EXECUTION COPY
===============================================================
Connecticut Development Authority
and
Bridgeport Hydraulic Company
______________
LOAN AGREEMENT
______________
Dated as of September 1, 1996
Connecticut Development Authority
$30,000,000 6.00% Water Facilities Revenue Bonds
(Bridgeport Hydraulic Company Project - 1996 Series)
===============================================================
Connecticut Development Authority
Bridgeport Hydraulic Company
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and dated as of September 1, 1996
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 Bridgeport Hydraulic
Company, a corporation organized and existing under the laws of the
State of Connecticut,
WITNESSETH THAT:
WHEREAS, the State Commerce Act, constituting Connecticut
General Statutes, Sections 32-1a through 32-23xx, as amended (the
"Act"), declares that there is a continuing need in the State (1) for
economic development and activity to provide and maintain employment
and tax revenues and to control, xxxxx and prevent pollution to
protect the public health and safety and (2) 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) that a
project may also include or consist exclusively of machinery,
equipment or fixtures; and
WHEREAS, the Act defines economic development project to
include "any project which is to be used or occupied by any person for
. . . (2) controlling, abating, preventing or disposing of land,
water, air or other environmental pollution . . . or (3) the
conservation of energy or the utilization of cogeneration technology
or solar, wind, hydro, biomass or other renewable sources to produce
energy for any industrial or commercial application."
WHEREAS, the Act provides that the Authority shall have
power (1) to determine the location and character of any project to be
financed under the provisions of the Act; (2) to purchase, receive by
gift or otherwise, lease, exchange, or
otherwise acquire, and construct, reconstruct, improve, maintain, equip and
furnish one or more projects, including all real and personal property which
the Authority may deem necessary therewith, and to enter into a contract
with a person therefor upon such terms and conditions as the Authority
shall determine to be reasonable, including but not limited to xxxx-
bursement for the planning, designing, financing, construction,
reconstruction, improvement, equipping, furnishing, operation and
maintenance of reserve and insurance funds with respect to the
financing of the project; (3) to extend credit or make loans to any
person for the planning, designing, financing, acquiring,
constructing, reconstructing, improving, equipping and furnishing of a
project and for the refinancing of existing indebtedness with respect
to any facility or part thereof which would qualify as a project in
order to facilitate substantial improvements thereto, which credits or
loans may be secured by loan agreements, mortgages, contracts and all
other instruments or fees and charges, upon such terms and conditions
as the Authority shall determine to be reasonable in connection with
such loans, including provision for the establishment and maintenance
of reserve and insurance funds and in the exercise of powers granted
in the Act in connection with a project for such person, to require
the inclusion in any contract, loan agreement or other instrument,
such provisions for the construction, use, operation and maintenance
and financing of a project as the Authority may deem necessary or
desirable; (4) to issue its bonds for such purposes, subject to the
approval of the Treasurer of the State; and, (5) 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 various resolutions, as amended by subsequent
resolutions, in furtherance of the purposes of the Act, the Authority
has accepted the application of Bridgeport Hydraulic Company for
assistance in the financing of various capital projects in the State
of Connecticut; and
WHEREAS, the Borrower currently owns certain existing
facilities within certain municipalities in the State and, by
resolution adopted in furtherance of the purposes of the Act, the
Authority has accepted the application of the Borrower for assistance
in the design, acquisition, installation and construction of a water
treatment facility for the treatment of water from the Hemlocks
Reservoir in the Town of Fairfield, Connecticut that will treat up to
50 million gallons per day from the Reservoir, two water treatment
facilities in Litchfield County, Connecticut for the filtration of
water from the Lakeville Reservoirs, in Salisbury, Connecticut and
Lake Wangum in Canaan, Connecticut that will each treat .75 million
gallons of water per day. The Project also involves the design,
acquisition,
-2-
construction and installation of certain other facilities
consisting of transmission and distribution mains, service lines,
meters and hydrants for the purpose of supplying safe potable water to
the general public within the Company's service area.(the "Project"),
and
WHEREAS, the Authority has by a further resolution adopted
September 18, 1996, authorized the issuance of $30,000,000 principal
amount of its 6.00% Water Facilities Revenue Bonds (Bridgeport
Hydraulic Company Project - 1996 Series) (the "Bonds") for the
purposes of providing funds for the Project; and
WHEREAS, pursuant to such resolution the Bonds (as
hereinafter defined) are to be secured by an Indenture of Trust of
even date herewith, by and between the Authority and Fleet National
Bank, as Trustee (the "Indenture"); and
WHEREAS, the Bonds shall be special obligations of the
Authority, payable solely from the revenues or other receipts, funds
or monies to be derived by the Authority under this Agreement or the
Indenture and from any amounts otherwise available under the Indenture
for the payment of the Bonds; and
WHEREAS, the Authority proposes with the proceeds of the
Bonds to make a loan to the Borrower and the Borrower proposes to
borrow such proceeds from the Authority for the purpose of the
acquisition, construction and installation of the Project; and
WHEREAS, the Borrower acknowledges that the Authority is
providing financing for the Project in furtherance of the Authority's
corporate purposes under the Act, that the accomplishment of these
purposes is dependent upon the compliance of the Borrower with its
covenants contained in this Agreement, that the Authority has a
resulting beneficial interest in the Project, and that the Borrower's
use of and interest in the Project as provided hereby are in
furtherance of the discharge of a public purpose; and
WHEREAS, the Connecticut Department of Public Utility
Control (the "DPUC") has approved the issuance of the Note;
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, covenants and agreements herein set forth, the
Authority and the Borrower, each binding itself, its successors and
assigns, do mutually promise, covenant and agree as follows (provided
that in the performance of the agreements of the Authority herein
contained, any obligation it may incur for the payment of money shall
not be an obligation, debt or liability of the
-3-
State or any municipality thereof and neither the State nor any municipality
thereof shall be liable on any obligation so incurred, but any such
obligation shall be payable solely out of the revenues or other
receipts, funds or monies to be derived by the Authority under this
Agreement or the Indenture and from any amounts otherwise available
under the Indenture for the payment of the Bonds):
-4-
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. For the purposes of this
-----------
Agreement, the following words and terms shall have the respective
meanings set forth as follows, and any capitalized word or term used
but not defined herein is used as defined in the Indenture:
"DPUC" means the State Department of Public Utilities
Control.
