman's, supplier's or vendor's
lien or right in respect thereof if payment is not yet due and payable and for
which statutory lien rights exist, (vii) such minor defects, irregularities,
easements, and rights-of- way (including agreements with any railroad the
purpose of which is to service the railroad siding) as normally exist with
respect to property similar in character to the Project and which do not
materially impair the value or use of the property affected thereby for the
purpose for which it was acquired hereunder, and (viii) any mortgage, lien,
security interest or other encumbrance to which the Authority and the Bond
Insurer may consent as provided in Section 4.8 hereof.

         "Principal User" means any principal user of the Project within the
meaning of Section 144(a)(2)(B) of the Code, including without limitation any
person who is a greater-than-10-percent-owner (or if none, the person(s) who
holds the largest ownership interest in the Project), lessee or user of more
than 10% of the Project measured either by occupiable space or fair rental value
under any formal or informal agreement or, under the particular facts and
circumstances, anyone who is a principal customer of the Project. The term
"principal customer" means any person, who purchases output of the Project under
a contract if the percentage of output taken or to be taken by such person,
multiplied by a fraction the numerator of which is the term of such contract and
the denominator of which is the economic life of the Project, exceeds 10%. In
the case of a person who purchases output of an electric or thermal energy, gas,
water or other similar facility, such person is a principal customer if the
total output purchased by such person during any one year period beginning with
the date the facility is placed in service is more than 10 percent of the
facility's output during each such period. Co-owners or co-lessees who are
shareholders in a corporation or who are collectively treated as a partnership
subject to subchapter K under section 761(a) of the Code are not treated as
Principal Users merely by reason of their ownership of corporate or partnership
interests.

         "Prior Obligations" means the $14,640,000 aggregate principal amount of
the Authority's Water Facilities Refunding Revenue Bonds (The Connecticut Water
Company Project - 1992 Series).

         "Project" means the Borrower's interest in the Project Realty and other
interests in the real property, and in all Project Equipment wherever located
and whether now owned or hereafter acquired or refinanced in whole or in part
with the proceeds of the Bonds and any additions and accessions thereto,
substitutions therefor and replacements, improvements, extensions and
restorations thereof, described in the appendices hereto, as amended from time
to time in accordance with this Agreement.

         "Project Equipment" means all personal property, goods, leasehold
improvements, machinery, equipment, furnishings, furniture, fixtures, tools and
attachments wherever located and whether now owned or hereafter acquired,
refinanced in whole or in part with the proceeds of the Bonds, and any additions
and accessions thereto, substitutions therefor and replacements thereof,
including, without

                                      -6-
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limitation the Project Equipment described in Appendix C hereto, as amended from
time to time in accordance herewith.

         "Project Realty" means the realty and other interests in the real
property refinanced in whole or in part from the proceeds of the Bonds, together
with all replacements, improvements, extensions, substitutions, restorations and
additions thereto which are made pursuant hereto, including without limitation,
the Project Realty described in Appendix B, as amended from time to time in
accordance herewith.

         "Redemption Price" means, when used with respect to a Bond or a portion
thereof, the principal amount of such Bond or portion thereof plus the
applicable premium, if any, payable upon redemption thereof pursuant to the
Indenture.

         "Related Person" means, with respect to any Principal User, a person
which is a related person (as defined in Section 144(a)(3) of the Code, and by
reference to Sections 267, 707(b) and 1563(a) of the Code, except that 50% is to
be substituted for 80% in Section 1563(a)).

         "S&P" means Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc., a corporation organized and existing under the laws of the State of
New York, its successors and their assigns, and, if such corporation or division
shall be dissolved, eliminated, reorganized, or liquidated or shall no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other nationally recognized securities rating agency designated by
the Authority at the direction of the Borrower, by notice to the Trustee and the
Borrower.

         "State" means the State of Connecticut.

         "Substantial User" means any substantial user of the Project within the
meaning of Section 147(a) of the Code.

         "Supplemental Indenture" means any indenture supplemental to the
Indenture or amendatory of the Indenture, adopted by the Authority in accordance
with Article X of the Indenture.

         "Tax Incidence Date" means the date as of which interest on the Bonds
becomes or became includable in the gross income of the recipient thereof (other
than the Borrower or another Substantial User or Related Person) for federal
income tax purposes for any cause, as determined by a Determination of
Taxability.

         "Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated as
of the date of initial issuance and delivery of the Bonds, among the Authority,
the Borrower and the Trustee, and any amendments and supplements thereto.

         "Term", when used with reference to this Agreement, means the term of
this Agreement determined as provided in Article III hereof.

         "Trustee" means U.S. Bank National Association, and its successor or
successors hereafter appointed in the manner provided in the Indenture.

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         SECTION 1.2. INTERPRETATION. IN THIS AGREEMENT:

                  (1)      The terms "hereby", "hereof", "hereto", "herein",
         "hereunder" and any similar terms, as used in this Agreement, refer to
         this Agreement, and the term "hereafter" means after, and the term
         "heretofore" means before, the date of this Agreement.

                  (2)      Words of the masculine gender mean and include
         correlative words of the feminine and neuter genders and words
         importing the singular number mean and include the plural number and
         vice versa.

                  (3)      Words importing persons include firms, associations,
         partnerships (including limited partnerships), trusts, corporations and
         other legal entities, including public bodies, as well as natural
         persons.

                  (4)      Any headings preceding the texts of the several
         Articles and Sections of this Agreement, and any table of contents
         appended to copies hereof, shall be solely for convenience of reference
         and shall not constitute a part of this Agreement, nor shall they
         affect its meaning, construction or effect.

                  (5)      Nothing contained in this Agreement shall be
         construed to cause the Borrower to become the agent for the Authority
         or the Trustee for any purpose whatsoever, nor shall the Authority or
         the Trustee be responsible for any shortage, discrepancy, damage, loss
         or destruction of any part of the Project wherever located or for
         whatever cause.

                  (6)      All approvals, consents and acceptances required to
         be given or made by any person or party hereunder shall be at the sole
         discretion of the party whose approval, consent or acceptance is
         required.

                  (7)      All notices to be given hereunder shall be given in
         writing within a reasonable time unless otherwise specifically
         provided.

                  (8)      If any provision of this Agreement shall be ruled
         invalid by any court of competent jurisdiction, the invalidity of such
         provision shall not affect any of the remaining provisions hereof.

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                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

         SECTION 2.1. REPRESENTATIONS BY THE AUTHORITY.

                  The Authority represents and warrants that:

                  (1)      It is a body corporate and politic constituting a
         public instrumentality and political subdivision of the State, duly
         organized and existing under the laws of the State including the Act.
         The Authority is authorized to issue the Bonds in accordance with the
         Act and to use the proceeds thereof to refund in full the Prior
         Obligations and refinance the Project.

                  (2)      The Authority has complied with the provisions of the
         Act and has full power and authority pursuant to the Act to consummate
         all transactions contemplated by the Bonds, the Indenture and the
         Financing Documents.

                  (3)      By resolution duly adopted by the Authority and still
         in full force and effect, the Authority has authorized the execution,
         delivery and due performance of the Bonds, the Indenture and the
         Financing Documents, and the taking of any and all action as may be
         required on the part of the Authority to carry out, give effect to and
         consummate the transactions contemplated by this Agreement and the
         Indenture, and all approvals necessary in connection with the foregoing
         have been received.

                  (4)      The Bonds have been duly authorized, executed,
         authenticated, issued and delivered, constitute valid and binding
         special obligations of the Authority payable solely from revenues or
         other receipts, funds or monies pledged therefor under the Indenture
         and from any amounts otherwise available under the Indenture, and are
         entitled to the benefit of the Indenture. Neither the State nor any
         municipality thereof is obligated to pay the Bonds or the interest
         thereon. Neither the faith and credit nor the taxing power of the State
         nor any municipality thereof is pledged for the payment of the
         principal, and premium, if any, of and interest on the Bonds.

                  (5)      The execution and delivery of the Bonds, the
         Indenture and the Financing Documents and compliance with the
         provisions thereof, will not conflict with or constitute on the part of
         the Authority a violation of, breach of or default under its by-laws or
         any statute, indenture, mortgage, deed of trust, note agreement or
         other agreement or instrument to which the Authority is a party or by
         which the Authority is bound, or, to the knowledge of the Authority,
         any order, rule or regulation of any court or governmental agency or
         body having jurisdiction over the Authority or any of its activities or
         properties, and all consents, approvals, authorizations and orders of
         governmental or regulatory authorities which are required for the
         consummation by the Authority of the transactions contemplated thereby
         have been obtained.

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

                  (7)      There is no action, suit, proceeding or investigation
         at law or in equity before or by any court, public board or body
         pending or threatened against or affecting the Authority, or to the
         best knowledge of the Authority, any basis therefor, wherein an
         unfavorable decision, ruling or finding would adversely affect the
         transactions contemplated hereby or by the Indenture, or which, in any
         way, would adversely affect the validity of the Bonds, or the validity
         of or

                                      -9-
<PAGE>

         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.

                                      -10-
<PAGE>

                  (6)      The Borrower represents that it has not made any
         commitment or taken any action which will result in a valid claim for
         any finders' or similar fees or commitments in respect of the
         transactions described in this Agreement other than the fees to various
         parties to the transactions contemplated hereby which have been
         heretofore paid or provided.

                  (7)      The Project is included within the definition of a
         "project" in the Act. The Borrower intends the Project to continue to
         be an authorized project under the Act during the Term of this
         Agreement.

                  (8)      All amounts shown in Schedule D of the Tax Regulatory
         Agreement are eligible costs of a project financed by bonds issued by
         the Authority under the Act, and may be refinanced by amounts in the
         Refunding Fund under the Indenture. None of the proceeds of the Bonds
         will be used directly or indirectly as working capital or to finance
         inventory.

                  (9)      The Project is in material compliance with all
         applicable federal, State and local laws and ordinances (including
         rules and regulations) relating to zoning, building, safety and
         environmental quality.

                  (10)     The availability of financial assistance from the
         Authority, among other factors, has induced the Borrower to locate the
         Project in the State. The Borrower does not presently intend to lease
         the Project.

                  (11)     The Borrower will not take or omit to take any action
         which action or omission will in any way cause the proceeds of the
         Bonds to be applied in a manner contrary to that provided in the
         Indenture and the Financing Documents as in force from time to time.

                  (12)     The Borrower has not taken and will not take any
         action and knows of no action that any other person, firm or
         corporation has taken or intends to take, which would cause interest on
         the Bonds to be includable in the gross income of the recipients
         thereof for federal income tax purposes. The representations,
         certifications and statements of reasonable expectation made by the
         Borrower in the Tax Regulatory Agreement and relating to Project
         description, composite issues, bond maturity and average asset economic
         life, use of Bond proceeds, arbitrage and related matters are hereby
         incorporated by this reference as though fully set forth herein.

                  (13)     The Borrower has good and marketable title in fee
         simple to the Project Realty subject only to Permitted Encumbrances and
         to irregularities or defects in title which may exist which do not
         materially impair the use of such properties in the Borrower's
         business.

                  (14)     The Borrower has good and merchantable title to the
         Project Equipment owned by the Borrower as of the date hereof, free and
         clear of liens and encumbrances, other than Permitted Encumbrances.

                  (15)     As of the date of hereof, except for the Mortgage,
         neither the Borrower, nor to its knowledge anyone acting on behalf of
         the Borrower, has entered into negotiations with any person for the
         purpose of undertaking any borrowing concurrently with or subsequent to
         the issuance of the Bonds and to be secured wholly or partially by a
         lien or encumbrance on the Project or any part thereof, and the
         Borrower has no present intention of undertaking any such borrowing.

                  (16)     The Borrower will use all of the proceeds of the
         Bonds to refund in full the Prior Obligations and to pay a portion of
         the costs of issuance of the Bonds.

                                      -11-
<PAGE>

                                  ARTICLE III
                                    THE LOAN

         SECTION 3.1. LOAN CLAUSES. (A) Subject to the conditions and in
accordance with the terms of this Agreement, the Authority agrees to make a loan
to the Borrower from the proceeds of the Bonds in the amount of $14,930,000 and
the Borrower agrees to borrow such amount from the Authority.

         (B)      The loan shall be made at the time of delivery of the Bonds
and receipt of payment therefor by the Authority against receipt by the
Authority of the Note duly executed and delivered to evidence the pecuniary
indebtedness of the Borrower hereunder. As and for the loan the Authority shall
apply the proceeds of the Bonds as provided in the Indenture on the terms and
conditions therein prescribed.

         (C)      On or before the third Business Day immediately preceding each
due date for the payment of the principal of or interest on the Bonds, until the
principal or Redemption Price, if any, of and interest on the Bonds shall have
been fully paid or provision for the payment thereof shall have been made in
accordance with the Indenture, the Borrower shall make loan payments to the
Trustee for the account of the Authority in an amount which, when added to any
moneys then on deposit in the Debt Service Fund and available therefor, shall be
equal to the amount payable on such due date with respect to the Bonds as
provided in Section 5.3 of the Indenture, including amounts due for the payment
of the principal of and interest on the Bonds. In addition, the Borrower shall
pay to the Trustee, as and when the same shall become due, all other amounts due
under the Financing Documents, together with interest thereon at the then
applicable rate as set forth herein in Section 6.2(G). The Borrower shall have
the option to prepay its loan obligation in whole or in part at the times and in
the manner provided in Article VIII hereof.

         (D)      Anything herein to the contrary notwithstanding any amount at
any time held in the Principal and Interest Account of the Debt Service Fund by
the Trustee pursuant to this Section shall be credited against the next
succeeding loan payment obligation of the Borrower as provided in subsection
3.1(C) hereof. If, on any due date for payments with respect to the Bonds, the
balance in the Debt Service Fund is insufficient to make such payments, the
Borrower agrees forthwith to pay to the Trustee by no later than 11:00 a.m. on
such due date the amount of the deficiency. If at any time the amount held by
the Trustee in the Debt Service Fund shall be sufficient to pay or provide for
the payment of the Bonds in accordance with Section 12.1 of the Indenture, the
Borrower shall not be obligated to make any further payments under the foregoing
provisions.

         SECTION 3.2. OTHER AMOUNTS PAYABLE. (A) The Borrower hereby further
expressly agrees to pay to the Trustee as and when the same shall become due,
(i) an amount equal to the initial and annual fees of the Trustee for the
ordinary services of the Trustee rendered and its ordinary expenses incurred
under the Indenture, including fees and expenses as Paying Agent and the
reasonable fees and expenses of Trustee's counsel, including fees and expenses
as registrar and in connection with preparation and delivery of new Bonds upon
exchanges or transfers, (ii) the reasonable fees and expenses of the Trustee and
any Paying Agents on the Bonds for acting as paying agents as provided in the
Indenture, including reasonable fees and expenses of its counsel, (iii) the
reasonable fees and charges of the Trustee for extraordinary services rendered
by it and extraordinary expenses incurred by it under the Indenture, including
reasonable counsel fees and expenses, and (iv) reasonable fees and expenses of
Bond Counsel and the Authority for any future action requested of either.

         (B)      The Borrower also agrees to pay all amounts payable by it
under the Financing Documents at the time and in the manner therein provided.

                                      -12-
<PAGE>

         (C)      The Borrower agrees to pay all Rebatable Arbitrages (and
penalties, if any) due to the United States of America pursuant to Section 148
(f) of the Code.

         (D)      The Borrower also agrees to pay directly to the Authority on
the date of issuance and delivery of the Bonds and on the second anniversary
date of the date of issuance and delivery of the Bonds and each anniversary date
thereafter, a fee equal to 1/8th of 1% of the principal amount of the Bonds
Outstanding, such fee to be payable without notice, demand or invoice of any
kind at the Authority's address as set forth herein or at such other address and
to the attention of such other person, or to such account as the Authority may
stipulate by written notice to the Borrower.

         SECTION 3.3. MANNER OF PAYMENT. The payments provided for in Section
3.1 hereof shall be made by any reasonable method providing immediately
available funds at the time and place of payment directly to the Trustee for the
account of the Authority and shall be deposited in the Debt Service Fund. The
additional payments provided for in Section 3.2 shall be made in the same manner
directly to the entitled party or to the Trustee for its own use or disbursement
to the Paying Agents, as the case may be.

         SECTION 3.4. OBLIGATION UNCONDITIONAL. The obligations of the Borrower
under the Financing Documents shall be absolute and unconditional, irrespective
of any defense or any rights of setoff, recoupment or counterclaim it might
otherwise have against the Authority or the Trustee. The Borrower will not
suspend or discontinue any such payment or terminate this Agreement (other than
in the manner provided for hereunder) for any cause, including, without limiting
the generality of the foregoing, any acts or circumstances that may constitute
failure of consideration, failure of title, or commercial frustration of
purpose, or any damage to or destruction of the Project, or the taking by
eminent domain of title to or the right of temporary use of all or any part of
the Project, or any change in the tax or other laws of the United States, the
State or any political subdivision of either thereof, or any failure of the
Authority or the Trustee to perform and observe any agreement or covenant,
whether expressed or implied, or any duty, liability or obligation arising out
of or connected with the Financing Documents.

         SECTION 3.5. SECURITIES CLAUSES. The Authority hereby notifies the
Borrower and the Borrower acknowledges that, among other things, the Borrower's
loan payments and all of the Authority's right, title and interest under the
Financing Documents to which it is a party (except its rights under Sections
6.2, 6.4, 7.2(A)(2) and 7.3 hereof) are being concurrently with the execution
and delivery hereof endorsed, pledged and assigned without recourse by the
Authority to the Trustee as security for the Bonds as provided in the Indenture.

         SECTION 3.6. ISSUANCE OF BONDS. The Authority has concurrently with the
execution and delivery hereof sold and delivered the Bonds under and pursuant to
a resolution adopted by the Authority on June 18, 2003, authorizing their
issuance under and pursuant to the Indenture. The proceeds of sale of the Bonds
shall be applied as provided in Articles IV and V of the Indenture.

         SECTION 3.7. EFFECTIVE DATE AND TERM. (A) This Agreement shall become
effective upon its execution and delivery by the parties hereto, shall remain in
full force from such date and, subject to the provisions hereof (including
particularly Articles VII and VIII), shall expire on such date as the Indenture
shall be discharged and satisfied in accordance with the provisions of
subsection 12.1(A) thereof. The Borrower's obligations under Sections 6.2 and
6.3 hereof, however, shall survive the expiration of this Agreement in
accordance with the provisions of such Sections.

         (B)      Within 60 days of such expiration the Authority shall deliver
to the Borrower any documents and take or cause the Trustee, at the Borrower's
expense, to take any such reasonable actions as may be necessary to effect the
cancellation, release and satisfaction of the Indenture and the Financing
Documents.

                                      -13-
<PAGE>

         SECTION 3.8. NO ADDITIONAL BONDS. No Additional Bonds on a parity with
the Bonds may be issued under the Indenture.

                                      -14-
<PAGE>

                                   ARTICLE IV
                                   THE PROJECT

         SECTION 4.1. COMPLETION OF THE PROJECT. (A) The Borrower represents and
warrants that the Project has been completed and that all costs and expenses
incurred in connection with the Project have been paid.

         (B)      The Borrower affirms that it shall bear all of the costs and
expenses in connection with the preparation of the Financing Documents and the
Indenture, the preparation and delivery of any legal instruments and documents
necessary in connection therewith and their filing and recording, if required,
and all taxes and charges payable in connection with any of the foregoing. Such
costs shall be paid by the Borrower in the manner and to the extent provided in
the Indenture.

         SECTION 4.2. BORROWER CONTRIBUTION. The Borrower agrees to deposit with
the Trustee on the date of issuance of the Bonds a contribution in the amount of
$499,250.56 ($210,246.67 of which represents the amount of interest to accrue on
the Prior Obligations from September 1, 2003 to November 29, 2003 and
$289,003.89 of which shall be applied to the payment of the costs of refunding
the Prior Obligations, including, but not limited to, all expenses incurred in
connection with the issuance, execution and sale of the Bonds, including
compensation and expenses of the Trustee, legal, accounting and consulting
expenses and fees, costs of printing and engraving, underwriting expenses and
recording and filing fees), which amount shall be deposited by the Trustee in
the Refunding Fund established pursuant to Section 5.1 of the Indenture.

         SECTION 4.3. NO WARRANTY REGARDING CONDITION, SUITABILITY OR COST OF
PROJECT. Neither the Authority, nor the Trustee, nor any Bondholder makes any
warranty, either expressed or implied, as to the Project or its condition or
that it will be suitable for the Borrower's purposes or needs, or that the
insurance required hereunder will be adequate to protect the Borrower's business
or interest.

         SECTION 4.4. TAXES. (A) The Borrower will pay when due all material (1)
taxes, assessments, water rates and sewer use or rental charges, (2) payments in
lieu thereof which may be required by law, and (3) governmental charges and
impositions of any kind whatsoever which may now or hereafter be lawfully
assessed or levied upon the Project Realty and the Project Equipment or any part
thereof, or upon the rents, issues, or profits thereof, whether directly or
indirectly. With respect to special assessments or other governmental charges
that may lawfully be paid in installments over a period of years, the Borrower
shall be obligated to pay only such installments as are required to be paid
during the Term.

         (B)      The Borrower may, at its expense and in its own name, in good
faith contest any such taxes, assessments and other charges and payments in lieu
of taxes including assessments and, in the event of such contest, may permit the
taxes, assessments or other charges or payments in lieu of taxes, including
assessments so contested to remain unpaid, provided either (1) prior written
notice thereof has been given to the Authority and the Trustee and reserves
satisfactory to the Authority are maintained during the period of such contest
and any appeal therefrom, or (2) such contest is conducted in full compliance
with Connecticut General Statutes Chapter 203 unless, in either case, by
nonpayment of such taxes, assessments or other charges or payments, the Project
or any part thereof will be subject to loss or forfeiture, and as a result
thereof a lien or charge will be placed upon any payment pursuant to this
Agreement or the value or operation of the Project Realty and the Project
Equipment will be materially impaired, in which event such taxes, assessments or
other charges or payments shall be paid forthwith. Nothing herein shall preclude
the Borrower, at its expense and in its own name and behalf, from applying for
any tax exemption allowed by the federal government, the State or any political
or taxing subdivision thereof under any existing or future provision of law
which grants or may grant such tax exemption.

                                      -15-
<PAGE>

         SECTION 4.5. INSURANCE. (A) The Borrower shall insure the Project
Realty and the Project Equipment against loss or damage by fire, flood,
lightning, windstorm, vandalism and malicious mischief and other hazards,
casualties, contingencies and extended coverage risks in such amounts and in
such manner as is required by the Mortgage while the Mortgage is in effect and
thereafter as is customary with companies in the same or similar business, and
shall pay when due the premiums thereon. In the event of loss or damage to the
Project Realty or Project Equipment the Net Proceeds of any insurance provided
under this subsection shall be deposited with the Mortgage Bond Indenture
Trustee as required by the Mortgage while the Mortgage is in effect and
thereafter shall be applied to the manner set forth in Article V hereof. Any
excess proceeds of insurance remaining after application as required by this
Section shall be paid to the Borrower, but only if the Borrower is not in
default under this Agreement. At least ten days prior to the expiration of any
policy required under this Section the Borrower shall furnish evidence
satisfactory to the Authority and the Trustee that such policy has been renewed
or replaced.

         (B)      The Borrower further agrees that it will at all times carry
public liability insurance with respect to the Project Realty and the Project
Equipment to the extent required by the Mortgage while the Mortgage is in
effect, and, thereafter, in a minimum amount of $5,000,000 with provisions for a
deductible amount not in excess of five percent of the amount of coverage
thereunder. In the event of a public liability occurrence, the Net Proceeds of
the insurance provided under this subsection shall be applied to satisfy or
extinguish the liability, subject to the Mortgage.

         (C)      As an alternative to the hazard insurance and public liability
insurance requirements of subsections (A) or (B) above the Borrower may, to the
extent permitted by the Mortgage, self-insure against hazard or public liability
risks if (1) self-insurance is the Borrower's customary method of insurance
against such risks in similar circumstances, and (2) the Borrower maintains
self-insurance reserves adequate and available to meet such risks, subject to
the terms of the Mortgage while the Mortgage is in effect. Amounts available
under any such self-insurance arrangement upon the occurrence of an insured
event shall be applied in the same manner as the Net Proceeds of any insurance
maintained pursuant to such subsections would have been applied.

         (D)      The insurance coverage required by this Section may be
effected under overall blanket or excess coverage policies of the Borrower or
any affiliate and may be carried with any insurer other than an unauthorized
insurer under the Connecticut Unauthorized Insurers Act. The Borrower shall
furnish evidence satisfactory to the Authority or the Trustee, promptly upon the
request of either, that the required insurance coverage is valid and in force.

         SECTION 4.6. COMPLIANCE WITH LAW. The Borrower will observe and comply
with all material laws, regulations, ordinances, rules, and orders (including
without limitation those relating to zoning, land use, environmental protection,
air, water and land pollution, wetlands, health, equal opportunity, minimum
wages, worker's compensation and employment practices) of any federal, state,
municipal or other governmental authority relating to the Project Realty and the
Project Equipment except during any period during which the Borrower at its
expense and in its name shall be in good faith contesting its obligation to
comply therewith.

         SECTION 4.7. MAINTENANCE AND REPAIR. At its own expense, the Borrower
will keep and maintain or cause the Project Realty and the Project Equipment to
be kept and maintained in accordance with sound water utility operating practice
and in good condition, working order and repair, will not commit or suffer any
waste thereon, and will make all material repairs and replacements thereto which
may be required in connection therewith. Nothing in this Section 4.7 shall (1)
apply to any portion of the Project beyond its useful or economic life or (2)
apply to the use and disposition by the Borrower of any part of the Project in
the ordinary course of its business.

                                      -16-
<PAGE>

         SECTION 4.8. DISPOSITION OF PROJECT REALTY BY BORROWER. (A) The
Borrower shall not sell, assign, encumber (other than Permitted Encumbrances),
convey or otherwise dispose of its interest in the Project Realty or any part
thereof during the Term without the prior written consent of the Authority and
the Bond Insurer, except as permitted hereby or by the Mortgage while the
Mortgage is in effect.

         (B)      The Borrower may, however, grant such rights of way or
easements over, across, or under, the Project Realty as shall be necessary or
convenient for the operation or use of the Project Realty, including but not
limited to easements or rights-of-way for utility, roadway, railroad or similar
purposes in connection with the Project Realty, or for the use of the real
property adjacent to or near the Project and owned by or leased to the Borrower,
but only if such rights-of-way or easements shall not materially or adversely
affect the value and operation of the Project Realty.

         (C)      In the event the Authority consents to any disposition of the
Borrower's interest in the Project Realty, the proceeds of the disposition shall
be deposited with the Mortgage Bond Indenture Trustee while the Mortgage is in
effect and thereafter in the Redemption Account of the Debt Service Fund for the
redemption of the Bonds under the Indenture. No conveyance or release effected
under the provisions of this Section shall entitle the Borrower to any abatement
or diminution of the amounts payable hereunder or under the Note, or relieve the
Borrower of the obligation to perform all of its covenants and agreements under
the Financing Documents.

         SECTION 4.9. LEASING OF THE PROJECT REALTY AND THE PROJECT EQUIPMENT.
The Borrower may not lease the Project Realty or the Project Equipment to any
person during the Term of this Agreement without the prior written consent of
the Authority, except as may be permitted by the Mortgage while the Mortgage is
in effect. No lease shall relieve the Borrower from primary liability for any of
its obligations hereunder, and in the event of any such lease the Borrower shall
continue to remain primarily liable for payment of the applicable amounts
specified in Article III hereof and for performance and observance of the other
agreements on its part herein provided to be performed and observed by it to the
same extent as though no lease had been made.

         SECTION 4.10. PROJECT EQUIPMENT. (A) The Borrower shall have the right
to install, operate, use, remove and dispose of the Project Equipment in the
normal and ordinary course of its business operations, and shall not be required
to replace any item of Project Equipment which is discarded or sold for scrap.
The Borrower shall not, however, either in one transaction or a series of
transactions sell, convey, transfer, remove or otherwise dispose of more than
20% by value of the Project Equipment without prior notice to and the consent of
the Authority, unless such Project Equipment is replaced by property of similar
value and utility, provided that such dispositions may be made as permitted by
the Mortgage while the Mortgage is in effect.

         (B) The Borrower shall maintain with the Trustee separate and
reasonably detailed descriptions of each item of property constituting the
Project Equipment. Without limiting the foregoing, the Project Equipment list
appended hereto at the date of execution and delivery of this Agreement shall be
modified to the extent required by this Section in connection with any
replacement of material items of Project Equipment under this Section or under
Section 5.2 hereof.

