Document:

exv4w31

 

Exhibit 4.31

[EXECUTION COPY]

 

CONNECTICUT DEVELOPMENT AUTHORITY

to

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 

INDENTURE OF TRUST

 

Dated as of October 1, 2005

Connecticut Development Authority

$5,000,000 Water Facilities Revenue Bonds

(The Crystal Water Company of Danielson Project — 2005A Series)

 

 

 

Exhibit 4.31

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Parties and Preambles	 	 	1	 
	Form of Bond	 	 	4	 
	 
	 	ARTICLE I	 	 	 	 
	 
	 	DEFINITIONS AND INTERPRETATION	 	 	 	 
	 
	 	Section 1.1. Definitions	 	 	14	 
	 
	 	Section 1.2. Interpretation	 	 	22	 
	 
	 	ARTICLE II	 	 	 	 
	 
	 	AUTHORIZATION, TERMS AND ISSUANCE OF BONDS	 	 	 	 
	 
	 	Section 2.1. Authorization for Indenture	 	 	24	 
	 
	 	Section 2.2. Authorization and Obligation of Bonds	 	 	24	 
	 
	 	Section 2.3. Issuance and Terms of the Bonds	 	 	24	 
	 
	 	Section 2.4. Redemption of Bonds	 	 	27	 
	 
	 	Section 2.5. Execution and Authentication of Bonds	 	 	29	 
	 
	 	Section 2.6. Delivery of Bonds	 	 	30	 
	 
	 	Section 2.7. No Additional Bonds	 	 	30	 
	 
	 	ARTICLE III	 	 	 	 
	 
	 	GENERAL TERMS AND PROVISIONS OF BONDS	 	 	 	 
	 
	 	Section 3.1. Date of Bonds	 	 	31	 
	 
	 	Section 3.2. Form and Denominations	 	 	31	 
	 
	 	Section 3.3. Legends	 	 	31	 
	 
	 	Section 3.4. Medium of Payment	 	 	31	 
	 
	 	Section 3.5. Bond Details	 	 	31	 
	 
	 	Section 3.6. Interchangeability, Transfer and Registry	 	 	31	 
	 
	 	Section 3.7. Bonds Mutilated, Destroyed, Stolen or Lost	 	 	32	 
	 
	 	Section 3.8. Cancellation and Destruction of Bonds	 	 	32	 
	 
	 	Section 3.9. Requirements With Respect To Transfers	 	 	32	 
	 
	 	Section 3.10. Registrar	 	 	33	 
	 
	 	ARTICLE IV	 	 	 	 
	 
	 	APPLICATION OF BOND PROCEEDS AND OTHER AMOUNTS	 	 	 	 
	 
	 	Section 4.1. Accrued Interest	 	 	34	 
	 
	 	Section 4.2. Bond Proceeds	 	 	34	 
	 
	 	Section 4.3. Borrower Contribution	 	 	34	 
	 
	 	ARTICLE V	 	 	 	 
	 
	 	CUSTODY AND INVESTMENT OF FUNDS	 	 	 	 
	 
	 	Section 5.1. Creation of Funds	 	 	35	 
	 
	 	Section 5.2. Project Fund	 	 	35	 
	 
	 	Section 5.3. Debt Service Fund	 	 	37	 
	 
	 	Section 5.4. Rebate Fund	 	 	39	 
	 
	 	Section 5.5. Renewal Fund	 	 	39	 
	 
	 	Section 5.6. Investment of Funds and Accounts	 	 	39	 
	 
	 	Section 5.7. Non-presentment of Bonds	 	 	40	 
	 
	 	ARTICLE VI	 	 	 	 
	 
	 	REDEMPTION OF BONDS	 	 	 	 
	 
	 	Section 6.1. Privilege of Redemption and Redemption Price	 	 	40	 
	 
	 	Section 6.2. Selection of Bonds to be Redeemed	 	 	40	 
	 
	 	Section 6.3. Notice of Redemption	 	 	40	 

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Exhibit 4.31

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	Section 6.4. Payment of Redeemed Bonds	 	 	41	 
	 
	 	Section 6.5. Notice to Authority and Borrower of Deceased Bondholder Redemption	 	 	41	 
	 
	 	Section 6.6. Cancellation of Redeemed Bonds	 	 	41	 
	 
	 	ARTICLE VII	 	 	 	 
	 
	 	PARTICULAR COVENANTS	 	 	 	 
	 
	 	Section 7.1. No Pecuniary Liability on Authority or Officers	 	 	42	 
	 
	 	Section 7.2. Payment of Principal, Redemption Price, if any, and Interest	 	 	42	 
	 
	 	Section 7.3. Performance of Covenants	 	 	42	 
	 
	 	Section 7.4. Further Assurances	 	 	42	 
	 
	 	Section 7.5. Inspection of Project Books	 	 	42	 
	 
	 	Section 7.6. Rights under Financing Documents	 	 	43	 
	 
	 	Section 7.7. Creation of Liens, Indebtedness	 	 	43	 
	 
	 	Section 7.8. Recording and Filing	 	 	43	 
	 
	 	ARTICLE VIII	 	 	 	 
	 
	 	REMEDIES OF BONDHOLDERS	 	 	 	 
	 
	 	Section 8.1. Events of Default; Acceleration of Due Dates	 	 	44	 
	 
	 	Section 8.2. Enforcement of Remedies	 	 	45	 
	 
	 	Section 8.3. Application of Revenue and Other Moneys After Default	 	 	46	 
	 
	 	Section 8.4. Actions by Trustee	 	 	47	 
	 
	 	Section 8.5. Majority Bondholders Control Proceedings	 	 	47	 
	 
	 	Section 8.6. Individual Bondholder Action Restricted	 	 	47	 
	 
	 	Section 8.7. Effect of Discontinuance of Proceedings	 	 	47	 
	 
	 	Section 8.8. Remedies Not Exclusive	 	 	47	 
	 
	 	Section 8.9. Delay or Omission Upon Default	 	 	48	 
	 
	 	Section 8.10. Notice of Default	 	 	48	 
	 
	 	Section 8.11. Waivers of Default	 	 	48	 
	 
	 	ARTICLE IX	 	 	 	 
	 
	 	TRUSTEE AND PAYING AGENTS	 	 	 	 
	 
	 	Section 9.1. Appointment and Acceptance of Duties	 	 	49	 
	 
	 	Section 9.2. Indemnity	 	 	49	 
	 
	 	Section 9.3. Responsibilities of Trustee	 	 	49	 
	 
	 	Section 9.4. Compensation	 	 	50	 
	 
	 	Section 9.5. Evidence on Which Trustee May Act	 	 	50	 
	 
	 	Section 9.6. Evidence of Signatures of Owners of the Bonds and Ownership of Bonds	 	 	51	 
	 
	 	Section 9.7. Trustee and any Paying Agent, May Deal in Bonds and With Borrower	 	 	51	 
	 
	 	Section 9.8. Resignation or Removal of Trustee	 	 	51	 
	 
	 	Section 9.9. Successor Trustee	 	 	52	 
	 
	 	Section 9.10. Appointment and Responsibilities of Paying Agent	 	 	53	 
	 
	 	Section 9.11. Resignation or Removal of Paying Agent; Successors	 	 	53	 
	 
	 	Section 9.12. Monies Held for Particular Bonds	 	 	54	 
	 
	 	Section 9.13. Continuation Statements	 	 	54	 
	 
	 	Section 9.14. Obligation to Report Defaults	 	 	54	 
	 
	 	Section 9.15. Payments Due on non-Business Day	 	 	54	 
	 
	 	Section 9.16. Appointment of Co-Trustee	 	 	54	 
	 
	 	Section 9.17. Project Description	 	 	55	 
	 
	 	ARTICLE X	 	 	 	 
	 
	 	AMENDMENTS OF INDENTURE	 	 	 	 
	 
	 	Section 10.1. Limitation on Modifications	 	 	56	 
	 
	 	Section 10.2. Supplemental Indentures Without Consent of Owners of the Bonds	 	 	56	 
	 
	 	Section 10.3. Supplemental Indentures With Consent of Owners of the Bonds	 	 	57	 
	 
	 	Section 10.4. Supplemental Indenture Part of the Indenture	 	 	58	 

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Exhibit 4.31

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE XI	 	 	 	 
	 
	 	AMENDMENTS OF FINANCING DOCUMENTS	 	 	 	 
	 
	 	Section 11.1. Rights of Borrower	 	 	59	 
	 
	 	Section 11.2. Amendments of Financing Documents Not Requiring Consent of Owners of the Bonds	 	 	59	 
	 
	 	Section 11.3. Amendments of Financing Documents Requiring Consent of Owners of the Bonds	 	 	59	 
	 
	 	ARTICLE XII	 	 	 	 
	 
	 	DISCHARGE OF INDENTURE	 	 	 	 
	 
	 	Section 12.1. Defeasance	 	 	60	 
	 
	 	ARTICLE XIII	 	 	 	 
	 
	 	GENERAL PROVISIONS	 	 	 	 
	 
	 	Section 13.1. Notices	 	 	61	 
	 
	 	Section 13.2. Covenant Against Discrimination	 	 	61	 
	 
	 	Section 13.3. Rights of Bond Insurer	 	 	61	 
	 
	 	Section 13.4. Bond Insurer Consent	 	 	62	 
	 
	 	Section 13.5. Notices to the Bond Insurer	 	 	62	 
	 
	 	Section 13.6. Parties Interested Herein	 	 	62	 
	 
	 	Section 13.7. Bond Insurer as Third Party Beneficiary	 	 	62	 
	 
	 	Section 13.8. Effective Date; Counterparts	 	 	62	 
	 
	 	Section 13.9. Date for Identification Purposes Only	 	 	62	 
	 
	 	Section 13.10. Separability of Invalid Provisions	 	 	63	 
	 
	 	 	 	 	 	 
	 
	 	APPENDICES	 	 	 	 
	Appendix A — Form of Requisition	 	 	 	 

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Exhibit 4.31

     THIS INDENTURE OF TRUST, made and dated as of October 1, 2005, 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 32-23zz, as amended (the “Act”), declares that there is a continuing need in the State (1)
for industrial development and activity to provide and maintain employment and tax revenues and to
control, abate and prevent pollution to protect the public health and safety, (2) for the
development of recreation facilities to promote tourism, provide and maintain employment and tax
revenues, and promote the public welfare, (3) for the development of commercial and retail sales
and service facilities in urban areas to provide and maintain construction and permanent employment
and tax revenues, to improve conditions of deteriorated physical development, slow economic growth
and eroded financial health of the public and private sectors in urban areas and to revitalize the
economy of urban areas, and (4) for assistance to public service businesses providing
transportation and utility services in the State, and that the availability of financial assistance
and suitable facilities are important inducements to industrial and commercial enterprises to
remain or locate in the State and to provide industrial, recreation, urban and public service
projects; and

     WHEREAS, the Act provides that (1) the term “project” as used therein means any facility,
plant, works, system, building, structure, utility, fixture or other real property improvement
located in the State, and the land on which it is located or which is reasonably necessary in
connection therewith, which is of a nature or which is to be used or occupied by any person for
purposes which would constitute it as an economic development project, recreation project, urban
project, public service project or health care project, and any real property improvement
reasonably related thereto, and (2) a project may also include or consist exclusively of machinery,
equipment or fixtures; and

     WHEREAS, the Act provides that the Authority shall have power to determine the location and
character of, and extend credit or make loans to any person for the planning, designing, acquiring,
improving and equipping of, a project which may be secured by loan, lease or sale agreements,
contracts and other instruments, upon such terms and conditions as the Authority shall determine to
be reasonable, to require the inclusion in any contract, loan agreement or other instrument of such
provisions for the construction, use, operation, maintenance and financing of the project as the
Authority may deem necessary or desirable, to issue its bonds for such purposes, subject to the
approval of the Treasurer of the State, and, as security for the payment of the principal or
redemption price, if any, of and interest on any such bonds, to pledge or assign such a loan, lease
or sale agreement and the revenues and receipts derived by the Authority from such a project; and