"Event of Default" means an Event of Default as defined in
subsection 7.1 hereof.
"Net Proceeds" when used with respect to any insurance or
condemnation award, means the gross proceeds from such award less all
expenses (including attorney's fees and expenses and any extraordinary
expenses) incurred by the Trustee in the collection thereof.
"Note" means the promissory note of the Borrower to the
Authority, dated the date of initial delivery of the Bonds in the form
attached as an Appendix to this Agreement, and any amendments and
supplements made in conformity with this Agreement and the Indenture.
"Participating Underwriter" shall have the meaning ascribed
thereto in the Continuing Disclosure Agreement.
"Permitted Encumbrances" mean, as of any particular date,
(i) the lien of the Mortgage, (ii) liens and encumbrances permitted by
the Mortgage, (iii) liens for taxes not yet due and payable, (iv) any
lien created by this Agreement and the Indenture, (v) utility, access
and other easements and rights-of-way, that will not interfere with or
impair the value or use of the Project as herein provided, (vi) any
mechanic's, laborer's, materialman's, supplier's or vendor's lien or
right in respect thereof if payment is not yet due and payable and for
which statutory lien rights exist, and (vii) such minor defects,
irregularities, easements, and rights-of- way (including agreements
with any railroad the purpose of which is to service the railroad
siding) as normally exist with respect to property similar in
character to the Project and which do not materially impair the value
or use of the property affected thereby for the purpose for which it
was acquired hereunder.
"Principal User" means any principal user of the Project
within the meaning of Section 144(a)(2)(B) of the Code, including
without limitation any person who is a greater-than-10-percent-owner
(or if none, the person(s) who
-5-
holds the largest ownership interest in
the Project), lessee or user of more than 10% of the Project measured
either by occupiable space or fair rental value under any formal or
informal agreement or, under the particular facts and circumstances,
anyone who is a principal customer of the Project. The term
"principal customer" means any person, who purchases output of the
Project under a contract if the percentage of output taken or to be
taken by such person, multiplied by a fraction the numerator of which
is the term of such contract and the denominator of which is the
economic life of the Project, exceeds 10%. In the case of a person
who purchases output of an electric or thermal energy, gas, water or
other similar facility, such person is a principal customer if the
total output purchased by such person during any one year period
beginning with the date the facility is placed in service is more than
10% of the facility's output during each such period. Co-owners or
co-lessees who are shareholders in a corporation or who are
collectively treated as a partnership subject to subchapter K under
section 761(a) of the Code are not treated as Principal Users merely
by reason of their ownership of corporate or partnership interests.
"Related Person" means, with respect to any Principal User,
a person which is a related person (as defined in Section 144(a)(3) of
the Code, and by reference to Sections 267, 707(b) and 1563(a) of the
Code, except that 50% is to be substituted for 80% in Section
1563(a)).
"Substantial User" means any substantial user of the Project
within the meaning of Section 147(a) of the Code.
Section 1.2. Interpretation. In this Agreement:
--------------
(1) The terms "hereby", "hereof", "hereto", "herein",
"hereunder" and any similar terms, as used in this Agreement,
refer to this Agreement, and the term "hereafter" means after,
and the term "heretofore" means before, the date of this
Agreement.
(2) Words of the masculine gender mean and include
correlative words of the feminine and neuter genders and words
importing the singular number mean and include the plural number
and vice versa.
(3) Words importing persons include firms, associations,
partnerships (including limited partnerships), trusts,
corporations and other legal entities, including public bodies,
as well as natural persons.
(4) Any headings preceding the texts of the several
Articles and Sections of this Agreement, and any table of
contents appended to copies hereof, shall be solely for
convenience of reference and shall not constitute a part
-6-
of this Agreement, nor shall they affect its meaning, construction or
effect.
(5) Nothing contained in this Agreement shall be construed
to cause the Borrower to become the agent for the Authority or
the Trustee for any purpose whatsoever, nor shall the Authority
or the Trustee be responsible for any shortage, discrepancy,
damage, loss or destruction of any part of the Project wherever
located or for whatever cause.
(6) All approvals, consents and acceptances required to be
given or made by any person or party hereunder shall be at the
sole discretion of the party whose approval, consent or
acceptance is required.
(7) All notices to be given hereunder shall be given in
writing within a reasonable time unless otherwise specifically
provided.
(8) This Agreement shall be governed by and construed in
accordance with the applicable laws of the State.
(9) If any provision of this Agreement shall be ruled
invalid by any court of competent jurisdiction, the invalidity of
such provision shall not affect any of the remaining provisions
hereof.
(10) All references to the Bank, the Reimbursement Agreement
or the Credit Facility in this Agreement, the Note, the
Indenture, and the Bonds shall be ineffective until such time as
there is delivered to the Trustee or Paying Agent a Credit
Facility and shall remain effective thereafter until: (a) the
date upon which there is no Credit Facility in effect; and (b)
the Trustee has received a certificate from the Bank stating that
all amounts payable to the Bank under the Reimbursement Agreement
have been paid in full.
-7-
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the Authority. The
--------------------------------
Authority represents and warrants that:
(1) It is a body corporate and politic constituting a
public instrumentality and political subdivision of the State,
duly organized and existing under the laws of the State including
the Act. The Authority is authorized to issue the Bonds in
accordance with the Act and to use the proceeds thereof to
finance the Project.
(2) The Authority has complied with the provisions of the
Act and has full power and authority pursuant to the Act to
consummate all transactions contemplated by the Bonds, the
Indenture and the Financing Documents.
(3) By resolution duly adopted by the Authority and still
in full force and effect, the Authority has authorized the
execution, delivery and due performance of the Bonds, the
Indenture and the Financing Documents, and the taking of any and
all action as may be required on the part of the Authority to
carry out, give effect to and consummate the transactions
contemplated by this Agreement and the Indenture, and all
approvals necessary in connection with the foregoing have been
received.
(4) The Bonds have been duly authorized, executed,
authenticated, issued and delivered, constitute valid and binding
special obligations of the Authority payable solely from revenues
or other receipts, funds or monies pledged therefor under the
Indenture and from any amounts otherwise available under the
Indenture, and are entitled to the benefit of the Indenture.