                                      -17-
<PAGE>

                                   ARTICLE V
                       CONDEMNATION DAMAGE AND DESTRUCTION

         SECTION 5.1. NO ABATEMENT OF PAYMENTS HEREUNDER. If the Project Realty
or Project Equipment shall be damaged or either partially or totally destroyed,
or if title to or the temporary use of the whole or any part thereof shall be
taken or condemned by a competent authority for any public use or purpose, there
shall be no abatement or reduction in the amounts payable by the Borrower
hereunder and the Borrower shall continue to be obligated to make such payments.
In any such case the Borrower shall promptly give written notice thereof to the
Authority and the Trustee.

         SECTION 5.2. PROJECT DISPOSITION UPON CONDEMNATION, DAMAGE OR
DESTRUCTION. In the event of any such condemnation, damage or destruction the
Borrower, except as otherwise permitted or required by the Mortgage while the
Mortgage is in effect shall:

                  (1)      At its own cost, repair, restore or reconstruct the
         Project Realty and Project Equipment to substantially its condition
         immediately prior to such event or to a condition of at least
         equivalent value, regardless of whether or not the proceeds of any and
         all policies of insurance covering such damage or destruction, or the
         amount of the award or compensation or damages recovered on account of
         such taking or condemnation, shall be available or sufficient to pay
         the cost thereof;

                  (2)      At its own cost, replace or relocate the Project
         Realty and Project Equipment at its site in such fashion as to render
         the replacement or relocated structures, improvements and items,
         machinery, equipment or other property of equivalent value to the
         Project Realty and Project Equipment immediately prior to such event;
         or

                  (3)      If and as permitted by Section 8.1 hereof, exercise
         its option to prepay its loan obligation in full.

         SECTION 5.3. APPLICATION OF NET PROCEEDS OF INSURANCE OR CONDEMNATION.
(A) The Net Proceeds from any insurance or condemnation award with respect to
the Project Realty or Project Equipment shall be deposited with the Mortgage
Bond Indenture Trustee while the Mortgage is in effect and thereafter shall be
deposited either (1) in the Renewal Fund and applied to pay for the cost of
making such repairs, restorations, reconstructions, replacements or relocations,
or to reimburse the Borrower, the Authority or the Trustee for payment therefor
from time to time as provided in the Indenture or (2) if prepayment of the loan
is then permitted and the Borrower exercises its option to prepay the loan, in
the Debt Service Fund and applied to the payment of the Note and redemption of
the Bonds.

         (B)      Notwithstanding the provisions of subsection (A) of this
Section, any insurance or condemnation proceeds attributable to improvements,
machinery, equipment and other property installed in or about the Project Realty
and the Project Equipment, but which do not constitute a portion of the Project
Realty and the Project Equipment, shall be paid directly to the Mortgage Bond
Indenture Trustee while the Mortgage is in effect and thereafter as the Borrower
may direct. The Trustee and the Authority agree to execute such documents as may
be reasonably necessary to accomplish the purposes of this subsection.

         (C)      Subject to the applicable requirements of the Mortgage, the
Borrower, the Authority and the Trustee shall cooperate and consult with each
other in all matters pertaining to the settlement or adjustment of any and all
claims and demands for damages on account of any taking or condemnation of the
Project Realty or the Project Equipment or pertaining to the settlement,
compromising or arbitration of any claim on account of any damage or destruction
thereof.

                                      -18-
<PAGE>

                                   ARTICLE VI
                                    COVENANTS

         SECTION 6.1. THE BORROWER TO MAINTAIN ITS CORPORATE EXISTENCE;
CONDITIONS UNDER WHICH EXCEPTIONS PERMITTED. (A) The Borrower covenants and
agrees that, during the Term of this Agreement it will maintain its corporate
existence, will continue to be a corporation either organized under the laws of
or duly qualified to do business as a foreign corporation in the State and in
all jurisdictions necessary in the operation of its business, will not dissolve
or otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it, except as permitted by the
Mortgage while the Mortgage is in effect.

         (B)      The Borrower may, however, without violating the agreements
contained in this Section, consolidate with or merge into another corporation or
permit one or more other corporations to consolidate with or merge into it, or
sell or otherwise transfer to another corporation all or substantially all of
its assets as an entity and thereafter liquidate or dissolve, if (a) the
Borrower is the surviving, resulting or transferee corporation, as the case may
be, or (b) in the event the Borrower is not the surviving, resulting or
transferee corporation, as the case may be, such corporation (i) is a solvent
corporation either organized under the laws of or duly qualified to do business
as a foreign corporation subject to service of process in the State and (ii)
assumes in writing all of the obligations of the Borrower herein, and under the
Note.

         SECTION 6.2. INDEMNIFICATION, PAYMENT OF EXPENSES, AND ADVANCES. (A)
The Borrower agrees to protect, defend and hold harmless the Authority, the
State, agencies of the State, members, servants, agents, directors, officers and
employees, now or forever, of the Authority or the State (each an "Authority
Indemnified Party"), the Trustee and the Paying Agent, agents, directors,
officers and employees, now or forever, of the Trustee and the Paying Agent
(each an "Indemnified Party"), from any claim, demand, suit, action or other
proceeding and any liabilities, costs, and expenses whatsoever by any person or
entity whatsoever, arising or purportedly arising from or in connection with the
Financing Documents, the Indenture, the Bonds, or the transactions contemplated
thereby or actions taken thereunder by any person (including without limitation
the filing of any information, form or statement with the Internal Revenue
Service, if applicable), except for any willful and material misrepresentation,
willful misconduct or gross negligence on the part of the Indemnified Party or
the Authority Indemnified Party or any bad faith on the part of any indemnitee
other than an Authority Indemnified Party.

         The Borrower agrees to indemnify and hold harmless any Indemnified
Party against any and all claims, demands, suits, actions or other proceedings
and all liabilities, costs and expenses whatsoever caused by any untrue
statement or misleading statement or alleged untrue statement or alleged
misleading statement of a material fact contained in the written information
provided by the Borrower in connection with the issuance of the Bonds or
incorporated by reference therein or caused by any omission or alleged omission
from such information of any material fact relating to the Borrower or the
Project required to be stated therein or necessary in order to make the
statements made therein in the light of the circumstances under which they were
made, not misleading.

         (B)      The Authority and the Trustee shall not be liable for any
damage or injury to the persons or property of the Borrower or its members,
directors, officers, agents, servants or employees, or any other person who may
be about the Project due to any act or omission of any person other than the
Authority or the Trustee, respectively, or their respective members, directors,
officers, agents, servants and employees.

         (C)      The Borrower releases each Indemnified Party from, agrees that
no Indemnified Party shall be liable for, and agrees to hold each Indemnified
Party harmless against, any reasonable attorney

                                      -19-
<PAGE>

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

                                      -20-
<PAGE>

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.

                                      -21-
<PAGE>

         (E)      The obligation of the Borrower to make the payments provided
for in this Section shall be absolute and unconditional, and the failure of the
Authority or the Trustee to execute or deliver or cause to be executed or
delivered any documents or to take any action required under this Agreement or
otherwise shall not relieve the Borrower of its obligation under this Section.
Notwithstanding any other provision of this Agreement or the Indenture, the
Borrower's obligations under this Section shall survive the termination of this
Agreement and the Indenture.

         (F)      The occurrence of a Determination of Taxability shall not be
an Event of Default hereunder but shall require only the performance of the
obligations of the Borrower stated in this Section, the breach of which shall
constitute an Event of Default as provided in Section 7.1 hereof.

         SECTION 6.4. PUBLIC PURPOSE COVENANTS. (A) The Borrower covenants that
it will operate the Project for the purposes and in a manner consistent with its
application for assistance to the Authority. The Borrower further covenants and
agrees that it will, throughout the term of this Agreement, (1) comply with all
applicable laws, regulations, ordinances, rules, and orders relating to the
Project as provided in the Financing Documents, (2) maintain the Project in
accordance with the Financing Documents, (3) not cause or permit the Project to
become or remain a public nuisance, (4) not allow any change in the nature of
the occupancy, use or operation of the Project which is substantially
inconsistent with the Borrower's application for assistance to the Authority,
except that the Borrower may, after notice to the Authority, permit any such
change which does not disqualify the Project as an authorized project under the
Act as in effect on the date hereof, and (5) except as permitted hereunder, not
sell, assign, convey, further lease, sublease or otherwise dispose of title to
the Project without the prior written consent of the Authority. Nothing in this
Section is intended to require the Borrower to operate the Project in such
manner as, in the good faith judgment of the Borrower, shall materially and
adversely impair the use and operation of the Project.

         (B)      A breach of any covenant contained in this Section shall
constitute an Event of Default but, in order to relieve the Authority of the
consequences of unanticipated failure of consideration, shall permit only the
exercise by the Authority of the remedies provided in Section 7.3 hereof.

         SECTION 6.5. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. The
Authority and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
Realty or Project Equipment or for carrying out the intention of or facilitating
the performance of this Agreement.

         SECTION 6.6. COVENANT BY BORROWER AS TO COMPLIANCE WITH INDENTURE. The
Borrower covenants and agrees that it will comply with the provisions of the
Indenture with respect to the Borrower and that the Trustee and the Bondholders
shall have the power and authority provided in the Indenture. The Borrower
further agrees to aid in the furnishing to the Authority or the Trustee of
opinions that may be required under the Indenture. The Borrower covenants and
agrees that the Trustee shall be entitled to and shall have all the rights,
including the right to enforce against the Borrower the provisions of the
Financing Documents, pertaining to the Trustee notwithstanding the fact that the
Trustee is not a party to the Financing Documents.

         SECTION 6.7. ASSIGNMENT OF AGREEMENT OR NOTE. (A) The Borrower may not
assign its rights, interests or obligations hereunder or under the Note except
as may be permitted pursuant to Section 6.1(B) hereof.

                                      -22-
<PAGE>

         (B)      The Authority agrees that it will not assign or transfer any
of the Financing Documents or the revenues and other receipts, funds and monies
to be received thereunder during the Term except to the Trustee as provided in
this Agreement and the Indenture.

         SECTION 6.8. INSPECTION. The Authority and its duly authorized agents
shall have (1) the right at all reasonable times, and upon notice sufficient to
permit the Borrower to take actions necessary to comply with any security
regulations then in effect at the Project, to enter upon and to examine and
inspect the Project Realty and the Project Equipment and (2) such rights of
access thereto as may be reasonably necessary for the proper maintenance and
repair thereof in the event of failure by the Borrower to perform its
obligations under this Agreement. The Authority and the Trustee shall also be
permitted, at all reasonable times, to examine the books and records of the
Borrower with respect to the Project Realty and the Project Equipment.

         SECTION 6.9. DEFAULT NOTIFICATION. Upon becoming aware of any condition
or event which constitutes, or with the giving of notice or the passage of time
would constitute, an Event of Default, the Borrower shall deliver to the
Authority and the Trustee a notice stating the existence and nature thereof and
specifying the corrective steps, if any, the Borrower is taking with respect
thereto.

         SECTION 6.10. COVENANT AGAINST DISCRIMINATION. (A) The Borrower in the
performance of this Agreement will not discriminate or permit discrimination
against any person or group of persons on the grounds of race, color, religion,
national origin, age, sex, sexual orientation, marital status, physical or
learning disability, political beliefs, mental retardation or history of mental
disorder in any manner prohibited by the laws of the United States or of the
State.

         (B)      The Borrower will comply with the provisions of the resolution
adopted by the Authority on June 14, 1977, as amended, and the policy of the
Authority implemented pursuant thereto concerning the promotion of equal
employment opportunity through affirmative action plans. The resolution requires
that all borrowers receiving financial assistance from the Authority adopt and
implement an affirmative action plan prior to the closing of the loan. The plan
shall be updated annually as long as the Bonds remain Outstanding.

         SECTION 6.11. COVENANT TO PROVIDE DISCLOSURE. The Borrower hereby
covenants and agrees that it will execute, comply with and carry out all of the
provisions of the Disclosure Agreement. Notwithstanding any other provision of
this Agreement, failure of the Borrower to comply with the provisions of the
Disclosure Agreement shall not be considered an Event of Default hereunder;
however, the Trustee may, subject to the provisions of Article IX of the
Indenture (and, at the request of the underwriter for the Bonds or the Holders
of at least 25% aggregate principal amount in Outstanding Bonds, shall), or any
Bondholder or Beneficial Owner may take such actions as may be necessary and
appropriate, including seeking mandamus or specific performance by court order,
to cause the Borrower to comply with its obligations under this Section 6.11.
For purposes of this Section, "Beneficial Owner" means any person which (a) has
the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as the owner
of any Bonds for federal income tax purposes.

         SECTION 6.12. COVENANT AGAINST ISSUING ADDITIONAL DEBT SECURED BY THE
MORTGAGE. The Borrower shall not issue any additional debt secured by the
Mortgage unless the Bonds are equally and ratably secured by the Mortgage.

         SECTION 6.13. ANNUAL REPORTING REQUIREMENTS. (A) The Borrower shall
provide to the Bond Insurer as soon as available, but not later than 120 days
after the end of the respective party's fiscal year, (i) the annual audited
financial statements of Connecticut Water Service, Inc.; (ii) the annual budget
for

                                      -23-
<PAGE>

the succeeding year for Connecticut Water Service, Inc.; and (iii) the annual
(unaudited) financial statements of the Borrower.

         (B)      Simultaneously with the delivery of the Borrower's annual
(unaudited) financial statements, the Borrower shall also deliver to the Bond
Insurer a statement of:

         (i)      the number of system users as of the end of the fiscal year;

         (ii)     notification of the withdrawal of any system user comprising
5% or more of the system sales measured in terms of revenue dollars since the
last reporting date;

         (iii)    any significant plant retirements or expansions planned or
undertaken since the last reporting date;

         (iv)     maximum and average daily usage for the fiscal year;

         (v)      updated capital plans for expansion and improvement projects;
and

         (vi)     results of annual engineering inspections, if any, occurring
at the end of the fiscal year.

         (C)      The Borrower will permit the Bond Insurer to discuss the
affairs, finances and accounts of the Borrower or any information the Bond
Insurer may reasonably request regarding the security for the Bonds with
appropriate officers of the Borrower. The Borrower will permit the Bond Insurer
to have access to the Project and have access to and make copies of all books
and records relating to the Bonds at any reasonable time.

         (D)      The Borrower shall provide the Bond Insurer with such
additional information as the Bond Insurer may reasonably request.

                                  ARTICLE VII
                         EVENTS OF DEFAULT AND REMEDIES

         SECTION 7.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "Event of Default" hereunder:

                  (1)      Any material representation or warranty made by the
         Borrower in the Financing Documents or any certificate, statement, data
         or information furnished in writing to the Authority or the Trustee by
         the Borrower in connection with the closing of the Bonds or included by
         the Borrower in its application to the Authority for assistance proves
         at any time to have been incorrect in any material respect when made.

                  (2)      Failure by the Borrower to pay any interest,
         principal or premium, if any, that has become due and payable with
         respect to the Bonds and the continuance of such failure for more than
         five (5) Business Days.

                  (3)      Failure by the Borrower to pay any amount, other than
         principal interest or premium with respect to the Bonds, that has
         become due and payable with respect to the Bonds or any other amount
         due and payable pursuant to the Financing Documents and the continuance
         of such failure for more than thirty (30) Business Days.

                                      -24-
<PAGE>

                  (4)      Failure by the Borrower to comply with the default
         notification provisions of Section 6.9 hereof.

                  (5)      The occurrence of an "Event of Default" under Section
         8.1(A) of the Indenture.

                  (6)      Failure by the Borrower to observe or perform any
         covenant, condition or agreement hereunder or under the Financing
         Documents (other than the Disclosure Agreement) (except those referred
         to above and except as provided in Section 6.3(G) hereof with respect
         to the occurrence of a Determination of Taxability which, in and of
         itself, shall not constitute an Event of Default hereunder but shall
         require only the performance of the obligations of the Borrower stated
         in Section 6.3(G) hereof, the breach of which shall constitute an Event
         of Default hereunder) and (a) continuance of such failure for a period
         of sixty (60) days after receipt by the Borrower of written notice
         specifying the nature of such failure or (b) if by reason of the nature
         of such failure the same cannot be remedied within the sixty-day
         period, the Borrower fails to proceed with reasonable diligence after
         receipt of the notice to cure the failure.

                  (7)      The Borrower shall (a) apply for or consent to the
         appointment of a receiver, trustee, liquidator or custodian or the like
         of itself or of its property, (b) admit in writing its inability to pay
         its debts generally as they become due, (c) make a general assignment
         for the benefit of creditors, (d) be adjudicated a bankrupt or
         insolvent, or (e) commence a voluntary case under the federal
         bankruptcy laws of the United States of America or file a voluntary
         petition or answer seeking reorganization, an arrangement with
         creditors or an order for relief or seeking to take advantage of any
         insolvency law or file an answer admitting the material allegations of
         a petition filed against it in any bankruptcy, reorganization or
         insolvency proceeding; or corporate action shall be taken by it for the
         purpose of effecting any of the foregoing; or if without the
         application, approval or consent of the Borrower, a proceeding shall be
         instituted in any court of competent jurisdiction, seeking in respect
         of the Borrower an adjudication in bankruptcy, reorganization,
         dissolution, winding up, liquidation, a composition or arrangement with
         creditors, a readjustment of debts, the appointment of a trustee,
         receiver, liquidator or custodian or the like of the Borrower or of all
         or any substantial part of its assets, or other like relief in respect
         thereof under any bankruptcy or insolvency law, and, if such proceeding
         is being contested by the Borrower in good faith, the same shall
         continue undismissed, or pending and unstayed, for any period of 75
         consecutive days.

                  (8)      Failure by the Borrower to make when due any payment
         of principal or interest required under the provisions of any loan
         agreement (after the expiration of any applicable grace periods) to
         which the Authority and the Borrower are parties.

         SECTION 7.2. REMEDIES ON DEFAULT. (A) Except as provided in Section
6.4(B) hereof, whenever any Event of Default shall have occurred, the Trustee,
or the Authority where so provided herein, may take any one or more of the
following actions:

                  (1)      The Trustee, as and to the extent provided in Article
         VIII of the Indenture, may cause all amounts payable under the
         Financing Documents to be immediately due and payable without notice or
         demand of any kind, whereupon the same shall become immediately due and
         payable.

                  (2)      The Authority, without the consent of the Trustee or
         any Bondholder, may proceed to enforce the obligations of the Borrower
         to the Authority under this Agreement.

                                      -25-
<PAGE>

                  (3)      The Trustee may take whatever action at law or in
         equity it may have to collect the amounts then due and thereafter to
         become due, or to enforce the performance or observance of the
         obligations, agreements, and covenants of the Borrower under the
         Financing Documents.

                  (4)      The Trustee may exercise any and all rights it may
         have under the Financing Documents.

         (B)      In the event that any Event of Default or any proceeding taken
by the Authority (or by the Trustee on behalf of the Authority) thereon shall be
waived or determined adversely to the Authority, then the Event of Default shall
be annulled and the Authority and the Borrower shall be restored to their former
rights hereunder, but no such waiver or determination shall extend to any
subsequent or other default or impair any right consequent thereon.

         SECTION 7.3. REMEDIES ON PUBLIC PURPOSE DEFAULT. (A) If the Borrower
shall default in the performance of any of the covenants contained in Section
6.4 hereof, and in the event that such default shall also constitute an Event of
Default under Section 7.1 hereof, such Event of Default shall continue for
thirty (30) days without the Trustee or Bondholders instituting the remedial
steps provided for in subsection 7.2(A)(1) hereof or subsection 8.1(B) of the
Indenture, then, in either case, the Authority may, so long as such Event of
Default is continuing, send a notice to the Trustee calling for the acceleration
of all of the Borrower's obligations under the Financing Documents and for the
redemption of all of the Bonds then Outstanding. Any such notice shall set forth
in reasonable detail the default by the Borrower giving rise thereto and shall
specify the date upon which (1) notice of Bond redemption is to be given by the
Trustee (which shall be not less than one hundred twenty days from the date of
the Authority's determination notice) and (2) the redemption of the Bonds is to
occur (which shall be at least thirty (30) days after notice of redemption is
given by the Trustee). Within thirty (30) days following receipt of the notice,
the Trustee shall forward a copy thereof to the Borrower and each registered
Bondholder, together with a copy of Sections 6.4 and 7.3 of this Agreement.

         (B)      If, within sixty (60) days after the mailing of notice by the
Trustee to the Borrower and the Bondholders, the Trustee receives no objection
(as hereinbelow provided) to such redemption, the Trustee shall give such notice
and effect the acceleration of the Borrower's obligations and the redemption of
all Outstanding Bonds in accordance with the Authority's notice and pursuant to
Section 2.4 (D) of the Indenture. If, however, the Borrower or any Bondholder
disputes the existence of such Event of Default, the Borrower or such Bondholder
shall mail a notice to the Authority and the Trustee containing a statement of
such person's belief with respect to the claimed default. The receipt of such
notice by the Trustee shall serve to suspend the proceedings for redemption of
Bonds initiated by the Authority's notice of default.

         (C)      If upon receipt of such notice from the Borrower or any
Bondholder, the Authority determines to affirm its earlier determination, either
the Borrower or any Bondholder shall have the right to bring an action in any
court of competent jurisdiction to enjoin the proceedings for the redemption of
such Bonds, and during the pendency of any such action the redemption
proceedings shall be suspended. Neither the Authority, the Borrower nor any
Bondholder shall be responsible for any costs, fees, expenses, or reasonable
counsel fees incurred by any other party in connection with any such action,
other than the Trustee (whose costs, fees and expenses shall be paid by the
Borrower). In the event the Authority is successful in such a proceeding, and a
final judgment is rendered which is not appealable or appealed within sixty (60)
days thereafter finding the Borrower in default under Section 6.4 hereof, the
Trustee shall, promptly upon receipt of notice from the Authority of the entry
of the decision, give notice of the redemption of all Outstanding Bonds under
Section 6.3 of the Indenture, and redeem all such Bonds upon the date fixed for
redemption in the notice (which shall be no more than thirty-five (35) days
after the notice is given). In the event the Borrower or such Bondholders are
successful in such a

                                      -26-
<PAGE>

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.

                                      -27-
<PAGE>

                                  ARTICLE VIII
                              PREPAYMENT PROVISIONS

         SECTION 8.1. OPTIONAL PREPAYMENT. (A) The Borrower shall have, and is
hereby granted, the option to prepay its loan obligation at any time, and from
time to time, on or after September 1, 2008 and to cause the corresponding
optional redemption of the Bonds pursuant to Section 2.4(A) of the Indenture at
such times, in such amounts, and with such premium, if any, for such optional
redemption as set forth in the form of the Bond, by delivering a written notice
to the Trustee in accordance with Section 8.2 hereof, with a copy to the
Authority, setting forth the amount to be prepaid, the amount of Bonds requested
to be redeemed with the proceeds of such prepayment, and the date on which such
Bonds are to be redeemed. Such prepayment must be sufficient to provide monies
for the payment of interest and Redemption Price in accordance with the terms of
the Bonds requested to be redeemed with such prepayment and all other amounts
then due under the Financing Documents. In the event of any complete prepayment
of its loan obligation, the Borrower shall, at the time of such prepayment, also
pay or provide for the payment of all reasonable or necessary fees and expenses
of the Authority, the Trustee and the Paying Agent accrued and to accrue through
the final payment of all the Bonds. Any such prepayments shall be applied to the
redemption of Bonds in the manner provided in Section 6.2 of the Indenture, and
credited against payments due hereunder in the same manner.

         (B)      The Borrower shall have, and is hereby granted, the option to
prepay its loan obligation in full at any time without premium if any of the
following events shall have occurred, as evidenced in each case by the filing
with the Trustee of a certificate of an Authorized Representative of the
Borrower to the effect that one of such events has occurred and is continuing,
and describing the same:

                  (1)      The Project shall have been damaged or destroyed to
         such extent that (a) the Project cannot be reasonably restored within a
         period of six (6) months from the date of such damage or destruction to
         the condition thereof immediately preceding such damage or destruction,
         or (b) the Borrower is thereby prevented or likely to be prevented from
         carrying on its normal operation of the Project for a period of six (6)
         months from the date of such damage or destruction.

                  (2)      Title to or the temporary use of all or substantially
         all of the Project shall have been taken or condemned by a competent
         authority, which taking or condemnation results or is likely to result
         in the Borrower being thereby prevented or likely to be prevented from
         carrying on its normal operation of the Project for a period of six (6)
         months.

                  (3)      A change in the Constitution of the State or of the
         United States of America or legislative or executive action (whether
         local, state, or federal) or a final decree, judgment or order of any
         court or administrative body (whether local, state, or federal) that
         causes this Agreement to become void or unenforceable or impossible of
         performance in accordance with the intent and purpose of the parties as
         expressed herein or, imposes unreasonable burdens or excessive
         liabilities upon the Borrower with respect to the Project or the
         operation thereof.

                  (4)      The operation of any of the Project shall have been
         enjoined or shall otherwise have been prohibited by any order, decree,
         rule or regulation of any court or of any local, state, or federal
         regulatory body, administrative agency or other governmental body for a
         period of not less than six months.

                  (5)      Changes in the economic availability of raw
         materials, operating supplies or facilities necessary for the operation
         of the Project or technological or other changes shall have occurred
         which the Borrower cannot reasonably overcome or control and which in
         the

                                      -28-
<PAGE>

         Borrower's reasonable judgment renders the Project unsuitable or
         uneconomic for the purposes herein specified or any tax shall be levied
         upon payments due under the Note in an amount which the Borrower in its
         reasonable judgment believes imposes an unreasonable burden upon the
         Borrower.

In any such case the final loan payment shall be a sum sufficient, together with
other funds deposited with Trustee and available for such purpose, to redeem all
Bonds then Outstanding under the Indenture at the redemption price of 100% of
the principal amount thereof plus accrued interest to the redemption date and
all other amounts then due under the Financing Documents, and the Borrower shall
also pay or provide for all reasonable or necessary fees and expenses of the
Authority, the Trustee and Paying Agent accrued and to accrue through final
payment for the Bonds. The Borrower shall deliver a written notice to the
Trustee, with a copy to the Authority, requesting the redemption of the Bonds
under the Indenture, which notice shall have attached thereto the applicable
certificate of the Authorized Representative of the Borrower.

         SECTION 8.2. NOTICES AND SOURCES OF PREPAYMENT. To exercise any options
granted in this Article, or to consummate the acceleration of the loan payments
as set forth in this Article, the written notice to the Trustee shall be signed
by an Authorized Representative of the Borrower and shall specify therein the
date of prepayment, which date shall be not less than thirty-five days nor more
than ninety days from the date the notice is mailed. A duplicate copy of any
written notice hereunder shall also be filed with the Authority by the Borrower.

         SECTION 8.3. MANDATORY PREPAYMENT ON TAXABILITY. The Borrower shall pay
or cause the prepayment of its loan obligation following a Determination of
Taxability in the manner provided in Section 6.3 of this Agreement.

         SECTION 8.4. MANDATORY PREPAYMENT FOR DECEASED BONDHOLDER REDEMPTION.
The Borrower is unconditionally obligated, upon its receipt of notice from the
Trustee pursuant to Section 2.4(D) of the Indenture, to prepay its loan
obligation in amounts sufficient to permit redemption of Bonds eligible for
redemption as specified in Section 2.4(D) of the Indenture. Any such prepayments
shall be made not later than the date of such redemption and applied to the
redemption of Bonds in the manner provided in Section 2.4(D) of the Indenture,
and credited against payments due hereunder.

                                      -29-
<PAGE>

                                   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 Main
Street, Clinton, Connecticut 06413 Attention: Vice President-Chief Financial
Officer and Treasurer; if to

                                      -30-
<PAGE>

the Paying Agent, Goodwin Square, 225 Asylum Street, Hartford, Connecticut
06103, Attention: Corporate Trust Department; if to the Trustee, Goodwin Square,
225 Asylum Street, Hartford, Connecticut 06103, Attention: Corporate Trust
Administration; and if to the Bond Insurer, 1221 Avenue of the Americas, New
York, New York 10020, Attention: Surveillance. A duplicate copy of each notice,
certificate or other communication given hereunder by either the Authority or
the Borrower to the other shall also be given to the Trustee and the Bond
Insurer. In addition, copies of all amendments to this Agreement which are
consented to by the Bond Insurer shall be sent to S&P. The Authority, the
Borrower, the Paying Agent, the Trustee and the Bond Insurer may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.