     WHEREAS, by resolution adopted on May 19, 2004, in furtherance of the purposes of the Act, the
Authority has accepted the application of The Crystal Water Company of Danielson (the “Borrower”)
for assistance in the financing of various capital projects located in the State of Connecticut;
and

     WHEREAS, the Borrower currently owns certain existing facilities within certain municipalities
in the State and at this time requests assistance in the design, acquisition, installation,
improvement and construction of certain facilities consisting of water treatment and storage
facilities, transmission and

 

 

Exhibit 4.31

distribution mains, service lines, meters, hydrants and pumping
equipment for the purpose of supplying safe potable water to the general public within the
Borrower’s service area; and

     WHEREAS, the Authority has by a further resolution adopted on August 17, 2005 authorized the
issuance of not to exceed $5,000,000 principal amount of its Water Facilities Revenue Bonds (The
Crystal Water Company of Danielson Project — 2005A Series) for the purpose of providing funds for
the Project; and

     WHEREAS, the Authority has determined that the issuance, sale and delivery of the Bonds, as
hereinafter provided, is needed to finance the cost of the Project, and concurrently herewith the
Authority and the Borrower have entered into a Loan Agreement, dated as of October 1, 2005,
providing for a loan by the Authority to the Borrower for such purpose in an aggregate 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, payment of the principal and redemption price, if any, of and interest on the Bonds
when due and the performance of all of the Borrower’s payment obligations under the Agreement have
been guaranteed by Connecticut Water Service, Inc. (the “Guarantor”) pursuant to the Guaranty (the
“Guaranty”) dated as of October 1, 2005 between the Guarantor and the Trustee; 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:

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Exhibit 4.31

[FORM OF BOND]

No. R- $5,000,000

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.

CONNECTICUT DEVELOPMENT AUTHORITY

WATER FACILITIES REVENUE BOND

(THE CRYSTAL WATER COMPANY OF DANIELSON PROJECT — 2005A SERIES)

BOND DATE: November 30, 2005

MATURITY DATE: October 1, 2040

INTEREST PAYMENT DATES: April 1 and October 1

INTEREST RATE: %

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: $5,000,000.00***

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.

     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

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Exhibit 4.31

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 fifteenth day of the month immediately
preceding each INTEREST PAYMENT DATE, 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 $5,000,000 designated: Water Facilities Revenue
Bonds (The Crystal Water Company of Danielson Project — 2005A Series) (the “Bonds”) which are
issued for the purpose of providing The Crystal Water Company of Danielson (the “Borrower”), a
corporation organized and existing under the laws of the State of Connecticut, with funds for the
purpose of financing various capital improvements constituting a portion of the Borrower’s existing
water system (the “Project”), and paying necessary expenses incidental thereto. The Bonds are
issued pursuant to the State Commerce Act, constituting Connecticut General Statutes, Sections
32-1a through 32-23zz, as amended, a resolution adopted by the Authority on August 17, 2005 and an
Indenture of Trust, dated as of October 1, 2005 (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,
2005, 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 and 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 financing of the Project and under which the Borrower will use
and occupy the Project and the Borrower will 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
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. The
payment of the principal and redemption price, if any, of and interest on the Bonds has been
guaranteed to the Trustee by Connecticut Water Service, Inc. pursuant to a Guaranty, dated as of
October 1, 2005.

     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.

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Exhibit 4.31

     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 October
1, 2009, at a 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 election to redeem Bonds
following completion of the Project in accordance with the Indenture or 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, (a) to the extent that excess Bond proceeds are transferred to
the Redemption Account from the Project Fund in accordance with Section 5.2(F) of the Indenture, or
(b) 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 Redemption. For purposes of this paragraph 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 October 1, 2007: (ii) the
maximum aggregate principal amount of Deceased Owner Bonds that the Authority shall be required to
redeem during the 12-month period commencing October 1, 2007 and each October 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 the estate of or successor in interest to the deceased owner
and, 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

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Exhibit 4.31

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.

     Extraordinary Mandatory Redemption. In the event that the Borrower shall fail to
comply with the restrictions relating to the restructuring, merger, consolidation and
reorganization of the Borrower set forth in Section 6.1(A) of the Agreement or the sale of assets
by the Borrower set forth in Section 6.1(B) of the Agreement, or if The Connecticut Water Company
shall fail to comply with the restrictions regarding the sale of assets by The Connecticut Water
Company as set forth in Section 6.1(C) of the Agreement, or if the Guarantor shall fail to comply
with the restrictions regarding the sale of assets by the Guarantor or the merger, consolidation,
restructuring or reorganization of the Guarantor set forth in Section 2.4 of the Guaranty, the
Bonds shall be subject to redemption prior to maturity as a whole on any date at the redemption
price equal to 100% of the principal amount thereof plus accrued interest to the date of
redemption.

     Optional Public Purpose Redemption. If the Borrower fails to perform its obligations
under Section 6.6 of the Agreement, the Bonds shall be subject to redemption prior to maturity as a
whole on any date at the option of the Authority in accordance with Section 7.3 of the Agreement,
at the redemption price equal to 100% of the principal amount thereof plus accrued interest to the
date of redemption.

     Extraordinary Optional Redemption Without Premium to Preserve Tax Exempt Status of the
Bonds. The Bonds shall be subject to extraordinary optional redemption by the Authority, at
the direction of the Borrower, in whole or in part on any date at a Redemption Price equal to 100%
of the unpaid principal amount thereof, together with accrued interest to the date of redemption,
and without premium, if the Borrower shall have delivered to the Trustee and the Authority an
opinion of Bond Counsel addressed to the Trustee and the Authority substantially to the effect that
(i) a failure so to redeem the Bonds (or the relevant portion thereof) may adversely affect the
exclusion of interest on the Bonds from the gross income of the holders pursuant to Section 103 of
the Code, and (ii) redemption of Bonds in the amount set forth in such opinion (but in no smaller
amount than that set forth in such opinion) would permit the continuance of any exclusion so
afforded under Section 103 of the Code.

     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

-6-

 

Exhibit 4.31

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, fees or other governmental charges, if any, and a sum sufficient to pay the cost
of preparing and delivering each new Bond issued upon such transfer. The Paying Agent will not be
required to make an exchange or transfer of this bond (a) 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 or (b) if this bond is selected, called or being called for redemption in
whole or in part, except in the case of a bond to be redeemed in part, the portion not to be
redeemed.

     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 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.

-7-

 

Exhibit 4.31

     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.

     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-

 

Exhibit 4.31

     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
	 	/s/    Karin A. Lawrence	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Karin A. Lawrence	 	 
	 

	 	 	 	Authorized Representative	 	 

-9-

 

Exhibit 4.31

[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:
	 	/s/   Cauna M. Silva	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Cauna M. Silva, Vice President	 	 
	 

	 	 	 	Authorized Signature	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,	 	 
	 	 	Paying Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/   Cauna M. Silva	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Cauna M. Silva, Vice President	 	 
	 

	 	 	 	Authorized Signature	 	 

-10-

 

Exhibit 4.31

STATEMENT OF INSURANCE

     Financial Guaranty Insurance Company (“Financial Guaranty”) has issued a policy containing the
following provision with respect to the Bonds, such policy being on file at the principal office of
U.S. Bank National Association, as paying agent (the “Paying Agent”);

     Financial Guaranty hereby unconditionally and irrevocably agrees to pay for disbursement to
the bondholders that portion of the principal or accreted value (if applicable) of and interest on
the Bonds which is then due for payment and which the issuer of the Bonds (the “Issuer”) shall have
failed to provide. Due for payment means, with respect to principal or accreted value (if
applicable), the stated maturity date thereof, or the date on which the same shall have been duly
called for mandatory sinking fund redemption and the date on which the Bonds shall have been duly
called for mandatory redemption as a result of the interest on the Bonds having been determined to
have become subject to federal income taxation, and does not refer to any earlier date on which the
payment of principal or accreted value (if applicable) of the Bonds is due by reason of call for
redemption (other than mandatory sinking fund redemption or mandatory taxability redemption),
acceleration or other advancement of maturity, and with respect to interest, the stated date for
payment of such interest.

     Upon receipt of telephonic or telegraphic notice, subsequently confirmed in writing, or
written notice by registered or certified mail, from a Bondholder or the Paying Agent to Financial
Guaranty that the required payment of principal, accreted value or interest (as applicable) has not
been made by the Issuer to the Paying Agent, Financial Guaranty on the due date of such payment or
within one business day after receipt of notice of such nonpayment, whichever is later, will make a
deposit of funds, in an account with U.S. Bank Trust National Association, or its successor as its
agent (the “Fiscal Agent”), sufficient to make the portion of such payment not paid by the Issuer.
Upon presentation to the Fiscal Agent of evidence satisfactory to it of the Bondholder’s right to
receive such payment and any appropriate instruments of assignment required to vest all of such
Bondholders’ right to such payment in Financial Guaranty, the Fiscal Agent will disburse such
amount to the Bondholder.

     As used herein the term “Bondholder” means the person other than the Issuer or the borrower(s)
of bond proceeds who at the time of nonpayment of a Bond is entitled under the terms of such Bond
to payment thereof.

     The policy is non-cancellable for any reason.

FINANCIAL GUARANTY INSURANCE COMPANY

-11-

 

Exhibit 4.31

[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]

-12-

 

Exhibit 4.31

     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
Projects, 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 6.4, 6.6, 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 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 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 written consent, to

-13-

 

Exhibit 4.31

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 32-23zz, 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 subdivision or instrumentality of the State which shall hereafter succeed to the powers,
duties and functions thereof.

-14-

 

Exhibit 4.31

“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
Certificates of Accrual on Treasury Securities (“CATS”) and Treasury Investment Growth
Receipts (“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 United 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

Senior debt obligations

-15-

 

Exhibit 4.31

	 	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 the Federal Deposit Insurance Corporation (“FDIC”),
including the Bank Insurance Fund (“BIF”) and the Savings Association Insurance Fund
(“SAIF”).
	 
	G.	 	Investment Agreements, including Guaranteed Investment Contracts, 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.
	 
	 	 	Repos provide for the transfer of securities from a dealer bank or securities firm
(seller/borrower) to a municipal entity (or borrower in a conduit financing
undertaken by such municipal entity) (buyer/lender), and the transfer of cash from a
municipal entity (or borrower in a conduit financing undertaken by such 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 (or
borrower in a conduit financing undertaken by such municipal entity) in exchange for
the securities at a specified date.

	 	1.	 	Repos must be between the municipal entity (or borrower in a
conduit financing undertaken by such municipal entity) and a dealer bank or
securities firm.

-16-

 

Exhibit 4.31

	 	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
	 
	 	b.	 	Banks rated “A” or better by S&P and A2 or
better by Moody’s.

	 	2.	 	The written repurchase agreement for a Repo 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, or
	 
	 	(3)	 	Obligations of FNMA and FHLMC

	 	b.	 	The term of the Repos may be up to 30 days.
	 
	 	c.	 	The collateral for the Repos must be delivered
to the municipal entity (or borrower in a conduit financing undertaken
by such 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 for the
Repos must be equal to 104% of the amount of cash transferred by
the municipal entity (or borrower in a conduit financing
undertaken by such 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 (or borrower in a conduit
financing undertaken by such 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

-17-

 

Exhibit 4.31

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.

     “Bonds” means the $5,000,000 Water Facilities Revenue Bonds (The Crystal Water Company of
Danielson Project — 2005A 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 municipal bond new issue insurance policy issued by the Bond
Insurer that guarantees payment of principal of and interest on the Bonds.

     “Bond Insurer” means Financial Guaranty Insurance Company, a New York stock insurance company,
or any successor thereto.