Neither the State nor any municipality thereof is obligated to
pay the Bonds or the interest thereon. Neither the faith and
credit nor the taxing power of the State nor any municipality
thereof is pledged for the payment of the principal, and premium,
if any, of and interest on the Bonds.
(5) The execution and delivery of the Bonds, the Indenture
and the Financing Documents and compliance with the provisions
thereof, will not conflict with or constitute on the part of the
Authority a violation of, breach of or default under its by-laws
or any statute, indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Authority
is a party or by which the Authority is bound, or, to the
knowledge of the Authority, any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Authority or any of its activities or properties, and all
consents, approvals,
-8-
authorizations and orders of governmental or
regulatory authorities which are required for the consummation by
the Authority of the transactions contemplated thereby have been
obtained.
(6) Subject to the provisions of this Agreement and the
Indenture, the Authority will apply the proceeds of the Bonds to
the purposes specified in the Indenture and the Financing
Documents.
(7) There is no action, suit, proceeding or investigation
at law or in equity before or by any court, public board or body
pending or threatened against or affecting the Authority, or to
the best knowledge of the Authority, any basis therefor, wherein
an unfavorable decision, ruling or finding would adversely affect
the transactions contemplated hereby or by the Indenture, or
which, in any way, would adversely affect the validity of the
Bonds, or the validity of or enforceability of the Indenture or
the Financing Documents, or any agreement or instrument to which
the Authority is a party and which is used or contemplated for
use in consummation of the transactions contemplated hereby and
by the Indenture.
(8) It has not made any commitment or taken any action
which will result in a valid claim for any finders or similar
fees or commitments in respect of the transactions contemplated
by this Agreement.
(9) The representations of the Authority set forth in the
Tax Regulatory Agreement are by this reference incorporated in
this Agreement as though fully set forth herein.
Section 2.2. Representations by the Borrower. The Borrower
-------------------------------
represents and warrants that:
(1) The Borrower has been duly incorporated and validly
exists as a corporation in good standing under the laws of the
State of Connecticut, is not in violation of any provision of its
certificate of incorporation or its by-laws, has corporate power
to enter into and perform the Financing Documents, and by proper
corporate action has duly authorized the execution and delivery
of the Financing Documents.
(2) The Financing Documents constitute valid and legally
binding obligations of the Borrower, enforceable in accordance
with their respective terms, except to the extent that such
enforceability may be limited by bankruptcy or insolvency or
other laws affecting creditors' rights generally or by general
principles of equity.
-9-
(3) Neither the execution and delivery of the Financing
Documents, the consummation of the transactions contemplated
thereby, nor the fulfillment by the Borrower of or compliance by
the Borrower with the terms and conditions thereof is prevented
or limited by or conflicts with or results in a breach of, or
default under the terms, conditions or provisions of any
contractual or other restriction of the Borrower, evidence of its
indebtedness or agreement or instrument of whatever nature to
which the Borrower is now a party or by which it is bound, or
constitutes a default under any of the foregoing. No event has
occurred and no condition exists which, upon the execution and
delivery of any Financing Documents, constitutes an Event of
Default hereunder or an event of default thereunder or, but for
the lapse of time or the giving of notice, would constitute an
Event of Default hereunder or an event of default thereunder.
(4) There is no action or proceeding pending or, to the
knowledge of the Borrower, threatened against the Borrower before
any court, administrative agency or arbitration board that may
materially and adversely affect the ability of the Borrower to
perform its obligations under the Financing Documents and all
authorizations, consents and approvals of governmental bodies or
agencies required in connection with the execution and delivery
of the Financing Documents and in connection with the performance
of the Borrower's obligations hereunder or thereunder have been
obtained.
(5) The execution, delivery and performance of the
Financing Documents and any other instrument delivered by the
Borrower pursuant to the terms hereof or thereof are within the
corporate powers of the Borrower and have been duly authorized
and approved by the board of directors of the Borrower and are
not in contravention of law or of the Borrower's certificate of
incorporation or by-laws, as amended to date, or of any
undertaking or agreement to which the Borrower is a party or by
which it is bound.
(6) The Borrower represents that it has not made any
commitment or taken any action which will result in a valid claim
for any finders' or similar fees or commitments in respect of the
transactions described in this Agreement other than the fees to
various parties to the transactions contemplated hereby which
have been heretofore paid or provided.
(7) The Project is included within the definition of a
"project" in the Act, and its estimated cost is equal to or in
excess of $30,000,000. The Borrower intends the Project to be
and continue to be an authorized project under the Act during the
Term of this Agreement.
-10-
(8) All amounts shown in Schedule D of the Tax Regulatory
Agreement are eligible costs of a project financed by bonds
issued by the Authority under the Act, and may be financed by
amounts in the Project Fund under the Indenture. None of the
proceeds of the Bonds will be used directly or indirectly as
working capital or to finance inventory.
(9) The Project is in material compliance with all
applicable federal, State and local laws and ordinances
(including rules and regulations) relating to zoning, building,
safety and environmental quality the non-compliance with which
would materially adversely affect the performance by the Borrower
of any of its obligations hereunder.
(10) The Borrower has obtained, or will obtain, all
necessary material approvals from any and all governmental
agencies requisite to the Project, and has also obtained all
material occupancy permits and authorizations from appropriate
authorities authorizing the occupancy and use of the Project for
the purposes contemplated hereby. The Borrower further
represents and warrants that it will complete the Project in
accordance with all material federal, State and local laws,
ordinances and regulations applicable thereto.
(11) The Borrower does not presently intend to lease the
Project.
(12) The Borrower will not take or omit to take any action
which action or omission will in any way cause the proceeds of
the Bonds to be applied in a manner contrary to that provided in
the Indenture and the Financing Documents as in force from time
to time.
(13) The Borrower has not taken and will not take any action
and knows of no action that any other person, firm or corporation
has taken or intends to take, which would cause interest on the
Bonds to be includable in the gross income of the recipients
thereof for federal income tax purposes. The representations,
certifications and statements of reasonable expectation made by
the Borrower in the Tax Regulatory Agreement and relating to
Project description, composite issues, bond maturity and average
asset economic life, use of Bond proceeds, arbitrage and related
matters are hereby incorporated by this reference as though fully
set forth herein.