         SECTION 9.6. PRIOR AGREEMENTS SUPERSEDED. This Agreement, together with
all agreements executed by the parties concurrently herewith or in conjunction
with the sale of the Bonds, shall completely and fully supersede all other prior
understandings or agreements, both written and oral, between the Authority and
the Borrower relating to the lending of money and the Project, including those
contained in any commitment letter executed in anticipation of the issuance of
the Bonds but excluding agreements entered into in connection with the financing
of the Project with other bonds previously issued by the Authority.

         SECTION 9.7. EXECUTION OF COUNTERPARTS. This Agreement may be executed
simultaneously in several counterparts each of which shall be an original and
all of which shall constitute but one and the same instrument.

         SECTION 9.8. TIME. All references to times of day in this Agreement are
references to New York City time.

         SECTION 9.9. SEPARABILITY OF INVALID PROVISIONS. In case any one or
more of the provisions contained in this Agreement or in the Note shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.

         SECTION 9.10. THIRD PARTY BENEFICIARIES. The Authority and the Borrower
agree that the Trustee, the Paying Agent and the Bond Insurer shall be third
party beneficiaries of this Agreement to the extent that any of the provisions
hereof relate to or provide rights to the Trustee, the Paying Agent or the Bond
Insurer.

         SECTION 9.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
reference to its choice of law principles.

                                      -31-
<PAGE>

                  IN WITNESS WHEREOF, the Authority has caused this Agreement to
be executed in its corporate name by a duly Authorized Representative, and the
Borrower has caused this Agreement to be executed in its corporate name by its
duly authorized officer all as of the date first above written.

                                            CONNECTICUT DEVELOPMENT AUTHORITY

                                            By__________________________________
                                            Name: Francis T. Gagliardo
                                            Authorized Representative

                                            THE CONNECTICUT WATER COMPANY

                                            By__________________________________
                                            Name:  David C. Benoit
                                            Title: Vice President Finance and
                                                   Chief Financial Officer

                                      -32-
<PAGE>

                                   APPENDIX A

                          THE CONNECTICUT WATER COMPANY

                                     FORM OF
                                 PROMISSORY NOTE
                                  2003C SERIES

No. 1                                                                $14,930,000

         The Connecticut Water Company, a corporation organized and existing
under the laws of the State of Connecticut (the "Borrower"), for value received,
hereby promises to pay to the order of the Connecticut Development Authority
(the "Authority"), the principal sum of $14,930,000.00 together with interest on
the unpaid principal balance thereof from the date hereof until fully and
finally paid, on the applicable Interest Payment Dates together with all taxes
levied or assessed on this Note or the debt evidenced hereby against the holder
hereof. This Note shall bear interest at the rate of interest borne by the Bonds
referred to below.

         This Note has been executed under and pursuant to a Loan Agreement,
dated as of October 1, 2003, between the Authority and the Borrower (the
"Agreement"). This Note is issued to evidence the obligation of the Borrower
under the Agreement to repay the loan made by the Authority from the proceeds of
its $14,930,000 Water Facilities Refunding Revenue Bonds (The Connecticut Water
Company Project - 2003C Series) (the "Bonds"), together with interest thereon
and all other amounts, fees, penalties, premiums, adjustments, expenses,
reasonable counsel fees and other payments of any kind required to be paid by
the Borrower under the Agreement. The Agreement includes provision for mandatory
and optional prepayment of this Note as a whole or in part. Advances made
pursuant to Section 6.2 of the Agreement shall bear interest at the rate
specified in accordance therewith.

         The Agreement and this Note (hereinafter, together with the Tax
Regulatory Agreement, collectively referred to as the "Financing Documents")
have been assigned to U.S. Bank National Association (the "Trustee") acting
pursuant to an Indenture of Trust, dated as of October 1, 2003 (the
"Indenture"), between the Authority and the Trustee. Such assignment is made as
security for the payment of the Bonds issued by the Authority pursuant to the
Indenture.

         As provided in the Agreement and subject to the provisions thereof,
payments hereon are to be made at the corporate trust office of U.S. Bank
National Association in Hartford, Connecticut, or at the office designated for
such payment by any successor trustee in an amount which, together with other
moneys available therefor pursuant to the Indenture, will equal the amount
payable as principal or Redemption Price, if any, of and interest on the Bonds
outstanding under the Indenture on each such due date.

         The Borrower shall make payments on this Note on the dates and in the
amounts specified herein and in the Agreement and in addition shall make such
other payments as are required pursuant to the Financing Documents, the
Indenture and the Bonds. Upon the occurrence of an Event of Default, as defined
in any of the Financing Documents, the principal of and interest on this Note
may be declared immediately due and payable as provided in the Agreement. Upon
any such declaration the Borrower shall pay all cost, disbursements, expenses
and reasonable counsel fees of the Authority and the Trustee in seeking to
enforce their rights under any of the Financing Documents.

                                      -33-
<PAGE>

         THE BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER HEREOF
MAY DESIRE TO USE. The Borrower further (1) waives diligence, demand,
presentment for payment, notice of nonpayment, protest and notice of protest,
notice of any renewals or extension of this Note, and all rights under any
statute of limitations, (2) agrees that the time for payment of this Note may be
changed and extended in accordance with the provisions of the Indenture, and (3)
consents to the release of all or any part of the security for the payment
thereof at the discretion of the Trustee or the release of any party liable for
this obligation without affecting the liability of the other parties hereto. Any
delay on the part of the Authority or the Trustee in exercising any right
hereunder shall not operate as a waiver of any such right, and any waiver
granted with respect to one default shall not operate as a waiver in the event
of any subsequent default.

         IN WITNESS WHEREOF, The Connecticut Water Company has caused this Note
to be executed in its corporate name by its duly authorized officer, dated
October 30, 2003.

                                            THE CONNECTICUT WATER COMPANY

                                            By:_________________________________
                                               Name:
                                               Authorized Representative

                                      -34-
<PAGE>

                              AUTHORITY ENDORSEMENT

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

                                            CONNECTICUT DEVELOPMENT AUTHORITY

                                            By:_________________________________
                                               Name:  Francis T. Gagliardo
                                               Authorized Representative

                                      -35-
<PAGE>

                                   APPENDIX B

                          DESCRIPTION OF PROJECT REALTY

                                    [TO COME]

                                      -36-
<PAGE>

                                   APPENDIX C

                        DESCRIPTION OF PROJECT EQUIPMENT

                                    [TO COME]

                                      -37-<PAGE>

                                                                    EXHIBIT 4.15

================================================================================

                        CONNECTICUT DEVELOPMENT AUTHORITY

                                       TO

                         U.S. BANK NATIONAL ASSOCIATION,

                                   AS TRUSTEE

                             ----------------------
                               INDENTURE OF TRUST
                             ----------------------

                           DATED AS OF OCTOBER 1, 2003

                        CONNECTICUT DEVELOPMENT AUTHORITY
               $14,930,000 WATER FACILITIES REFUNDING REVENUE BONDS
             (THE CONNECTICUT WATER COMPANY PROJECT - 2003C SERIES)

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                                                                                                              <C>
Parties and Preambles....................................................................................         1
Form of Bond.............................................................................................         4
                                                     ARTICLE I
                                           DEFINITIONS AND INTERPRETATION
   Section 1.1. Definitions..............................................................................        13
   Section 1.2. Interpretation...........................................................................        21
                                                     ARTICLE II
                                     AUTHORIZATION, TERMS AND ISSUANCE OF BONDS
   Section 2.1. Authorization for Indenture..............................................................        23
   Section 2.2. Authorization and Obligation of Bonds....................................................        23
   Section 2.3. Issuance and Terms of the Bonds..........................................................        23
   Section 2.4. Redemption of Bonds......................................................................        26
   Section 2.5. Execution and Authentication of Bonds....................................................        27
   Section 2.6. Delivery of Bonds........................................................................        28
   Section 2.7. No Additional Bonds......................................................................        28
                                                    ARTICLE III
                                       GENERAL TERMS AND PROVISIONS OF BONDS
   Section 3.1. Date of Bonds............................................................................        29
   Section 3.2. Form and Denominations...................................................................        29
   Section 3.3. Legends..................................................................................        29
   Section 3.4. Medium of Payment........................................................................        29
   Section 3.5. Bond Details.............................................................................        29
   Section 3.6. Interchangeability, Transfer and Registry................................................        29
   Section 3.7. Bonds Mutilated, Destroyed, Stolen or Lost...............................................        30
   Section 3.8. Cancellation and Destruction of Bonds....................................................        30
   Section 3.9. Requirements With Respect To Transfers...................................................        30
   Section 3.10.Registrar................................................................................        31
   Section 3.11.Payment Procedure Pursuant to the Bond Insurance Policy..................................        31
                                                     ARTICLE IV
                                   APPLICATION OF BOND PROCEEDS AND OTHER AMOUNTS
   Section 4.1. Accrued Interest.........................................................................        33
   Section 4.2. Bond Proceeds............................................................................        33
   Section 4.3. Borrower Contribution....................................................................        33
                                                     ARTICLE V
                                          CUSTODY AND INVESTMENT OF FUNDS
   Section 5.1. Creation of Funds........................................................................        34
   Section 5.2. Refunding Fund...........................................................................        34
   Section 5.3. Debt Service Fund........................................................................        35
   Section 5.4. Rebate Fund..............................................................................        36
   Section 5.5. Renewal Fund.............................................................................        36
   Section 5.6. Investment of Funds and Accounts.........................................................        36
   Section 5.7. Non-presentment of Bonds.................................................................        37
                                                     ARTICLE VI
                                                REDEMPTION OF BONDS
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 6.1. Privilege of Redemption and Redemption Price.............................................        38
Section 6.2. Selection of Bonds to be Redeemed........................................................        38
Section 6.3. Notice of Redemption.....................................................................        38
Section 6.4. Payment of Redeemed Bonds................................................................        38
Section 6.5. Notice to Authority and Borrower of Deceased Bondholder Redemption.......................        39
Section 6.6. Cancellation of Redeemed Bonds...........................................................        39
                                                    ARTICLE VII
                                                PARTICULAR COVENANTS
Section 7.1. No Pecuniary Liability on Authority or Officers..........................................        40
Section 7.2. Payment of Principal, Redemption Price, if any, and Interest.............................        40
Section 7.3. Performance of Covenants.................................................................        40
Section 7.4. Further Assurances.......................................................................        40
Section 7.5. Inspection of Project Books..............................................................        40
Section 7.6. Rights under Financing Documents.........................................................        41
Section 7.7. Creation of Liens, Indebtedness..........................................................        41
Section 7.8. Recording and Filing.....................................................................        41
                                                    ARTICLE VIII
                                              REMEDIES OF BONDHOLDERS
Section 8.1. Events of Default; Acceleration of Due Dates.............................................        42
Section 8.2. Enforcement of Remedies..................................................................        42
Section 8.3. Application of Revenue and Other Moneys After Default....................................        44
Section 8.4. Actions by Trustee.......................................................................        44
Section 8.5. Majority Bondholders Control Proceedings.................................................        45
Section 8.6. Individual Bondholder Action Restricted..................................................        45
Section 8.7. Effect of Discontinuance of Proceedings..................................................        45
Section 8.8. Remedies Not Exclusive...................................................................        45
Section 8.9. Delay or Omission Upon Default...........................................................        45
Section 8.10.Notice of Default........................................................................        46
Section 8.11.Waivers of Default.......................................................................        46
                                                     ARTICLE IX
                                             TRUSTEE AND PAYING AGENTS
Section 9.1. Appointment and Acceptance of Duties.....................................................        47
Section 9.2. Indemnity................................................................................        47
Section 9.3. Responsibilities of Trustee..............................................................        47
Section 9.4. Compensation.............................................................................        48
Section 9.5. Evidence on Which Trustee May Act........................................................        48
Section 9.6. Evidence of Signatures of Owners of the Bonds and Ownership of Bonds.....................        49
Section 9.7. Trustee and any Paying Agent, May Deal in Bonds and With Borrower........................        49
Section 9.8. Resignation or Removal of Trustee........................................................        49
Section 9.9. Successor Trustee........................................................................        50
Section 9.10.Appointment and Responsibilities of Paying Agent.........................................        51
Section 9.11.Resignation or Removal of Paying Agent; Successors.......................................        51
Section 9.12.Monies Held for Particular Bonds.........................................................        52
Section 9.13.Continuation Statements..................................................................        52
Section 9.14.Obligation to Report Defaults............................................................        52
Section 9.15.Payments Due on non-Business Day.........................................................        52
Section 9.16.Appointment of Co-Trustee................................................................        52
Section 9.17.Project Description......................................................................        53
                                                     ARTICLE X
                                              AMENDMENTS OF INDENTURE
Section 10.1. Limitation on Modifications.............................................................        54
</TABLE>

                                      -ii-
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 10.2. Supplemental Indentures Without Consent of Owners of the Bonds..........................        54
Section 10.3. Supplemental Indentures With Consent of Owners of the Bonds.............................        55
Section 10.4. Supplemental Indenture Part of the Indenture............................................        56
                                                     ARTICLE XI
                                         AMENDMENTS OF FINANCING DOCUMENTS
Section 11.1. Rights of Borrower......................................................................        57
Section 11.2. Amendments of Financing Documents Not Requiring Consent of Owners of the Bonds..........        57
Section 11.3. Amendments of Financing Documents Requiring Consent of Owners of the Bonds..............        57
                                                    ARTICLE XII
                                               DISCHARGE OF INDENTURE
Section 12.1. Defeasance..............................................................................        58
                                                    ARTICLE XIII
                                                 GENERAL PROVISIONS
Section 13.1. Notices.................................................................................        59
Section 13.2. Covenant Against Discrimination.........................................................        59
Section 13.3. Rights of Bond Insurer..................................................................        59
Section 13.4. Bond Insurer Consent....................................................................        60
Section 13.5. Notices to the Bond Insurer.............................................................        60
Section 13.6. Parties Interested Herein...............................................................        60
Section 13.7. Bond Insurer as Third Party Beneficiary.................................................        60
Section 13.8. Effective Date; Counterparts............................................................        60
Section 13.9. Date for Identification Purposes Only...................................................        60
Section 13.10. Separability of Invalid Provisions.....................................................        60
</TABLE>

                                      -iii-
<PAGE>

         THIS INDENTURE OF TRUST, made and dated as of October 1, 2003, by and
between the CONNECTICUT DEVELOPMENT AUTHORITY, a body corporate and politic
constituting a public instrumentality and political subdivision of the State of
Connecticut, and U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized, existing and authorized to accept and execute trusts of the character
herein set out under and by virtue of the laws of the United States of America,
with a corporate trust office located in Hartford, Connecticut, as Trustee,

                                WITNESSETH THAT:

         WHEREAS, the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23yy, as amended (the "Act"), declares that
there is a continuing need in the State (1) for industrial development and
activity to provide and maintain employment and tax revenues and to control,
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, the Authority has heretofore issued and sold $15,000,000 of
its Water Facilities Refunding Revenue Bonds (The Connecticut Water Company
Project - 1992 Series) ($14,640,000 of which were outstanding as of the date of
this Indenture) (the "Prior Obligations"), the proceeds of which were used to
refund in full the Authority's Water Facilities Revenue Bonds (The Connecticut
Water Company Project - 1987 Series), the proceeds of which were used to finance
various capital improvements constituting a portion of the Borrower's existing
water system (the "Project"); and

         WHEREAS, the Authority has by a resolution adopted on June 18, 2003
authorized the issuance of $8,000,000 principal amount of its Water Facilities
Refunding Revenue Bonds (The Connecticut Water Company - 2003C Series) for the
purpose of refunding in full the Prior Obligations; and

<PAGE>

         WHEREAS, the Authority has determined that the issuance, sale and
delivery of the Bonds, as hereinafter provided, is needed to refinance the cost
of the Project, and concurrently herewith the Authority and the Borrower have
entered into a Loan Agreement, dated as of October 1, 2003, providing for a loan
by the Authority to the Borrower for such purpose in an amount equal to the
principal amount of the Bonds; and

         WHEREAS, the Connecticut Department of Public Utility Control (the
"DPUC") has approved the issuance of the Note; and

         WHEREAS, the Bonds shall be special obligations of the Authority,
payable solely out of the revenues and other receipts, funds or monies derived
by the Authority under the Agreement or the Indenture and from any amounts
otherwise available under this Indenture for the payment of the Bonds; and

         WHEREAS, the Bonds are to be originally issued as fully registered
bonds and such Bonds and the Trustee's certificate of authentication to be
endorsed thereon shall be in substantially the following form, with appropriate
variations, omissions and insertions as permitted or required by this Indenture,
to wit:

                                      -2-
<PAGE>

                                 [FORM OF BOND]

No. R-                                                                   $

         NEITHER THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY THEREOF IS
         OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF
         THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY THEREOF IS PLEDGED TO THE
         PAYMENT OF, THE PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS
         BOND.

         XL CAPITAL ASSURANCE INC. (THE "BOND INSURER"), NEW YORK, NEW YORK, HAS
         DELIVERED ITS MUNICIPAL BOND INSURANCE POLICY (THE "BOND INSURANCE
         POLICY") WITH RESPECT TO THE SCHEDULED PAYMENTS DUE OF PRINCIPAL OF,
         AND INTEREST ON, THIS BOND TO U.S. BANK NATIONAL ASSOCIATION OR ITS
         SUCCESSOR, AS PAYING AGENT FOR THE BONDS (THE "PAYING AGENT"). SAID
         BOND INSURANCE POLICY IS ON FILE AND AVAILABLE FOR INSPECTION AT THE
         PRINCIPAL OFFICE OF THE PAYING AGENT AND A COPY THEREOF MAY BE OBTAINED
         FROM THE BOND INSURER OR THE PAYING AGENT.

                        CONNECTICUT DEVELOPMENT AUTHORITY
                     WATER FACILITIES REFUNDING REVENUE BOND
             (THE CONNECTICUT WATER COMPANY PROJECT - 2003C SERIES)

BOND DATE:  October 1, 2003

MATURITY DATE:  September 1, 2022

INTEREST PAYMENT DATES:  March 1 and September 1

INTEREST RATE:  %

REGISTERED OWNER:  CEDE & CO.

PRINCIPAL AMOUNT:  $14,930,000.00***

CUSIP NUMBER:

         CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority"), a body corporate
and politic constituting a public instrumentality and political subdivision of
the State of Connecticut (the "State"), for value received, hereby promises to
pay to the REGISTERED OWNER or registered assigns, on the MATURITY DATE, solely
from the sources and in the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of America, the PRINCIPAL
AMOUNT and in like manner to pay interest on the unpaid principal balance
thereof until the Authority's obligation with respect to the payment of such sum
shall be discharged. Interest shall be payable (computed on the basis of a
360-day year consisting of twelve 30-day months) from the most recent INTEREST
PAYMENT DATE, to which interest has been paid or duly provided for or, if no
interest has been paid, from the DATE OF THIS BOND at the INTEREST RATE per
annum, payable semi-annually on the INTEREST PAYMENT DATES until the date on
which this bond becomes due, whether at maturity or by acceleration or
redemption. From and after that date, any unpaid principal will bear interest at
the same rate until paid or duly provided for.

                                      -3-
<PAGE>

         Payment of Principal and Interest. The principal and premium, if any,
of this Bond is payable to the REGISTERED OWNER hereof but only upon
presentation and surrender of this bond at the corporate trust office of U.S.
Bank National Association, as Paying Agent (with its successors, the "Paying
Agent"). Interest is payable by check or draft mailed by the Paying Agent to the
REGISTERED OWNER of this bond (or of one or more predecessor or successor Bonds
(as defined below)), determined as of the close of business on the applicable
record date, at its address as shown on the registration books maintained by the
Paying Agent. If any payment, redemption or maturity date for principal, premium
or interest shall not be a Business Day then the payment thereof may be made on
the next succeeding Business Day with the same force and effect as if made on
the specified payment date and no interest shall accrue for the period after the
specified payment date. Payment shall be in any coin or currency of the United
States of America, which, on the respective dates of payment thereof, is legal
tender for the payment of public and private debts.

         The record date for payment of interest is the first day of the month
in which the interest is to be paid, provided that, with respect to overdue
interest or interest payable on redemption of this bond other than on an
INTEREST PAYMENT DATE or interest on any overdue amount, the Trustee (as defined
below) may establish a special record date. The special record date may be not
more than thirty (30) days before the date set for payment. The Paying Agent
will mail notice of a special record date to the registered owners of the Bonds
(the "Bondholders") at least ten (10) days before the special record date. The
Paying Agent will promptly certify to the Authority and the Trustee that it has
mailed such notice to all Bondholders, and such certificate will be conclusive
evidence that such notice was given in the manner required hereby.

         Authorization and Purpose. This bond is one of an authorized issue of
Bonds of the Authority in the aggregate principal amount of $8,000,000
designated: Water Facilities Refunding Revenue Bonds (The Connecticut Water
Company Project - 2003A Series) (the "Bonds") which are issued for the purpose
of refunding in full the Authority's $8,000,000 aggregate principal amount of
Water Facilities Refunding Revenue Bonds (The Connecticut Water Company Project
- 1993 Series) (the "Prior Obligations"), which were issued for the purpose of
refunding in full the Authority's Water Facilities Revenue Bonds (The
Connecticut Water Company Project - 1983 Series), which were issued for the
purpose of financing various capital improvements constituting a portion of the
Borrower's existing water system (the "Project"), for the benefit of The
Connecticut Water Company (the "Borrower"), a corporation organized and existing
under the laws of the State of Connecticut, and paying necessary expenses
incidental thereto. The Bonds are issued pursuant to the State Commerce Act,
constituting Connecticut General Statutes, Sections 32-1a through 32-23yy, as
amended, a resolution adopted by the Authority on June 18, 2003 and an Indenture
of Trust, dated as of October 1, 2003 (which Indenture as from time to time
amended and supplemented is herein referred to as the "Indenture"), duly
executed and delivered by the Authority to U.S. Bank National Association, as
trustee (with its successors, the "Trustee"), and are equally and ratably
secured by and entitled to the protection of the Indenture, which is on file in
the office of the Trustee.

         Pledge and Security. Pursuant to the Indenture, the Authority has
assigned to the Trustee all of its right, title and interest in and to a Loan
Agreement, dated as of October 1, 2003, as it may be amended or supplemented
from time to time (the "Agreement"), between the Authority and the Borrower, and
the Note evidencing the Borrower's obligations under the Agreement (except for
certain enforcement and indemnification rights which are reserved in the
Indenture), including all rights to receive loan payments sufficient to pay the
principal or premium if any, of and interest and all other amounts due on the
Bonds as the same become due, to be made by the Borrower pursuant to the
Agreement. The Agreement sets forth the terms and conditions under which the
Authority will provide for the refinancing of the Project and under which the
Borrower will use and occupy the Project and make loan payments to the Authority
in such amounts as are necessary to pay the principal of, premium if any, and
interest on the Bonds. Reference is hereby made to the Indenture for the
definition of any capitalized word or term used but not

                                      -4-
<PAGE>

defined herein and for a description of the property pledged, assigned and
otherwise available for the payment of the Bonds, the provisions, among others,
with respect to the nature and extent of the security, the rights, duties and
obligations of the Authority, the Trustee and the owners of the Bonds, and the
terms upon which the Bonds are issued and secured, and the holders of the Bonds
are deemed to assent to the provisions of the Indenture by the acceptance of
this bond.

         Event of Default. In case any Event of Default occurs and is
continuing, the principal amount of this bond together with accrued interest may
be declared due and payable in the manner and with the effect provided in the
Indenture.

         General Optional Redemption. The Bonds are subject to redemption prior
to maturity from time to time pursuant to the Indenture at the option of the
Authority, which option shall be exercised at the direction of the Borrower, as
a whole or in part on any date on or after December 15, 2008, at the Redemption
Price equal to 100% of the principal amount thereof, plus accrued interest to
the redemption date.

         Extraordinary Optional Redemption. In addition, at the option of the
Authority, which option shall be exercised upon the giving of notice by the
Borrower of its intention to prepay amounts due under the Agreement, the Bonds
are subject to redemption prior to maturity as a whole on any date at a
Redemption Price equal to 100% of the principal amount thereof plus accrued
interest to the date of redemption, if any one or more of the events of casualty
to or condemnation of the Project or change in law or certain economic events
affecting the Project specified in subsection 8.1(B) of the Agreement shall have
occurred, as evidenced in each case by the filing of a certificate of an
Authorized Representative of the Borrower.

         Mandatory Taxability Redemption. In the event of a Determination of
Taxability, the Bonds shall be redeemed on any day selected by the Borrower that
is not more than 180 days after the occurrence of such Determination of
Taxability as provided in the Indenture, at the Redemption Price equal to 100%
of the principal amount thereof plus accrued interest to the date of redemption.
Redemption under this paragraph shall be in whole unless not less than
forty-five (45) days prior to the redemption date the Borrower delivers to the
Trustee an opinion of Bond Counsel reasonably satisfactory to the Trustee to the
effect that a redemption of less than all of the Bonds will preserve the
tax-exempt status of interest on the remaining Bonds outstanding subsequent to
such redemption.

         Deceased Bondholder Redemptions. For purposes of this section only, the
owner of a Bond shall mean the Beneficial Owner of said Bond so long as the
Book-Entry Only System shall be in effect.

         Notwithstanding the foregoing redemption provisions, the estate of,
successor in interest to and, in the case of jointly held Bonds (whether by
joint tenancy, tenancy in common or tenancy by the entirety) any surviving joint
owner may, within two years of the date of death of a deceased owner, request
the redemption of Bonds of which such deceased owner on the date of his or her
death was an owner or joint owner ("Deceased Owner Bonds"), and the Authority
will redeem such Bonds within 60 days of receipt by the Trustee of such request
at a Redemption Price of 100% of the principal amount thereof plus accrued
interest to the date of redemption in the manner and as provided in Article VI
of the Indenture, subject to the following limitations: (i) the Authority shall
not be obligated to redeem any Deceased Owner Bonds prior to September 1, 2005:
(ii) the maximum aggregate principal amount of Deceased Owner Bonds that the
Authority shall be required to redeem during each 12-month period commencing
September 1, 2005 and each September 1 thereafter through maturity of the Bonds
is $450,000; (iii) during any such 12-month period, the Authority shall not be
required to redeem in excess of $25,000 aggregate principal amount of Deceased
Owner Bonds with respect to any one deceased owner, and (iv) such Deceased Owner
Bonds had been held by such owner for at least six months prior to his or her
death. A request for redemption of Deceased Owner Bonds shall be made by the
executor of

                                      -5-
<PAGE>

the estate of or successor in interest to the deceased owner or, in the case of
jointly owned Bonds, by any joint owner surviving the deceased owner, in
writing, in form satisfactory to the Trustee, signed by the person requesting
redemption or such person's legal representative, with such signature
guarantees, evidences of due authorization to make such request for redemption,
evidence of death of the deceased owner and ownership of such Bond(s) at the
time of death, evidence of tax waivers and such other evidence as the Trustee
may require under the Indenture. A request for redemption shall specify the
Bonds to be redeemed. Subject to the limitations herein provided, requests for
redemption shall be accepted and honored by the Trustee in the order of receipt
of such requests by the Trustee. Upon the receipt by the requesting party of
notice from the Trustee in accordance with Article VI of the Indenture that the
Bonds with respect to which a request for redemption has been made are eligible
for redemption and shall be redeemed, such Bonds shall be tendered to the
Trustee no later than the date set for redemption. Any request for redemption
may be withdrawn at any time prior to the Trustee's sending notice of redemption
pursuant to the Indenture; after notice of redemption is sent, a request for
redemption is irrevocable.

         Selection of Bonds to be Redeemed. If less than all of the Outstanding
Bonds are to be called for redemption, the Bonds (or portions thereof) to be
redeemed shall be selected as provided in the Indenture.

         Notice of Redemption. In the event this bond is selected for
redemption, notice (which notice may state that it is subject to the receipt of
the redemption moneys by the Trustee on or before the date fixed for redemption
and which notice shall be of no effect unless such moneys are so received on or
before such date) will be mailed no more than forty-five (45) days nor less than
thirty (30) days prior to the redemption date to the REGISTERED OWNER at its
address shown on the registration books maintained by the Paying Agent. Failure
to mail notice to the owner of any other Bond or any defect in the notice to
such an owner shall not affect the redemption of this bond.

         If this bond is of a denomination in excess of five thousand dollars
($5,000), portions of the principal amount in the amount of five thousand
dollars ($5,000) or any multiple thereof may be redeemed. If less than all of
the principal amount is to be redeemed, upon surrender of this bond to the
Paying Agent, there will be issued to the REGISTERED OWNER, without charge, a
new Bond or Bonds, at the option of the REGISTERED OWNER, for the unredeemed
principal amount.