     “Borrower” means (i) The Crystal Water Company of Danielson, 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 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.

     “Completion Date” means the date of completion of the Project as specified and established in
accordance with Article IV of the Agreement.

     “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.

-18-

 

Exhibit 4.31

     “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 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 6.5 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 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, and (2) when used with respect to
the Authority, means any of the foregoing documents and agreements to which the Authority is a
direct party. The Financing Documents do not include any documents or agreements to which the
Borrower is not a direct party, including the Bonds or the Indenture.

     “Fitch” means Fitch Inc., a corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, and if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” shall be
deemed to refer to any other nationally recognized securities rating agency designated by the
Authority, at the direction of the Borrower, by notice to the Trustee and the Borrower and with the
prior written consent or approval of the Bond Insurer.

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

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Exhibit 4.31

     “Guarantor” means Connecticut Water Service, Inc., a Connecticut corporation, and any and each
successor thereto or assignee thereof.

     “Guaranty” means the Guaranty from the Guarantor to the Trustee, dated as of October 1, 2005,
as amended and supplemented from time to time.

     “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” 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 and with the prior written consent or approval of the Bond Insurer.

     “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 or
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

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Exhibit 4.31

	 	(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.

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

     “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 financed 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 Costs” mean all costs and expenses of the Project for which the Trustee is permitted
to make payment as provided in subsection 5.2(B) hereof.

     “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, financed in whole or in part with the proceeds of the Bonds, and any
additions and accessions thereto, substitutions therefor and replacements thereof, including
without limitation the Project Equipment described in appendices to the Agreement, as amended from
time to time in accordance herewith.

     “Project Fund” means the special trust fund so designated, established pursuant to Section 5.1
and Section 5.2 hereof.

     “Project Realty” means the realty and other interests in the real property financed 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.

     “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.

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

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Exhibit 4.31

     “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 Project
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.

     “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 and with the prior written
consent or approval of the Bond Insurer.

     “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.

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Exhibit 4.31

     (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.

     (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.

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Exhibit 4.31

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 Revenue Bonds (The Crystal Water Company of
Danielson Project — 2005A 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 Revenue Bonds (The
Crystal Water Company of Danielson Project — 2005A Series) in the principal amount of $5,000,000.
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 October 1, 2040 and bear interest at the per annum rate of 5.00%
payable on April 1, 2006 and on each April 1 and October 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 on the fifteenth day of the calendar month next preceding such Interest Payment Date,
by check or draft

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Exhibit 4.31

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, 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

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Exhibit 4.31

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”).

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Exhibit 4.31

     (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
October 1, 2009, at a 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 election
to redeem Bonds following completion of Project pursuant to Section 5.2(F) hereof or 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, (a) to the
extent excess Bond proceeds are transferred to the Redemption Account from the Project Fund in
accordance with Section 5.2(F) of the Indenture, or (b) 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 Redemption. 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

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Exhibit 4.31

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 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) Extraordinary Mandatory Redemption. In the event that the Borrower shall fail to
comply with the restrictions relating to the restructuring, merger, consolidation and
reorganization of the Borrower set forth in Section 6.1(A) of the Agreement or the sale of assets
by the Borrower set forth in Section 6.1(B) of the Agreement, or if the Connecticut Water Company
shall fail to comply with the restrictions regarding the sale of assets by the Connecticut Water
Company as set forth in Section 6.1(C) of the Agreement, or if the Guarantor shall fail to comply
with the restrictions regarding the sale of assets by the Guarantor or the merger, consolidation,
restructuring or reorganization of the Guarantor set forth in Section 2.4 of the Guaranty, the
Bonds shall be subject to redemption prior to maturity as a whole on any date at the redemption
price equal to 100% of the principal amount thereof plus accrued interest to the date of
redemption.

     (F) Optional Public Purpose Redemption. If the Borrower fails to perform its
obligations under Section 6.6 of the Agreement, the Bonds shall be subject to redemption prior to
maturity as a whole on any date at the option of the Authority in accordance with Section 7.3 of
the Agreement, at the redemption price equal to 100% of the principal amount thereof plus accrued
interest to the date of redemption.

     (G) Extraordinary Optional Redemption Without Premium to Preserve Tax Exempt Status of the
Bonds. The Bonds shall be subject to extraordinary optional redemption by the Authority, at
the direction of the Borrower, in whole or in part on any date at a Redemption Price equal to 100%
of the unpaid principal amount thereof, together with accrued interest to the date of redemption,
and without premium, if the Borrower shall have delivered to the Trustee and the Authority an
opinion of Bond Counsel addressed to the Trustee and the Authority substantially to the effect that
(i) a failure so to redeem the Bonds (or the relevant portion thereof) may adversely affect the
exclusion of interest on the Bonds from the gross income of the holders pursuant to Section 103 of
the Code, and (ii) redemption of Bonds in the amount set forth in such opinion (but in no smaller
amount than that set forth in such opinion) would permit the continuance of any exclusion so
afforded under Section 103 of the Code.

     (H) 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.

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Exhibit 4.31

     (I) 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 5.2(F) hereof or Section 8.2 of the
Agreement, as the case may be, to which shall be attached the certificates referred to in
Section 5.2(F) hereof and 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 6.5 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.

     (5) Redemption shall be made pursuant to the provisions of Section 2.4(E) on such date
as the Borrower shall request in a written notice to the Bond Insurer, the Authority and the
Trustee.

     (6) Redemption shall be made pursuant to the provisions of Section 2.4(F) in accordance
with Section 7.3 of the Agreement.

     (7) Redemption shall be made pursuant to the provisions of Section 2.4(G) at the
earliest possible date following the delivery to the Trustee and the Authority of the
opinion of Bond Counsel described in Section 2.4(G) hereof, without the necessity of any
instructions or further act of the Authority or the Borrower.

     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 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

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Exhibit 4.31

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 Guaranty and 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 Project 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.

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Exhibit 4.31

ARTICLE III

GENERAL TERMS AND PROVISIONS OF BONDS

     Section 3.1. Date of Bonds. The Bonds shall be dated and bear interest from their
date of delivery, 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

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Exhibit 4.31

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.

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Exhibit 4.31

     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.

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Exhibit 4.31

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 as follows:

	 	(A)	 	$4,900,000.00 will be deposited in the Project Account of the
Project Fund; and
	 
	 	(B)	 	$100,000.00 will be deposited in the Costs of Issuance Account
of the Project Fund.

     Section 4.3. Borrower Contribution. A contribution of the Borrower in the amount of
$242,110.45 (which shall be applied to the payment of certain costs and expenses incurred in
connection with the issuance, execution and sale of the Bonds for which the Borrower is
responsible, including compensation and expenses of the Trustee, bond insurance premium, legal,
accounting and consulting expenses and fees, costs of printing and engraving, underwriting expenses
and recording and filing fees) shall simultaneously with the delivery of the Bonds be deposited by
the Trustee in the Costs of Issuance Account of the Project Fund. Notwithstanding anything to the
contrary contained in this Indenture, such contribution shall not be subject to the lien of this
Indenture and any portion of such contribution not disbursed for the payment of costs and expenses
incurred in connection with the issuance, execution and sale of the Bonds within sixty (60) days of
the date of issuance of the Bonds (including investment earnings, if any attributable thereto)
shall be returned to the Borrower.

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Exhibit 4.31

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)	 	Project Fund

	 	(a)	 	Project Account
	 
	 	(b)	 	Costs of Issuance Account

	 	(2)	 	Debt Service Fund

	 	(a)	 	Principal and Interest Account
	 
	 	(b)	 	Redemption Account

	 	(3)	 	Rebate Fund
	 
	 	(4)	 	Renewal Fund

     (B) The Rebate 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 administrative or accounting purposes
in order to facilitate the performance of its duties and obligations hereunder.

     Section 5.2. Project Fund. (A) The Trustee shall establish two separate accounts
within the Project Fund to be respectively designated “Project Account” and “Costs of Issuance
Account”. There shall be deposited in the various Accounts of the Project Fund any and all amounts
required to be deposited therein pursuant to Sections 4.2 and 4.3 hereof or otherwise required to
be deposited therein pursuant to the Agreement or this Indenture.

     (B) The Trustee shall apply the amounts in the various Accounts of the Project Fund, at the
direction of the Borrower, to pay the costs of the Project and the costs of issuance of the Bonds
including, but not limited to:

(1) The costs of title insurance, surveys, legal fees and recording and other
closing expenses;

(2) Obligations incurred for labor and materials;

(3) All costs of contract bonds and of insurance of all kinds that may be required
or necessary during the course of construction of the Project;

(4) All costs of engineering services, including the costs of test borings, surveys,
estimates, plans and specifications and preliminary investigation therefor and for
supervising construction, as well as for the performance of all other duties
required by or

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Exhibit 4.31

consequent upon the proper construction of, and alterations, additions and
improvements to, the Project;

(5) All expenses incurred in connection with the issuance, execution and sale of the
Bonds, including compensation and expenses of the Trustee, the Authority’s issuance
fee, Bond Counsel fees, and expenses, underwriting discount, legal, accounting and
consulting expenses and fees, costs of printing and engraving, and recording and
filing fees;

(6) All costs which the Borrower shall be required to pay, under the terms of any
contract or contracts, for the acquisition, construction, installation or equipping
of the Project, including any amounts required to reimburse the Borrower for
advances or payments made for any of the above items or for any other costs incurred
and for work done which are properly chargeable to the Project;

(7) Interest due and payable on the Bonds from the date of issuance to the
Completion Date of the Project;

(8) Any other costs and expenses relating to the Project.

     (C) The Trustee is hereby authorized and directed to issue its checks or to effect wire
transfers for each disbursement from the various Accounts of the Project Fund (excepting any fees
payable to the Trustee as to which no further authority is required) upon a requisition submitted
to the Trustee and signed by an Authorized Representative of the Borrower in substantially the form
attached hereto as Appendix A. Such requisition shall state with respect to each payment to be
made: (1) the Account within the Project Fund from which such disbursement is to be made, (2) the
requisition number, (3) the name and address of the person, firm or corporation to whom payment is
due, or to whom a reimbursable advance, if any, has been made, (4) the amount to be paid, (5) that
each obligation mentioned therein has been properly incurred within the provisions of the
Agreement, is a proper charge against the Project Fund, is unpaid or unreimbursed, and has not been
the basis of any previous withdrawal, (6) that the requisition and the use of proceeds set forth
therein are consistent in all material respects with the Tax Regulatory Agreement with respect to
the Bonds, and (7) unless the Trustee has received the certificate described in subsection 5.2(F)
hereof, 95% or more of the amount requisitioned is to be applied to costs (a) paid or incurred
after the date which is sixty (60) days prior to the adoption of the Authority’s inducement
resolution for the Project, (b) for the acquisition, construction or reconstruction of land or
property of a character subject to the allowance for depreciation provided in Section 167 of the
Internal Revenue Code of 1986, as amended, and (c) which are chargeable to the capital account of
the Project or would be so chargeable either with an election by the Borrower or but for the
election of the Borrower to deduct the amount of the item.

     Notwithstanding anything to the contrary contained herein, any portion of the contribution of
the Borrower made pursuant to Section 4.3 hereof remaining on deposit in the Costs of Issuance
Account of the Project Fund sixty (60) days following the date of issuance of the Bonds (including
investment earnings, if any, attributable thereto) shall be returned to the Borrower.

     (D) In making any such payment from the various Accounts of the Project Fund, the Trustee may
rely on such requisitions and proof delivered to it and the Trustee shall be relieved of all
liability with respect to making such payments in accordance with the foregoing.