(14) The Borrower has good and marketable title to the
Project subject only to Permitted Encumbrances and to
irregularities or defects in title which may exist which do not
materially impair the use of such properties in the Borrower's
business.
-11-
(15) As of the date of execution hereof, except for the
Mortgage, neither the Borrower, nor to its knowledge anyone
acting on behalf of the Borrower, has entered into negotiations
with any person for the purpose of undertaking any borrowing
concurrently with or subsequent to the issuance of the Bonds and
to be secured wholly or partially by a lien or encumbrance on the
Project or any part thereof, and the Borrower has no present
intention of undertaking any such borrowing.
(16) The Borrower will use all of the proceeds of the Bonds
to finance the Project Costs.
-12-
ARTICLE III
THE LOAN
Section 3.1. Loan Clauses. (A) Subject to the conditions
------------
and in accordance with the terms of this Agreement, the Authority
agrees to make a loan to the Borrower from the proceeds of the Bonds
in the amount of $30,000,000 and the Borrower agrees to borrow such
amount from the Authority.
(B) The loan shall be made at the time of delivery of the
Bonds and receipt of payment therefor by the Authority against receipt
by the Authority of the Note duly executed and delivered to evidence
the pecuniary indebtedness of the Borrower hereunder. As and for the
loan the Authority shall apply the proceeds of the Bonds as provided
in the Indenture on the terms and conditions therein prescribed.
(C) On or before 11:00 a.m. of each due date for the
payment of the principal of or interest on the Bonds, until the
principal or Redemption Price, if any, of and interest on the Bonds
shall have been fully paid or provision for the payment thereof shall
have been made in accordance with the Indenture, the Borrower shall
make loan payments to the Trustee for the account of the Authority in
an amount which, when added to any moneys then on deposit in the Debt
Service Fund and available therefor, shall be equal to the amount
payable on such due date with respect to the Bonds as provided in
Section 5.3 of the Indenture, including amounts due for the payment of
the principal of and interest on the Bonds. In addition, the Borrower
shall pay to the Trustee, as and when the same shall become due, all
other amounts due under the Financing Documents, together with
interest thereon at the then applicable rate as set forth herein in
Section 6.2(G). The Borrower shall have the option to prepay its loan
obligation in whole or in part at the times and in the manner provided
in Article VIII hereof. The Borrower shall also pay to the
Remarketing Agent amounts in accordance with and pursuant to Section
9.18(B) of the Indenture.
(D) Anything herein to the contrary notwithstanding any
amount at any time held in the Debt Service Fund by the Trustee
pursuant to this Section shall be credited against the next succeeding
loan payment obligation of the Borrower as provided in subsection
3.1(c) hereof. If, on any due date for payments with respect to the
Bonds, the balance in the Debt Service Fund is insufficient to make
such payments, the Borrower agrees forthwith to pay to the Trustee no
later than 11:00 a.m. the amount of the deficiency. If at any time
the amount held by the Trustee in the Debt Service Fund shall be
sufficient to pay or provide for the payment of the Bonds in
accordance with Section 12.1 of the Indenture, the Borrower shall not
be obligated to make any further payments under the foregoing
provisions.
-13-
(E) The payment obligations of the Borrower while the Bonds
are in the Daily, Weekly or Flexible Modes in this Section 3.1 are
subject in all respects to the provisions of Sections 3.7 and 3.8
hereof regarding the use of Priority Amounts and the effect of
drawings under the Credit Facility.
Section 3.2. Other Amounts Payable. (A) The Borrower
---------------------
hereby further expressly agrees to pay to the Trustee as and when the
same shall become due, (i) an amount equal to the initial and annual
fees of the Trustee for the ordinary services of the Trustee rendered
and its ordinary expenses incurred under the Indenture, including fees
and expenses as Paying Agent and the fees and expenses of Trustee's
counsel, including fees and expenses as registrar and in connection
with preparation and delivery of new Bonds upon exchanges or
transfers, (ii) the reasonable fees and expenses of the Trustee and
any Paying Agents on the Bonds for acting as paying agents as provided
in the Indenture, including fees and expenses of Paying Agent as
registrar and in connection with the preparation of new Bonds upon
exchanges, transfers or redemptions, (iii) the reasonable fees and
charges of the Trustee for extraordinary services rendered by it and
extraordinary expenses incurred by it under the Indenture, including
reasonable counsel fees and expenses, and (iv) fees and expenses of
Bond Counsel and the Authority for any future action requested of
either.
(B) The Borrower also agrees to pay all amounts payable by
it under the Financing Documents at the time and in the manner therein
provided.
(C) The Borrower agrees to pay all Rebate Amounts (and
penalties, if any) due to the United States of America pursuant to
Section 148 (f) of the Code.
(D) The Borrower also agrees to pay directly to the
Authority on the date of issuance of the Bonds and on each anniversary
date thereafter, a fee equal to 1/12 of 1% of the principal amount of
the Bonds Outstanding, such fee to be payable, without notice, demand
or invoice of any kind at the Authority's address as set forth herein
or at such other address and to the attention of such other person, or
to such account as the Authority may stipulate by written notice to
the Borrower.
Section 3.3. Manner of Payment. The payments provided for
-----------------
in Section 3.1 hereof shall be made by any reasonable method providing
immediately available funds at the time and place of payment directly
to the Trustee for the account of the Authority and shall be deposited
in the Debt Service Fund. The additional payments provided for in
Section 3.2 shall be made in the same manner directly to the entitled
party or to the Trustee for its own use or disbursement to the Paying
Agents, as the case may be.
-14-
Section 3.4. Obligation Unconditional. The obligations of
------------------------
the Borrower under the Financing Documents shall be absolute and
unconditional, irrespective of any defense or any rights of setoff,
recoupment or counterclaim it might otherwise have against the
Authority or the Trustee. The Borrower will not suspend or
discontinue any such payment or terminate this Agreement (other than
in the manner provided for hereunder) for any cause, including,
without limiting the generality of the foregoing, any acts or
circumstances that may constitute failure of consideration, failure of
title, or commercial frustration of purpose, or any damage to or
destruction of the Project, or the taking by eminent domain of title
to or the right of temporary use of all or any part of the Project, or
any change in the tax or other laws of the United States, the State or
any political subdivision of either thereof, or any failure of the
Authority or the Trustee to perform and observe any agreement or
covenant, whether expressed or implied, or any duty, liability or
obligation arising out of or connected with the Financing Documents.