         Notice of redemption having been duly mailed, and moneys for the
redemption having been deposited with the Paying Agent, this bond, or the
portion called for redemption, will become due and payable on the redemption
date at the applicable redemption price from and after the date fixed for
redemption, interest on this bond (or such portion) will no longer accrue.

         Transfer of Bonds. This bond is transferable by the REGISTERED OWNER,
in person or by its attorney duly authorized in writing, at the office of the
Paying Agent, upon surrender of this bond to the Paying Agent for cancellation.
Upon the transfer, a new Bond or Bonds in authorized denominations of the same
aggregate principal amount will be issued to the transferee at the same office.
This bond may also be exchanged at the office of the Paying Agent for a new Bond
or Bonds in authorized denominations of the same aggregate principal amount
without transfer to a new registered owner. Exchanges and transfers will be
without expense to the owner except for applicable taxes or other governmental
charges, if any. The Paying Agent will not be required to make an exchange or
transfer of this bond during the fifteen (15) days preceding any date fixed for
selection for redemption if this bond (or any portion thereof) is eligible to be
selected for redemption.

         Amendment of Indenture. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Authority and the rights of the owners of the Bonds at
any time by the Authority with the consent of the Bond Insurer, unless the Bond
Insurer is in default under the Bond Insurance Policy, in which case such
amendment shall require

                                      -6-
<PAGE>

the consent of the owners of not less than 51% in aggregate principal amount of
the Bonds at the time outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all future owners of each
Bond and of any such Bond issued upon the transfer thereof, whether or not
notation of such consent is made thereon. The Indenture also permits the
amendment thereof by the Authority but without the consent of the owners of the
Bonds or the Bond Insurer for certain specified purposes.

         Limitation on Bondholder Enforcement Rights. The owner of this bond
shall have no right to enforce the provisions of the Indenture, to institute
action to enforce the provisions and covenants thereof or to institute, appear
in or defend any suit or other proceedings with respect thereto, except as
provided in the Indenture. Anything in the Indenture to the contrary
notwithstanding, upon the occurrence and continuance of an Event of Default
under the Indenture, so long as the Bond Insurance Policy is in effect and the
Bond Insurer is not in default thereunder, the Bond Insurer shall be entitled to
control and direct the enforcement of all rights and remedies granted to the
holders of the Bonds or the Trustee for the benefit of the holders of the Bonds
under the Indenture.

         Special Obligations of the Authority. This bond and the issue of which
it forms a part are special obligations of the Authority, payable solely out of
the revenues or other receipts, funds or moneys of the Authority pledged under
the Indenture and from any amounts otherwise available under the Indenture for
the payment of the Bonds. Neither the State nor any municipality thereof shall
be obligated to pay the principal or redemption price, if any, of or interest on
this bond and neither the faith and credit nor taxing power of the State or any
municipality thereof is pledged to such payment. The Bonds do not now and shall
never constitute a debt or liability of the State or any municipality thereof or
bonds issued or guaranteed by either of them within the meaning of any
constitutional or statutory limitation.

         Estoppel Clause. This bond is issued pursuant to and in full compliance
with the Constitution and laws of the State. It is hereby certified, recited and
declared that all acts, conditions and things required to exist, happen and be
performed precedent to and in the issuance of this bond do exist, have happened
and have been performed in due time, form and manner as required by law and that
the issuance of this bond and of the issue of which it forms a part, together
with all other obligations of the Authority, do not exceed or violate any
constitutional or statutory limitation.

         NEITHER THE AUTHORITY, THE TRUSTEE NOR ANY PAYING AGENT WILL HAVE ANY
RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY
BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY
DTC OR ANY SUCCESSOR SECURITIES DEPOSITORY, ANY PARTICIPANT, OR ANY INDIRECT
PARTICIPANT; (II) THE PAYMENT BY DTC OR ANY SUCCESSOR SECURITIES DEPOSITORY OR
ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE
PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS; (III) THE SELECTION
BY DTC OR ANY SUCCESSOR SECURITIES DEPOSITORY OR ANY DIRECT OR INDIRECT
PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL
REDEMPTION OF THE BONDS; (IV) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR
ANY SUCCESSOR SECURITIES DEPOSITORY AS BONDHOLDER; OR (V) THE DELIVERY TO ANY
PARTICIPANT, OR INDIRECT PARTICIPANT, BENEFICIAL OWNER OR OTHER PERSON OTHER
THAN DTC OR ANY SUCCESSOR SECURITIES DEPOSITORY OF ANY NOTICE WITH RESPECT TO
THE BONDS, INCLUDING BUT NOT LIMITED TO, ANY NOTICE OF REDEMPTION.

         No Personal Liability. Neither the officers, directors or employees of
the Authority or the Trustee nor any person executing this bond shall be liable
personally or be subject to any personal liability or accountability by reason
of the issuance hereof.

                                      -7-
<PAGE>

         Authentication. This bond shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under the Indenture until
the certificate of authentication hereon shall have been signed by the Trustee
or the Paying Agent.

         Authorized Denomination. The Bonds are issuable only in fully
registered form in denominations of $5,000 or any multiple thereof.

         Persons Deemed Owners. The Authority, the Trustee, the Paying Agent and
the Borrower may treat the REGISTERED OWNER as the absolute owner of this bond
for all purposes, notwithstanding any notice to the contrary.

                                      -8-
<PAGE>

         IN WITNESS WHEREOF, the CONNECTICUT DEVELOPMENT AUTHORITY has caused
this Bond to be executed in its name by the manual or facsimile signature of its
Authorized Representative.

                                         CONNECTICUT DEVELOPMENT AUTHORITY

                                         By ____________________________________
                                            Authorized Representative

                                      -9-
<PAGE>

                     [FORM OF CERTIFICATE OF AUTHENTICATION]
                          CERTIFICATE OF AUTHENTICATION

         This bond is one of the Bonds of the issue described in the within
mentioned Indenture.

Date of Registration:

                                        U.S. BANK NATIONAL ASSOCIATION, Trustee

                                        By _____________________________ [,or
                                           Authorized Signature

                                           U.S. BANK NATIONAL ASSOCIATION,
                                           Paying Agent

                                        By _____________________________
                                           Authorized Signature]

<PAGE>

                              [FORM OF ASSIGNMENT]

                                   ASSIGNMENT

         For value received the undersigned sells, assigns and transfers this
bond to

________________________________________________________________________________

(Name and Address of Assignee)

________________________________________________________________________________

Social Security or Other Identifying Number of Assignee

and irrevocably appoints __________________________________ attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power of
substitution.

________________________________________________________________________________

NOTE: The signature to this assignment must correspond with the name as written
on the face of the bond without alteration or enlargement or other change and
must be guaranteed by a Participant in a Recognized Signature Guaranty Medallion
Program.

Dated:

Signature Guaranteed:

_____________________________________________________
Participant in a Recognized
Signature Guaranty Medallion Program

By: _________________________________________________
    Authorized Signature

                              [END OF FORM OF BOND]

                                      -11-
<PAGE>

         WHEREAS, all things necessary to make the Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, the valid, binding and
legal obligations of the Authority according to the import thereof, and to
constitute this Indenture a valid pledge of revenues to the payment of the
principal or Redemption Price, if any, of and interest on the Bonds and all
other amounts due in connection therewith and a valid assignment of the rights
of the Authority (except as stated below) under the Agreement and the Note have
been done and performed, and the creation, execution and delivery of this
Indenture and the creation, execution and issuance of the Bonds subject to the
terms hereof, have in all respects been duly authorized;

               NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS:

                                GRANTING CLAUSES

         That the Authority in consideration of the premises and the acceptance
by the Trustee of the trusts hereby created and of the purchase and acceptance
of the Bonds by the holders and owners thereof, and of the sum of One Dollar,
lawful money of the United States of America, to it duly paid by the Trustee at
or before the execution and delivery of these presents, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, and in
order to secure the payment of the principal of, Redemption Price, if any, and
interest on the Bonds according to their tenor and effect and all other amounts
due in connection therewith and the performance and observance by the Authority
of all the covenants expressed or implied herein and in the Bonds, does hereby
grant, bargain, sell, convey, pledge and assign unto, and grant a security
interest in and to the Trustee, and unto its respective successors in trust, and
to their respective assigns, forever, for the securing of the performance of the
obligations of the Authority hereinafter set forth, the following:

                                       I.

         The Agreement and the Note (except to the extent to which any such
document provides for the indemnification or the payment of expenses of the
Authority, rights of the Authority to inspect the Project, receive notices and
grant approvals) including all extensions and renewals of the term thereof, if
any, together with all right, title and interest of the Authority therein,
including, but without limiting the generality of the foregoing, the present and
continuing right to claim, collect and receive any of the moneys, income,
revenues, issues, profits and other amounts payable or receivable thereunder, to
bring actions and proceedings thereunder or for the enforcement thereof, and to
do any and all things which the Authority is or may become entitled to do under
the Agreement and the Note but reserving, however, to the Authority rights of
the Authority under Sections 6.2, 6.4, 7.2(A)(2) and 7.3 of the Agreement upon
the conditions therein set forth;

                                       II.

         All Funds and Accounts (except the Rebate Fund and the Refunding Fund)
and moneys therein; and

                                      III.

         All moneys and securities from time to time held by the Trustee or the
Paying Agent under the terms of this Indenture (except moneys and securities in
the Rebate Fund and the Refunding Fund) and any and all other real or personal
property of every name and nature concurrently herewith or from time to time
hereafter by delivery or by writing of any nature conveyed, mortgaged, pledged,
assigned or transferred as and for additional security hereunder by the
Authority or by anyone in its behalf, or with its

                                      -12-
<PAGE>

written consent, to the Trustee or the Paying Agent, which are hereby authorized
to receive any and all such property at any and all times and to hold and apply
the same subject to the terms hereof;

         TO HAVE AND TO HOLD all and singular the trust estate, whether now
owned or hereafter acquired, unto the Trustee and its respective successors and
assigns in trust forever to its and their own proper use and behoof but:

         IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit, security and protection of all present and
future holders and owners of the Bonds from time to time issued and to be issued
under and secured by this Indenture without privilege, priority or distinction
as to the lien or otherwise of any of the Bonds over any of the other Bonds;

         PROVIDED, HOWEVER, that if the Authority, its successors or assigns,
shall well and truly pay, or cause to be paid, the principal of, Redemption
Price, if any, and interest on, the Bonds due or to become due thereon, and all
other amounts due thereunder, at the times and in the manner mentioned in the
Bonds according to their tenor, and shall cause the payments to be made on the
Bonds as required under Article VII hereof, or shall provide, as permitted
hereby, for the payment thereof by depositing with the Trustee the entire amount
due or to become due thereon, and shall well and truly keep, perform and observe
all the covenants and conditions pursuant to the terms of this Indenture to be
kept, performed and observed by it, and shall pay or cause to be paid to the
Trustee all sums of money due or to become due to it in accordance with the
terms and provisions of the Agreement, the Note and this Indenture, then upon
the final payment thereof this Indenture and the rights hereby granted shall
cease, determine and be void; otherwise this Indenture to be and remain in full
force and effect.

         THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly
declared, that all Bonds issued and secured hereunder are to be issued,
authenticated and delivered and all of the property, rights and interests,
including, without limitation the loan payments and other amounts hereby
assigned and pledged are to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants, agreements, trusts,
uses and purposes as hereinafter expressed, and the Authority has agreed and
covenanted, and does hereby agree and covenant with the Trustee and with the
respective holders and owners of the Bonds as follows:

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

         SECTION 1.1. DEFINITIONS. As used in this Indenture:

         "Account" or "Accounts" shall mean the Account or Accounts established
pursuant to Article V herein below.

         "Act" means the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-la through 32-23yy, as amended.

         "Agreement" means the Loan Agreement of even date herewith between the
Authority and the Borrower, and any amendments and supplements thereto.

         "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

                                      -13-
<PAGE>

subdivision or instrumentality of the State which shall hereafter succeed to the
powers, duties and functions thereof.

         "Authorized Investments" means any of the following:

         A.       Direct obligations of the United States of America (including
                  obligations issued or held in book-entry form on the books of
                  the Department of the Treasury, and CATS and TIGRS) or
                  obligations the principal of and interest on which are
                  unconditionally guaranteed by the United States of America.

         B.       Bonds, debentures, notes or other evidence of indebtedness
                  issued or guaranteed by any of the following federal agencies
                  and provided such obligations are backed by the full faith and
                  credit of the Untied States of America (stripped securities
                  are only permitted if they have been stripped by the agency
                  itself):

                  1.       U.S. Export-Import Bank (Eximbank) Direct obligations
                           or fully guaranteed certificates of beneficial
                           ownership

                  2.       Farmers Home Administration (FmHA)
                           Certificates of Beneficial Ownership

                  3.       Federal Financing Bank

                  4.       Federal Housing Administration Debentures (FHA)

                  5.       General Services Administration
                           Participation Certificates

                  6.       Government National Mortgage Association (GNMA or
                           Ginnie Mae)
                           GNMA - guaranteed mortgage-backed bonds
                           GNMA - guaranteed pass-through obligations

                  7.       U.S. Maritime Administration
                           Guaranteed Title XI financing

                  8.       U.S. Department of Housing and Urban Development
                           (HUD)
                           Project Notes
                           Local Authority Bonds
                           New Communities Debentures - U.S. government
                           guaranteed debentures
                           U.S. Public Housing Notes and Bonds - U.S. government
                                guaranteed public housing notes and bonds

         C.       Bonds, debentures, notes or other evidence of indebtedness
                  issued or guaranteed by any of the following federal agencies
                  which are not backed by the full faith and credit of the
                  United States of America (stripped securities are only
                  permitted if they have been stripped by the agency itself):

                  1.       Federal Home Loan Bank System
                           Senior debt obligations

                  2.       Federal Home Loan Mortgage Corporation (FHLMC or
                           Freddie Mac)
                           Participation Certificate

                                      -14-
<PAGE>

                           Senior debt obligations

                  3.       Federal National Mortgage Association (FNMA or Fannie
                           Mae) Mortgage-backed securities and senior debt
                           obligations

                  4.       Student Loan Marketing Association (SLMA or Sallie
                           Mae) Senior debt obligations

                  5.       Resolution Funding Corp. (REFCORP) obligations

                  6.       Farm Credit System
                           Consolidated systemwide bonds and notes

         D.       Money market funds registered under the Federal Investment
                  Company Act of 1940, whose shares are registered under the
                  Federal Securities Act of 1933, and having a rating by S&P of
                  AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aa1
                  or Aa2.

         E.       Certificates of deposit secured at all times by collateral
                  described in (A) and/or (B) above. Such certificates must be
                  issued by commercial banks, savings and loan associations or
                  mutual savings banks. The collateral must be held by a third
                  party and the bondholders must have a perfected first security
                  interest in the collateral.

         F.       Certificates of deposit, savings accounts, deposit accounts or
                  money market deposits which are fully insured by FDIC,
                  including BIF and SAIF.

         G.       Investment Agreements, including GIC's, Forward Purchase
                  Agreements and Reserve Fund Put Agreements acceptable to the
                  Bond Insurer.

         H.       Commercial paper rated, at the time of purchase, "Prime -1" by
                  Moody's and "A-1" or better by S&P.

         I.       Bonds or notes issued by any state or municipality which are
                  rated by Moody's and S&P in one of the two highest rating
                  categories assigned by such rating agencies.

         J.       Federal funds or bankers acceptances with a maximum term of
                  one year of any bank which has an unsecured, uninsured and
                  unguaranteed obligation rating of "Prime - 1" or "A3" or
                  better by Moody's and "A-1" or "A" or better by S&P.

         K.       Repurchase Agreements ("Repos") for 30 days or less must
                  follow the following criteria. Repos which exceed 30 days must
                  be acceptable to the Bond Insurer (criteria available upon
                  request).

                  Repos provide for the transfer of securities from a dealer
                  bank or securities firm (seller/borrower) to a municipal
                  entity (buyer/lender), and the transfer of cash from a
                  municipal entity to the dealer bank or securities firm with an
                  agreement that the dealer bank or securities firm will repay
                  the cash plus a yield to the municipal entity in exchange for
                  the securities at a specified date.

                  1.       Repos must be between the municipal entity and a
                           dealer bank or securities firm.

                           a.       Primary dealers on the Federal Reserve
                                    reporting dealer list which are rated A or
                                    better by S&P and A2 or better by Moody's,
                                    or

                                      -15-
<PAGE>

                           b.       Banks rated "A" or better by S&P and A2 or
                                    better by Moody's.

                  2.       The written repurchase agreement must include the
                           following:

                           a.       Securities which are acceptable for transfer
                                    are:

                                    (1)      Direct obligations of the United
                                             States of America referred to in
                                             Section A above, or

                                    (2)      Obligations of federal agencies
                                             referred to in Section B above

                                    (3)      Obligations of FNMA and FHLMC

                           b.       The term of the Repos may be up to 30 days.

                           c.       The collateral must be delivered to the
                                    municipal entity, trustee (if trustee is not
                                    supplying the collateral) or third party
                                    acting as agent for the trustee is (if the
                                    trustee is supplying the collateral)
                                    before/simultaneous with payment (perfection
                                    by possession of certificated securities).

                           d.       Valuation of Collateral.

                                    (1)      the securities must be valued
                                             weekly, marked-to-market at current
                                             market price plus accrued interest.

                                    (2)      The value of collateral must be
                                             equal to 104% of the amount of cash
                                             transferred by the municipal entity
                                             to the dealer bank or security firm
                                             under the repo plus accrued
                                             interest. If the value of
                                             securities held as collateral slips
                                             below 104% of the value of the cash
                                             transferred by the municipal
                                             entity, then additional cash and/or
                                             acceptable securities must be
                                             transferred. If, however, the
                                             securities used as collateral are
                                             FNMA or FHLMC, then the value of
                                             collateral must equal 105%.

                                    (3)      A legal opinion which must be
                                             delivered to the municipal entity
                                             that states that the Repo meets
                                             guidelines under state law for
                                             legal investment of public funds.

         "Authorized Representative" means, in the case of the Authority, the
Chairman or Vice Chairman, the President, the Executive Vice President, Deputy
Director or any Senior Vice President or any Vice President thereof and, in the
case of the Borrower, the Chairman, the President and Chief Executive Officer,
the Vice President-Chief Financial Officer and Treasurer, and any Vice
President, Assistant Treasurer or Secretary thereof and, when used with
reference to the performance of any act, the discharge of any duty or the
execution of any certificate or other document, any officer, employee or other
person authorized to perform such act, discharge such duty or execute such
certificate or other document.

         "Beneficial Owner" shall have the meaning specified in Section 2.3(F)
hereof. If any person claims to the Trustee to be a Beneficial Owner, for
purposes of Sections 2.4(C), such person shall prove such claim to the
satisfaction of the Trustee with such documentation and signature guaranties as
the Trustee may request and shall be responsible for and pay any costs
associated with such claim.

                                      -16-
<PAGE>

         "Bonds" means the $14,930,000 Water Facilities Refunding Revenue Bonds
(The Connecticut Water Company Project - 2003C Series) authorized and issued
pursuant to Section 2.3 hereof.

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

         "Bondholder", "holder" or "owner" or words of similar import when used
with reference to Bonds, shall unless otherwise specified, mean any person who
shall be the registered owner of any Outstanding Bond.

         "Bond Insurance Policy" means the financial guaranty insurance policy
issued by the Bond Insurer insuring the payment when due of the principal of and
interest on the Bonds as provided therein.

         "Bond Insurer" means XL Capital Assurance Inc., a financial guaranty
insurance company incorporated under the laws of the State of New York, and its
successors and assigns.

         "Borrower" means (i) The Connecticut Water Company, a corporation
organized and existing under the laws of the State of Connecticut, and its
successors and assigns and (ii) any surviving, resulting or transferee
corporation as provided in Section 6.1 of the Agreement.

         "Business Day" means any day (i) that is not a Saturday or Sunday, (ii)
that is a day on which banks located in Hartford, Connecticut and New York, New
York are not required or authorized to remain closed, (iii) that is a day on
which banking institutions in all of the cities in which the principal offices
of 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.

         "Cede & Co." means the nominee for The Depository Trust Company (DTC)
who shall act as securities depository for the Bonds.

         "Code" means the Internal Revenue Code of 1986, as amended and
regulations promulgated thereunder.

         "Computation Period" means each period from the date of issuance
through the date on which a determination of the Rebatable Arbitrage is made or
required to be made pursuant to Section 8.3 of the Tax Regulatory Agreement.

         "Debt Service Fund" means the special trust fund so designated,
established pursuant to Section 5.1 hereof.

         "Default" means any event or condition which will, with the lapse of
time, or the giving of notice, or both, become an Event of Default.

         "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.

         "Depository" means DTC or any other depository holding the Bonds for
purpose of a book-entry system.

         "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 (provided the Borrower has been afforded the opportunity to
participate at its own expense in all appeals and proceedings to which such
owner of any Bonds is a

                                      -17-
<PAGE>

party relating to such assessment and demand for payment) and the expiration of
the appeal period provided therein if no appeal is taken or, if an appeal is
taken by such owner of any Bonds as provided in Section 6.3 of the 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 the Bonds is includable in the gross income for federal income
tax purposes (other than for purposes of alternative minimum tax, environmental
tax or foreign branch profits tax) of an owner or former owner thereof, other
than for a period during which such owner or former owner is or was a
"substantial user" of the Project financed by such Bonds or a "related person"
as such terms are defined in the Code. For purposes of this definition only, the
term owner means the Beneficial Owner of the Bonds so long as the Book-Entry
Only System is in effect.

         "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 and providing for the provision of certain
information subsequent to the issuance of the Bonds.

         "Event of Bankruptcy" means the filing of a petition in bankruptcy or
the commencement of a proceeding under the United States Bankruptcy Code or any
other applicable law concerning insolvency, reorganization or bankruptcy by or
against the Authority, the Borrower, or any guarantor of the Bonds, as debtor.

         "Event of Default" has the meaning given such term in Section 8.1
hereof.

         "Federal Securities" means any direct and general obligations of, or
any obligations whose full and timely payment is unconditionally guaranteed by,
the United States of America.

         "Financing Documents" means (1), when used with respect to the
Borrower, means the Agreement, the Tax Regulatory Agreement, the Note, the
Disclosure Agreement and the general certificate of the Borrower delivered in
connection with the issuance of the Bonds, but shall not include the Mortgage,
and (2) when used with respect to the Authority, means any of the foregoing
documents and agreements to which the Authority is a direct party. The Financing
Documents do not include any documents or agreements to which the Borrower is
not a direct party, including the Bonds or the Indenture.

         "Fund" or "Funds" shall mean the Fund or Funds established pursuant to
Article V herein below.

         "Indenture" means this Indenture as from time to time amended or
supplemented by Supplemental Indentures in accordance with Article X hereof.

         "Indirect Participant" shall have the meaning set forth in Section
2.3(F) hereof.

         "Interest Payment Date" shall mean each date on which interest is
payable on the Bonds as provided in the form of the Bonds.

         "Loan Payments" means the amounts required to be paid by the Borrower
in repayment of the loan made to the Borrower by the Authority pursuant to the
provisions of the Agreement and the Note, including all amounts realized by the
Trustee thereunder in accordance with Article VIII hereof.

         "Moody's" means Moody's Investors Service, 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"

                                      -18-
<PAGE>

shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Authority, at the direction of the Borrower, by notice
to the Trustee and the Borrower.

         "Mortgage" means the Indenture of Mortgage and Deed of Trust, dated as
of June 1, 1956, between the Borrower and U.S. Bank National Association
(successor to The Connecticut Bank and Trust Company), as Mortgage Bond
Indenture Trustee, as amended as of the date hereof and as may be amended
hereafter.

         "Mortgage Bond Indenture Trustee" means U.S. Bank National Association,
acting as Mortgage Bond Indenture Trustee pursuant to the Mortgage.

         "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 the Agreement, and any amendments of supplements made in conformity with
the Agreement and this 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
hereunder, except:

         (1)      Any Bonds cancelled 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)      moneys 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
                           moneys to such payment on the date so specified; or

                  (b)      obligations of the kind described in subsection
                           12.1(B) hereof in such principal amounts, of such
                           maturities, bearing such interest and otherwise
                           having such terms and qualifications as shall be
                           necessary to provide moneys 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
                  hereof; and

         (4)      any Bond deemed to have been paid as provided in Section 12.1
                  hereof.

         "Participant" means one of the entities that deposits securities,
directly or indirectly, in the Book-Entry Only System.

         "Paying Agent" means any paying agent for the Bonds appointed pursuant
to Section 9.10 hereof (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 herewith.

                                      -19-
<PAGE>

         "Principal and Interest Account" means the special trust account of the
Debt Service Fund so designated, established pursuant to Section 5.3 hereof.

         "Prior Obligations" means the $14,640,000 aggregate principal amount of
the Authority's Water Facilities Refunding Revenue Bonds (The Connecticut Water
Company Project - 1992 Series).

         "Project" means the Borrower's interest in the Project Realty and other
interests in the real property, and in all Project Equipment wherever located
and whether now owned or hereafter acquired, acquired or refinanced in whole or
in part with the proceeds of the Bonds, and any additions and accessions
thereto, substitutions therefor and replacements, improvements, extensions and
restorations thereof, described in appendices to the Agreement, as amended from
time to time in accordance with the Agreement.

         "Project Equipment" means all personal property, goods, leasehold
improvements, machinery, equipment, furnishings, furniture, fixtures, tools and
attachments wherever located and whether now owned or hereafter acquired,
refinanced in whole or in part with the proceeds of the Bonds, and any additions
and accessions thereto, substitutions therefor and replacements thereof,
including without limitation the Project Equipment described in appendices to
the Agreement, as amended from time to time in accordance herewith.

         "Project Realty" means the realty and other interests in the real
property refinanced in whole or in part from the proceeds of the Bonds, together
with all replacements, improvements, extensions, substitutions, restorations and
additions thereto which are made pursuant hereto including without limitation
the Project Realty described in appendices to the Agreement, as amended from
time to time in accordance herewith.

         "Rebate Fund" means the special trust fund so designated, established
pursuant to Section 5.1 hereof.

         "Redemption Account" means the special trust account of the Debt
Service Fund so designated, established pursuant to Section 5.3 hereof.

         "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 this
Indenture.

         "Refunding Fund" means the special trust fund so designated,
established pursuant to Section 5.1 hereof.

         "Renewal Fund" means the special trust fund so designated, established
pursuant to Section 5.1 hereof.

         "Representation Letter" has the meaning given such term in Section
2.3(F) hereof.

         "Revenues" means (a) the Loan Payments, (b) all amounts paid to the
Trustee with respect to the principal of, redemption premium, if any, or
interest on, the Bonds (1) by the Borrower as required under the Agreement and
(2) upon deposit in the Debt Service Fund from the proceeds of the Bonds and (c)
investment income with respect to any moneys held by the Trustee in the
Refunding Fund, the Debt Service Fund and the Renewal Fund. The term "Revenues"
does not include any moneys or investments or investment income in the Rebate
Fund.

                                      -20-
<PAGE>

         "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.

         "Supplemental Indenture" means any indenture supplemental hereto or
amendatory hereof, adopted by the Authority in accordance with Article X hereof.

         "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 the Agreement, means the term of
the Agreement determined as provided in Article III thereof.

         "Trustee" means U.S. Bank National Association, and its successor or
successors hereafter appointed in the manner provided in this Indenture.

         SECTION 1.2. INTERPRETATION. (A) In this Indenture:

                           (1)      Any capitalized word or term used but not
                  defined herein shall have the meaning ascribed to such word or
                  term in the Agreement or the Tax Regulatory Agreement, as the
                  case may be.

                           (2)      The terms "hereby", "hereof", "hereto",
                  "herein", "hereunder" and any similar terms, as used in this
                  Indenture, refer to this Indenture, and the term "hereafter"
                  means after, and the term "heretofore" means before, the date
                  of execution of this Indenture.

                           (3)      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.

                           (4)      Words importing persons include firms,
                  associations, partnerships (including limited partnerships),
                  limited liability companies, trusts, corporations and other
                  legal entities, including public bodies, as well as natural
                  persons.

                           (5)      Any headings preceding the texts of the
                  several Articles and Sections of this Indenture, and any table
                  of contents appended to copies hereof, shall be solely for
                  convenience of reference and shall not constitute a part of
                  this Indenture, nor shall they affect its meaning,
                  construction or effect.

                                      -21-
<PAGE>

                           (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)      This Indenture shall be governed by and
                  construed in accordance with the applicable laws of the State.