     (E) The Trustee shall hold in the Project Fund an amount equal to 5% of the net proceeds of
the Bonds ($250,000.00) until the Trustee has received, with respect to the Bonds, a certified
statement of Project Costs together with the Borrower’s certificate to the effect that Project
Costs in an amount equal

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Exhibit 4.31

to 95% or more of the proceeds of the Bonds (as defined in the Agreement) have been paid or
incurred for the acquisition, construction or reconstruction of land or depreciable property under
the Internal Revenue Code of 1986, as amended, and have been or could be capitalized by the
Borrower for Federal income tax purposes. Such documents may be delivered upon issuance of the
Bonds and may anticipate the use of the final amounts to be requisitioned permitted by subsections
5.2(E) and (F) hereof. Upon the receipt of such documents, the Trustee shall apply the balance in
the Project Fund to or at the direction of the Borrower in accordance with such documents. The
Borrower shall notify the Trustee of any inability to deliver such documents, and in that event the
Trustee shall upon the receipt of such notification transfer the balance in the Project Fund to the
Redemption Account of the Debt Service Fund.

     (F) The completion of the Project shall be evidenced by the filing with the Authority and the
Trustee of a certificate of an Authorized Representative of the Borrower in accordance with Article
IV of the Agreement, stating the date of such completion and the amount, if any, required in its
opinion for the payment of any remaining part of the costs of the Project. Upon the filing of such
certificate, the balance in the Project Fund in excess of the amount, if any, stated in such
certificate, shall be applied by the Trustee in accordance with the written order of any Authorized
Representative of the Borrower in one or more of the following ways:

(1) Deposited in the Redemption Account of the Debt Service Fund; or

(2) Used in any other manner which preserves the exemption of interest on the Bonds
from federal income taxation, provided there is delivered to the Trustee an opinion
of Bond Counsel to the effect that the use of such moneys is permitted by law and
will not adversely affect the exemption from federal income taxation of interest on
the Bonds. The Trustee may rely on such opinion in any disbursement of funds
pursuant to this subsection 5.2(F)(2).

Thereafter, upon payment of all the costs and expenses incident to the Project, any balance in the
Project Fund shall be deposited in the Redemption Account of the Debt Service Fund.

     (G) Promptly following June 30 in each year, until there is no balance remaining in the
Project Fund, the Trustee shall deliver a report to the Authority setting forth the amounts
remaining in the Project Fund as of such date and a schedule of the securities in which such
amounts are invested.

     (H) In the event the Borrower shall be required to or shall elect to cause the Bonds to be
redeemed in full pursuant to Article VIII of the Agreement, the balance in the Project Fund which
is not required to pay incurred Project Costs shall be deposited in the Redemption Account of the
Debt Service Fund.

     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 or Section
2.1 of the Guaranty, 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

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Exhibit 4.31

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) Excess or remaining amounts in the Project Fund required to be deposited in the
Redemption Account of the Debt Service Fund pursuant to subsections 5.2(E) and 5.2(F) hereof,
which shall be credited to the Redemption Account.

     (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 Project 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 Project Fund shall be
retained in the Project Fund prior to the Completion Date of the Project, and transferred to the
Principal and Interest Account of the Debt Service Fund subsequent to the Completion Date.

     (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 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.

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Exhibit 4.31

     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) 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 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, at all times be deemed to be a part of the Fund and Account, from which the investment
was made.

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Exhibit 4.31

     (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, which shall be credited to the Rebate Fund). Income or interest earned and gains
realized in excess of losses suffered by the Project Fund shall be retained therein prior to the
Completion Date of the Project and transferred to the Principal and Interest Account of the Debt
Service Fund subsequent to the Completion Date.

     (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.

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 Bondholder
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

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Exhibit 4.31

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 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.

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Exhibit 4.31

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

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Exhibit 4.31

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.

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Exhibit 4.31

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). In determining whether an Event of Default shall
have occurred under this Section 8.1(A)(1), no effect shall be given to payments made under
the Bond Insurance Policy.

     (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, the Bond Insurer 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 6.6(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 (provided the Bond Insurer is not in default
under the Bond Insurance Policy) 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.

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Exhibit 4.31

     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 6.6(B) 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, the Guaranty 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, the Guaranty 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, the Guaranty 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 security and indemnity to its satisfaction, 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.

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Exhibit 4.31

     (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.

     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

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Exhibit 4.31

Trustee and Paying Agents and the Bond Insurer 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 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,

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Exhibit 4.31

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, 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 immediately mail (upon the
Trustee’s actual knowledge thereof), to each owner of the Bonds and the Bond Insurer, written
notice of an Event of Default under Section 8.1(A)(1) hereof of which it has actual knowledge. The
Trustee shall promptly mail (within thirty (30) days of the Trustee’s actual knowledge thereof), to
each owner of the Bonds and the Bond Insurer, written notice of the occurrence of any Event of
Default under Sections 8.1(A)(2), 8.1(A)(3) and 8.1(A)(4) hereof 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. The
Trustee shall not be required to monitor the compliance by the Authority with the terms of this
Indenture, or the Borrower with the terms of the Agreement, except as aforesaid.

     Section 8.11. Waivers of Default. Subject to the provisions of Section 8.2(E) hereof,
the Trustee, with the prior written consent of the Bond Insurer, 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.

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Exhibit 4.31

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.

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Exhibit 4.31

     (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; provided, that if in the
opinion of the Trustee such action might involve expense or liability, it shall not be obligated to
take such action (other than the payment of any Bonds when due from funds held under this Indenture
for the payment thereof or the acceleration of any Bonds pursuant to Section 8.1(B) hereof), unless
it is furnished with indemnity and security to its satisfaction therefor.

     (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),

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Exhibit 4.31

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.

     (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.

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Exhibit 4.31

     (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 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.

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Exhibit 4.31

     (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 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

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Exhibit 4.31

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.

     (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. In accordance with the provisions of
Section 8.10 hereof, 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

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Exhibit 4.31

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.

     (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.

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Exhibit 4.31

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 this 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 (except as otherwise provided in (6) below) 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) With the prior written consent of the Bond Insurer, 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.

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Exhibit 4.31

     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,

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Exhibit 4.31

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.

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Exhibit 4.31

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 or the Guaranty 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. (A) 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 or the Guaranty,
including the substitution of an assignee for the Borrower or the Guarantor and the release of the
Borrower or the Guarantor from the obligations of the Financing Documents or the Guaranty, as the
case may be, 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 or the Guarantor 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.

     (B) Notwithstanding anything to the contrary contained herein or in the Agreement or the
Guaranty, none of the transactions described in Section 6.1 and 6.2 of the Agreement or Section 2.4
of the Guaranty shall require the consent of the Authority or the Trustee.

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Exhibit 4.31

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, (i) 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, (ii) 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 and (iii) the
Borrower shall provide, or cause to be provided, a verification report of an independent nationally
recognized certified public accountant and an opinion of nationally recognized bond counsel
addressed to the Bond Insurer to the effect that the Bonds are no longer Outstanding under the
Indenture.

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Exhibit 4.31

ARTICLE XIII

GENERAL PROVISIONS

     Section 13.1. Notices. (A) Any notice, request, demand, communication, direction 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 West Main Street, Clinton,
Connecticut 06413, Attention: Vice President-Finance; if to the Trustee, Goodwin Square, 225
Asylum Street, Hartford, Connecticut 06103, Attention: Corporate Trust Administration; and if to
the Bond Insurer, 125 Park Avenue, New York, New York 10017, Attention: Risk Management (and if to
the Bond Insurer’s Fiscal Agent at U.S. Bank Trust National Association, 100 Wall Street, 19th
Floor, New York, New York 10005, Attention: Corporate Trust Department). 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 and the Bond Insurer. 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.

     (C) Notwithstanding anything to the contrary contained herein, all notices, requests, demands,
communications or directions to the Trustee shall be given in writing.

     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

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Exhibit 4.31

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 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 (including, without limitation, the principal amount,
maturities and CUSIP numbers thereof), 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 as provided in Section 8.10 hereof, 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.

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Exhibit 4.31

     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.

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Exhibit 4.31

     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
	 	/s/ Karin A. Lawrence	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Karin A. Lawrence	 	 
	 

	 	 	 	Authorized Representative	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Cauna M. Silva	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Cauna M. Silva	 	 
	 

	 	 	 	Title: Vice President	 	 

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Exhibit 4.31

APPENDIX A TO INDENTURE

REQUISITION

     The Crystal Water Company of Danielson (the “Borrower”) hereby requests U.S. Bank National
Association, as trustee (the “Trustee”) under the Indenture of Trust, dated October 1, 2005,
between U.S. Bank National Association and the Connecticut Development Authority (the “Indenture”),
to withdraw $                                         from the                                          Account of the Project Fund established under the
Indenture for purposes permitted by Section 5.2 thereof. In connection with this withdrawal, the
Borrower states as follows:

     1. The number of this requisition is                                                             .

     2. Payments aggregating                                          are due to the following persons in the following
amounts for expenditures incurred in connection with the Project:

	 	 	 	 	 	 	 
	Person
	 	Address
	 	Amount
	 	Item

Attached hereto are invoices evidencing each such amount due and the person to whom such amount is
payable.

     3. Payment is due to the Borrower in the total amount of $                                         in reimbursement for
amounts paid by the Borrower in connection with the Project:

	 	 	 
	Amount
	 	Item

Attached hereto are receipts or other evidences of payment showing payment of each such amount and
the person to whom payment was made.

     4. Each amount set forth in paragraphs 2 and 3 hereof has been properly paid or incurred
within the provisions of the Agreement and the Indenture, is a proper charge against the Project
Fund, is unpaid or unreimbursed, and has not been the basis for any previous withdrawal.

     5. This requisition and the use of proceeds set forth herein are consistent in all material
respects with the Tax Regulatory Agreement.

     6. Ninety-five percent or more of the amount requisitioned is to be applied to costs (a) paid
or incurred not more than sixty (60) days prior to the adoption of the Authority’s inducement
resolution for the Project on May 19, 2004, (b) for the acquisition, construction or reconstruction
of land or property of a character subject to the allowance for depreciation provided in Section
167 of the Internal Revenue Code of 1986, as amended, and (c) which are chargeable to the capital
account of the Project or would be so chargeable either with an election by the Borrower or but for
the election of the Borrower to deduct the amount of the item.

     Capitalized terms used in this requisition are used as defined in the Indenture.

A-1

 

Exhibit 4.31

     I am an Authorized Representative of the Borrower under the Agreement.

	 	 	 	 	 	 	 
	 	 	THE CRYSTAL WATER COMPANY OF	 	 
	 

	 	  
	 	DANIELSON	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

A-2exv4w32

 

EXHIBIT 4.32

Execution Copy

INSURANCE AGREEMENT

     INSURANCE AGREEMENT, dated November 30, 2005, among The Crystal Water Company of Danielson
(“Crystal Water”), Connecticut Water Service Inc. (the “Holding Company”) and Financial Guaranty
Insurance Company, a New York stock insurance company (“FGIC”).

     WHEREAS, pursuant to an Indenture of Trust, dated as of October 1, 2005 (the “Indenture”),
between Connecticut Development Authority (the “Issuer”) and U.S. Bank National Association as
trustee (the “Trustee”), the Issuer has issued $5,000,000 in aggregate principal amount of its
Water Facilities Revenue Bonds (The Crystal Water Company of Danielson Project – 2005A Series) (the
“Bonds”); and

     WHEREAS, the Crystal Water and the Issuer have entered into a Loan Agreement, dated as of
October 1, 2005 (the “Loan Agreement”), pursuant to which Crystal Water is obligated to make loan
payments sufficient to pay, among other items, debt service on the Bonds; and

     WHEREAS, the Holding Company and the Issuer have entered into a Guaranty, dated as of October
1, 2005 (the “Guaranty Agreement”), pursuant to which the Holding Company is obligated to make loan
payments sufficient to pay, among other items, debt service on the Bonds to the extent the Crystal
Water fails to make such payments; and

     WHEREAS, FGIC has issued its Financial Guaranty Insurance Policy (the “Policy”), which insures
the scheduled payments of principal of and interest on the Bonds and payment of principal of and
interest on the Bonds upon a Determination of Taxability (as defined in the Indenture) as specified
in the Policy; and

     WHEREAS, Crystal Water and the Holding Company understand that FGIC expressly requires the
delivery of this Agreement as part of the consideration for the delivery by FGIC of the Policy;

     NOW, THEREFORE, in consideration of the premises and of the agreements herein contained and of
the execution and delivery of the Policy, Crystal Water, the Holding Company and FGIC agree as
follows:

ARTICLE I

DEFINITIONS

     SECTION 1.01. Definitions. Except as otherwise expressly provided herein or unless the
context otherwise requires, the terms that are capitalized herein shall have the meanings specified
in the Indenture unless otherwise defined in Annex A hereto.