Section 3.5. Securities Clauses. The Authority hereby
------------------
notifies the Borrower and the Borrower acknowledges that, among other
things, the Borrower's loan payments and all of the Authority's right,
title and interest under the Financing Documents to which it is a
party (except its rights under Section 6.2 hereof) are being
concurrently with the execution and delivery hereof endorsed, pledged
and assigned without recourse by the Authority to the Trustee as
security for the Bonds as provided in the Indenture.
Section 3.6. Issuance of Bonds. The Authority has
-----------------
concurrently with the execution and delivery hereof sold and delivered
the Bonds under and pursuant to a resolution adopted by the Authority
on September 18, 1996, authorizing their issuance under and pursuant
to the Indenture. The proceeds of sale of the Bonds shall be applied
as provided in Articles IV and V of the Indenture.
Section 3.7. Use of Priority Amounts. The Borrower and the
-----------------------
Authority acknowledge their intention to minimize the risk that any
payment made to a Bondowner from amounts provided by or on behalf of
the Borrower may be determined by a bankruptcy court to constitute a
preference. To this end the parties agree that payments to Bondowners
on Bonds supported by a Credit Facility shall be made only from
Priority Amounts, except when and to the extent no Priority Amounts
are available for the purpose as provided in Section 5.9(E) of the
Indenture.
Section 3.8. Effect of Drawings Under Credit Facility. The
----------------------------------------
payment of obligations of the Borrower under this Agreement and the
Note with respect to the Bonds shall be completely satisfied to the
extent of all drawings made under
-15-
a Credit Facility for the purpose of satisfying such obligations.
Section 3.9. Effective Date and Term. (A) This Agreement
-----------------------
shall become effective upon its execution and delivery by the parties
hereto, shall remain in full force from such date and, subject to the
provisions hereof (including particularly Articles VII and VIII),
shall expire on such date as the Indenture shall be discharged and
satisfied in accordance with the provisions of subsection 12.1(A)
thereof. The Borrower's obligations under Sections 6.2 and 6.3
hereof, however, shall survive the expiration of this Agreement in
accordance with the provisions of such Sections.
(B) Within 60 days of such expiration the Authority shall
deliver to the Borrower any documents and take or cause the Trustee,
at the Borrower's expense, to take any such reasonable actions as may
be necessary to effect the cancellation, release and satisfaction of
the Indenture and the Financing Documents.
Section 3.10. Borrower's Purchase of Bonds. Pursuant to
----------------------------
Section 5.9(F) of the Indenture, if the amount drawn on the Credit
Facility and deposited with the Paying Agent, together with all other
amounts (including remarketing proceeds) received by the Paying Agent
for the purchase of Bonds supported by a Credit Facility and tendered
pursuant to Sections 2.3(G)(1)(b), 2.3(G)(1)(c), 2.3(G)(2)(b), (c) or
(d), or 2.3(G)(3)(b), (c) or (d), of the Indenture, is not sufficient
to pay the Purchase Price of such Bonds on the Purchase Date, the
Paying Agent shall before 3:30 P.M. on such Purchase Date, notify the
Borrower, the Remarketing Agent and the Trustee of such deficiency by
telephone promptly confirmed in writing. The Borrower shall pay to
the Paying Agent in immediately available funds by 4:00 P.M. on the
Purchase Date an amount equal to the Purchase Price of such Bonds less
the amount, if any, available to pay the Purchase Price in accordance
with Section 9.18 of the Indenture from the proceeds of the
remarketing of such Bonds or from drawings on a Credit Facility, as
reported by the Paying Agent. Bonds purchased entirely with moneys
furnished by the Borrower shall be Borrower Bonds.
Section 3.11. Credit Facility. The Borrower is to arrange,
prior to but effective with the Conversion Date to a Daily, Weekly or
Flexible Mode, for the delivery to the Paying Agent, together with a
copy of the related Reimbursement Agreement, of a Credit Facility,
having a term expiring three years from the date of such conversion,
and providing for the Paying Agent to be entitled to draw on or prior
to the Termination Date (as defined therein), an amount that is not
less than the sum of the aggregate principal amount (or that portion
of the purchase price corresponding to principal) of the Outstanding
Bonds so converted, and up to forty-five (45)
-16-
days of interest accrued on such Bonds (or that portion of the purchase
price corresponding to interest) if such Bonds were issued at the Maximum
Interest Rate.
Section 3.12. Requirements for Delivery of a Substitute
-----------------------------------------
Credit Facility. (A) The Borrower may, upon satisfaction of the
---------------
requirements set forth in this Section, at its option (except during
the period between the giving of notice of mandatory tender for
purchase on account of the expiration of a Credit Facility and the
Purchase Date), provide for the delivery to the Paying Agent of a
substitute Credit Facility; provided, however, that (1) the Credit
-------- -------
Facility being replaced shall in no event be terminated or released
until the Borrower has given not less than forty-five (45) days'
written notice to the Authority, the Trustee, the Paying Agent and the
Remarketing Agent, and further the Paying Agent has received the
proceeds of all outstanding drawings on the Credit Facility being
replaced, (2) if any Bonds supported by the Credit Facility being
replaced are in the Daily Mode, or the Weekly Mode the Paying Agent
has given not less than (30) days' written notice of the termination
or release of the Credit Facility to owners of such Bonds in the Daily
Mode or the Weekly Mode and (3) if any of the Bonds supported by the
Credit Facility being replaced are in the Flexible Mode, such Credit
Facility shall in no event be terminated or released earlier than on
the second Business Day after an Effective Date for all such Bonds or
such earlier day on or after such Effective Date on which the full
Purchase Price for such Bonds is received by the Paying Agent. Any
notice given pursuant to clause (1) or (2) above shall specify the
expiration date of the Credit Facility being replaced and the name of
the entity providing the substitute Credit Facility and shall advise
that the Credit Facility being replaced will terminate on the date
stated in such notice.