         (B)      Whenever the Authority is named or referred to, it shall be
deemed to include its successors and assigns whether so expressed or not. All of
the covenants, stipulations, obligations, and agreements by or on behalf of, and
other provisions for the benefit of, the Authority contained in this Indenture
shall bind and inure to the benefit of such successors and assigns and shall
bind and inure to the benefit of any officer, board, commission, authority,
agency or instrumentality to whom or to which there shall be transferred by or
in accordance with law any right, power or duty of the Authority, or of its
successors or assigns, the possession of which is necessary or appropriate in
order to comply with any such covenants, stipulations, obligations, agreements
or other provisions hereof.

         (C)      If any one or more of the covenants or agreements provided
herein on the part of the Authority, the Trustee or any Paying Agent to be
performed should be contrary to law, then such covenant or covenants or
agreement or agreements, shall be deemed separable from the remaining covenants
and agreements hereof, and shall in no way affect the validity of the other
provisions of this Indenture or of the Bonds.

         (D)      All approvals, consents and actions of the Trustee under this
Indenture, the Bonds and the Financing Documents may be given or withheld or
taken or not taken in accordance with the direction of the owners of not less
than 51% of the principal amount of the Outstanding Bonds or of the Bond Insurer
as provided herein.

         (E)      If the Paying Agent shall be removed and the duties and
obligations of such Paying Agent discharged pursuant to Section 9.10 hereof,
then each and every such duty and obligation to be performed by such Paying
Agent set forth herein and in the Financing Documents shall be performed to the
same extent and in the same manner by the Trustee, and each and every reference
herein and in the Financing Documents to the Paying Agent shall refer to and
shall be deemed to refer to the Trustee unless a successor Paying Agent shall
have been appointed.

         (F)      For purposes hereof the Trustee shall not be deemed to have
knowledge or actual knowledge of any fact or the occurrence of any event unless
and until an officer of the Trustee's corporate trust administration department
has written notice thereof.

         (G)      In the event of any solicitation of consents from and voting
by owners of the Bonds, the Trustee shall establish a record date for such
purposes and give DTC notice of such record date not less than fifteen calendar
days in advance of such record date to the extent possible.

                                      -22-
<PAGE>

                                   ARTICLE II
                   AUTHORIZATION, TERMS AND ISSUANCE OF BONDS

         SECTION 2.1. AUTHORIZATION FOR INDENTURE. This Indenture is made and
entered into by virtue of and pursuant to the provisions of the Act. The
Authority has ascertained and hereby determines and declares that the execution
and delivery of this Indenture is necessary to carry out the powers and duties
expressly provided by the Act, that each and every act, matter, thing or course
of conduct as to which provision is made herein is necessary or convenient in
order to carry out and effectuate the purposes of the Authority in accordance
with the Act and to carry out powers expressly given thereby, and that each and
every covenant or agreement herein contained and made is necessary, useful or
convenient in order to better secure the Bonds and necessary, useful or
convenient to carry out and effectuate its corporate purposes under the Act.

         SECTION 2.2. AUTHORIZATION AND OBLIGATION OF BONDS. (A) Bonds of the
Authority issued hereunder, each to be entitled Water Facilities Refunding
Revenue Bonds (The Connecticut Water Company Project - 2003C Series), shall be
subject to the terms, conditions and limitations established herein. No Bonds
may be authenticated and delivered except in accordance with this Article.

         (B)      All Bonds shall be entitled to the benefit of the continuing
pledge and lien created by this Indenture to secure the full and final payment
of the principal or Redemption Price, if any, thereof and the interest thereon
and all other amounts due under the Financing Documents. The Bonds shall be
special obligations of the Authority, payable solely out of the revenues or
other receipts, funds or moneys pledged therefor pursuant to this Indenture and
from any amounts otherwise available under this Indenture for the payment of the
Bonds. Neither the State nor any municipality thereof shall be obligated to pay
the principal or Redemption Price, if any, of or the interest on the Bonds and
neither the faith and credit nor the taxing power of the State or any
municipality thereof is pledged to pay such principal, Redemption Price or
interest. The Bonds shall never constitute a debt or liability of the State or
any municipality thereof or bonds issued or guaranteed by the State or any
municipality thereof within the meaning of any constitutional or statutory
limitation.

         SECTION 2.3. ISSUANCE AND TERMS OF THE BONDS. (A) There shall be issued
under and secured by this Indenture a series of Bonds to be designated Water
Facilities Refunding Revenue Bonds (The Connecticut Water Company Project -
2003C Series) in the principal amount of $14,930,000. The Bonds shall be
issuable in fully registered form without coupons and shall be dated as provided
in Section 3.1 hereof.

         (B)      The Bonds shall mature on September 1, 2022 and bear interest
at the per annum rate of 5.00% payable on March 1, 2004 and on each March 1 and
September 1 thereafter until maturity or prior redemption.

         (C)      Interest on the Bonds shall be computed on the basis of a
360-day year consisting of twelve (12) 30-day months.

         (D)      The Bonds shall be numbered from one upward in consecutive
numerical order. Bonds issued in exchange shall be numbered in such manner as
the Trustee and the Paying Agent in their discretion shall determine.

         (E)      The principal or Redemption Price, if any, of the Bonds as
they respectively become due shall be payable upon presentation and surrender of
the Bonds at the corporate trust office of the Trustee in Hartford, Connecticut,
or at the office designated for such payment of any successor Paying Agent.
Payment of each installment of interest on the Bonds shall be made to the
registered owners thereof who shall appear on the registration books of the
Authority maintained by the Trustee at the close of business

                                      -23-
<PAGE>

on the fifteenth day of the calendar month next preceding such Interest Payment
Date, by check or draft mailed to each such registered owner at his address as
it appears on such registration books. Alternatively, payment shall be made as
otherwise agreed in writing by the Bondholder and the Trustee and, at the
written request to the Trustee of and at the expense of any holder of at least
$1,000,000 in Bonds, such payment may be made by wire transfer or other
reasonable method to an account or place designated by such registered owner.

         (F)      Book-Entry Only System for the Bonds

         (1)      The Depository Trust Company ("DTC"), New York, New York shall
act as securities depository for the Bonds. One fully registered bond in the
aggregate principal amount of the Bonds shall be registered in the name of Cede
& Co., as nominee for DTC. Notwithstanding any provision herein to the contrary,
the provisions of this Section 2.3(F) and the Representation Letter (as defined
below) shall apply with respect to any Bond registered to Cede & Co. or any
other nominee of DTC, New York, New York, while the Book-Entry Only System
(meaning the system of registration described in paragraph (2) of this Section
2.3(F)) is in effect. DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants ("Direct Participants") include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.

         (2)      The Bonds in or to be in the Book-Entry Only System shall be
issued in the form of a separate single authenticated fully registered Bond in
substantially the form provided for in this Indenture. Any legend required to be
on the Bonds by DTC may be added by the Trustee or Paying Agent. On the date of
original delivery thereof, the Bonds shall be registered in the registry books
of the Paying Agent in the name of Cede & Co., as nominee of The Depository
Trust Company as agent for the Authority in maintaining the Book-Entry Only
System.

         WITH RESPECT TO BONDS REGISTERED IN THE REGISTRY BOOKS KEPT BY THE
PAYING AGENT IN THE NAME OF CEDE & CO., AS NOMINEE OF DTC, THE AUTHORITY, THE
PAYING AGENT, THE BORROWER AND THE TRUSTEE SHALL HAVE NO RESPONSIBILITY OR
OBLIGATION TO ANY PARTICIPANT (WHICH MEANS SECURITIES BROKERS AND DEALERS,
BANKS, TRUST COMPANIES, CLEARING CORPORATIONS AND VARIOUS OTHER ENTITIES, SOME
OF WHOM OR THEIR REPRESENTATIVES OWN DTC) OR TO ANY BENEFICIAL OWNER (WHICH
MEANS, WHEN USED WITH REFERENCE TO THE BOOK-ENTRY ONLY SYSTEM, THE PERSON WHO IS
CONSIDERED THE BENEFICIAL OWNER OF THE BONDS PURSUANT TO THE ARRANGEMENTS FOR
BOOK ENTRY DETERMINATION OF OWNERSHIP APPLICABLE TO DTC) WITH RESPECT TO THE
FOLLOWING: (A) THE ACCURACY OF THE RECORDS OF DTC, CEDE & CO. OR ANY PARTICIPANT
WITH RESPECT TO ANY OWNERSHIP INTEREST IN THE BONDS, (B) THE DELIVERY TO OR FROM
ANY PARTICIPANT, ANY BENEFICIAL OWNER OR ANY OTHER PERSON,

                                      -24-
<PAGE>

OTHER THAN DTC, OF ANY NOTICE WITH RESPECT TO THE OTHER PERSON, OTHER THAN DTC,
OF ANY NOTICE WITH RESPECT TO THE BONDS, INCLUDING ANY NOTICE OF REDEMPTION
(WHETHER MANDATORY OR OPTIONAL), OR (C) THE PAYMENT TO ANY PARTICIPANT, ANY
BENEFICIAL OWNER OR ANY OTHER PERSON, OTHER THAN DTC, OF ANY AMOUNT WITH RESPECT
TO THE PRINCIPAL OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS.

         The Paying Agent shall pay all principal of and premium, if any, and
interest on the Bonds only to or upon the order of DTC, and all such payments
shall be valid and effective fully to satisfy and discharge the Authority's
obligations with respect to the principal of and premium, if any, and interest
on Bonds to the extent of the sum or sums so paid. No person other than DTC
shall be entitled to receive an authenticated Bond evidencing the obligation of
the Authority to make payments of principal and premium, if any, and interest
pursuant to this Indenture. Upon delivery by DTC to the Paying Agent of written
notice to the effect that DTC has determined to substitute a new nominee in
place of Cede & Co., the words "Cede & Co." in this Indenture shall refer to
such new nominee of DTC.

         The Authority, the Borrower, the Trustee and the Paying Agent shall be
entitled to treat the registered owner of a Bond (initially, DTC or its nominee)
as the absolute owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary received by any of
them. So long as all Bonds are registered in the name of DTC or its nominee or
any qualified successor, the Borrower and the Paying Agent shall cooperate with
DTC or its nominee or any qualified successor in effecting payment of the
principal of, redemption premium, if any, and interest on the Bonds by arranging
for payment in such manner that funds for such payments are properly identified
and are made to DTC when due.

         (3)      Upon receipt by the Trustee or the Paying Agent of written
notice from DTC to the effect that DTC is unable or unwilling to discharge its
responsibilities, the Authority shall issue and the Paying Agent shall transfer
and exchange Bonds as requested by DTC in appropriate amounts and in authorized
denominations, and whenever DTC requests the Authority, the Paying Agent and the
Trustee to do so, the Trustee, the Paying Agent and the Authority will, at the
expense of the Borrower, cooperate with DTC in taking appropriate action after
reasonable notice (A) to arrange for a substitute bond depository willing and
able upon reasonable and customary terms to maintain custody of the Bonds or (B)
to make available for transfer and exchange Bonds registered in whatever name or
names and in whatever authorized denominations as DTC shall designate.

         (4)      In such event, the Borrower shall so notify DTC, the Paying
Agent and the Trustee, whereupon DTC will notify the Participants of the
availability through DTC of Bond certificates. In such event, the Authority
shall issue and the Paying Agent shall transfer and exchange Bond certificates
as requested by DTC in appropriate amounts and in authorized denominations.
Whenever DTC requests the Paying Agent to do so, the Paying Agent will cooperate
with DTC in taking appropriate action after reasonable notice to make available
for transfer and exchange Bonds registered in whatever name or names and in
whatever authorized denominations as DTC shall designate.

         (5)      The Authority may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In that
event, Bond certificates will be printed and delivered.

         (6)      Notwithstanding any other provisions of this Indenture to the
contrary, so long as any Bond is registered in the name of Cede & Co., as
nominee of DTC, all payments with respect to the principal of, premium, if any,
and interest on such Bond and all notices with respect to such Bond shall be
made and given, respectively, to DTC as provided in the Blanket Letter of
Representation, dated March 29, 1995, from the Authority to DTC (the
"Representation Letter").

                                      -25-
<PAGE>

         (7)      Notwithstanding any other provisions of this Indenture to the
contrary, so long as any of the Bonds outstanding are held in the Book-Entry
Only System, if less than all of such Bonds are to be redeemed upon any
redemption of Bonds hereunder, the particular Bonds or portions of Bonds to be
converted or redeemed shall be selected by DTC in such manner as DTC may
determine.

         Notwithstanding any provision herein to the contrary, the Trustee and
the Paying Agent may comply with the provisions of the Letter of Representation
or similar document required by DTC or any successor securities depository in
order to maintain the Book-Entry Only System for the Bonds.

         SECTION 2.4. REDEMPTION OF BONDS. (A) General Optional Redemption. At
the option of the Authority, which option shall be exercised upon the giving of
written notice by the Borrower of its intention to prepay amounts due under the
Agreement pursuant to subsection 8.1(A) thereof and the Note, the Bonds shall be
subject to redemption prior to maturity from time to time upon not less than 30
days' notice in writing, as a whole or in part on any date on or after September
1, 2008, at the Redemption Price equal to 100% of the principal amount thereof,
plus accrued interest to the date of redemption.

         (B)      Extraordinary Optional Redemption. In addition, at the option
of the Authority, which option shall be exercised upon the giving of written
notice by the Borrower of its intention to prepay amounts due under the
Agreement pursuant to Section 8.1(B) thereof, the Outstanding Bonds shall be
subject to redemption prior to maturity as a whole on any date at the redemption
price of 100% of the principal amount thereof plus accrued interest to the date
of redemption, if any one or more of the events of casualty to or condemnation
of the Project, change in law, or certain economic events specified in Section
8.1(B) of the Agreement shall have occurred, as evidenced in each case by the
filing with the Trustee of a certificate of an Authorized Representative of the
Borrower.

         (C)      Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed in the manner and as
provided in this Indenture, at the redemption price equal to 100% of the
principal amount thereof plus accrued interest to the date of redemption on any
day selected by the Borrower, that is not more than 180 days after such
Determination of Taxability. In the case of any redemption pursuant to this
subsection, the Authority or the Borrower or any Bondholder shall deliver to the
Trustee a certificate of an Authorized Representative specifying the event
giving rise to such inclusion in the gross income of the recipient thereof and
the dates which are the Tax Incidence Date and the date of the Determination of
Taxability. Such certificate shall be delivered at least ten days before notice
of redemption is required to be given. Redemption under this paragraph shall be
in whole unless not less than forty-five (45) days prior to the redemption date
the Borrower delivers to the Trustee an opinion of Bond Counsel reasonably
satisfactory to the Trustee to the effect that a redemption of less than all of
the Bonds will preserve the tax-exempt status of interest on the remaining Bonds
outstanding subsequent to such redemption.

         For purposes of this Subsection C only, the owner of a Bond means the
Beneficial Owner of said Bond so long as the Book-Entry Only System shall be in
effect.

         (D)      Deceased Bondholder Redemptions. For purposes of this
paragraph, the owner of said Bond shall mean the Beneficial Owner of said Bond
so long as the Book-Entry Only System shall be in effect. Notwithstanding the
foregoing redemption provisions, the Bonds are subject to redemption at the
request of the estate of, successor in interest to and, in the case of jointly
held Bonds, any surviving joint owner with, any person who, on the date of his
or her death, was an owner or joint owner of such Bonds, in the manner and
subject to the conditions set forth in the form of Bonds contained herein. For
purposes of this redemption provision, a Bond held in tenancy by the entirety,
joint tenancy or tenancy in common will be deemed to be held by a single owner
and the death of a tenant, by the entirety, joint tenant or tenant in common
will be deemed the death of an owner. The death of a person, who, during his
lifetime, was entitled to substantially all of the beneficial interests of
ownership of a Bond will be deemed the

                                      -26-
<PAGE>

death of an owner, regardless of the owner, if such beneficial interest can be
established to the satisfaction of the Trustee. Such beneficial interest shall
be deemed to exist in typical cases of street name or nominee ownership,
ownership under the Uniform Gifts to Minors Act, community property or other
joint ownership arrangements between a husband and wife, and trust and certain
other arrangements where one person has substantially all of the beneficial
ownership interests in the Bond during his lifetime. In the case of Bonds
registered in the name of banks, trust companies or broker/dealers who are
members of a national securities exchange or the National Association of
Securities Dealers, Inc. or any securities depository ("Qualified
Institutions"), the redemption limitations described above apply to each
beneficial owner of Bonds held by any Qualified Institution. Beneficial
interests shall include the power to sell, transfer or otherwise dispose of a
Bond and the right to receive the proceeds therefrom, as well as interest and
principal payable with respect thereto. The party requesting redemption pursuant
to this Section 2.4(D) shall pay all fees, costs and expenses of the Trustee in
connection with establishing the beneficial ownership of the Bonds requested to
be redeemed, including but not limited to the obtaining of position listings of
DTC, or any successor securities depository, any Direct Participant or Indirect
Participant or any nominees.

         (E)      Upon any redemption of Bonds there shall also be due and
payable, concurrently with the payment of the Redemption Price, interest accrued
on the Bonds and all other amounts then due under the Financing Documents.

         (F)      Redemption of Bonds permitted or required by this Article II
shall be made as follows, and the Trustee shall give the notice of redemption
referred to in Section 6.3 hereof in respect of each such redemption:

                  (1)      Redemption shall be made pursuant to the general
         optional redemption provisions of Section 2.4(A) in such principal
         amounts as the Borrower shall request in a written notice to the
         Trustee in accordance with Section 8.2 of the Agreement.

                  (2)      Redemption shall be made pursuant to the
         extraordinary optional redemption provisions of Section 2.4(B) at such
         date as the Borrower shall request in a written notice to the Authority
         and Trustee in accordance with Section 8.2 of the Agreement, to which
         shall be attached the certificate referred to in Section 8.1(B)
         thereof.

                  (3)      Redemption shall be made pursuant to the mandatory
         taxability redemption provisions of Section 2.4(C) at the earliest
         possible date following receipt of the certificate prescribed in
         Section 2.4(C) hereof and of the payments made by the Borrower
         prescribed in Section 6.3 of the Agreement, without the necessity of
         any instructions or further act of the Authority or the Borrower.

                  (4)      Redemption shall be made pursuant to the provisions
         of Section 2.4(D) in accordance with said Section and with Article VI
         of this Indenture.

         SECTION 2.5. EXECUTION AND AUTHENTICATION OF BONDS. (A) After their
authorization as provided in this Article, Bonds may be executed by or on behalf
of the Authority and delivered to the Trustee or the Paying Agent for
authentication. Each Bond shall be executed in the name of the Authority by the
manual or facsimile signature of any one or more Authorized Representatives of
the Authority.

         (B)      In case any officer who shall have signed any of the Bonds
shall cease to be such officer before the Bonds so signed shall have been
authenticated and delivered by the Trustee or the Paying Agent, such Bonds may
nevertheless be authenticated and delivered as herein provided as if the person
who so signed such Bonds had not ceased to be such officer. Any Bond may be
signed on behalf of the

                                      -27-
<PAGE>

Authority by any person who, on the date of such act, shall hold the proper
office, notwithstanding that at the date of such Bond such person may not have
held such office.

         (C)      The Bonds shall each bear thereon a certificate of
authentication, in the form set forth in the recitals to this Indenture,
executed manually by the Trustee or the Paying Agent. Only such Bonds as shall
bear thereon such certificate of authentication shall be entitled to any right
or benefit under this Indenture and no Bond shall be valid or obligatory for any
purpose until such certificate of authentication shall have been duly executed
by the Trustee or the Paying Agent. Such certificate of the Trustee or the
Paying Agent upon any Bond executed on behalf of the Authority shall be
conclusive evidence that the Bond so authenticated has been duly authenticated
and delivered under this Indenture and that the holder thereof is entitled to
the benefits hereof.

         SECTION 2.6. DELIVERY OF BONDS. The Bonds shall be executed in the form
and manner set forth herein and shall be deposited with the Trustee and
thereupon shall be authenticated by the Trustee or the Paying Agent. Upon
payment to the Trustee of the proceeds of sale thereof, such Bonds shall be
delivered by the Trustee or the Paying Agent to or upon the order of the
purchasers thereof, but only upon receipt by the Trustee of:

                  (1)      A certified copy of the Authority's resolution
         authorizing the issuance of the Bonds and, the execution and delivery
         of this Indenture and the Financing Documents;

                  (2)      Original executed counterparts of the Financing
         Documents other than the Note, and the originally executed Note;

                  (3)      A request and authorization to the Trustee or the
         Paying Agent on behalf of the Authority to authenticate and deliver the
         Bonds to the purchasers therein identified upon payment to the Trustee,
         for the account of the Authority, of a sum specified in such request
         and authorization, plus any accrued interest on the Bonds to the date
         of such delivery. The proceeds of such payment shall be paid over to
         the Trustee and deposited in the Refunding Fund and Debt Service Fund
         pursuant to Article IV hereof; and

                  (4)      A written opinion by Bond Counsel to the effect that
         the issuance of such Bonds has been duly authorized and that all
         conditions precedent to the delivery thereof set forth in this
         Indenture have been fulfilled.

         SECTION 2.7. NO ADDITIONAL BONDS. No Additional Bonds on a parity with
the Bonds may be issued under this Indenture.

                                      -28-
<PAGE>

                                   ARTICLE III
                      GENERAL TERMS AND PROVISIONS OF BONDS

         SECTION 3.1. DATE OF BONDS. The Bonds shall be dated and bear interest
from October 1, 2003, except in the case of Bonds delivered in any exchange or
transfer hereunder on or subsequent to the first Interest Payment Date of the
Bond for which it is exchanged or transferred, which shall bear interest from
the Interest Payment Date next preceding the date of such delivery, unless, as
shown by the records of the Trustee, interest on the Bond surrendered in
exchange for such Bond shall be in default, in which case such Bond shall bear
interest from the date to which interest has been paid in full on the Bond so
surrendered.

         SECTION 3.2. FORM AND DENOMINATIONS. Bonds shall be issued in fully
registered form, without coupons, in denominations of $5,000 or any multiple
thereof. Subject to the provisions of Section 3.3 hereof, the Bonds shall be in
substantially the form set forth in the recitals to this Indenture, with such
variations, omissions and insertions as are permitted or required by this
Indenture.

         SECTION 3.3. LEGENDS. Each Bond shall contain on the face thereof a
statement to the effect that neither the State nor any municipality thereof
shall be obligated to pay the principal of the Bond or interest thereon and
neither the faith and credit nor taxing power of the State or any municipality
thereof is pledged to such payment. The Bonds may, in addition, contain or have
endorsed thereon such provisions, specifications and descriptive words not
inconsistent with the provisions of this Indenture as may be necessary or
desirable to comply with custom or otherwise as may be determined by the
Authority prior to the delivery thereof.

         SECTION 3.4. MEDIUM OF PAYMENT. The principal or Redemption Price, if
any, of and interest on the Bonds shall be payable in any coin or currency of
the United States of America which, on the respective dates of payment thereof,
is legal tender for the payment of public and private debts. Such payment may be
made as provided in Section 2.3 hereof.

         SECTION 3.5. BOND DETAILS. Subject to the provisions hereof, the Bonds
shall be dated, shall mature in such years and such amounts, shall bear interest
at such rate or rates per annum, shall be subject to redemption on such terms
and conditions and shall be payable as to principal or Redemption Price, if any,
and interest at such place or places as shall be specified in this Indenture.

         SECTION 3.6. INTERCHANGEABILITY, TRANSFER AND REGISTRY. (A) Each Bond
shall be transferable only upon compliance with the restrictions on transfer set
forth on such Bond and only upon the books of the Authority, which shall be kept
for the purpose at the principal office of the Paying Agent, by the registered
owner thereof in person or by his attorney duly authorized in writing, upon
presentation thereof together with a written instrument of transfer satisfactory
to the Paying Agent duly executed by the registered owner or his duly authorized
attorney. Upon the transfer of any Bond, the Paying Agent shall prepare and
issue in the name of the transferee one or more new Bonds in authorized
denominations of the same aggregate principal amount as the surrendered Bond.

         (B)      Any Bond, upon surrender thereof at the office of the Paying
Agent with a written instrument of transfer satisfactory to the Paying Agent,
duly executed by the registered owner or his attorney duly authorized in
writing, may be exchanged at the office of the Paying Agent for a new Bond or
Bonds in authorized denominations of the same aggregate principal amount without
transfer to a new registered owner. No transfer will be effective unless
represented by such surrender and reissue.

         (C)      Except as otherwise specifically provided herein, the
Authority, the Borrower, the Trustee, and any Paying Agent may deem and treat
the person in whose name any Bond shall be registered as the absolute owner of
such Bond, whether such Bond shall be overdue or not, for the

                                      -29-
<PAGE>

purpose of receiving payment of, or on account of, the principal and Redemption
Price, if any, of and interest on such Bond and for all other purposes, and all
payments made to any such registered owner or upon his order shall be valid and
effectual to satisfy and discharge the liability upon such Bond to the extent of
the sum or sums so paid, and neither the Authority, the Borrower, the Trustee
nor any Paying Agent, nor any agent of the foregoing, shall be affected by any
notice to the contrary.

         (D)      The Paying Agent shall not be required to exchange or transfer
(a) any Bond during the fifteen (15) day period preceding any Interest Payment
Date or the date fixed for selection of Bonds for redemption, or (b) any Bonds
selected, called or being called for redemption in whole or in part except, in
the case of any Bond to be redeemed in part, the portion thereof not so to be
redeemed.

         SECTION 3.7. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any
Bond shall become mutilated or be destroyed, stolen or lost, the Authority shall
execute and thereupon the Trustee or the Paying Agent shall authenticate and
deliver, a new Bond of the same principal amount as the Bond so mutilated,
destroyed, stolen or lost, in exchange and substitution for such mutilated Bond,
upon surrender and cancellation of such mutilated Bond or in lieu of and
substitution for the Bond destroyed, stolen or lost, upon filing with the
Trustee of evidence satisfactory to the Authority, the Trustee and the Paying
Agent that such Bond has been destroyed, stolen or lost and proof of ownership
thereof, and upon furnishing the Authority, the Trustee and the Paying Agent
with indemnity satisfactory to them and complying with such other reasonable
requirements as the Authority and the Trustee and the Paying Agent may prescribe
and paying such expenses as the Authority, the Trustee and the Paying Agent may
incur. All Bonds so surrendered to the Trustee shall be cancelled by it. Any
such new Bonds issued pursuant to this Section in substitution for Bonds alleged
to be destroyed, stolen or lost shall constitute original additional contractual
obligations on the part of the Authority, whether or not the Bonds so alleged to
be destroyed, stolen or lost be at any time enforceable by anyone, and shall be
equally secured by and entitled to equal and proportionate benefits with all
other Bonds issued hereunder in any moneys or securities held by the Authority,
the Trustee or the Paying Agent for the benefit of the owners of the Bonds.

         SECTION 3.8. CANCELLATION AND DESTRUCTION OF BONDS. All Bonds paid or
redeemed in full, either at or before maturity, shall be delivered to the Paying
Agent when such payment or redemption is made, and such Bonds together with all
Bonds purchased by the Paying Agent, together with all Bonds surrendered in any
exchange or transfers, shall thereupon be promptly cancelled. All Bonds acquired
and owned by the Borrower and delivered to the Paying Agent for cancellation
shall be deemed paid and shall be promptly cancelled. Bonds so cancelled shall
be cremated or otherwise destroyed by the Paying Agent, who shall execute a
certificate of cremation or destruction in duplicate under signature of one of
its authorized officers describing the Bonds so cremated or otherwise destroyed,
and one executed certificate shall be filed with the Authority and the other
executed certificate shall be retained by the Paying Agent. The Paying Agent
shall provide written notice to Moody's, if the Bonds are then rated by Moody's
and to S&P, if the Bonds are then rated by S&P, of the final payment or
redemption of any of the Bonds, either at or before maturity, upon cancellation
of any such Bonds.

         SECTION 3.9. REQUIREMENTS WITH RESPECT TO TRANSFERS. In all cases in
which the privilege of transferring Bonds is exercised, the Authority shall
execute and the Trustee or the Paying Agent shall authenticate and deliver Bonds
in accordance with the provisions of this Indenture. All Bonds surrendered in
any such transfer shall forthwith be cancelled by the Trustee or the Paying
Agent. For every such transfer of Bonds, the Authority, the Trustee or the
Paying Agent may, as a condition precedent to the privilege of making such
transfer, make a charge sufficient to reimburse it for any tax, fee or other
governmental charge required to be paid with respect to such transfer and may
charge a sum sufficient to pay the cost of preparing and delivering each new
Bond issued upon such transfer, which sum or sums shall be paid by the person
requesting such transfer.