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EXHIBIT 4.32

ARTICLE II

PREMIUM AND REIMBURSEMENT OBLIGATIONS

OF THE COMPANY

     SECTION 2.01. Premium. In consideration of FGIC’s agreeing to issue the Policy hereunder,
Crystal Water hereby agrees to pay FGIC the Premium at the times and in the amounts provided in the
Commitment. To the extent that any such payment of the Premium is not paid when due, interest
shall accrue on such unpaid amount at a rate equal to the Effective Interest Rate.

     SECTION 2.02. Reimbursement Obligation. Crystal Water and the Holding Company agree to
reimburse Financial Guaranty, from any available funds, immediately and unconditionally upon
demand, for any Policy Payment. To the extent that any such payment due hereunder is not paid when
due, interest shall accrue on such unpaid amounts at a rate equal to the Effective Interest Rate.
Following any such Policy Payment, the payment by Crystal Water and the Holding Company of the
amount of principal of and/or interest on the obligations in respect of which such Policy Payment
shall have been made shall satisfy and discharge, to the extent thereof, the corresponding
obligations of Crystal Water and the Holding Company under this Section 2.02.

     SECTION 2.03. Unconditional Obligation. The obligations of Crystal Water and the Holding
Company hereunder are absolute and unconditional and will be paid or performed strictly in
accordance with this Agreement, irrespective of:

     (a) any lack of validity or enforceability of, or any amendment or other modification of, or
waiver with respect to the Bonds, the Indenture, the Loan Agreement or any other bond financing
document;

     (b) any exchange, release or nonperfection of any security interest in property securing the
Bonds, the Indenture, the Loan Agreement or this Agreement or any obligations hereunder;

     (c) any circumstances that might otherwise constitute a defense available to, or discharge of,
Crystal Water or the Holding Company with respect to the Bonds, the Indenture, this Agreement or
the Loan Agreement; or

     (d) whether or not the obligations under the Bonds, the Indenture, this Agreement or the Loan
Agreement are contingent or matured, disputed or undisputed, liquidated or unliquidated.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     SECTION 3.01. Representations and Warranties of Crystal Water and the Holding Company.

     (a) Crystal Water makes the following representations as the basis for its undertakings herein
contained:

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EXHIBIT 4.32

     (1) Crystal Water is a Connecticut corporation organized and existing under the laws of the
State of Connecticut, and has the power to enter into and has duly authorized, by proper action,
the execution and delivery of this Agreement, and the Loan Agreement (collectively, the “Company
Documents”).

     (2) Neither the execution and delivery of any Company Document, the consummation of the
transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms
and conditions hereof and thereof, conflicts with or results in a breach of any of the terms,
conditions or provisions of Crystal Water organizational documents or of any material agreement or
instrument to which Crystal Water is now a party or by which it is bound, or constitutes a default
(with due notice or the passage of time or both) under any of the foregoing, or results in the
creation or imposition of any prohibited lien, charge or encumbrance whatsoever upon any of the
property or assets of Crystal Water under the terms of any material instrument or agreement to
which Crystal Water is now a party or by which it is bound.

     (3) All certificates, approvals, permits and authorizations of applicable local governmental
agencies, the State of Connecticut and the federal government that are necessary (i) for the due
execution and delivery by Crystal Water of, and the performance by Crystal Water of its obligations
under, each Company Document and (ii) for the operation and use of the capital projects being
financed by the Bonds, in each case, have been obtained and continue in force, except, in the case
of clause (ii), for such certificates, approvals, permits and authorizations the failure of which
to obtain or to maintain in full force would not, individually or in the aggregate, materially and
adversely affect the financial condition, assets, properties or operation of Crystal Water.

     (4) No event has occurred and no condition exists that would constitute an Event of Default
under the Company Documents or to Crystal Water’s knowledge the Indenture or that, with the passing
of time or with the giving of notice or both would become such an Event of Default.

     (5) The Company Documents have been executed and delivered by Crystal Water and are the legal,
valid and binding obligations of Crystal Water, enforceable against Crystal Water in accordance
with its terms, subject to laws with respect to bankruptcy and general principals of equity.

(b) The Holding Company makes the following representations as the basis for its undertakings
herein contained:

     (1) The Holding Company is a Connecticut corporation organized and existing under the laws of
the State of Connecticut and has the power to enter into and has duly authorized, by proper action,
the execution and delivery of the Agreement, and the Guaranty Agreement;

     (2) Neither the execution and delivery of this Agreement or the Guaranty Agreement, the
consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or
compliance with the terms and conditions hereof and thereof, conflicts with or results in a breach
of any of the terms, conditions or provisions of the Holding Company’s organizational documents or
of any material actions or of any material agreement or instrument to which the

-3-

 

EXHIBIT 4.32

Company is now a party or by which it is bound, or constitutes a default (with due notice or
the passage of time or both) under any of the foregoing, or results in the creation or imposition
of any prohibited lien, charge or encumbrance whatsoever upon any of the property or assets of the
Holding Company under the terms of any material instrument or agreement to which the Holding
Company is now a party or by which it is bound.

     (3) All certificates, approvals, permits and authorizations of applicable local governmental
agencies, the State of Connecticut and the federal government that are necessary for the due
execution and delivery by the Holding Company of, and the performance by the Holding Company of its
obligations under, this Agreement and the Guaranty Agreement have been obtained and continue in
force.

     (4) No event has occurred and no condition exists that to the knowledge of the Holding Company
would constitute an Event of Default (as defined in the Indenture, the Loan Agreement or hereunder)
or that, with the passing of time or with the giving of notice or both would become such an Event
of Default.

     (5) The Guaranty Agreement and this Agreement have been executed and delivered by the Holding
Company and are the legal, valid and binding obligations of the Holding Company, enforceable
against the Holding Company in accordance with its terms, subject to laws with respect to
bankruptcy and general principals of equity.

(c) Crystal Water and the Holding Company make the following representations as the basis for their
undertakings herein contained:

     (1) Except as disclosed in the Official Statement, dated November 16, 2005, delivered in
connection with the issuance of the Bonds, (i) there is no action, suit, proceeding or
investigation at law or in equity before or by any court or governmental agency or body pending or
to their knowledge threatened against or affecting Crystal Water or the Holding Company that seeks
to restrain or enjoin the issuance or delivery of the Bonds, or the collection of the payments to
be made pursuant to the Indenture, the Bonds, any Company Document, the Guaranty Agreement or in
any way contests or materially adversely affects the validity of the Bonds, the Indenture, any
Company Document, the Guaranty Agreement or the resolutions of Crystal Water or the Holding Company
relating to the Bonds, or contests or affects the powers of Crystal Water or the Holding Company to
enter into or perform its obligations or consummate the transactions contemplated under any of the
foregoing; and (ii) Crystal Water or the Holding Company are not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal, state, municipal or
other governmental authority.

     (2) The financial statements of the Holding Company and its consolidated subsidiaries as at
December 31, 2004 and September 30, 2005 contained in the Holding Company’s Annual Report on Form
10-K for the year ended December 31, 2004 as filed with the SEC on March 30, 2005 and Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005 as filed with the SEC on November 9,
2005, respectively, present fairly in all material respects the financial condition, results of
operations and cash flows of the Holding Company and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein).

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EXHIBIT 4.32

Since September 30, 2005, there has been no material adverse change in the financial
condition, assets, properties or operation of the Holding Company.

ARTICLE IV

COVENANTS

     SECTION 4.01. Consolidation, Merger and Transfer of Mortgaged Property.

     (a) Restructuring, Merger, Consolidation, Reorganization. Crystal Water (or any subsequent
obligor on the Note) shall not merge, consolidate, restructure or reorganize with an entity without
the prior written consent of FGIC, provided, however, Crystal Water (or any subsequent obligor on
the Note) may merge, consolidate, restructure or reorganize with an entity without the prior
written consent of FGIC either if (a) Crystal Water (or any subsequent obligor on the Note)
continues to exist after such merger, consolidation, restructuring or reorganization and (i)
Crystal Water (or any subsequent obligor on the Note) remains a public utility regulated by the
appropriate regulatory body, (ii) Crystal Water (or any subsequent obligor on the Note) remains
obligated to FGIC with respect to, and to make payments with respect to, the Bonds, the Note and
the Company Documents and (iii) the Guaranty Agreement remains enforceable against the Holding
Company or against an entity with a rating on its unenhanced long-term debt that is the same or
higher than the rating on the unenhanced long-term debt of the Holding Company or (b) Crystal Water
(or any subsequent obligor on the Note) is not the surviving entity after such merger,
consolidation, restructuring or reorganization and (i) the surviving entity is a public utility
regulated by the appropriate regulatory body, (ii) the surviving entity fully assumes all
obligations to FGIC with respect to, and to make payments with respect to the Bonds, the Note and
the Company Documents and (iii) the Guaranty Agreement remains enforceable against the Holding
Company or against an entity with a rating on its unenhanced long-term debt that is the same or
higher than the rating on the unenhanced long-term debt of the Holding Company. Notwithstanding
the foregoing, if as a result of the merger, consolidation, restructuring or reorganization of
Crystal Water (or any subsequent obligor on the Note) with an entity without the prior written
consent of FGIC, the unenhanced rating on the Bonds is lower than investment grade by any Rating
Agency then rating the Bonds or if any Rating Agency then rating the unenhanced Bonds ceases to
rate the unenhanced Bonds, all obligations to FGIC with respect to, and all payments under, the
Note and the Company Documents must be paid in full and the Bonds must be fully redeemed in
accordance with the Indenture.

     (b) Sale of Assets of Crystal Water. Crystal Water (or any subsequent obligor on the Note)
may sell or otherwise dispose of substantially all of the assets of Crystal Water (or any
subsequent obligor on the Note) without the prior written consent of FGIC if (i) the transferee of
such assets fully assumes all obligations under the Bonds, the Note and the Company Documents, (ii)
the transferee is a public utility regulated by the appropriate regulatory body, (iii) the Guaranty
Agreement remains enforceable against the Holding Company or an entity with a rating on its
unenhanced long-term debt that is the same or higher than the rating on the unenhanced long-term
debt of the Holding Company and (iv) the Bonds must have an unenhanced rating not lower than
investment grade by any Rating Agency then rating the unenhanced Bonds. If Crystal Water (or any
subsequent obligor on the Note) sells or otherwise disposes of substantially all of the assets of
Crystal Water (or any subsequent obligor on the Note) without the prior written consent of FGIC and
any of the conditions set forth in the

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EXHIBIT 4.32

previous sentence have not be met, then all obligations to FGIC with respect to, and all
payments under, the Note and the Company Documents must be paid in full and the Bonds must be fully
redeemed in accordance with the Indenture.

     (c) Sale of Assets of Connecticut Water Company. If upon, and as a result of, the sale or
other disposition without the prior written consent of FGIC of an aggregate of 20% or more of the
assets of Connecticut Water Company (or of any successor to the interests of Connecticut Water
Company) based upon the historical book value of the assets sold as determined on the issuance date
of the Bonds, the unenhanced rating on the bonds of the Connecticut Water Company issued on the
same date as the Bonds is lower than investment grade by any Rating Agency then rating such bonds
or if any Rating Agency then rating the unenhanced bonds ceases to rate the unenhanced bonds, then
all obligations of Crystal Water to FGIC with respect to, and all payments under, the Note, the
Insurance Agreement and the Loan Agreement must be paid in full and the Bonds must be fully
redeemed in accordance with the Indenture.