(B) Each substitute Credit Facility must:
(i) be an irrevocable, unconditional obligation of a
financial institution;
(ii) be on terms no less favorable to the Paying
Agent than the Credit Facility being replaced
and entitle the Paying Agent to draw upon or
demand payment and receive in immediately
available funds an amount equal to the sum of
the principal amount of the Bonds supported by
the Credit Facility being replaced, any premium
applicable thereto, and forty-five (45) days'
accrued interest at the Maximum Interest Rate on
the principal amount of Bonds then Outstanding
in the Daily Mode, the Weekly Mode or the
Flexible Mode; and
-17-
(iii) provide for a term which may not expire in less
than 360 days and which may not expire or be
terminated prior to the fifth Business Day after
the mandatory tender for purchase as provided in
Section 2.3(G)(1)(c), 2.3(G)(2)(d) or
2.3(G)(3)(d) of the Indenture. The Borrower
shall not enter into any Reimbursement Agreement
or agree to any amendment of a Reimbursement
Agreement which in any way limits the obligation
of the Bank to provide funds under the
substitute Credit Facility without the prior
written consent of the Holders of 100% of the
principal amount of the Bonds Outstanding and
entitled to the benefit thereof.
(C) No substitute Credit Facility may be delivered to the
Trustee for any purpose under this Agreement or the Indenture unless
accompanied by the following documents: (i) an opinion of counsel for
the issuer of the substitute Credit Facility to the effect that it
constitutes a legal, valid and binding obligation of the issuer
enforceable in accordance with its terms; (ii) an opinion of Bond
Counsel to the effect that the issuance of a substitute Credit
Facility will not adversely affect the exclusion of interest on the
Bonds from gross income for federal income tax purposes and that such
Credit Facility is permitted under the Indenture; (iii) an opinion of
counsel to the Borrower satisfactory to the Trustee, stating that the
delivery of such substitute Credit Facility is authorized under this
Agreement and complies with the terms hereof; (iv) a certificate of
the Bank that all amounts due under the Reimbursement Agreement
relating to the outstanding Credit Facility have been paid and that
the Borrower has fulfilled all its obligations arising out of such
agreement; (v) an executed copy of the Reimbursement Agreement entered
into with respect to the substitute Credit Facility; (vi) copies of
any other documents, agreements or arrangements entered into directly
or indirectly between the Borrower and the entity issuing the
substitute Credit Facility with respect to the transactions
contemplated by the substitute Credit Facility and related
Reimbursement Agreement; and (vii) such other documents and opinions
as the Trustee or the Authority may reasonably request. Notice of the
substitution, replacement, termination or extension of a Credit
Facility shall be sent by the Paying Agent to S&P and shall include
the new expiration date of the Credit Facility and the name of the
entity providing the substitute Credit Facility.
The substitute Credit Facility, related Reimbursement
Agreement and other documents, agreements and arrangements entered
into and delivered with respect to the delivery of a substitute Credit
Facility shall not include any
-18-
provisions less favorable to the owners
of the Bonds than the provisions of the Credit Facility being replaced
and related Reimbursement Agreement, documents, agreements and
arrangements, including provisions regarding the acceleration of the
Bonds, any right of setoff of assets of the account party by the
entity issuing the substitute Credit Facility, and any direct or
indirect pledge of collateral which is not pledged on a priority or
parity basis to the owners of the Bonds.
Section 3.13. Securities Laws. In any remarketing of Bonds
---------------
under this Agreement, the Borrower shall at all times comply with
applicable federal and state securities laws.
Section 3.14. No Additional Bonds. No Additional Bonds on
-------------------
a parity with the Bonds may be issued under the Indenture.
-19-
ARTICLE IV
THE PROJECT
Section 4.1. Completion of the Project. (A) The Borrower
-------------------------
agrees that it will undertake and complete or cause to be undertaken
and completed the Project for the purposes and in the manner intended
hereby and by the Borrower's application for assistance to the
Authority and in accordance with the plans and specifications therefor
which have been prepared by or on behalf of the Borrower and placed on
file in the principal office of the Borrower and with the Trustee, and
that it will cause such improvements to be made to the Project as are
necessary for the operation thereof in the manner herein provided.
(B) The Borrower may modify, alter and amend the plans and
specifications for the Project from time to time and at any time,
provided that such modifications, alterations and amendments do not
materially impair the operation of the Project as water treatment
facilities under the Act and provided that no material modifications,
alterations or amendments shall be made unless the Borrower shall have
theretofore delivered to the Trustee an opinion of counsel acceptable
to the Trustee to the effect that such amendment, modification or
alteration and the expenditure of amounts from the Project Fund in
connection therewith will not cause interest on the Bonds to be
subject to federal income taxation, together with any written
representations or certifications of fact made by or on behalf of the
Borrower upon which such counsel has relied in rendering such opinion.
(C) The Borrower affirms that it shall bear all of the
costs and expenses in connection with the preparation of the Financing
Documents and the Indenture, the preparation and delivery of any legal
instruments and documents necessary in connection therewith and their
filing and recording, if required, and all taxes and charges payable
in connection with any of the foregoing. Such costs and all other
costs of the Project shall be paid by the Borrower in the manner and
to the extent provided in the Indenture.
(D) The Borrower hereby agrees that in order to effectuate
the purposes of the Financing Documents, it will make, execute,
acknowledge and deliver any contracts, orders, receipts, writings and
instructions with any other persons, firms, or corporations and in
general do all things which may be requisite or proper, all for the
purpose of carrying out and completing the Project. The Borrower will
use its best efforts to complete the Project with all reasonable
dispatch. If for any reason the completion of such work does not
occur within this period, there shall be no liability on the part of
the Authority and no diminution in or postponement of the
-20-
payments required in Section 3.1 hereof to be paid by the Borrower.
(E) The Borrower has obtained or shall obtain all necessary
approvals from any and all governmental agencies requisite to the
undertaking and completion of the Project and in compliance with all
federal, State and local laws, ordinances and regulations applicable
thereto. Upon completion of the Project, the Borrower shall obtain
all required permits and authorizations from appropriate authorities,
if any be required, authorizing the operation and uses of the Project
for the purposes contemplated hereby, where failure to obtain such
approvals, permits and authorizations would have a material adverse
effect on the transactions contemplated hereby.