                                      -30-
<PAGE>

         SECTION 3.10. REGISTRAR. The Trustee shall also be Registrar for the
Bonds, and shall maintain a register showing the names of all registered owners
of Bonds, Bond numbers and amounts, and other information appropriate to the
discharge of its duties hereunder. The Trustee shall make available to the
Borrower for its inspection during normal business hours the registration books
for the Bonds, as may be requested by the Borrower in connection with any
purchase or tender offer by it with respect to the Bonds.

         SECTION 3.11. PAYMENT PROCEDURE PURSUANT TO THE BOND INSURANCE POLICY.
If, on the third Business Day prior to the related scheduled interest payment
date or principal payment date ("Payment Date"), there is not on deposit with
the Trustee, after making all transfers and deposits required under the
Indenture, moneys sufficient to pay the principal of, and interest on, Bonds due
on such Payment Date, the Trustee shall give notice to the Bond Insurer and to
its designated agent (if any) (the "Bond Insurer's Fiscal Agent"), by telephone
or telecopy, of the amount of such deficiency by 10:00 a.m., New York City time,
on such Business Day. If, on the Business Day prior to the related Payment Date,
there is not on deposit with the Trustee moneys sufficient to pay the principal
of, and interest on, the Bonds due on such Payment Date, the Trustee shall make
a claim under the Bond Insurance Policy and give notice to the Bond Insurer and
the Bond Insurer 's Fiscal Agent (if any) by telephone of the amount of any
deficiency in the amount available to pay principal and interest, and the
allocation of such deficiency between the amount required to pay interest on the
Bonds and the amount required to pay principal of the Bonds, confirmed in
writing to the Bond Insurer and Bond Insurer's Fiscal Agent by 10:00 a.m., New
York City time, on such Business Day, by delivering the Notice of Nonpayment and
Certificate.

         For the purposes of the preceding paragraph, "Notice" means telephonic
or telecopied notice, subsequently confirmed in a signed writing, or written
notice by registered or certified mail, from the Trustee to the Bond Insurer,
which notice shall specify (a) the name of the entity making the claim, (b) the
policy number, (c) the claimed amount and (d) the date such claimed amount will
become Due for Payment. "Nonpayment" means the failure of Borrower to have
provided sufficient funds to the Trustee for payment in full of all principal
of, and interest on, the Bonds that are Due for Payment. "Due for Payment", when
referring to the principal of the Bonds, means when the stated maturity date or
mandatory redemption date for the application of a required sinking fund
installment has been reached and does not refer to any earlier date on which
payment is due by reason of call for redemption (other than by application of
required sinking fund installments), acceleration or other advancement of
maturity, unless the Bond Insurer shall elect, in its sole discretion, to pay
such principal due upon such acceleration; and when referring to interest on
Bonds, means when the stated date for payment of interest has been reached.
"Certificate" means a certificate in form and substance satisfactory to the Bond
Insurer as to the Trustee's right to receive payment under the Bond Insurance
Policy.

         The Trustee shall designate any portion of payment of principal on the
Bonds paid by the Bond Insurer at maturity on its books as a reduction in the
principal amount of Bonds registered to the then current Bondholder, whether DTC
or its nominee or otherwise, and shall issue a replacement Bond to the Bond
Insurer, registered in the name of the Bond Insurer, as the case may be, in a
principal amount equal to the amount of principal so paid (without regard to
authorized denominations); provided that the Trustee's failure to so designate
any payment or issue any replacement Bond shall have no effect on the amount of
principal or interest payable by the Borrower on any Bond or the subrogation
rights of the Bond Insurer.

         The Trustee shall keep a complete and accurate record of all funds
deposited by the Bond Insurer into the Policy Payments Account (as hereinafter
defined) and the allocation of such funds to payment of interest on and
principal paid with respect to any Bond. The Bond Insurer shall have the right
to inspect such records at reasonable times upon reasonable notice to the
Trustee.

                                      -31-
<PAGE>

         Upon payment of a claim under the Bond Insurance Policy, the Trustee
shall establish a separate special purpose trust account for the benefit of
holders of the Bonds referred to herein as the "Policy Payments Account" and
over which the Trustee shall have exclusive control and sole right of
withdrawal. The Trustee shall receive any amount paid under the Bond Insurance
Policy in trust on behalf of holders of Bonds and shall deposit any such amount
in the Policy Payments Account and distribute such amount only for purposes of
making the payments for which a claim was made. Such amounts shall be disbursed
by the Trustee to holders of the Bonds in the same manner as principal and
interest payments are to be made with respect to the Bonds under the sections
hereof regarding payment of the Bonds. It shall not be necessary for such
payments to be made by checks or wire transfers separate from the check or wire
transfer used to pay debt service with other funds available to make such
payments.

         Funds held in the Policy Payments Account shall not be invested by the
Trustee and may not be applied to satisfy any costs, expenses or liabilities of
the Trustee.

         Any funds remaining in the Policy Payments Account following a Bond
payment date shall promptly be remitted to the Bond Insurer.

                                      -32-
<PAGE>

                                   ARTICLE IV
                 APPLICATION OF BOND PROCEEDS AND OTHER AMOUNTS

         SECTION 4.1. ACCRUED INTEREST. Simultaneously with the delivery of any
Bonds by the Trustee, the amount received as accrued interest thereon, if any,
shall be deposited in the Principal and Interest Account of the Debt Service
Fund.

         SECTION 4.2. BOND PROCEEDS. The proceeds of sale and delivery of any
Bonds, together with any premium received on account of the sale thereof (but
excluding any accrued interest on the Bonds), shall simultaneously with the
delivery thereof by the Trustee be deposited in the Refunding Fund.

         SECTION 4.3. BORROWER CONTRIBUTION. A contribution of the Borrower in
the amount of $499,250.56 ($210,246.67 of which represents the amount of
interest to accrue on the Prior Obligations from September 1, 2003 to November
29, 2003 and $289,003.89 of which shall be applied to the payment of the costs
of refunding the Prior Obligations, including, but not limited to, all expenses
incurred in connection with the issuance, execution and sale of the Bonds,
including compensation and expenses of the Trustee, legal, accounting and
consulting expenses and fees, costs of printing and engraving, underwriting
expenses and recording and filing fees) shall simultaneously with the delivery
of the Bonds be deposited by the Trustee in the Refunding Fund.

                                      -33-
<PAGE>

                                    ARTICLE V
                         CUSTODY AND INVESTMENT OF FUNDS

         SECTION 5.1. CREATION OF FUNDS. (A) The Authority hereby establishes
and creates the following special trust Funds and Accounts within such Funds:

                  (1)      Refunding Fund

                  (2)      Debt Service Fund

                           (a) Principal and Interest Account

                           (b) Redemption Account

                  (3)      Rebate Fund

                  (4)      Renewal Fund

         (B)      The Rebate Fund and the Refunding Fund shall be held by the
Trustee free and clear of any lien, charge or pledge created by this Indenture.
All of the Funds and Accounts created hereunder shall be held by the Trustee,
including one or more depositories in trust for the Trustee. All moneys and
investments deposited with the Trustee or any Paying Agent shall be held in
trust and applied only in accordance with this Indenture and shall be trust
funds for the purposes of this Indenture.

         (C)      The Trustee, in its sole discretion, may establish accounts
and subaccounts within the Funds established pursuant to Section 5.1(A) for its
internal accounting purposes.

         SECTION 5.2. REFUNDING FUND. (A) There shall be deposited in the
Refunding Fund any and all amounts required to be deposited therein pursuant to
Section 4.2, Section 4.3 and Section 5.6 hereof or otherwise required to be
deposited therein pursuant to the Agreement or this Indenture. Moneys and
securities on deposit in the Refunding Fund shall be held by the Trustee in
trust for the benefit of the owners of the Prior Obligations.

         (B)      Subject to the provisions of Section 5.6(B) hereof, the
Trustee shall apply $14,850,247.67 on deposit in the Refunding Fund to pay in
full the principal of and interest on the Prior Obligations on November 29,
2003, and apply $579,002.89 on deposit in the Refunding Fund to pay the costs of
refunding the Prior Obligations, including, but not limited to, all expenses
incurred in connection with the issuance, execution and sale of the Bonds,
including compensation and expenses of the Trustee, legal, accounting and
consulting expenses and fees, costs of printing and engraving, underwriting
expenses and recording and filing fees.

         (C)      Disbursements from the Refunding Fund in respect of the
payment of costs of refunding the Prior Obligations shall be made in accordance
with a requisition submitted to the Trustee by the Borrower signed by an
Authorized Representative of the Borrower stating the names of the payees, the
purpose of each payment in terms sufficient for identification and the
respective amounts of each such payment. Amounts on deposit in the Refunding
Fund to be applied to the payment of costs of refunding the Prior Obligations
shall not be invested by the Trustee.

         (D)      Any amounts constituting the proceeds of the issuance of the
Bonds and any portion of the equity contribution of the Borrower remaining in
the Refunding Fund after the refunding of the Prior Obligations and the payment
of all costs associated therewith shall be returned to the Borrower.

                                      -34-
<PAGE>

         SECTION 5.3. DEBT SERVICE FUND. (A) The Trustee shall establish two
separate accounts within the Debt Service Fund to be respectively designated
"Principal and Interest Account" and "Redemption Account".

         (B)      The Trustee shall promptly deposit the following receipts in
the Debt Service Fund:

         (1)      Any amount required pursuant to Section 4.1 hereof to be
     deposited from the proceeds of the Bonds, which shall be credited to the
     Principal and Interest Account.

         (2)      All amounts received by the Trustee pursuant to Section 3.1 of
     the Agreement, which shall be credited to the Principal and Interest
     Account, in the manner set forth in this Indenture and the Agreement, and
     applied together with amounts available in the Principal and Interest
     Account, to pay (i) the interest due on the Outstanding Bonds on the
     Interest Payment Date next succeeding such payment and (ii) the principal,
     if any, of the Outstanding Bonds due (otherwise than by call for
     redemption) on such Interest Payment Date.

         (3)      Reserved.

         (4)      Any other amounts required to be paid to the Debt Service Fund
     for payment of principal and interest due on the Bonds, which shall be
     credited to the Principal and Interest Account.

         (5)      Prepayments under the Agreement received by the Trustee
     pursuant to Article VIII thereof, which shall be credited to the Redemption
     Account.

         (6)      All other receipts when and if required by the Financing
     Documents or any subsequent agreement or by this Indenture to be paid into
     the Debt Service Fund, which shall be credited to the Principal and
     Interest Account or the Redemption Account, as appropriate.

         (7)      Any amounts constituting income or interest earned and gains
     realized in excess of losses suffered by any Fund and Account hereunder,
     excluding the Refunding Fund, which shall be credited to the Principal and
     Interest Account in accordance with Section 5.6(B) hereof. Income or
     interest earned and gains realized in excess of losses suffered by the
     Refunding Fund shall be transferred to, or applied at the direction of, the
     Borrower on the date of the refunding of the Prior Obligations.

         (C)      There shall be paid from the Principal and Interest Account to
the respective Paying Agents on each Interest Payment Date for the Bonds the
amounts required for the payment of the principal and interest due on the Bonds
on such date. Such amounts shall be applied by the Paying Agents to the payment
of principal and interest on the Bonds when due. All other amounts payable on
the Bonds from the Principal and Interest Account shall be paid to the
respective Paying Agents upon receipt, and shall immediately be paid by such
Paying Agents to the Bondholders.

         (D)      Amounts in the Redemption Account shall be applied, as
promptly as practicable, by the Trustee at the direction of the Borrower to the
purchase of Bonds at prices not exceeding the optional Redemption Price thereof
applicable on the next redemption date plus accrued interest and all other
amounts then due under the Financing Documents in connection with such
redemption. Such redemption date shall be the earliest date upon which Bonds are
subject to redemption from such amounts. Any amount in the Redemption Account
not so applied to the purchase of Bonds by forty-five days prior to the next
date on which the Bonds are so redeemable shall be applied to the redemption of
Bonds on such redemption date; provided that if such amount aggregates less than
$10,000, it need not be then applied to such redemption. Amounts in the
Redemption Account to be applied to the redemption of Bonds shall be paid to the
respective Paying Agents on or before the redemption date and applied by them on
such redemption date to the payment of the Redemption Price of the Bonds being
redeemed plus interest on

                                      -35-
<PAGE>

such Bonds accrued to the redemption date and all other amounts then due under
the Financing Documents in connection with such redemption.

         (E)      Any amounts remaining in the Debt Service Fund after payment
in full of the Bonds, the fees, charges and expenses of the Trustee and the
Paying Agents and all other amounts required to be paid hereunder or under the
Financing Documents shall be paid to the Borrower upon the expiration or sooner
termination of the Term of the Agreement.

         SECTION 5.4. REBATE FUND. (A) There shall be credited to the Rebate
Fund all amounts required to be credited thereto from interest earnings or net
gain on disposition of investments pursuant to this Article V.

         (B)      On the first Business Day following each Computation Period
(as defined in the Tax Regulatory Agreement), upon direction in writing from the
Borrower, pursuant to the Tax Regulatory Agreement, the Trustee shall withdraw
from the Funds and Accounts and deposit to the Rebate Fund an amount such that
the amount held in the Rebate Fund after such deposit is equal to the Rebatable
Arbitrage (as defined in the Tax Regulatory Agreement) calculated as of the last
day of the Computation Period; provided, however, that the Trustee may transfer
monies from any Fund or Account only to the extent such transfer does not result
in an Event of Default hereunder. In the event of any deficiency, the balance
required shall be provided by the Borrower pursuant to Section 8.3 of the Tax
Regulatory Agreement. Computations of the amounts on deposit in each Fund and
Account and of the Rebatable Arbitrage shall be furnished to the Trustee by the
Borrower in accordance with Section 8.3 of the Tax Regulatory Agreement. Any
amounts on deposit in the Rebate Fund in excess of the Rebatable Arbitrage shall
be deposited to the Debt Service Fund.

         (C)      The Trustee, upon receipt of written instructions from an
Authorized Representative of the Borrower in accordance with Section 8.3 of the
Tax Regulatory Agreement, shall pay to the United States out of amounts in the
Rebate Fund (1) not later than 30 days after the end of each five-year period
following the date of issuance of the Bonds, an amount such that, together with
amounts previously paid, the total amount paid to the United States is equal to
90% of the Rebatable Arbitrage calculated as of the end of the most recent
Computation Period, and (2) not later than 30 days after the date on which all
of the Bonds have been paid or redeemed, 100% of the Rebatable Arbitrage as of
the end of the final Computation Period.

         (D)      In transferring any funds to the Rebate Fund and making any
payments to the United States from the Rebate Fund, the Trustee may rely on the
written directions and computations provided it by the Borrower and the Trustee
shall be relieved of all liability with respect to the making of such transfers
and payments in accordance with the foregoing.

         SECTION 5.5. RENEWAL FUND. (A) Subject to the provisions of the
Mortgage, there shall be paid into the Renewal Fund all amounts to be deposited
therein pursuant to Section 5.3 of the Agreement, and such amounts shall be
applied as provided therein.

         (B)      Any surplus remaining in the Renewal Fund after the completion
of any payments for the replacement, repair, reconstruction, alteration,
relocation or restoration, of the Project with respect to any event of damage,
destruction or condemnation shall be transferred to the Redemption Account of
the Debt Service Fund, but the excess, if any, of such amount as will be
sufficient to discharge and satisfy this Indenture and pay all Bonds as provided
in Section 12.1 hereof shall be paid over to the Borrower free and clear of any
pledge or lien hereunder.

         SECTION 5.6. INVESTMENT OF FUNDS AND ACCOUNTS. (A) Except as otherwise
provided in this Indenture, amounts in the Funds and Accounts held hereunder
shall, if and to the extent then permitted by

                                      -36-
<PAGE>

law, be invested in Authorized Investments. Investments authorized under this
Section shall be made by the Trustee at the written request of an Authorized
Representative of the Borrower, and may be made by the Trustee through its own
bond department. Any investment hereunder shall be made in accordance with the
Tax Regulatory Agreement, including particularly the terms and conditions of
Article VII thereof relating to arbitrage. Such investments shall mature in such
amounts and at such times as may be necessary to provide funds when needed to
make payments from such Funds and Accounts, and any such investments shall,
subject to the provisions hereof, including, without limitation, 5.6(B) below,
at all times be deemed to be a part of the Fund and Account, from which the
investment was made.

         (B)      Except as provided in the following sentence, the income or
interest earned and gains realized in excess of losses suffered by any Fund and
Account held hereunder from the date of delivery of the Bonds shall be credited
to the Principal and Interest Account of the Debt Service Fund (except income or
interest earned and gains realized in excess of losses suffered by the Rebate
Fund). Income or interest earned and gains realized in excess of losses suffered
by the Refunding Fund shall be transferred to, or applied at the direction of,
the Borrower on the date of the refunding of the Prior Obligations.

         (C)      Prior to each Interest Payment Date on the Bonds, the Trustee
shall notify the Borrower of the amount of any net investment income or gain
received and collected subsequent to the preceding interest payment date and the
amount then available in the Debt Service Fund.

         SECTION 5.7. NON-PRESENTMENT OF BONDS. In the event any Bond shall not
be presented for payment when the remaining principal thereof becomes due,
either at final maturity, or at the date fixed for redemption thereof, or
otherwise, and funds sufficient to pay any such Bond shall have been made
available to the Trustee for the benefit of the holder or holders thereof, all
liability of the Authority to the holder thereof for the payment of such Bond
shall forthwith cease, determine and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such funds, without liability for
interest thereon, for the benefit of the holder of such Bond, who shall
thereafter be restricted exclusively to such funds, for any claim of whatever
nature on his part under this Indenture or on, or with respect to, such Bond.
Funds remaining with the Trustee as above unclaimed for six years shall be paid
to the Borrower.

                                      -37-
<PAGE>

                                   ARTICLE VI
                               REDEMPTION OF BONDS

         SECTION 6.1. PRIVILEGE OF REDEMPTION AND REDEMPTION PRICE. Bonds or
portions thereof subject to redemption prior to maturity shall be redeemable,
upon mailed notice as provided in this Article, at the times, at the Redemption
Prices and upon such terms, in addition to and consistent with the terms
contained in this Article, as shall be specified in Section 2.4 hereof and in
such Bonds.

         SECTION 6.2. SELECTION OF BONDS TO BE REDEEMED. So long as the Bonds
are in book-entry form, when Bonds are called, allocation shall be made by DTC
or any successor securities depository and not by the Authority or the Trustee.
In the event of redemption of less than all the Outstanding Bonds of like
maturity, the Trustee shall select by lot, using such method of selection as it
shall deem proper in its discretion, the principal amount of such Bonds to be
redeemed. For purposes of this Section, Bonds or portions of Bonds which have
theretofore been selected by lot for redemption shall not be deemed Outstanding.
In the event that the book-entry system is discontinued, if less than all of the
Bonds are to be redeemed at the option of the Borrower, the Bonds or portion
thereof to be redeemed shall be selected by the Borrower.

         SECTION 6.3. NOTICE OF REDEMPTION. Except with respect to deceased
Bondholders redemptions as described in Section 2.4(D) hereof (the notice
provisions relating to which are set forth in the Form of Bond contained in the
recitals to this Indenture), when redemption is required or permitted by this
Indenture, upon written notification of the Trustee by the Borrower of such
redemption not less than seven (7) days prior to the date on which the Trustee
must give notice to Holders as provided in this Section or the Letter of
Representation among the Authority, the Trustee and DTC (if the book entry
system is still in effect), the Trustee shall give notice of such redemption in
the name of the Authority, specifying the subsection of Section 2.4 hereof under
which the redemption is to be made, the numbers and amounts of the Bonds or
portions thereof to be redeemed, the redemption date and the place or places
where amounts due upon such redemption will be payable. Such notice shall
further state that on such date there shall become due and payable upon each
Bond or portion thereof to be redeemed the Redemption Price thereof together
with interest accrued to the redemption date and all other amounts then due
under the Financing Documents, and that from and after such date interest
thereon shall cease to accrue and be payable. Alternatively, at the option of
the Authority, such notice may state that it is subject to the receipt of the
redemption moneys by the Trustee on or before the date fixed for redemption and
which notice shall be of no effect unless such moneys are so received on or
before such date. Notice of redemption shall be given by the Trustee in the name
and on behalf of the Authority by mailing a copy of each such notice to the
registered owner of each Bond by first-class mail postage prepaid, addressed to
him at his last known address as it appears upon the bond register, no more than
forty-five (45) nor less than thirty (30) days prior to the date fixed for
redemption. Such notice shall be effective when mailed and any failure to
receive such notice shall not affect the validity of the proceedings for
redemption. In the event of a postal strike, the Trustee shall give notice by
other appropriate means selected by the Trustee in its discretion.

         SECTION 6.4. PAYMENT OF REDEEMED BONDS. (A) Notice having been given in
the manner provided in Section 6.3 hereof, the Bonds or portions thereof so
called for redemption shall become due and payable on the redemption dates so
designated at the Redemption Price, plus interest accrued to the redemption date
and all other amounts then due under the Financing Documents. If, on the
redemption date, monies for the redemption of all the Bonds or portions thereof
to be redeemed, together with interest to the redemption date, and all other
amounts then due under the Financing Documents, shall be held by the Paying
Agent so as to be available therefor on such date and if notice of redemption
shall have been given as aforesaid, then, from and after the redemption date,
interest on the Bonds or portions thereof so called for redemption shall cease
to accrue and become payable. If such monies shall not be so available

                                      -38-
<PAGE>

on the redemption date, such Bonds or portions thereof shall continue to bear
interest until paid at the same rate as they would have borne had they not been
called for redemption.

         (B)      Payment of the Redemption Price together with interest and all
other amounts then due to the Bondholders under the Financing Documents shall be
made to or upon the order of the registered owner, only upon presentation of the
Bond for cancellation or notation as provided in Section 6.6 hereof.

         SECTION 6.5. NOTICE TO AUTHORITY AND BORROWER OF DECEASED BONDHOLDER
REDEMPTION. Not later than ten Business Days after receipt of a request for
redemption pursuant to Section 2.4(D) hereof by the Trustee, the Trustee shall
give notice to the Authority and the Borrower specifying the amount of Bonds
requested to be redeemed, the amount of Bonds eligible for redemption, the date
on which such Bonds eligible for redemption shall be redeemed and the amount of
funds required to be deposited in the Redemption Account.

         SECTION 6.6. CANCELLATION OF REDEEMED BONDS. (A) All Bonds redeemed in
full under the provisions of this Article shall forthwith be cancelled and
destroyed by the Trustee and a certificate of destruction furnished to the
Authority, and no Bonds shall be executed, authenticated, issued or delivered in
exchange or substitution therefor or for or in respect of any paid portion of a
fully registered Bond. In the event that a portion only of a Bond shall be so
called for redemption, then, at the option of the registered owner thereof if
such owner is a securities depository, such Bond may be either submitted to the
Trustee for notation thereon of the payment of the portion of the principal
thereof called for redemption or surrendered for redemption. If so surrendered,
one or more new Bonds shall be issued for the unredeemed portion hereof.

         (B)      If there shall be called for redemption less than all of a
Bond, the Authority shall execute and the Trustee shall authenticate and
deliver, upon the surrender of such Bond, without charge to the owner thereof,
for the unredeemed balance of the principal amount of the Bond so surrendered,
Bonds in any of the authorized denominations.

                                      -39-
<PAGE>

                                   ARTICLE VII
                              PARTICULAR COVENANTS

         SECTION 7.1. NO PECUNIARY LIABILITY ON AUTHORITY OR OFFICERS. (A) No
covenant or agreement contained in this Indenture or in the Bonds or any
obligations herein or therein imposed upon the Authority or the breach thereof,
shall constitute or give rise to a charge upon its general credit, or impose
upon the Authority a pecuniary liability except as set forth herein. In making
the agreements, provisions and covenants set forth in this Indenture, the
Authority has not obligated itself except with respect to the application of the
Revenues as hereinabove provided.

         (B)      All covenants, stipulations, promises, agreements and
obligations of the Authority contained herein shall be deemed to be covenants,
stipulations, promises, agreements and obligations of the Authority and not of
any member, officer, agent or employee thereof in his individual capacity. No
recourse shall be had for the payment of the principal or Redemption Price, if
any, of or interest on the Bonds, for the performance of any obligation
hereunder, or for any claim based thereon or hereunder against any such member,
officer, agent or employee or against any natural person executing the Bonds. No
such member, officer, agent, employee or natural person is or shall become
personally liable for any such payment, performance or other claim, and in no
event shall any monetary or deficiency judgment be sought or secured against any
such member, officer, agent, employee or other natural person.

         SECTION 7.2. PAYMENT OF PRINCIPAL, REDEMPTION PRICE, IF ANY, AND
INTEREST. The Authority covenants that it will promptly pay, solely from the
Revenues or other monies derived in connection with the Project or otherwise
available hereunder, the principal or Redemption Price, if any, of and interest
on every Bond issued under this Indenture, together with all other amounts due
under the Financing Documents, at the place, on the dates and in the manner
provided herein and in the Bonds according to the true intent and meaning
thereof.

         SECTION 7.3. PERFORMANCE OF COVENANTS. The Authority covenants that it
will faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions contained in this Indenture, in any and every Bond
executed, authenticated and delivered hereunder and in all of its proceedings
pertaining thereto. The Authority covenants that it is duly authorized under the
Constitution and laws of the State, including particularly and without
limitation the Act, to issue the Bonds authorized hereby and to execute this
Indenture, to create, accept and assign the liens in the property described
herein and created hereby, to grant the security interest herein provided, to
assign the Financing Documents and to pledge the revenues and other amounts
hereby pledged in the manner and to the extent herein set forth; that all action
on its part for the issuance of the Bonds and the execution and delivery of this
Indenture has been duly and effectively taken, and that the Bonds in the hands
of the holders and owners thereof are and will be valid and enforceable
obligations according to their terms and the terms of this Indenture, 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.

         SECTION 7.4. FURTHER ASSURANCES. The Authority and the Trustee each
covenants that it will do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, such indentures supplemental hereto and
such further acts, instruments and transfers as the other may reasonably require
for the better assuring, transferring, conveying pledging, assigning and
confirming unto the Trustee all and singular the property and rights assigned
hereby and the amounts pledged hereby to the payment of the principal or
Redemption Price, if any, of and interest on the Bonds and all other amounts due
under the Financing Documents.

         SECTION 7.5. INSPECTION OF PROJECT BOOKS. The Authority covenants and
agrees that all books and documents in its possession relating to the Project
and the revenues derived from the Project shall at

                                      -40-
<PAGE>

all times be open to inspection by such accountants or other agencies as the
Trustee may from time to time designate.

         SECTION 7.6. RIGHTS UNDER FINANCING DOCUMENTS. The Financing Documents,
originals or duly executed counterparts of which have been filed with the
Trustee, set forth the covenants and obligations of the Authority and the
Borrower, including provisions that subsequent to the issuance of Bonds and
prior to their payment in full or provision for payment thereof in accordance
with the provisions hereof, the Financing Documents may not be effectively
amended, changed, modified, altered or terminated without the written consents
provided for therein, and reference is hereby made to the same for a detailed
statement of the covenants and obligations of the Borrower thereunder. Subject
to the provisions of Article IX hereof and to the extent explicitly set forth
herein and in the Loan Agreement, the Trustee agrees to enforce all covenants
and obligations of the Borrower under the Financing Documents and it is agreed
that the Trustee may and is hereby granted the right to enforce all rights of
the Authority and all obligations of the Borrower under and pursuant to the
Financing Documents. Nothing in this Section shall permit any reduction in the
payments required to be made by the Borrower under or pursuant to the Financing
Documents or any alteration in the terms of payment thereof. All covenants and
agreements on the part of the Authority shall, except as otherwise specifically
provided herein, be for the benefit of the holders from time to time of the
Bonds and may be enforced in the manner provided by Article VIII hereof on
behalf of such holders by the Trustee.

         SECTION 7.7. CREATION OF LIENS, INDEBTEDNESS. The Authority shall not
create or suffer to be created any lien or charge upon or pledge of the
Revenues, except the lien, charge and pledge created by this Indenture and the
Bonds. The Authority shall not incur any indebtedness or issue any evidence of
indebtedness, other than the Bonds herein authorized, secured by a lien on or
pledge of such Revenues.