     (d) Holding Company Restructuring, Merger, Consolidation, Reorganization or Sale of Assets.
The Holding Company shall not merge, consolidate, restructure or reorganize with an entity or sell
substantially all of its assets without the prior written consent of FGIC, provided, however, the
Holding Company may merge, consolidate, restructure or reorganize with an entity or sell
substantially all of its assets without the prior written consent of FGIC if (i) the obligor on the
Note remains an entity that is a public utility regulated by the appropriate regulatory body and
(ii) the Holding Company, any successor entity or the transferee of substantially all of the
Holding Company’s assets is obligated on the Insurance Agreement and the Guaranty Agreement.
Notwithstanding the foregoing, if the Holding Company merges, consolidates, restructures or
reorganizes with an entity or sells substantially all of its assets without the prior written
consent of FGIC and the unenhanced rating on the Bonds is lower than investment grade by any Rating
Agency then rating the Bonds or if any Rating Agency then rating the unenhanced Bonds ceases to
rate the unenhanced Bonds, all obligations to FGIC with respect to, and all payments under, the
Note and Loan Agreement must be paid in full and the Bonds must be fully redeemed in accordance
with the Indenture.

     (e) Upon the occurrence of an event specified in section 4.01 (a)(b)(c) or (d) Crystal Water
and the Holding Company shall deliver to FGIC a certificate of the president or any vice president
and an opinion of counsel acceptable to FGIC, each stating that such occurrence complies with this
Section 4.01.

     (f) Upon the occurrence of an event specified in section 4.01(a), (b) or (d), the successor
entity shall succeed to, and be substituted for, and may exercise every right and power under this
Agreement with the same effect as if such successor had been named herein, and thereafter, the
predecessor entity shall be relieved of all obligations and covenants hereunder.

     SECTION 4.02. Restrictions on Liens and Sale and Leaseback Transactions.

     (a) For so long as the Bonds are outstanding and FGIC has fully performed all of its
obligations under the Policy, Crystal Water will not, nor will it permit any Significant Subsidiary
to, (1) issue, incur, assume or permit to exist any Debt, if such Debt is secured by a Lien on any
Principal Property (whether such Principal Property is now owned or hereafter acquired), unless

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EXHIBIT 4.32

the Company provides that the Bonds will be equally and ratably secured with such secured Debt
or (2) incur or permit to exist any Attributable Debt in respect of Principal Property; provided,
however, that the foregoing restriction shall not apply to:

     (i) to the extent Crystal Water or any Significant Subsidiary consolidates with, or
merges with or into, another entity, Liens on the property of such entity securing Debt in
existence on the date of such consolidation or merger, provided that such Debt and Liens
were not created or incurred in anticipation of such consolidation or merger and that such
Liens do not extend to cover any Principal Property;

     (ii) Liens existing on property hereafter acquired at the time of such acquisition, as
long as the Lien was not created or incurred in anticipation thereof and does not extend to
or cover any other Principal Property;

     (iii) Liens of any kind, including purchase money Liens, conditional sales agreements
or title retention agreements and similar agreements, upon any property acquired,
constructed, developed or improved by Crystal Water or any Significant Subsidiary (whether
alone or in association with others) which do not exceed the cost or value of the property
acquired, constructed, developed or improved and which are created prior to, at the time of,
or within 12 months after such acquisition (or in the case of property constructed,
developed or improved, within 12 months after the completion of such construction,
development or improvement and commencement of full commercial operation of such property,
whichever is later) to secure or provide for the payment of any part of the purchase price
or cost thereof; provided that the Liens shall not extend to any Principal Property other
than the property so acquired, constructed, developed or improved;

     (iv) Liens in favor of the United States, any state or any foreign country or any
department, agency or instrumentality or political subdivision of any such jurisdiction to
secure payments pursuant to any contract or statute or to secure any indebtedness incurred
for the purpose of financing all or any part of the purchase price or cost of constructing
or improving the property subject to such Lien, including Liens related to governmental
obligations the interest on which is tax-exempt under Section 103 of the Internal Revenue
Code or any successor section of the Internal Revenue Code;

     (v) Liens in favor of Crystal Water, the Holding Company or one or more Significant
Subsidiaries of the Crystal Water, the Holding Company, or one or more wholly-owned
Subsidiaries of Crystal Water or the Holding Company or any of the foregoing combination;
and

     (vi) replacements, extensions or renewals (or successive replacements, extensions or
renewals), in whole or in part, of any Lien, or of any agreement, referred to above in
clauses (i) through (v) inclusive, or replacements, extensions or renewals of the Debt
secured thereby (to the extent that the amount of Debt secured by any such Lien is not
increased from the amount originally so secured, plus any premium, interest, fee or expenses
payable in connection with any replacements, refundings, refinancings, remarketings,
extensions or renewals); provided that such replacement, extension or

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EXHIBIT 4.32

renewal is limited to all or a part of the same property (plus improvements thereon or
additions or accessions thereto) that secured the Lien replaced, extended or renewed.

     (b) Notwithstanding the restriction in subsection (a) of this Section 4.02, Crystal Water or
any Significant Subsidiary may (1) issue, incur or assume Debt secured by a Lien not described in
clauses (i) through (vi) of subsection (a) above on any Principal Property now or hereafter owned
without providing that the Bonds be equally and ratably secured with such Debt and (2) issue or
permit to exist Attributable Debt in respect of Principal Property, in either case so long as the
aggregate amount of such secured Debt and Attributable Debt, together with the aggregate amount of
all other Debt secured by Liens not described in clauses (i) through (vi) of subsection (a) above
then outstanding and all other Attributable Debt, does not exceed 10% of the Net Tangible Assets of
Crystal Water, as determined by Crystal Water as of a month end not more than 90 days prior to the
closing or consummation of the proposed transaction.

     (c) For purposes of determining compliance with this Section 4.02, in the event that any Lien
at any time meets the criteria of more than one of the categories described in clauses (i) through
(vi) above of Section 4.02(a), or is entitled to be created pursuant to Section 4.02(b), Crystal
Water will be permitted to classify (and later reclassify) in whole or in part in its sole
discretion such Lien in any manner that complies with this Section 4.02.

     (d) For purposes of determining compliance with any Dollar-denominated restriction on the
incurrence of Debt secured by Liens on Principal Property, the Dollar-equivalent principal amount
of Debt denominated in a foreign currency will be calculated based on the relevant currency
exchange rate in effect on the date such Debt was incurred, in the case of term Debt, or first
committed, in the case of revolving credit Debt; provided that if such Debt is incurred to
refinance other Debt denominated in the same foreign currency, and such refinancing would cause the
applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, the Dollar-denominated restriction will be
deemed not to have been exceeded so long as the principal amount of the refinancing Debt does not
exceed the principal amount of the Debt being refinanced. Notwithstanding any other provision of
this Section 4.02, the maximum amount of Debt secured by Liens on Principal Property that Crystal
Water or any Significant Subsidiary may incur pursuant to this covenant will not be deemed to be
exceeded solely as a result of fluctuations in the exchange rate of currencies.

     (e) Except as provided in Section 4.02 hereof, while there are any Bonds Outstanding or any
reimbursement obligations owed to FGIC, without the prior written consent of Financial Guaranty,
Crystal Water will not permit, create, assume or suffer to be created or to exist any mortgage,
lien, security interest, or encumbrance of any kind, upon, or pledge of, any of Crystal Water’s
properties of any character, including real, personal, tangible and intangible properties and
revenues, now owned or hereafter acquired, to secure any indebtedness without providing that the
Bonds and the reimbursement obligations hereunder have the same security.

     SECTION 4.03. Liquidity Facility. If at any time the Bonds are converted into a mode, other
than a long-term mode longer than five years or an auction mode, Crystal Water shall provide a
Liquidity Facility to support the Bonds. The Liquidity Facility and the Liquidity

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EXHIBIT 4.32

Provider shall satisfy the terms set forth in Annex B hereto or shall otherwise be subject to
the prior written approval of FGIC.

     SECTION 4.04. Covenant Merger. Notwithstanding anything in the foregoing covenants to the
contrary, the foregoing covenants with respect to the Crystal Water Company Bonds shall no longer
be applicable if Crystal Water is merged into, consolidated with or otherwise reorganized into the
Connecticut Water Company. The covenants with respect to the Connecticut Water Company shall apply
to the merged, consolidated or otherwise reorganized entity.

ARTICLE V

EVENTS OF DEFAULT; REMEDIES

     SECTION 5.01. Events of Default. The following events shall constitute Events of Default
hereunder:

     (a) Crystal Water or the Holding Company shall fail to pay to FGIC any amount payable under
Section 2.02 or 7.01 hereof and such failure shall have continued for a period in excess of ten
days after receipt by Crystal Water or the Holding Company of written notice thereof;

     (b) Any representation or warranty made by Crystal Water or the Holding Company hereunder
under any other Company Document, the Guaranty Agreement, or any statement in the application for
the Policy or any written report, certificate, financial statement or other instrument provided in
connection with the Commitment, the Policy, the Guaranty Agreement, or any Company Document shall
have been materially false at the time when made;

     (c) Except as otherwise provided in this Section 5.01, Crystal Water or the Holding Company
shall fail to perform any of its other obligations hereunder, provided that such failure continues
for more than thirty days after receipt by Crystal Water or the Holding Company of written notice
of such failure to perform;

     (d) Crystal Water or the Holding Company shall (i) voluntarily commence any proceeding or file
any petition seeking relief under the United States Bankruptcy Code or any other Federal, state or
foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to
controvert in a timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver, paying agent, custodian,
sequestrator or similar official for Crystal Water or the Holding Company or for a substantial part
of its property, (iv) file an answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi)
become unable, admit in writing its inability or fail generally to pay its debts as they become
due; or

     (e) An involuntary proceeding shall be commenced or an involuntary petition shall be filed in
a court of competent jurisdiction seeking (i) relief in respect of Crystal Water or the

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EXHIBIT 4.32

Holding Company, or of a substantial part of its property, under the United States Bankruptcy
Code or any other Federal, state or foreign bankruptcy, insolvency or similar law or (ii) the
appointment of a receiver, paying agent, custodian, sequestrator or similar official for Crystal
Water or the Holding Company or for a substantial part of its property; and such proceeding or
petition shall continue undismissed for forty-five (45) days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect for thirty (30) days.

     SECTION 5.02. Remedies. If an Event of Default shall occur and be continuing, then FGIC may
take whatever action at law or in equity may appear necessary or desirable, including, without
limitation, legal action for the specific performance of any covenant made by Crystal Water or the
Holding Company herein and any financing document and, to the extent applicable, the pursuit of
remedies available under the Bonds, the Company Documents and the Guaranty Agreement to collect the
amounts then due under this Agreement, or to enforce performance and observance of any obligation,
agreement or covenant of Crystal Water or the Holding Company under the Bonds, Company Documents
and the Guaranty Agreement. All rights and remedies of FGIC under this Section 5.02 are cumulative
and the exercise of any one remedy does not preclude the exercise of one or more of the other
available remedies under the Bonds, the Company Documents, the Indenture and the Guaranty
Agreement, or now or hereafter existing at law or in equity. No delay or omission to exercise any
right or power accruing under the Bonds, the Company Documents, the Indenture, the Guaranty
Agreement, or any other financing document, or otherwise, upon the happening of any event set forth
in Section 5.01, shall impair any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle FGIC to exercise any remedy reserved to FGIC in this Article, it
shall not be necessary to give any notice, other than such notice as may be required by this
Article.