(F) The Borrower covenants that it will take such action
and institute such proceedings as shall be necessary to cause and
require all contractors and material suppliers to complete their
contracts diligently in accordance with the terms of the contracts,
including, without limitation, the correcting of any defective work.
(G) Upon the occurrence of a default by any contractor or
subcontractor or supplier under any contract made by it in connection
with the Project, the Borrower will promptly proceed, to the extent it
deems appropriate in the circumstances, either separately or in
conjunction with others, to exhaust the remedies of the Borrower
against each surety for the performance of such contract.
(H) The Borrower will have good and marketable title in fee
simple to the Project Realty, subject only to Permitted Encumbrances,
sufficient for the purposes of this Agreement.
Section 4.2. Payment of Additional Project Costs by Borrower.
-----------------------------------------------
In the event that moneys in the Project Fund are not
sufficient to pay Project Costs in full, the Borrower shall
nonetheless complete the Project and shall pay that portion of the
Project Costs as may be in excess of the moneys available therefor in
the Project Fund and shall not be entitled to any reimbursement
therefor from the Authority or from the Trustee or from the holders of
any of the Bonds, nor shall it be entitled to any diminution of the
amounts payable under the Financing Documents.
Section 4.3. No Warranty Regarding Condition, Suitability
--------------------------------------------
or Cost of Project. Neither the Authority, nor the Trustee, nor any
------------------
Bondholder makes any warranty, either expressed or implied, as to the
Project or its condition or that it will be suitable for the Borrower's
purposes or needs, or that the insurance required hereunder will be
adequate to protect the Borrower's business or interest, or that the
-21-
proceeds of the Bonds will be sufficient to complete the Project.
Section 4.4. Taxes. (A) The Borrower will pay when due
-----
all material (1) taxes, assessments, water rates and sewer use or
rental charges, (2) payments in lieu thereof which may be required by
law, and (3) governmental charges and impositions of any kind
whatsoever which may now or hereafter be lawfully assessed or levied
upon the Project or any part thereof, or upon the rents, issues, or
profits thereof, whether directly or indirectly. With respect to
special assessments or other governmental charges that may lawfully be
paid in installments over a period of years, the Borrower shall be
obligated to pay only such installments as are required to be paid
during the Term.
(B) The Borrower may, at its expense and in its own name,
in good faith contest any such taxes, assessments and other charges
and payments in lieu of taxes including assessments and, in the event
of such contest, may permit the taxes, assessments or other charges or
payments in lieu of taxes, including assessments so contested to
remain unpaid, provided either (1) prior written notice thereof has
been given to the Trustee and reserves to the extent required by the
Reimbursement Agreement, if any, are maintained during the period of
such contest and any appeal therefrom, or (2) such contest is
conducted in full compliance with Connecticut General Statutes Section
12-53a(d) unless, in either case, by nonpayment of such taxes,
assessments or other charges or payments, the Project or any part
thereof will be subject to loss or forfeiture, and as a result thereof
a lien or charge will be placed upon any payment pursuant to this
Agreement or the value or operation of the Project will be materially
impaired, in which event such taxes, assessments or other charges or
payments shall be paid forthwith. Nothing herein shall preclude the
Borrower, at its expense and in its own name and behalf, from applying
for any tax exemption allowed by the federal government, the State or
any political or taxing subdivision thereof under any existing or
future provision of law which grants or may grant such tax exemption.
Section 4.5. Insurance. (A) The Borrower shall insure the
---------
Project against loss or damage by fire, flood, lightning, windstorm,
vandalism and malicious mischief and other hazards, casualties,
contingencies and extended coverage risks in such amounts and in such
manner as is required by the Mortgage while the Mortgage is in effect
and thereafter as is customary with companies in the same or similar
business, and shall pay when due the premiums thereon. In the event
of loss or damage to the Project Realty or Project Equipment the Net
Proceeds of any insurance provided under this subsection shall be
deposited with the Mortgage Trustee as required by the Mortgage while
the Mortgage is in effect and thereafter shall be applied to the
manner set forth in Article V hereof. Any
-22-
excess proceeds of insurance remaining after application as required by
this Section shall be paid to the Borrower, but only if the Borrower is not
in default under this Agreement. At least ten days prior to the
expiration of any policy required under this Section the Borrower
shall furnish evidence satisfactory to the Authority and the Trustee
that such policy has been renewed or replaced.
(B) The Borrower further agrees that it will at all times
carry public liability insurance with respect to the Project to the
extent required by the Mortgage while the Mortgage is in effect, and,
thereafter, in a minimum amount of $5,000,000 with provisions for a
deductible amount not in excess of five percent of the amount of
coverage thereunder. In the event of a public liability occurrence,
the Net Proceeds of the insurance provided under this subsection shall
be applied to satisfy or extinguish the liability, subject to the
Mortgage.
(C) As an alternative to the hazard insurance and public
liability insurance requirements of subsections (A) or (B) above the
Borrower may self-insure against hazard or public liability risks if
(1) self-insurance is the Borrower's customary method of insurance
against such risks in similar circumstances, and (2) the Borrower
maintains self-insurance reserves adequate and available to meet such
risks, subject to the terms of the Mortgage while the Mortgage is in
effect. Amounts available under any such self-insurance arrangement
upon the occurrence of an insured event shall be applied in the same
manner as the Net Proceeds of any insurance maintained pursuant to
such subsections would have been applied.
(D) The insurance coverage required by this Section may be
effected under overall blanket or excess coverage policies of the
Borrower or any affiliate and may be carried with any insurer other
than an unauthorized insurer under the Connecticut Unauthorized
Insurers Act. The Borrower shall furnish evidence satisfactory to the
Authority or the Trustee, promptly upon the request of either, that
the required insurance coverage is valid and in force.
Section 4.6. Compliance with Law. The Borrower will
-------------------
observe and comply with all material laws, regulations, ordinances,
rules, and orders (including without limitation those relating to
zoning, land use, environmental protection, air, water and land
pollution, wetlands, health, equal opportunity, minimum wages,
worker's compensation and employment practices) of any federal, state,
municipal or other governmental authority relating to the Project
except during any period during which the Borrower at its expense and
in its name shall be in good faith contesting its obligation to comply
therewith.