         SECTION 7.8. RECORDING AND FILING. The Authority covenants that it will
cause the Financing Documents, this Indenture and all supplements thereto and
hereto, as well as such other security agreements, financing statements, and
other instruments as may be required from time to time to be kept, to be
recorded and filed in such manner and in such places as may be required by law
in order to fully preserve and protect the security of the holders and owners of
the Bonds and the rights of the Trustee hereunder.

                                      -41-
<PAGE>

                                  ARTICLE VIII
                             REMEDIES OF BONDHOLDERS

         SECTION 8.1. EVENTS OF DEFAULT; ACCELERATION OF DUE DATES. (A) Each of
the following events is hereby defined as and shall constitute an "Event of
Default":

                  (1)      Failure to duly and punctually pay (a) the interest
         or (b) any installment of the principal or Redemption Price of any
         Bond, whether at the stated maturity thereof or upon proceedings for
         redemption thereof (excluding redemptions for which a conditional
         notice has been given in accordance with Section 6.3 of this Indenture
         in which case the failure to pay the Redemption Price of any Bonds
         shall not constitute an Event of Default under this Section 8.1(1)
         unless monies are on deposit with the Trustee and available to pay the
         Redemption Price on the redemption date), and the continuance of such
         failure for a period of more than five (5) Business Days.

                  (2)      Failure to duly and punctually pay any amount, other
         than the amounts specified in (1) above, due under the Financing
         Documents and the continuance of such failure for more than thirty (30)
         days.

                  (3)      Failure to perform or observe any other of the
         covenants, agreements or conditions on the part of the Authority in
         this Indenture or in the Bonds contained and not otherwise a default
         hereunder and the continuance thereof for a period of sixty (60) days
         after written notice given by the Trustee or by the owners of not less
         than 51% of the principal amount of Bonds then Outstanding.

                  (4)      The occurrence of an "Event of Default" under any of
         the Financing Documents (other than the Disclosure Agreement).

         (B)      Subject to Sections 6.4(B) and 7.2(C) of the Loan Agreement,
upon the happening and continuance of any Event of Default specified in
subsection 8.1(A) hereof (unless the principal of all the Bonds shall have
already become due and payable), the Trustee (a) upon request in writing to the
Authority and the Trustee from the Bond Insurer or, if the Bond Insurance Policy
is no longer in effect and if such Event of Default is specified in (1) or (2)
above, shall, or (b) if the Bond Insurance Policy is no longer in effect, the
Trustee may, and upon request in writing from the owners of not less than 51% in
principal amount of the Bonds then Outstanding, shall, declare the principal of
all the Bonds then Outstanding, and the interest accrued thereon, to be due and
payable immediately, and upon such declaration the same shall become and be
immediately due and payable, anything in this Indenture or in any of the Bonds
contained to the contrary notwithstanding.

         (C)      The right of the Trustee or of the owners of not less than 51%
in principal amount of the Outstanding Bonds to make any declaration authorized
under subsection 8.1(B) hereof with respect to any failure under subsection
8.1(A)(1) hereof, however, is subject to the condition that if, at any time
before such declaration, all overdue installments of interest upon the Bonds and
the principal of all Bonds which shall have matured by their terms, together
with the reasonable and proper charges, expenses and liabilities of the Trustee,
shall either be paid by or for account of the Authority or provision
satisfactory to the Trustee shall be made for such payment, and all other events
of default cured and waived as provided in Section 8.11 then in every such case
any such default and its consequences shall ipso facto be deemed to be annulled,
but no such annulment shall extend to or affect any subsequent default or impair
or exhaust any right or power consequent thereon.

         SECTION 8.2. ENFORCEMENT OF REMEDIES. (A) Upon the happening and
continuance of any Event of Default, then and in every case, but subject to the
provisions of Section 9.2 hereof and Sections 6.4(B)

                                      -42-
<PAGE>

and 7.2(C) of the Loan Agreement, the Trustee, with the consent of the Bond
Insurer, may proceed, and upon the written request of the Bond Insurer or the
owners of not less than 51% in the principal amount of the Bonds Outstanding,
with the consent of the Bond Insurer, shall proceed, to protect and enforce its
rights and the rights of the Bondholders under the Act, the Bonds, the Financing
Documents and this Indenture, and under any agreement executed in connection
with the foregoing, forthwith by such suits, actions or special proceedings in
equity or at law, or by proceedings in the office of any board or officer having
jurisdiction, whether for the specific performance of any covenant or agreement
contained in this Indenture or the Financing Documents or in aid of the
execution of any power granted therein or in the Act or for the enforcement of
any legal or equitable rights or remedies as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce such rights or to
perform any of its duties under this Indenture; provided, that, no such consent
of the Bond Insurer shall be required if the Bond Insurance Policy is no longer
in effect or if the Bond Insurer is in default under the Bond Insurance Policy.

         (B)      [Reserved]

         (C)      Subject to the provisions of Section 8.2(E) below, in the
enforcement of any right or remedy under this Indenture or under the Act, the
Trustee shall be entitled to sue for, enforce payment on and receive any or all
amounts then or during any default becoming, and any time remaining, due from
the Authority for principal, Redemption Price, interest or otherwise under any
of the provisions of the Financing Documents, this Indenture or of the Bonds,
and unpaid, and, to the extent permitted by law, with interest on overdue
payments at the applicable rate or rates of interest specified in the Bonds,
together with any and all costs and expenses of collection and of all
proceedings under the Financing Documents, this Indenture and under the Bonds,
without prejudice to any other right or remedy of the Trustee or of the
Bondholders, and to recover and enforce judgment or decree against the
Authority, but solely as provided in the Financing Documents, this Indenture and
in the Bonds, for any portion of such amounts remaining unpaid, with interest,
to the extent permitted by law, costs and expenses, and to collect in any manner
provided by law, the moneys adjudged or decreed to be payable.

         (D)      Regardless of the happening of an Event of Default, the
Trustee, if requested in writing by the owners of not less than 51% in principal
amount of the Bonds then Outstanding with the consent of the Bond Insurer, while
the Bond Insurance Policy is in effect and the Bond Insurer is not in default
thereunder, and furnished with reasonable security and indemnity, shall
institute and maintain such suits and proceedings as it may be advised shall be
necessary or expedient to prevent any impairment of the security under this
Indenture by any acts which may be unlawful or in violation of this Indenture or
of any resolution authorizing Bonds, and such suits and proceedings as the
Trustee may be advised shall be necessary or expedient to preserve or protect
its interests and the interests of the Bondholders; but no such request shall be
otherwise than in accordance with the provisions of law and of the Indenture or
be unduly prejudicial to the interests of the holders of Bonds not making such
request.

         (E)      Anything in this Indenture to the contrary notwithstanding,
but subject to Section 9.2 hereinbelow, upon the occurrence and continuance of
an Event of Default as defined herein, the Bond Insurer, so long as the Bond
Insurance Policy is in effect and the Bond Insurer is not in default thereunder,
shall be entitled to control and direct the enforcement of all rights and
remedies granted to the holders of the Bonds or the Trustee for the benefit of
the holders of the Bonds under this Indenture, including, without limitation,
(i) the right to accelerate the principal of the Bonds as described in this
Indenture and (ii) the right to annul any declaration of acceleration, and the
Bond Insurer shall also be entitled to approve all waivers of Events of Default.

         (F)      The Bond Insurer's rights under this Article VIII shall be
suspended in the event that the Bond Insurer is in default under the Bond
Insurance Policy. The preceding sentence shall not affect or limit the Bond
Insurer's rights obtained by virtue of subrogation upon payment of any amounts
due and owing with respect to the Bonds.

                                      -43-
<PAGE>

         SECTION 8.3. APPLICATION OF REVENUE AND OTHER MONEYS AFTER DEFAULT. (A)
All moneys received by the Trustee pursuant to any right given or action taken
under the provisions of this Article, after payment of the cost and expenses of
the proceedings resulting in the collection of such moneys and of the fees,
expenses, liabilities and advances incurred or made by the Trustee and any
Paying Agent, shall be deposited in the applicable account of the Debt Service
Fund and all moneys so deposited in such Fund and available for payment of the
Bonds shall be applied as follows:

                  (1)      Unless the principal of all of the Bonds shall have
         become or have been declared due and payable:

         FIRST To the payment of all amounts due under the Financing Documents,
         exclusive of unpaid principal and interest on the Note;

         SECOND To the payment to the persons entitled thereto of all
         installments of interest then due on the Bonds, in the order of the
         maturity of the installments of such interest and, if the amount
         available shall not be sufficient to pay in full any particular
         installment, then to the payment ratably, according to the amounts due
         on such installment, to the persons entitled thereto, without any
         discrimination or preference; and

         THIRD To the payment to the persons entitled thereto of the unpaid
         principal or Redemption Price, if any, of any of the Bonds which shall
         have become due (other than Bonds called for redemption for the payment
         of which moneys are held pursuant to the provisions of this Indenture),
         in order of maturity, from the respective dates upon which they become
         due and, if the amount available shall not be sufficient to pay in full
         Bonds due on any particular date, then to the payment ratably,
         according to the amount of principal or Redemption Price due on such
         date, to the persons entitled thereto without any discrimination or
         preference.

                  (2)      If the principal of all the Bonds shall have become
         or have been declared due and payable, to the payment of all amounts
         due under the Financing Documents, then to the payment of the principal
         and interest (at the rate or rates expressed thereon) then due and
         unpaid upon the Bonds without preference or priority of principal over
         interest or of interest over principal, or of any installment of
         interest over any other installment of interest, or any Bond over any
         other Bond, ratably, according to the amounts due respectively for
         principal and interest, to the persons entitled thereto without any
         discrimination or preference.

         (B)      Whenever moneys are to be applied pursuant to the provisions
of this Section, such moneys shall be applied at such times, and from time to
time, as the Trustee shall determine, having due regard to the amount of such
moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Trustee
shall apply such funds, it shall fix the date upon which such application shall
be made. The Trustee shall give such notice as it may deem appropriate of the
deposit with it of any such moneys and of the fixing of any such date, and shall
not be required to make payment to the owner of any Bonds until such Bonds shall
be presented to the Trustee for appropriate endorsement or for cancellation if
fully paid.

         (C)      Whenever all Bonds and interest thereon and all other amounts
due under the Financing Documents have been paid under the provisions of this
Section and all fees, expenses and charges of the Trustee and Paying Agents have
been paid, any balance remaining in the Debt Service Fund shall be paid to or
upon the order of the Borrower.

         SECTION 8.4. ACTIONS BY TRUSTEE. All rights of action under this
Indenture or under any of the Bonds may be enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any trial or other
proceedings relating thereto and any such suit or proceedings instituted by the

                                      -44-
<PAGE>

Trustee shall be brought in its name as Trustee without the necessity of joining
as plaintiffs or defendants any owners of the Bonds, and any recovery of
judgment, subject to the provisions of Section 8.3 hereof, shall be for the
benefit of the holders of the Outstanding Bonds.

         SECTION 8.5. MAJORITY BONDHOLDERS CONTROL PROCEEDINGS. Subject to
Sections 8.2(E) and 13.3 hereof and Section 7.2(C) of the Loan Agreement, the
holders of at least 51% in aggregate principal amount of Bonds then Outstanding
shall have the right, at any time, by an instrument or instruments in writing
executed and delivered to the Trustee, to direct the method and place of
conducting all proceedings to be taken in connection with the enforcement of the
terms and conditions of the Indenture, or for any other proceedings hereunder;
but such direction shall not be otherwise than in accordance with the provisions
of law and of this Indenture.

         SECTION 8.6. INDIVIDUAL BONDHOLDER ACTION RESTRICTED. (A) No owner of
the Bonds shall have any right to institute any suit, action or proceeding at
law or in equity for the enforcement of any provision of this Indenture or the
execution of any trust under this Indenture or for any remedy under this
Indenture, unless such owners shall have previously given to the Trustee written
notice of the happening of an "Event of Default", as provided in this Article,
and the owners of at least 51% in principal amount of the Bonds then Outstanding
shall have filed a written request with the Trustee, and shall have offered it
reasonable opportunity, either to exercise the powers granted in this Indenture
or by the Act or by the laws of the State or to institute such action, suit or
proceeding in its own name, and unless such owners shall have offered to the
Trustee adequate security and indemnity against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee shall have
refused to comply with such request for a period of sixty days after receipt by
it of such notice, request and offer of indemnity, it being understood and
intended that no owner of any Bond shall have any right in any manner whatever
by his or their action to affect, disturb or prejudice the pledge created by
this Indenture, or to enforce any right under this Indenture, except in the
manner herein provided; and that all proceedings at law or in equity to enforce
any provision of this Indenture shall be instituted, had and maintained in the
manner provided in this Indenture and for the equal benefit of all owners of the
Outstanding Bonds.

         (B)      Nothing herein or in the Bonds contained shall affect or
impair the right of any owner of the Bonds to payment of the principal or
Redemption Price, if any, of and interest on any Bond or other amounts due under
the Financing Documents at and after the maturity thereof, or the obligation of
the Authority to pay the principal or Redemption Price, if applicable, of and
interest on each of the Bonds or other amounts due under the Financing Documents
to the respective owners thereof at the time, place, from the source and in the
manner herein and in such Bonds expressed.

         SECTION 8.7. EFFECT OF DISCONTINUANCE OF PROCEEDINGS. In case any
proceeding taken by the Trustee on account of any Event of Default shall have
been dismissed, discontinued or abandoned for any reason, or shall have been
determined adversely, then and in every such case the Authority, the Trustee,
and the owners of the Bonds shall be restored, respectively, to their former
positions and rights hereunder, and all rights, remedies, powers and duties of
the Trustee shall continue as though no such proceedings had been taken.

         SECTION 8.8. REMEDIES NOT EXCLUSIVE. No remedy by the terms of this
Indenture conferred upon or reserved to the Trustee or to the owners of the
Bonds is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.

         SECTION 8.9. DELAY OR OMISSION UPON DEFAULT. No delay or omission of
the Trustee or of the owners of any Bond to exercise any right or power arising
upon any Event of Default shall impair any right or power or shall be construed
to be a waiver of any such default or any acquiescence therein; and every power
and remedy given by this Article to the Trustee and the owner of any Bond,
respectively,

                                      -45-
<PAGE>

may be exercised from time to time and as often as may be deemed expedient by
the Trustee or by the owner of the Bonds.

         SECTION 8.10. NOTICE OF DEFAULT. The Trustee shall promptly mail, to
each owner of the Bonds, written notice of the occurrence of any Event of
Default of which it has actual knowledge. Actual knowledge means the actual
knowledge of an officer in the Trustee's corporate trust administration
department. The Trustee shall not, however, be subject to any liability to any
owner of the Bonds by reason of its failure to mail any notice required by this
Section.

         SECTION 8.11. WAIVERS OF DEFAULT. Subject to the provisions of Section
8.2(E) hereof, the Trustee shall waive any Event of Default hereunder and its
consequences upon the written request of the owners of 51% in aggregate
principal amount of the Bonds then Outstanding; except that there shall not be
waived without the consent of the owners of all the Bonds Outstanding (a) any
default in the payment of the principal of and Redemption Price on any
Outstanding Bonds at the date of maturity specified therein or (b) any default
in the payment when due of the interest on any such Bonds unless, prior to such
waiver, all arrears of interest, at the rate borne by the Bonds on overdue
installments of interest, to the extent permitted by law, in respect of which
such default shall have occurred or all arrears of payments of principal due on
the Bonds when due, as the case may be, and all expenses of the Trustee and any
Paying Agent in connection with such default shall have been paid or provided
for, and in case of any such waiver, or in case any proceeding taken by the
Trustee on account of any such default shall have been dismissed, discontinued
or abandoned or determined adversely, then and in every such case the Authority,
the Trustee and the owners of the Bonds shall be restored to their former
positions and rights hereunder respectively, but no such waiver, dismissal,
discontinuance, abandonment or determination shall extend to any subsequent or
other default, or impair any right consequent thereon.

                                      -46-
<PAGE>

                                   ARTICLE IX
                            TRUSTEE AND PAYING AGENTS

         SECTION 9.1. APPOINTMENT AND ACCEPTANCE OF DUTIES. (A) U.S. Bank
National Association is hereby appointed as Trustee. The Trustee shall signify
its acceptance of the duties and obligations of the Trustee by executing this
Indenture. All provisions of this Article shall be construed as extending to and
including all the rights, duties and obligations imposed upon the Trustee under
the Agreement and the other Financing Documents as fully for all intents and
purposes as if this Article were contained in the Agreement and the other
Financing Documents.

         (B)      The Trustee is hereby appointed as Paying Agent for the Bonds.
The Authority may also from time to time appoint one or more other Paying Agents
in the manner and subject to the conditions set forth in Section 9.10 hereof for
the appointment of a successor Paying Agent. Each Paying Agent shall signify its
acceptance of the duties and obligations imposed upon it by this Indenture by
executing and delivering to the Authority and to the Trustee a written
acceptance thereof. The principal offices of the Paying Agents are designated as
the respective offices or agencies of the Authority for the payment of the
interest on and principal or Redemption Price of the Bonds, except that interest
on all registered Bonds and the principal and Redemption Price of all registered
Bonds shall be payable at the corporate trust office of the Trustee located in
Hartford, Connecticut.

         SECTION 9.2. INDEMNITY. The Trustee shall be under no obligation to
institute any suit, or to take any remedial proceeding under this Indenture, or
to enter any appearance in or in any way defend any suit in which it may be made
defendant, or to take any steps in the execution of the trusts hereby created or
in the enforcement of any rights and powers hereunder, until it shall be
indemnified and provided with adequate security to its satisfaction against any
and all reasonable costs and expenses, outlays, and counsel fees and other
disbursements, and against all liability not due to its willful misconduct,
gross negligence or bad faith.

         The Trustee shall be indemnified for and held harmless against any
loss, liability or expense incurred without gross negligence or bad faith on its
part arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that payment of such funds or adequate indemnity against such risk or
liability is not assured to it.

         SECTION 9.3. RESPONSIBILITIES OF TRUSTEE. (A) The Trustee shall have no
responsibility in respect of the validity or sufficiency of this Indenture or
the security provided hereunder or the due execution hereof by the Authority, or
in respect of the title or the value of the Project, or in respect of the
validity of any Bonds authenticated and delivered by the Trustee in accordance
with this Indenture or to see to the recording or filing of the Indenture or any
financing statement (except the filing of continuation statements as provided in
Section 9.13 hereof) or any other document or instrument whatsoever. The
recitals, statements and representations contained herein and in the Bonds shall
be taken and construed as made by and on the part of the Authority and not by
the Trustee, and the Trustee does not assume any responsibility for the
correctness of the same; except that the Trustee shall be responsible for its
representation contained in its certificate on the Bonds. The obligation
hereunder to pay or reimburse the Trustee for expenses, advances, reimbursements
and to indemnify and hold harmless the Trustee pursuant to Section 9.2 hereof
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of all obligations under this Indenture.

                                      -47-
<PAGE>

         (B)      The Trustee shall not be liable or responsible because of the
failure of the Authority to perform any act required of it by this Indenture or
the Financing Documents or because of the loss of any monies arising through the
insolvency or the act or default or omission of any depositary other than itself
in which such monies shall have been deposited. The Trustee shall not be
responsible for the application of any of the proceeds of the Bonds or any other
monies deposited with it and paid out, invested, withdrawn or transferred in
accordance herewith or for any loss resulting from any such investment. The
Trustee shall not be liable in connection with the performance of its duties
hereunder except for its own willful misconduct, gross negligence or bad faith.
The immunities and exemptions from liability of the Trustee shall extend to its
directors, officers, employees and agents.

         (C)      The Trustee, prior to the occurrence of an Event of Default
and subsequent to an Event of Default that has been cured, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred of which the Trustee has
actual knowledge (as defined in Section 8.10 hereinabove) and which has not been
cured the Trustee, subject to Section 9.2 hereof, shall exercise such of the
rights and powers vested in it hereby and use the same degree of care and skill
in their exercise, as a prudent person would exercise under the circumstances in
the conduct of his own affairs.

         (D)      The Trustee shall in all instances act in good faith in
incurring costs, expenses and legal fees in connection with the transactions
contemplated by this Indenture and the Agreement.

         (E)      The Trustee shall not be liable or responsible for the failure
of the Borrower to effect or maintain insurance on the Project as provided in
the Financing Documents nor shall it be responsible for any loss by reason of
want or insufficiency in insurance or by reason of the failure of any insurer in
which the insurance is carried to pay the full amount of any loss against which
it may have insured the Authority, the Borrower, the Trustee or any other
person.

         SECTION 9.4. COMPENSATION. The Trustee and Paying Agents shall be
entitled to receive and collect from the Borrower as provided in the Financing
Documents payment for reasonable fees for services rendered hereunder and all
advances, counsel fees and expenses and other expenses reasonably and
necessarily made or incurred by the Trustee or Paying Agents in connection
therewith.

         SECTION 9.5. EVIDENCE ON WHICH TRUSTEE MAY ACT. (A) In case at any time
it shall be necessary or desirable for the Trustee to make any investigation
concerning any fact preparatory to taking or not taking any action, or doing or
not doing anything, as such Trustee, and in any case in which this Indenture or
the Financing Documents provide for permitting or taking any action, it may rely
upon any certificate required or permitted to be filed with it under the
provisions hereof or of the Financing Documents, and any such certificate shall
be evidence of such fact or protect it in any action that it may or may not
take, or in respect of anything it may or may not do, in good faith, by reason
of the supposed existence of such fact.

         (B) The Trustee shall be protected and shall incur no liability in
acting or proceeding, or in not acting or not proceeding, in good faith,
reasonably and in accordance with the terms of this Indenture or the Financing
Documents, upon any resolution, order, notice, request, consent, waiver,
certificate, statement, affidavit, requisition, bond or other paper or document
which it shall in good faith reasonably believe to be genuine and to have been
adopted or signed by the proper board or person, or to have been prepared and
furnished pursuant to any of the provisions of this Indenture or the Financing
Documents, or upon the written opinion of any attorney (who may be an attorney
for the Authority or the Borrower), engineer, appraiser, or accountant
reasonably believed by the Trustee to be qualified in relation to the subject
matter. The Trustee is not required to investigate the qualifications of any
such expert.

                                      -48-
<PAGE>

         (C) Notwithstanding any other provision of this Indenture, in
determining whether the rights of the holders of any of the Bonds will be
adversely affected by any action taken pursuant to the terms and provisions of
this Indenture, the Trustee (or any Paying Agent) shall consider the effect on
the holders of the Bonds as if there were no Bond Insurance Policy then in
effect.

         SECTION 9.6. EVIDENCE OF SIGNATURES OF OWNERS OF THE BONDS AND
OWNERSHIP OF BONDS. (A) Any request, consent, revocation of consent or other
instrument which this Indenture may require or permit to be signed and executed
by the owners of the Bonds may be in one or more instruments of similar tenor,
and shall be signed or executed by such owners of the Bonds in person or by
their attorneys appointed in writing. Proof of (i) the execution of any such
instrument, or of any instrument appointing any such attorney, or (ii) the
holding by any person of the Bonds shall be sufficient for any purpose of this
Indenture (except as otherwise herein expressly provided) if made in the
following manner, or in any other manner satisfactory to the Trustee, which may
nevertheless in its discretion require further or other proof in cases where it
deems the same desirable:

                  (1)      The fact and date of the execution by any owner of
         the Bonds or his attorney of such instruments may be proved by a
         guarantee of the signature thereon by an officer of a bank or trust
         company or by the certificate of any notary public or other officer
         authorized to take acknowledgments of deeds, that the person signing
         such request or other instrument acknowledged to him the execution
         thereof, or by an affidavit of a witness of such execution, duly sworn
         to before such notary public or other officer. Where such execution is
         by an officer of a corporation or a member of an association, a limited
         liability company or a partnership, on behalf of such corporation,
         association, limited liability company or partnership, such signature
         guarantee, certificate or affidavit shall be accompanied by sufficient
         proof of his authority.

                  (2)      The ownership of registered Bonds and the amount,
         numbers and other identification, and date of owning the same shall be
         proved by the registry books.

         (B)      Except as otherwise provided in Section 10.3 hereof with
respect to revocation of a consent, any request or consent by the owner of any
Bond shall bind all future owners of such Bond in respect of anything done or
suffered to be done by the Authority or the Trustee or any Paying Agent in
accordance therewith.

         SECTION 9.7. TRUSTEE AND ANY PAYING AGENT, MAY DEAL IN BONDS AND WITH
BORROWER. Any national banking association, bank or trust company acting as a
Trustee, or Paying Agent, and its directors, officers, employees or agents, may
in good faith buy, sell, own, hold and deal in any of the Bonds and may join in
any action which any owner of the Bonds may be entitled to take and may
otherwise deal with the Borrower with like effect as if such association, bank
or trust company were not such Trustee or Paying Agent.

         SECTION 9.8. RESIGNATION OR REMOVAL OF TRUSTEE. (A) The Trustee may
resign and thereby become discharged from the trusts created under this
Indenture by notice in writing to be given to the Authority, the Borrower and
the Bond Insurer (so long as the Bond Insurance Policy is in effect and the Bond
Insurer is not in default thereunder) and by notice mailed, postage prepaid to
the owners of the Bonds not less than sixty (60) days before such resignation is
to take effect, but such resignation shall not take effect until the appointment
of a successor Trustee pursuant to Section 9.9 hereof and such successor Trustee
shall accept such trust.

         (B)      The Trustee may be removed at any time thirty (30) days after
an instrument or concurrent instruments in writing, is filed with the Trustee
and signed by either the Bond Insurer or the owners of not less than a majority
in principal amount of the Bonds then Outstanding or their attorneys-in-fact
duly authorized, but such removal shall not take effect until the appointment of
a

                                      -49-
<PAGE>

successor Trustee pursuant to Section 9.9 hereof and such successor Trustee
shall accept such trust. The Trustee shall promptly give notice of such filing
to the Authority.

         SECTION 9.9. SUCCESSOR TRUSTEE. (A) If at any time the Trustee shall
resign, or shall be removed, be dissolved or otherwise become incapable of
acting or shall be adjudged a bankrupt or insolvent, or if a receiver,
liquidator or conservator thereof, or of its property, shall be appointed, or if
any public officer shall take charge or control of the Trustee or of its
property or affairs, the position of Trustee shall thereupon become vacant. If
the position of Trustee shall become vacant for any of the foregoing reasons or
for any other reason, the Authority shall appoint a successor Trustee to fill
such vacancy. If the Authority fails to act prior to the date of resignation of
any Trustee or within fifteen days after the position of Trustee becomes vacant,
the Trustee may appoint a temporary successor Trustee. The Authority may
thereafter appoint a successor Trustee to succeed such temporary Trustee. Within
forty-five (45) days after such appointment, the successor Trustee shall cause
notice of such appointment to be mailed, postage prepaid, to the Borrower and
all owners of the Bonds.

         (B)      At any time within one year after such vacancy shall have
occurred, the owners of a majority in principal amount of the Bonds then
Outstanding, by an instrument or concurrent instruments in writing, signed by
such owners of the Bonds or their attorneys-in-fact thereunto duly authorized
and filed with the Authority, may appoint a successor Trustee, which shall,
immediately and without further act, supersede any Trustee theretofore
appointed. If no appointment of a successor Trustee shall be made pursuant to
the foregoing provisions of this Section, the owner of any Bond then Outstanding
or any retiring Trustee may apply to any court of competent jurisdiction to
appoint a successor Trustee. Such court may thereupon, after such notice, if
any, as such court may deem proper and prescribe, appoint a successor Trustee.
In either event, within thirty (30) days after such appointment, the successor
Trustee shall cause notice of such appointment to be marked, postage prepaid, to
the Borrower.

         (C)      Any Trustee appointed under this Section shall be a national
banking association or a bank or trust company duly organized under the laws of
the State or under the laws of any state of the United States authorized to
exercise corporate trust powers and shall be acceptable to the Bond Insurer (so
long as the Bond Insurance Policy is in effect and the Bond Insurer is not in
default thereunder). At the time of its appointment, any successor Trustee shall
have a capital stock and surplus aggregating not less than $100,000,000.

         (D)      Every successor Trustee shall execute, acknowledge and deliver
to its predecessor, and also to the Authority, an instrument in writing
accepting such appointment, and thereupon such successor Trustee, without any
further act, deed, or conveyance, shall become fully vested with all monies,
estates, properties, rights, immunities, powers and trusts, and subject to all
the duties and obligations of its predecessor, with like effect as if originally
named as such Trustee; but such predecessor shall, nevertheless, on the written
request of its successor or of the Authority, and upon payment of the
compensation, expenses, charges and other disbursements of such predecessor
which are due and payable pursuant to Section 9.4 hereof, execute and deliver an
instrument transferring to such successor Trustee all the estate, properties,
rights, immunities, powers and trusts of such predecessor, except any
indemnification rights. Every predecessor Trustee shall also deliver all
property and monies held by it under the Indenture to its successor. Should any
instrument in writing from the Authority be required by any successor Trustee
for more fully and certainly vesting in such Trustee, the estate, properties,
rights, immunities, powers and trusts vested or intended to be vested in the
predecessor Trustee any such instrument in writing shall, on request, be
executed, acknowledged and delivered by the Authority. Any successor Trustee
shall promptly notify the Paying Agents of its appointment as Trustee.