ARTICLE VI

SETTLEMENT

     Financial Guaranty shall have the exclusive right to decide and determine whether any claim,
liability, suit or judgment made or brought against Financial Guaranty on the Policy (a “Policy
Claim”), shall or shall not be paid, compromised, resisted, defended, tried or appealed, and
Financial Guaranty’s decision thereon, if made in good faith, shall be final and binding upon
Crystal Water and the Holding Company. An itemized statement of payments made by Financial
Guaranty, certified by an officer of Financial Guaranty, or the voucher or vouchers for such
payments, shall be prima facie evidence of the liability of Crystal Water and the Holding Company.

ARTICLE VII

MISCELLANEOUS

     SECTION 7.01. Reimbursement of Costs and Expenses; Payments Generally.

     (a) Crystal Water and the Holding Company shall pay or reimburse FGIC for any and all charges,
fees, costs, and expenses (including reasonable attorney’s fees) that FGIC may reasonably pay or
incur in connection with the following: (i) the administration, enforcement, defense, or
preservation of any rights or security hereunder or under any other transaction

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EXHIBIT 4.32

document; (ii) the pursuit of any remedies hereunder, under any other transaction document, or
otherwise afforded by law or equity, (iii) any amendment, waiver, or other action hereunder or with
respect to or related to any transaction document whether or not executed or completed; (iv) the
violation by Crystal Water and the Holding Company of any law, rule, or regulation or any judgment,
order or decree applicable to it; (v) any advances or payments made by FGIC to cure defaults of
Crystal Water and the Holding Company under the transaction documents; or (vi) any litigation or
other dispute in connection with this Agreement or any other transaction document, or the
transactions contemplated hereby or thereby, other than amounts resulting from the failure of the
FGIC to honor its payment obligations under the Policy. FGIC reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver, or consent proposed in respect of
any transaction document. The obligations of Crystal Water and the Holding Company to FGIC shall
survive discharge and termination of the transaction documents. Crystal Water and the Holding
Company’s obligations under this Section 7.01 shall be unconditional and shall be paid promptly
upon receipt by the Company of demand therefor.

     (b) If any payment hereunder is specified to be made on a date that is not a Business Day,
then such payment shall be made on the Business Day next succeeding the date originally specified
for such payment.

     SECTION 7.02. Indemnification; Limitation of Liability.

     (a) In addition to any and all rights of indemnification or any other rights of FGIC pursuant
hereto or under law or equity or under any financing document, Crystal Water and the Holding
Company and any successors thereto agree to pay, and to protect, indemnify and save harmless, FGIC
and its officers, directors, shareholders, employees, and agents, from and against any and all
claims, losses, liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses, including, without limitation, reasonable fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations or obligations
whatsoever paid by FGIC (herein collectively referred to as “Liabilities”) of any nature arising
out of or relating to the transactions contemplated by the financing documents by reason of:

     (i) any untrue statement or alleged untrue statement of a material fact contained in
the offering document or in any amendment or supplement thereto or arising out of or based
upon any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except insofar as such
Liabilities arise out of or are based upon any such untrue statement or omission or
allegation thereof based upon information which describes FGIC in the offering document set
forth under the caption “Bond Insurance”, or in the financial statements of FGIC, including
any information in any amendment or supplement to the offering document furnished by FGIC in
writing expressly for use therein that amends or supplements such information;

     (ii) to the extent not covered by clause (i) above, any act or omission of Crystal
Water and the Holding Company in connection with the offering, issuance, sale or delivery of
the Bonds other than by reason of false or misleading information provided

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EXHIBIT 4.32

by FGIC in writing for inclusion in the offering document as specified in clause (i)
above or the allegation thereof;

     (iii) the misfeasance or malfeasance of, or negligence or theft committed by, any
director, officer, employee or agent of any of Crystal Water and the Holding Company; and

     (iv) any claim by any party other than the parties to be indemnified under this Section
7.02 arising out of any Event of Default under the Company Documents.

     (b) This indemnity provision shall survive the termination of this Agreement and shall survive
until the statute of limitations has run on any causes of action which arise from one of these
reasons and until all suits filed as a result thereof have been finally concluded. Any party which
proposes to assert the right to be indemnified under this Section 7.02 will promptly after receipt
of notice of commencement of any action, suit or proceeding against such party in respect of which
a claim is to be made against Crystal Water and the Holding Company under this Section 7.02, shall
notify Crystal Water and the Holding Company of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. In case any action, suit or proceeding shall be
brought against any indemnified party and it shall notify Crystal Water and the Holding Company of
the commencement thereof, Crystal Water and the Holding Company 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 Crystal Water and the Holding Company to such
indemnified party of its election so to assume the defense thereof, Crystal Water and the Holding
Company shall not be liable to such indemnified party for any legal expenses 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 counsel in any such
action the defense of which is assumed by Crystal Water and the Holding Company in accordance with
the terms of this subsection (b), but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless the employment of counsel by such indemnified party has been
authorized by Crystal Water and the Holding Company, or unless there is a conflict of interest.
Crystal Water and the Holding Company shall not under any circumstances be liable for any
settlement of any action or claim effected without its prior written consent.

     SECTION 7.03. Exercise of Rights. No failure or delay on the part of FGIC to exercise any
right, power or privilege under this Agreement and no course of dealing between FGIC Crystal Water
and the Holding Company or any other party shall operate as a waiver of any such right, power or
privilege, nor shall any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive of any rights or
remedies which FGIC would otherwise have pursuant to law or equity. No notice to or demand on any
party in any case shall entitle such party to any other or further notice or demand in similar or
other circumstances, or constitute a waiver of the right of the other party to any other or further
action in any circumstances without notice or demand.

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EXHIBIT 4.32

     SECTION 7.04. Amendment and Waiver. Any provision of this Agreement may be amended, waived,
supplemented, discharged or terminated only with the prior written consent of Crystal Water, the
Holding Company and FGIC. Crystal Water and the Holding Company hereby agree that upon the written
request of the Trustee, Financial Guaranty may make or consent to issue any substitute for the
Policy to cure any ambiguity or formal defect or omission in such Policy which does not materially
change the terms of such Policy or adversely affect the rights of the Holders, and this Agreement
shall apply to such substituted Policy. Financial Guaranty agrees to deliver to Crystal Water and
the Holding Company and to the company or companies, if any, rating the Bonds, a copy of such
substituted Policy.

     SECTION 7.05. Payments. The payments due by Crystal Water under the Note and the Loan
Agreement shall be structured such that moneys are deposited with the Bond Trustee five days in
advance of debt service payments on the Bonds Insured.

     SECTION 7.06. Successors and Assigns; Descriptive Headings.

     (a) This Agreement shall bind, and the benefits thereof shall inure to, Crystal Water and the
Holding Company and FGIC and their respective successors and assigns, so long as any Indenture is
in full force and effect. Except pursuant to an event specified in Article IV herein, neither
Crystal Water, the Holding Company nor FGIC may transfer or assign any or all of its rights and
obligations hereunder without the prior written consent of the other party hereto and any such
transfer or assignment without such written consent shall be void.

     (b) The descriptive headings of the various provisions of this Agreement are inserted for
convenience of reference only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.

     SECTION 7.07. Waiver. Crystal Water and the Holding Company waives any defense that this
Agreement was executed subsequent to the date of the Policy, admitting and covenanting that such
Policy was executed pursuant to Crystal Water and the Holding Company’s request and in reliance on
Crystal Water and the Holding Company’s promise to execute this Agreement.

     SECTION 7.08. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes any and all prior
agreements and understandings of the parties hereto with respect to the subject matter hereof,
including but not limited to the Commitment.

     SECTION 7.09. Notices, Requests, Demands. Except as otherwise expressly provided herein, all
written notices, requests, demands or other communications to or upon the respective parties hereto
shall be deemed to have been given or made when actually received, or in the case of telecopier
notice sent over a telecopier machine owned or operated by a party hereto, when sent, with
confirmation of receipt, addressed as specified below or at such other address as either of the
parties hereto may hereafter specify in writing to the other:

If to the Company:

The Crystal Water Company of Danielson

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EXHIBIT 4.32

93 West Main Street

Clinton, Connecticut 06413

Attention: Vice President – Finance

and Chief Financial Officer

Fax No.: 860-669-9326

If to the Holding Company:

Connecticut Water Service Inc.

93 West Main Street

Clinton, Connecticut 06413

Attention: Vice President – Finance

and Chief Financial Officer

Fax No.: 860-669-9326

If to FGIC:

Financial Guaranty Insurance Company

125 Park Avenue

New York, New York 10017

Attention: Manager, Global Utilities

Fax No.: 212-312-3093

     SECTION 7.10. Survival of Representations and Warranties. All representations, warranties
and obligations contained herein shall survive the execution and delivery of this Agreement and the
Policy.

     SECTION 7.11. Governing Law. This Agreement and the rights and obligations of the parties
under this Agreement shall be governed by and construed and interpreted in accordance with the laws
of the State of New York.

     SECTION 7.12. Counterparts. This Agreement may be executed in any number of copies and by
the different parties hereto on the same or separate counterparts, each of which shall be deemed to
be an original instrument. Complete counterparts of this Agreement shall be lodged with Crystal
Water, the Holding Company and FGIC.

     SECTION 7.13. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.

     SECTION 7.14. Parties Interested Herein. Nothing in this Agreement expressed or implied is
intended or shall be construed to confer upon, or to give or grant to, any person or entity, other
than Crystal Water and the Holding Company and Financial Guaranty, any right, remedy or claim under
or by reason of this Agreement or any covenant, condition or stipulation hereof, and all covenants,
stipulations, promises and agreements in this Agreement contained by and on behalf of Crystal Water
and the Holding Company shall be for the sole and exclusive benefit of Crystal Water and the
Holding Company and Financial Guaranty.

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EXHIBIT 4.32

     SECTION 7.15. Term. This Agreement shall expire upon the later of (i) the expiration of the
Policy in accordance with the terms thereof, or (ii) the repayment in full to Financial Guaranty of
any amounts due and owing to it by the Company under this Agreement or the Policy.

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EXHIBIT 4.32

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.

	 	 	 	 	 	 	 
	 	 	THE CRYSTAL WATER COMPANY OF DANIELSON	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David C. Benoit
 

	 	 
	 

	 	 	 	David C. Benoit	 	 
	 

	 	 	 	Vice President – Finance and Chief Financial
Officer	 	 
	 
	 	 	 	 	 	 
	 	 	CONNECTICUT WATER SERVICE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David C. Benoit
 

	 	 
	 

	 	 	 	Daniel C. Benoit	 	 
	 

	 	 	 	Vice President – Finance and Chief Financial
Officer	 	 
	 
	 	 	 	 	 	 
	 	 	FINANCIAL GUARANTY INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul R. Morrison
 

Paul R. Morrison
	 	 
	 

	 	 	 	Managing Director, International and Global
Utilities	 	 

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EXHIBIT 4.32

ANNEX A

DEFINITIONS

     For all purposes of this Agreement, except as otherwise expressly provided herein or unless
the context otherwise requires, all capitalized terms used herein and not otherwise defined shall
have the same meaning as in the Indenture, and all other capitalized terms shall have the meaning
as set out below.

     “Agreement” means this Insurance Agreement.

     “Attributable Debt” in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction, including any period
for which such lease has been extended or may, at the option of the lessor, be extended. Such
present value shall be calculated using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with generally accepted accounting principles.

     “Bonds” has the meaning set forth in the first recital of this Agreement.

     “Commitment” means that certain letter, dated March 17, 2005 as amended on October 5, 2005 and
on November 18, 2005, between Crystal Water, the Holding Company and FGIC.

     “Company Documents” has the meaning set forth in Article III(a).

     “Debt” means (A) indebtedness of Crystal Water or a Significant Subsidiary for borrowed money
evidenced by a bond, debenture, note or other written instrument or agreement by which Crystal
Water or a Significant Subsidiary is obligated to repay such borrowed money and (B) any guaranty by
Crystal Water or a Significant Subsidiary of any such indebtedness of another Significant
Subsidiary. “Debt” does not include, among other things, (w) indebtedness of Crystal Water or a
Significant Subsidiary under any installment sale or conditional sale agreement or any other
agreement relating to indebtedness for the deferred purchase price of property or services, or (x)
any trade obligation (including obligations under power or other commodity purchase agreements and
any hedges or derivatives associated therewith), or other obligations of Crystal Water or a
Significant Subsidiary in the ordinary course of business, (y) obligations of Crystal Water or a
Significant Subsidiary under any lease agreement (including any lease intended as security),
whether or not such obligations are required to be capitalized on the balance sheet of Crystal
Water or a Significant Subsidiary under generally accepted accounting principles.

     “Dollar” or “$” means a dollar or other equivalent unit in such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public and private debts.

     “Effective Interest Rate” means the lesser of the (i) the prime rate announced from time to
time by Citibank, N.A., or (ii) the maximum rate of interest permitted by then applicable law.

     “Event of Default” shall mean the events of default set forth in Section 5.01 of this
Agreement.

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EXHIBIT 4.32

     “Holder” or “Holders” means the Person in whose name a Bond is registered on the books kept
and maintained by the Trustee for registration and transfer of the Bonds.

     “Indenture” has the meaning set forth in the first recital of this Agreement.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, or any successor
federal statute.

     “Lien” means any mortgage, deed of trust, pledge, security interest, encumbrance, easement,
lease, reservation, restriction, servitude, charge or similar right and any other lien of any kind,
including, without limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof, and any defect, irregularity, exception or limitation in record title or,
when the context so requires, any lien, claim or interest arising from any of the foregoing.

     “Loan Agreement” has the meaning set forth in the second recital of this Agreement.

     “Net Tangible Assets” means the total amount of Crystal Water’s assets determined on a
consolidated basis in accordance with generally accepted accounting principles as of a date
determined pursuant to Section 4.02, less (i) the sum of Crystal Water’s consolidated current
liabilities determined in accordance with generally accepted accounting principles, and (ii) the
amount of Crystal Water’s consolidated assets classified as intangible assets, determined in
accordance with generally accepted accounting principles, including, but not limited to, such items
as goodwill, trademarks, trade names, patents, and unamortized debt discount and expense and
regulatory assets carried as an asset on Crystal Water’s consolidated balance sheet.

     “Policy Claim” has the meaning set forth in Article VI.

     “Policy Payment” means any payment by FGIC pursuant to the terms of the Policy.

     “Premium” means the premium described in the Commitment and payable by Crystal Water to FGIC
pursuant to Section 2.01 hereof.

     “Principal Property” means any property of Crystal Water or any Significant Subsidiary.

     “Significant Subsidiary” shall have the meaning specified in Rule 1-02(w) of Regulation S-X
under the Securities Act of 1933, as amended.

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EXHIBIT 4.32

ANNEX B

LIQUIDITY FACILITY REQUIREMENTS

	1.	 	Liquidity Provider Credit Ratings: The provider (the “Provider”) of a liquidity facility
(the “Facility”) to be used to pay the purchase price of tendered variable rate bonds (the
“Bonds”) shall be rated by both Moody’s Investors Service (“Moody’s”) and Standard & Poor’s
Ratings Services (“S&P”), and shall be of sufficient strength to cause the short-term ratings
for the Bond issue to be A-1+ by S&P and VMIG-1 by Moody’s. Financial Guaranty will not
deliver its bond insurance policy (the “Policy”) until such rating or ratings have been
released. Any Provider whose long-term rating drops below A- (S&P) or A3 (Moody’s) shall be
replaced at the request of Financial Guaranty.

	2.	 	Initial Term of Facility: Minimum initial term of 364 days is acceptable so long as the
notice of non-renewal (Section 9 hereof) provides adequate time for the Issuer to find a
substitute facility and the authorizing document mechanics in the event of non-renewal provide
for the Bonds to be tendered and the Facility to be drawn upon before expiration of the
Facility.

	3.	 	Renewals and Amendments: Any renewal on terms not identical to the terms of the initial (or
then renewing) Facility, or with a different Provider, shall be subject to the prior written
consent of Financial Guaranty. Financial Guaranty shall be provided with notice (and a copy)
of all Facility renewals, amendments and supplements.

	4.	 	(a) Immediate Termination Events. Upon the occurrence of only the following events, the
Provider may terminate the Facility prior to the stated expiration date thereof without
offering Bondholders one last opportunity to tender the Bonds to the Provider for purchase:

	 	(i)	 	Policy Default. Failure by Financial Guaranty to pay
principal and interest when, as and in the amounts required under the Policy,
including interest at the “bank rate” due the Provider on disbursements under
the Facility if such amount is included as interest on the Bonds under the
terms of the Bonds;
	 
	 	(ii)	 	Payment Default Under Other Insurance. Any default by
Financial Guaranty in making payment when, as and in the amounts required to be
made pursuant to the express terms and provisions of any other municipal bond
insurance policy or surety bond issued by Financial Guaranty;
	 
	 	(iii)	 	Nullity of Policy. The Policy for any reason ceases
to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, or Financial Guaranty denies that it has any
further liability under the terms thereof; or
	 
	 	(iv)	 	Insolvency Proceeding Against Financial Guaranty. A
proceeding has been instituted in a court having jurisdiction in the premises
seeking an

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EXHIBIT 4.32

order for relief, rehabilitation, reorganization, conservation, liquidation
or dissolution in respect of Financial Guaranty under the Insurance Law of
the State of New York or any successor provision thereto and such proceeding
is not terminated for a period of 60 consecutive days or such court enters
an order granting the relief sought in such proceeding.

	 	(b)	 	Termination Event Requiring “One Last Put” Opportunity. Upon the occurrence of
only the following events, the Provider may terminate the Facility prior to the stated
expiration date thereof but must provide Bondholders with one last opportunity to
tender their Bonds to the Provider for purchase prior to termination:

	 	(i)	 	The financial strength rating assigned to Financial Guaranty or
the rating assigned to securities insured by Financial Guaranty, as applicable,
is withdrawn, suspended or reduced to A, A2 or A, or below by any two of S&P,
Moody’s or Fitch, respectively.
	 
	 	(ii)	 	Failure of the Issuer to pay the Provider commitment fees for the Facility.

	 	(c)	 	No Other Termination Events. The only events permitting termination of the
Facility by the Provider prior to its stated expiration date are as specified in 4(a)
and 4(b) above. In particular, neither failure by the issuer to comply with any
covenants made by it in the Facility nor breach by the issuer of any representation or
warranty made by it in the Facility nor continuation of such failure or breach
following receipt by the issuer of notice thereof is a permissible event of
termination. The sole remedy allowed to the Provider upon such an event of default
shall be the ability to sue for specific performance.
	 
	 	(d)	 	Events Permitting Acceleration. Upon the occurrence of an event described in
4(a), the Provider may tender its Bonds to the issuer for immediate repurchase, and no
limitations shall be imposed on the exercise by the Provider of any remedies available
to it against the issuer (e.g., causing the issuer to accelerate its loan to the
ultimate borrower of Bond proceeds) should the issuer default on any such repurchase
obligation to the Provider.

	5.	 	Conditions to Effectiveness of Facility:

	 	(a)	 	As a condition to closing, Financial Guaranty may be required to provide its
customary enforceability and disclosure opinion with respect to the Policy.
	 
	 	(b)	 	As a condition to the issuance of the Policy, an opinion of counsel to the
Provider (including a separate opinion of foreign counsel in the case of a U.S. branch
of a foreign bank) regarding corporate matters, validity, enforceability and such other
matters as Financial Guaranty shall require, shall be addressed to (or shall be the
subject of a reliance letter addressed to) Financial Guaranty.

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EXHIBIT 4.32

	6.	 	Form of Liquidity Facility: Either a letter of credit or a standby bond purchase
agreement shall be acceptable.

	7.	 	Parity Payments: (Applicable for revenue bond issues) The Facility shall provide that only
the following amounts are payable on a parity with principal of and interest on the Bonds: (i)
the Provider’s periodic commitment fee and (ii) interest on the Bonds held by the Provider
calculated at the “provider rate.” All other amounts (e.g., “increased obligation of the
debtor enforceable in accordance with its terms costs,” uninsured “claw-back” amount, penalty
interest charges and indemnification amounts) shall be payable on a subordinated basis to
payment of principal and interest on the Bonds, replenishment of any debt service reserve fund
and payment of the fees of the trustee or paying agent for the Bonds (herein, the “Trustee”),
and both the Facility and the authorizing document for the Bonds shall specifically so
provide.

	8.	 	Increased Costs: Any “increased costs” payable by the issuer pursuant to the Facility shall
be subordinated to the payment of principal and interest on the Bonds, replenishment of any
debt service reserve fund and payment of the fees of the Trustee, and the Facility shall
expressly so provide. The Facility shall limit “increased costs” to increases in costs to the
Provider or any participant of its obligations under the Facility as the result of the
imposition, increase or applicability of any reserve, special deposit, capital adequacy or
similar requirement against the obligations of the Provider or any participant under the
Facility (other than as a result of the acts, omissions or financial condition of the Provider
or such participant) due to any change in any law or regulation or in the interpretation
thereof by any court or administrative or governmental authority charged with the
administration thereof.

	9.	 	Notice of Non-Renewal: The Provider shall be required to give not less than 30 days’ notice
to the Trustee and Financial Guaranty before the Trustee under the authorizing document is
required to give Bondholders notification to tender Bonds as a result of a non-renewal
(“Non-Renewal Mandatory Tender”). (If the Trustee is required to send out a Mandatory Tender
Notice 30 days prior to the Facility termination, the Provider will be required to give the
Trustee notice of non-renewal 60 days prior to the expiration date of the Facility of its
intention not to renew or extend the Facility.) Early termination pursuant to paragraph 4(b)
above requires the same timing notification as described above. Early termination pursuant to
paragraph 4(a) above requires no prior notice.

	10.	 	Certain Mandatory Conversions to Fixed Rate: The Trustee shall commence the process required
by the authorizing document to effect a mandatory conversion of the interest rate on the Bonds
to a fixed rate (sufficient to accomplish the complete remarketing at par of all Bonds then
held by the Provider) on or as soon as practicable after the termination date of the Facility,
in the case of a termination pursuant to paragraph 4(a) or 4(b) and a Non-Renewal Mandatory
Tender:

If such a remarketing cannot be effected, the Bonds shall continue to bear interest at the
variable rate and the remarketing agent shall attempt at least weekly to convert the Bonds
to a fixed interest rate sufficient to effect the remarketing at par of all Bonds then held
by the Provider.

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EXHIBIT 4.32

	11.	 	Holding Periods: For amortization periods of less than 5 years, no amortization shall be
permitted prior to the first anniversary of the date the tendered Bonds are purchased by the
Provider. For amortization periods of 5 years or more, no amortization shall be permitted
prior to 6 months from the date the tendered Bonds are purchased by the Provider. Whether
during the term of the Facility or subsequent to the termination thereof, the Provider shall
not be permitted to tender unremarketed Bonds to the issuer and shall be required to hold such
Bonds for the periods and in accordance with the conditions set forth above (except that no
holding period is required in the event of a termination of the Facility pursuant to 4(a)
hereof). Financial Guaranty shall pay only principal and interest on the Bonds as scheduled,
in accordance with the terms of the Policy, unless Financial Guaranty has provided, at the
request of the Provider, an endorsement to its Policy to cover a special mandatory redemption
under the authorizing document.

	12.	 	Maximum Rates: The maximum rate payable for any interest payment period on the Bonds,
whether or not held by or pledged to the Provider at such time, shall be the lesser of 10%
per annum and the maximum rate permitted by applicable law (the “Cap Rate”).

B-4

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