         (E)      Any company into which the Trustee may be merged or converted
or with which it may be consolidated or any company resulting from any merger,
conversion or consolidation to which it shall be a party or any company to which
the Trustee may sell or transfer all or substantially all of its corporate

                                      -50-
<PAGE>

trust business, provided such company shall be a national banking association or
a bank or trust company duly organized under the laws of any state of the United
States, shall have a capital stock and surplus aggregating not less than
$100,000,000, and shall be authorized by law to perform all the duties imposed
upon it by the Indenture, shall be the successor to such Trustee, both in its
capacity as Trustee and in its capacity as Paying Agent if the Trustee is
serving as Paying Agent, without the execution or filing of any paper or the
performance of any further act.

         (F)      Any Trustee which becomes incapable of acting as Trustee shall
pay over, assign and deliver to its successor any monies, funds or investments
held by it in the manner provided in Section 9.9(D) and shall render an
accounting to the Authority.

         SECTION 9.10. APPOINTMENT AND RESPONSIBILITIES OF PAYING AGENT. The
initial Paying Agent shall be U.S. Bank National Association. The Paying Agent
shall be entitled to the advice of counsel (who may be counsel for any party)
and shall not be liable for any action taken in good faith in reliance on such
advice. The Paying Agent may rely conclusively on any telephone or written
notice, certificate or other document furnished to it under this Indenture and
reasonably believed by it to be genuine. The Paying Agent shall not be liable
for any action taken or omitted to be taken by it in good faith and reasonably
believed by it to be within the discretion or power conferred upon it, or taken
by it pursuant to any direction or instruction by which it is governed under
this Indenture or omitted to be taken by it by reason of the lack of direction
or instruction required for such action, or be responsible for the consequences
of any error of judgment reasonably made by it. When any payment or other action
by the Paying Agent is called for by this Indenture, it may defer such action
pending receipt of such evidence, if any, as it may reasonably require in
support thereof. A permissive right or power to act shall not be construed as a
requirement to act. The Paying Agent shall not in any event be liable for the
application or misapplication of funds, or for other acts or defaults, by any
person, firm or corporation except by the Paying Agent's respective directors,
officers, agents and employees. For the purposes of this Indenture matters shall
not be considered to be known to the Paying Agent unless they are known to an
officer in its corporate trust administration division. The Paying Agent shall
not require indemnification prior to making any payment when due of principal,
premium or interest on any Bond to be made by the Paying Agent to any
Bondholder, except and unless such drawing or payment is prohibited by or
violates applicable law or any outstanding or pending court or governmental
order or decree.

         SECTION 9.11. RESIGNATION OR REMOVAL OF PAYING AGENT; SUCCESSORS. (A)
Any Paying Agent may at any time resign and be discharged of the duties and
obligations created by the Indenture by giving at least sixty days' written
notice to the Authority, the Trustee and the Borrower. Any successor Paying
Agent shall be appointed by the Authority, at the direction of the Borrower,
with the approval of the Trustee, and shall be a bank or trust company duly
organized under the laws of any state of the United States or a national banking
association, having a capital stock and surplus aggregating at least
$100,000,000, and willing and able to accept the office on reasonable and
customary terms and authorized by law to perform all the duties imposed upon it
by this Indenture. The Paying Agent may be removed at any time by the Authority
at the direction of the Borrower by a written instrument filed with the Trustee
and the Paying Agent. The Paying Agent may, but need not be, the same person as
the Trustee.

         (B)      If the position of Paying Agent shall become vacant for any
reason, or if any bankruptcy, insolvency or similar proceeding shall be
commenced by or against the Paying Agent, the Authority shall appoint a
successor Paying Agent designated by the Borrower to fill the vacancy. A written
acceptance of office shall be filed by the successor Paying Agent. The Trustee
shall give notice of the appointment of a successor Paying Agent in writing to
each Bondholder. The Trustee will promptly certify to the Borrower that it has
mailed such notice to all Bondholders, and such certificate will be conclusive
evidence that such notice was given in the manner required hereby.

                                      -51-
<PAGE>

         (C)      Any corporation, association, limited liability company
partnership or firm which succeeds to the business of the Paying Agent as a
whole or substantially as a whole, whether by sale, merger, consolidation or
otherwise, shall thereby become vested with all the property, rights and powers
of the Paying Agent under this Indenture and shall be subject to all the duties
and obligations of the Paying Agent under this Indenture.

         The Paying Agent shall send or cause to be sent notice to Bondholders
of a change of address for the delivery of Bonds or notice or the payment of
principal of Bonds.

         SECTION 9.12. MONIES HELD FOR PARTICULAR BONDS. The amounts held by the
Trustee or Paying Agents for the payment of the interest, principal or
Redemption Price due on any date with respect to particular Bonds, on and after
such date and pending such payment, shall be set aside on its books and held in
trust by it for the owners of the Bonds entitled thereto. Such funds shall be
invested in Federal Securities at the direction of the Borrower for the account
of the Borrower or shall otherwise remain uninvested.

         SECTION 9.13. CONTINUATION STATEMENTS. The Trustee shall cause all
continuation statements necessary to preserve and protect the security interest
of the Trustee in the collateral pledged by the Authority in the granting
clauses hereof to be filed in the applicable State offices so as to continue the
perfected status thereof pursuant to the Uniform Commercial Code of the State.

         SECTION 9.14. OBLIGATION TO REPORT DEFAULTS. Upon an officer in the
Trustee's corporate trust administration department 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 under the Financing
Documents or this Indenture, the Trustee shall deliver to the Authority a
written notice stating the existence thereof and the action it proposes to take
with respect thereto. Becoming aware means the actual knowledge of an officer in
the Trustee's corporate trust department.

         SECTION 9.15. PAYMENTS DUE ON NON-BUSINESS DAY. In any case where the
date of maturity of interest on or principal of the Bonds or the date fixed for
redemption of any Bonds shall, in the city of payment, be a day other than a
Business Day, then payment of such amount shall be made as provided in the forms
of the Bonds.

         SECTION 9.16. APPOINTMENT OF CO-TRUSTEE. (A) It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
denying or restricting the right of banking corporations or associations to
transact business as trustee in such jurisdiction. It is recognized that in case
of litigation under this Indenture or the Agreement, and in particular in case
of the enforcement of either on default, or in case the Trustee deems that by
reason of any present or future law of any jurisdiction it may not exercise any
of the powers, rights or remedies herein granted to the Trustee or hold title to
the properties, in trust, as herein granted, or take any other action which may
be desirable or necessary in connection therewith, it may be necessary that the
Trustee appoint an additional individual or institution as a separate trustee or
co-Trustee. The following provisions of this Section are adapted to these ends.

         (B)      In the event that the Trustee appoints an additional
individual or institution as a separate trustee or co-Trustee, each and every
remedy, power, right, claim, demand, cause of action, immunity, estate, title,
interest and lien expressed or intended by this Indenture to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable
by and vest in such separate trustee or co-Trustee but only to the extent
necessary to enable such separate trustee or co-Trustee to exercise such powers,
rights and remedies, and every covenant and obligation necessary to the exercise
thereof by such separate trustee or co-Trustee shall run to and be enforceable
by either of them.

                                      -52-
<PAGE>

         (C)      Should any instrument in writing from the Authority be
required by the separate trustee or co-Trustee so appointed by the Trustee for
more fully and certainly vesting in and confirming to him or it such properties,
rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the
Authority. In case any separate trustee or co-Trustee, or a successor to either,
shall die, become incapable of acting, resign or be removed, all the estates,
properties, rights, powers, trusts, duties and obligations of such separate
trustee or co-Trustee, so far as permitted by law, shall vest in and be
exercised by the Trustee until the appointment of a new trustee or successor to
such separate trustee or co-Trustee.

         SECTION 9.17. PROJECT DESCRIPTION. The Trustee shall maintain in
current form as an Appendix to the Agreement a list of the property constituting
the Project Realty and the Project Equipment and, on the basis of the
descriptions furnished by the Borrower pursuant to the Agreement, shall amend
the list in writing to reflect changes in the Project Realty and the Project
Equipment.

                                      -53-
<PAGE>

                                    ARTICLE X
                             AMENDMENTS OF INDENTURE

         SECTION 10.1. LIMITATION ON MODIFICATIONS. This Indenture shall not be
modified or amended in any respect except as provided in and in accordance with
and subject to the provisions of this Article.

         SECTION 10.2. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF OWNERS OF THE
BONDS. (A) Subject to paragraph (C) of the Section 10.2, the Authority may, from
time to time and at any time, adopt Supplemental Indentures without notice to or
consent of the owners of the Bonds or the Bond Insurer for any of the following
purposes:

                  (1)      To cure any formal defect, omission or ambiguity in
         this Indenture or in any description of property subject to the lien
         hereof, if such action is not adverse to the interests of the owners of
         the Bonds.

                  (2)      To grant to or confer upon the Trustee for the
         benefit of the owners of the Bonds any additional rights, remedies,
         powers, authority or security which may lawfully be granted or
         conferred and which are not contrary to or inconsistent with this
         Indenture as theretofore in effect.

                  (3)      To add to the covenants and agreements of the
         Authority in this Indenture other covenants and agreements to be
         observed by the Authority which are not contrary to or inconsistent
         with this Indenture as theretofore in effect.

                  (4)      To add to the limitations and restrictions in this
         Indenture other limitations and restrictions to be observed by the
         Authority which are not contrary to or inconsistent with this Indenture
         as theretofore in effect.

                  (5)      To confirm, as further assurance, any pledge under,
         and the subjection to any lien or pledge created or to be created by,
         this Indenture, of Revenues or other income from or in connection with
         the Project or of any other monies, securities or funds, or to subject
         to the lien or pledge of this Indenture additional revenues, properties
         or collateral.

                  (6)      To make any other changes which do not materially
         adversely affect the interest of owners of the Bonds, as evidenced to
         the Trustee by an opinion of Bond Counsel.

                  (7)      To enable the Authority and the Borrower to receive
         or maintain a rating on the Bonds from S&P and/or Moody's; provided,
         however, that nothing in this Section 10.2(7) shall limit or restrict
         the rights of Bondholders to consent to modifications, alterations or
         amendments to this Indenture as provided in Section 10.3 hereof.

         (B)      Before the Authority shall adopt any Supplemental Indenture
pursuant to this Section, there shall have been filed with the Trustee an
opinion of Bond Counsel satisfactory to the Trustee stating that such
Supplemental Indenture is authorized or permitted by this Indenture and the Act,
complies with the terms of this Indenture, and that upon enactment it will be
valid and binding upon the Authority in accordance with its terms.

         (C)      Notwithstanding anything to the contrary contained herein, any
provision of this Indenture expressly recognizing or granting rights in or to
the Bond Insurer may not be amended in any manner which affects the rights of
the Bond Insurer hereunder without the prior written consent of the Bond
Insurer.

                                      -54-
<PAGE>

         SECTION 10.3. SUPPLEMENTAL INDENTURES WITH CONSENT OF OWNERS OF THE
BONDS. (A) Subject to the terms and provisions contained in this Article, the
Bond Insurer, unless the Bond Insurer is in default under the Bond Insurance
Policy, in which case the owners of not less than 51% in aggregate principal
amount of the Bonds then Outstanding (or in the event that the proposed change
does not affect all owners of Bonds, the owners of not less than 51% of the
Bonds so affected), shall have the right from time to time, to consent to and
approve the adoption by the Authority of any Supplemental Indenture as shall be
deemed necessary or desirable by the Authority for the purpose of modifying,
altering, amending, adding to or rescinding, in any particular, any of the terms
or provisions contained herein. Nothing herein contained shall permit, or be
construed as permitting, without the consent of all of the owners of the Bonds
affected thereby (i) a change in the terms of redemption or maturity of the
principal of or the interest on any Outstanding Bond, or a reduction in the
principal amount or redemption price of any Outstanding Bond or the rate of
interest thereon, without the consent of the owner of such Bond, (ii) the
creation of a lien upon or pledge of Revenues other than the lien or pledge
created by this Indenture, (iii) a preference or priority of any Bond or Bonds
over any other Bond or Bonds, or (iv) a reduction in the aggregate principal
amount of the Bonds required for consent to such Supplemental Indenture.

         (B)      If at any time the Authority shall determine to adopt any
Supplemental Indenture for any of the purposes of this Section, it shall cause
notice of the proposed Supplemental Indenture to be mailed, postage prepaid, to
the Bond Insurer or, if the Bond Insurer is in default under the Bond Insurance
Policy, all owners of the Bonds. Such notice shall briefly set forth the nature
of the proposed Supplemental Indenture, and shall state that a copy thereof is
on file at the offices of the Trustee for inspection by the Bond Insurer or all
owners of the Bonds, as the case may be.

         (C)      Within one year after the date of such notice, the Authority
may adopt such Supplemental Indenture in substantially the form described in
such notice only if there shall have first been filed with the Authority (i) the
written consent of the Bond Insurer or, if the Bond Insurer is in default under
the Bond Insurance Policy, the written consent of the owners of not less than
51% in aggregate principal amount of the Bonds then Outstanding so affected, and
(ii) an opinion of counsel satisfactory to the Trustee stating that such
Supplemental Indenture is authorized or permitted by this Indenture and complies
with its terms, and that upon adoption it will be valid and binding upon the
Authority in accordance with its terms. Each valid consent of a Bondholder shall
be effective only if accompanied by proof of the owning, at the date of such
consent, of the Bonds with respect to which such consent is given. A certificate
or certificates by the Trustee that it has examined such proof and that such
proof is sufficient in accordance with this Indenture shall be conclusive that
the consents have been given by the owners of the Bonds described in such
certificate or certificates. Any such consent shall be binding upon the owner of
the Bonds giving such consent and upon any subsequent owner of such Bonds and of
any Bonds issued in exchange therefor (whether or not such subsequent owner
thereof has notice thereof), unless such consent is revoked in writing by the
owner of such Bonds giving such consent or a subsequent owner thereof by filing
such revocation with the Trustee prior to the adoption of such Supplemental
Indenture.

         (D)      If the owners of not less than the percentage of Bonds
required by this Section, or the Bond Insurer, on their behalf, shall have
consented to and approved the execution thereof as herein provided, no owner of
any Bond shall have any right to object to the enactment of such Supplemental
Indenture, or to object to any of the terms and provisions contained therein or
the operation thereof, or in any manner to question the propriety of the
adoption thereof, or to enjoin or restrain the Authority from adopting the same
or from taking any action pursuant to the provisions thereof.

         (E)      Upon the adoption of any Supplemental Indenture pursuant to
the provisions of this Section, this Indenture shall be deemed to be modified
and amended in accordance therewith, and the respective rights, duties and
obligations under this Indenture of the Authority, the Trustee, the Paying
Agent, the Bond Insurer and all owners of Bonds then Outstanding shall
thereafter be determined,

                                      -55-
<PAGE>

exercised and enforced under this Indenture, subject in all respects to such
modifications and amendments.

         SECTION 10.4. SUPPLEMENTAL INDENTURE PART OF THE INDENTURE. Any
Supplemental Indenture adopted in accordance with the provisions of this Article
shall thereafter form a part of this Indenture and all the terms and conditions
contained in any such Supplemental Indenture as to any provisions authorized to
be contained therein shall be deemed to be part of the terms and conditions of
this Indenture for any and all purposes. The Trustee shall execute any
Supplemental Indenture adopted in accordance with the provisions of Sections
10.2 or 10.3 hereof; provided, however, that the Trustee may, but shall not be
obligated to, enter into any such instrument which adversely affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

                                      -56-
<PAGE>

                                   ARTICLE XI
                        AMENDMENTS OF FINANCING DOCUMENTS

         SECTION 11.1. RIGHTS OF BORROWER. Anything herein to the contrary
notwithstanding, any Supplemental Indenture under Article X hereof which affects
in any manner any rights, powers, authority, duties or obligations of the
Borrower under the Financing Documents or of any subsequent user of the Project
or requires a revision of the Financing Documents or subsequent agreement with
respect to the Project shall not become effective unless and until the Borrower
or such subsequent user, as the case may be, shall have given its written
consent signed by its duly Authorized Representative to such Supplemental
Indenture.

         SECTION 11.2. AMENDMENTS OF FINANCING DOCUMENTS NOT REQUIRING CONSENT
OF OWNERS OF THE BONDS. The Authority and the Trustee may, without the consent
of or notice to the owners of the Bonds or the Bond Insurer, consent to any
amendment, change or modification of the Financing Documents for the purpose of
(i) curing any ambiguity or formal defect therein or which, in the judgment of
the Trustee will not materially prejudice the Trustee or the owners of the Bonds
or (ii) to make any other changes which do not materially adversely affect the
interests of the owners of the Bonds, as evidenced to the Trustee by an opinion
of counsel. The Trustee shall have no liability to any owner of the Bonds or any
other person for any action taken by it in good faith pursuant to this Section.

         SECTION 11.3. AMENDMENTS OF FINANCING DOCUMENTS REQUIRING CONSENT OF
OWNERS OF THE BONDS. Except as provided in Section 11.2 hereof, the Authority
and the Trustee shall not consent to any amendment, change or modification of
the Financing Documents, including the substitution of an assignee for the
Borrower and the release of the Borrower from the obligations of the Financing
Documents, without mailing of notice and the written approval or consent of the
Bond Insurer, unless the Bond Insurer is in default under the Bond Insurance
Policy, in which case such amendment, change or modification shall require the
mailing of notice and the written approval or consent of the owners of not less
than 51% in aggregate principal amount of the Bonds at the time Outstanding and
so affected given and procured as in Section 10.3 hereof provided. If at any
time the Borrower or a subsequent user of the Project shall request the consent
of the Trustee to any such proposed amendment, change or modification, the
Trustee shall cause notice of such proposed amendment, change or modification to
be mailed in the same manner as is provided in Article X hereof with respect to
Supplemental Indentures. Such notice shall briefly set forth the nature of such
proposed amendment, change or modification and shall state that copies of the
instrument embodying the same are on file at the principal office of the Trustee
for inspection by the Bond Insurer or all owners of the Bonds, as the case may
be.

                                      -57-
<PAGE>

                                   ARTICLE XII
                             DISCHARGE OF INDENTURE

         SECTION 12.1. DEFEASANCE. (A) If the Authority shall pay or cause to be
paid, or there shall otherwise be paid, to the owners of all Bonds the principal
or Redemption Price, if applicable, interest and all other amounts due or to
become due thereon or in respect thereof, and all other amounts due or to become
due under the Financing Documents, at the times and in the manner stipulated
therein and in this Indenture, and if all the fees, expenses and advances of the
Trustee and all Paying Agents have been paid, then the pledge of any revenues or
receipts from or in connection with the Financing Documents or the Project under
this Indenture and the estate and rights hereby granted, and all covenants,
agreements and other obligations of the Authority to the owners of the Bonds
hereunder shall thereupon cease, terminate and become void and be discharged and
satisfied and such Bonds shall thereupon cease to be entitled to any lien,
benefit or security hereunder, except as to moneys or securities held by the
Trustee or the Paying Agents as provided below in this subsection. At the time
of such cessation, termination discharge and satisfaction, (1) the Trustee shall
cancel and discharge the lien of this Indenture and execute and deliver to the
Borrower all such instruments as may be appropriate to satisfy such lien and to
evidence such discharge and satisfaction, and (2) the Trustee, the Authority and
the Paying Agents shall pay over or deliver to the Borrower or on its order all
moneys or securities held by them pursuant to the Indenture which are not
required (a) for the payment of principal or Redemption Price, if applicable, or
interest on Bonds not theretofore surrendered for such payment or redemption, or
(b) for the payment of all such other amounts due or to become due under the
Financing Documents.

         (B) Bonds or interest installments for the payment or redemption of
which moneys (or Federal Securities, the principal of and interest on which when
due, together with the moneys, if any, set aside at the same time, will provide
funds sufficient for such payment or redemption) shall then be set aside and
held in trust by the Trustee or Paying Agents, whether at or prior to the
maturity or the redemption date of such Bonds, shall be deemed to have been paid
within the meaning and with the effect expressed in subsection (A) of this
Section, if (a) in case any such Bonds are to be redeemed prior to maturity, all
action necessary to redeem such Bonds shall have been taken and notice of such
redemption shall have been duly given or provision satisfactory to the Trustee
shall have been made for the giving of such notice, and (b) if the maturity or
redemption date of any such Bond shall not then have arrived, provision shall
have been made by deposit with the Trustee or other methods satisfactory to the
Trustee for the payment to the owners of any such Bonds upon surrender thereof,
whether or not prior to the maturity or redemption date thereof, of the full
amount to which they would be entitled by way of principal or Redemption Price
and interest and all other amounts then due under the Financing Documents to the
date of such maturity or redemption, and provision satisfactory to the Trustee
shall have been made for the mailing of a notice to the owners of such Bonds
that such moneys are so available for such payment.

                                      -58-
<PAGE>

                                  ARTICLE XIII
                               GENERAL PROVISIONS

         SECTION 13.1. NOTICES. (A) Any notice, request, demand, communication
or other paper shall be sufficiently given and shall be deemed given when
delivered or mailed by registered or certified mail, return receipt requested,
postage prepaid, or sent by telegram, 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 Main Street, Clinton, Connecticut
06413, Attention: Vice President-Chief Financial Officer and Treasurer; if to
the Trustee, Goodwin Square, 225 Asylum Street, Hartford, Connecticut 06103,
Attention: Corporate Trust Administration; and if to the Bond Insurer, 1221
Avenue of the Americas, New York, New York 10020, Attention: Surveillance. A
duplicate copy of each notice required to be given hereunder by the Trustee to
either the Authority or the Borrower, shall also be given to the other. In
addition, copies of all amendments to this Indenture which are consented to by
the Bond Insurer, shall be sent to S&P. Any notice party may designate any
further or different addresses to which subsequent notices, certificates or
other communications shall be sent.

         (B)      Notice hereunder may be waived prospectively or
retrospectively by the person entitled to such notice, but no waiver shall
affect any notice requirement as to other persons.

         SECTION 13.2. COVENANT AGAINST DISCRIMINATION. The Trustee agrees and
warrants that in the performance of this Indenture it will not discriminate
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.

         SECTION 13.3. RIGHTS OF BOND INSURER. (A) Notwithstanding anything to
the contrary contained herein, so long as the Bond Insurer is not in default on
its payment obligations under the Bond Insurance Policy, such Bond Insurer shall
at all times be deemed to be the exclusive owner of the Bonds insured pursuant
to the Bond Insurance Policy issued by such Bond Insurer for the purposes of all
approvals, consents, waivers or institution of any action and the direction of
all remedies. To the extent that the Bond Insurer makes payment of principal of
or interest on the Bonds, it shall become the owner of such Bonds, or shall be
entitled to the right to payment of principal of or interest on such Bonds and
shall be fully subrogated to all of the registered owner's rights thereunder,
including the registered owner's right to payment thereof. To evidence such
subrogation (i) in the case of subrogation as to claims for past due interest,
the Trustee shall note the Bond Insurer's rights as subrogee on the registration
books of the Authority maintained by the Trustee upon receipt of proof from the
Bond Insurer as to payment of interest thereon to the registered owners of the
Bonds, and (ii) in the case of subrogation as to claims for past due principal,
the Trustee shall note the Bond Insurer's rights as subrogee on the registration
books of the Authority maintained by the Trustee upon receipt of proof from the
Bond Insurer of the surrender or transfer of the Bonds by the registered owners
thereof to the Bond Insurer. The Trustee shall deliver to the Bond Insurer or
its designated agent a document in form and substance acceptable to the Trustee
and the Bond Insurer or its designated agent confirming such subrogation rights.

         (B)      In the event that the principal of and/or interest on the
Bonds shall be paid by the Bond Insurer pursuant to the terms of the Bond
Insurance Policy, the Bonds shall remain Outstanding, the assignment and pledge
of the trust estate and all covenants, agreements and other obligations of the
Authority to the registered owners shall continue to exist and the Bond Insurer
shall be fully subrogated to all of the rights of such registered owners in
accordance with the terms and conditions of subparagraph (A) above and the Bond
Insurance Policy.

         (C)      Notwithstanding any provision in this Indenture or the
Agreement to the contrary, the Bond Insurer shall have no rights under this
Indenture or the Agreement, other than rights of subrogation

                                      -59-
<PAGE>

as herein provided to the extent that the Bond Insurer has made payments under
the Bond Insurance Policy, in the event that the Bond Insurance Policy is not in
effect or the Bond Insurer is in default on its payment obligations under the
Bond Insurance Policy.

         SECTION 13.4. BOND INSURER CONSENT. Notwithstanding any other
provisions of this Indenture, unless the Bond Insurer is in default under the
Bond Insurance Policy, the consent of the owners of Bonds for which a Bond
Insurance Policy has been issued shall for purposes of this Indenture be deemed
to have been obtained when the consent of the Bond Insurer is obtained, except
in the cases where approval of all Bondowners is required as provided in Section
10.3 (A) hereof, in which case the consents of the Bondowners and the Bond
Insurer shall be required. Notwithstanding any provision in this Indenture or
the Agreement to the contrary, all provisions in this Indenture or the Financing
Documents requiring the consent of the Bond Insurer shall have no force and
effect if the Bond Insurance Policy is not in effect or if the Bond Insurer is
in default under such Bond Insurance Policy.

         SECTION 13.5. NOTICES TO THE BOND INSURER. While the Bond Insurance
Policy is effect, the Trustee shall furnish to the Bond Insurer a copy of any
notice to be given to the registered owners of the Bonds or any other party to
this Indenture, including, without limitation, notice of any redemption of or
defeasance of Bonds, and any certificate rendered pursuant to this Indenture
relating to the security for the Bonds; and such additional information it may
reasonably request.

         Notwithstanding any other provision of this Indenture, the Trustee
shall immediately notify the Bond Insurer at any time there are insufficient
moneys to make any payments of principal and/or interest as required and
immediately upon the occurrence of any Event of Default hereunder.

         SECTION 13.6. PARTIES INTERESTED HEREIN. Except as otherwise
specifically provided herein, nothing in this Indenture expressed or implied is
intended or shall be construed to confer upon, or to give to, any person or
entity, other than the Authority, the Trustee, the Bond Insurer, the Borrower,
the Paying Agent and the registered owners of the Bonds, any right, remedy or
claim under or by reason of this Indenture or any covenant, condition or
stipulation hereof, and all covenants, stipulations, promises and agreements in
this Indenture contained by and on behalf of the Authority shall be for the sole
and exclusive benefit of the Authority, the Trustee, the Bond Insurer, the
Borrower, the Paying Agent and the registered owners of the Bonds.

         SECTION 13.7. BOND INSURER AS THIRD PARTY BENEFICIARY. To the extent
that this Indenture confers upon or gives or grants to the Bond Insurer any
right, remedy or claim under or by reason of this Indenture, the Bond Insurer is
hereby explicitly recognized as being a third-party beneficiary hereunder and
may enforce any such right, remedy or claim conferred, given or granted
hereunder.

         SECTION 13.8. EFFECTIVE DATE; COUNTERPARTS. This Indenture shall become
effective on delivery. It may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

         SECTION 13.9. DATE FOR IDENTIFICATION PURPOSES ONLY. The date of this
Indenture shall be for identification purposes only and shall not be construed
to imply that this Indenture was executed on such date.

         SECTION 13.10. SEPARABILITY OF INVALID PROVISIONS. In case any one or
more of the provisions contained in this Indenture or in the Bonds 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 Indenture, but this Indenture shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.

                                      -60-
<PAGE>

         IN WITNESS WHEREOF, the Connecticut Development Authority has caused
these presents to be signed in its name and behalf by an Authorized
Representative, and to evidence its acceptance of the trusts hereby created,
U.S. Bank National Association, has caused these presents to be signed in its
name and behalf by its duly authorized officer, as of the date first above
written.

                                  CONNECTICUT DEVELOPMENT AUTHORITY

                                  By __________________________
                                     Name: Francis T. Gagliardo
                                     Authorized Representative

                                  U.S. BANK NATIONAL ASSOCIATION

                                  By __________________________
                                     Name: Cauna M. Silva
                                     Title: Vice President

                                      -61-

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