-23-
Section 4.7. Maintenance and Repair. At its own expense,
----------------------
the Borrower will keep and maintain or cause the Project to be kept
and maintained in accordance with sound utility operating practice and
in good condition, working order and repair, will not commit or suffer
any waste thereon, and will make all material repairs and replacements
thereto which may be required in connection therewith. Nothing in
this Section 4.7 shall (1) apply to any portion of the Project beyond
its useful or economic life or (2) apply to the use and disposition by
the Borrower of any part of the Project in the ordinary course of its
business.
Section 4.8. Disposition of Project by Borrower. (A) The
----------------------------------
Borrower shall not sell, assign, encumber (other than Permitted
Encumbrances), convey or otherwise dispose of its interest in the
Project Realty or any part thereof during the Term without the prior
written consent of the Authority, except as permitted hereby or by the
Mortgage while the Mortgage is in effect.
(B) The Borrower may, however, grant such rights of way or
easements over, across, or under, the Project Realty as shall be
necessary or convenient for the operation or use of the Project
Realty, including but not limited to easements or rights-of-way for
utility, roadway, railroad or similar purposes in connection with the
Project Realty, or for the use of the real property adjacent to or
near the Project and owned by or leased to the Borrower, but only if
such rights-of-way or easements shall not materially or adversely
affect the value and operation of the Project Realty.
(C) In the event the Authority consents to any disposition
of the Borrower's interest in the Project Realty, the proceeds of the
disposition shall be deposited with the Mortgage Trustee while the
Mortgage is in effect and thereafter in the Redemption Account of the
Debt Service Fund for the redemption of the Bonds used to finance the
portion of the Project then being disposed of under the Indenture. No
conveyance or release effected under the provisions of this Section
shall entitle the Borrower to any abatement or diminution of the
amounts payable hereunder or under the Note, or relieve the Borrower
of the obligation to perform all of its covenants and agreements under
the Financing Documents.
Section 4.9. Leasing of the Project Realty and the Project
---------------------------------------------
Equipment. The Borrower may not lease the Project Realty or the
---------
Project Equipment to any person during the Term of this Agreement
without the prior written consent of the Authority, except as may be
permitted by the Mortgage while the Mortgage is in effect. No lease
shall relieve the Borrower from primary liability for any of its
obligations hereunder, and in the event of any such lease the Borrower
shall continue to remain primarily liable for payment of the
applicable amounts specified in Article III hereof and for
-24-
performance and observance of the other agreements on its part herein
provided to be performed and observed by it to the same extent as though
no lease had been made.
Section 4.10. Project Equipment. (A) The Borrower shall
-----------------
have the right to install, operate, use, remove and dispose of the
Project Equipment in the normal and ordinary course of its business
operations, and shall not be required to replace any item of Project
Equipment which is discarded or sold for scrap. The Borrower shall
not, however, either in one transaction or a series of transactions
sell, convey, transfer, remove or otherwise dispose of more than 20%
by value of the Project Equipment without prior notice to and the
consent of the Authority, unless such Project Equipment is replaced by
property of similar value and utility, provided that such dispositions
may be made as permitted by the Mortgage while the Mortgage is in
effect.
(B) The Borrower shall maintain with the Trustee separate
and reasonably detailed descriptions of each item of property
constituting the Project Equipment. Without limiting the foregoing,
the Project Equipment list appended hereto at the date of execution
and delivery of this Agreement shall be modified to the extent
required by this Section in connection with any disbursement for
Project Equipment from the Project Fund and any replacement of
material items of Project Equipment under this Section or under
Section 5.2 hereof.
-25-
ARTICLE V
CONDEMNATION
DAMAGE AND DESTRUCTION
Section 5.1. No Abatement of Payments Hereunder. If the
----------------------------------
Project Realty or Project Equipment shall be damaged or either
partially or totally destroyed, or if title to or the temporary use of
the whole or any part thereof shall be taken or condemned by a
competent authority for any public use or purpose, there shall be no
abatement or reduction in the amounts payable by the Borrower
hereunder and the Borrower shall continue to be obligated to make such
payments. In any such case the Borrower shall promptly give written
notice thereof to the Authority and the Trustee.
Section 5.2. Project Disposition Upon Condemnation, Damage
---------------------------------------------
or Destruction. In the event of any such condemnation, damage or
--------------
destruction the Borrower, except as otherwise permitted by the
Mortgage while the Mortgage is in effect shall:
(1) At its own cost, repair, restore or reconstruct the
Project Realty and Project Equipment to substantially its
condition immediately prior to such event or to a condition of at
least equivalent value, regardless of whether or not the proceeds
of any and all policies of insurance covering such damage or
destruction, or the amount of the award or compensation or
damages recovered on account of such taking or condemnation,
shall be available or sufficient to pay the cost thereof; comply
with the applicable provisions of the Mortgage concerning the
repair, reconstruction or restoration of the Project or give
notice to Authority of its decision not to so comply; and or
(2) At its own cost, replace or relocate the Project Realty
and Project Equipment at its site in such fashion as to render
the replacement or relocated structures, improvements and items,
machinery, equipment or other property of equivalent value to the
Project Realty and Project Equipment immediately prior to such
event; or
(3) If and as permitted by Section 8.1 hereof, exercise its
option to prepay its loan obligation in full.
Section 5.3. Application of Net Proceeds of Insurance or
-------------------------------------------
Condemnation. (A) The Net Proceeds from any insurance or
------------
condemnation award with respect to the Project Realty or Project
Equipment shall be deposited with the Mortgage Trustee while the
Mortgage is in effect and thereafter shall be deposited either (1) in
the Renewal Fund
-26-
and applied to pay for the cost of making such
repairs, restorations, reconstructions, replacements or relocations,
or to reimburse the Borrower, the Authority or the Trustee for payment
therefor from time to time as provided in the Indenture or (2) if
prepayment of the loan is then permitted and the Borrower exercises
its option to prepay the loan, in the Debt Service Fund and applied to
the payment of the Note and redemption of the Bonds.
(B) Notwithstanding the provisions of subsection (A) of
this Section, any insurance or condemnation proceeds attributable to
improvements, machinery, equipment and other property installed in or
about the Project Realty and the Project Equipment, but which do not
constitute a portion of the Project Realty and the Project Equipment,
shall be paid directly to the Borrower. The Trustee and the Authority
agree to execute such documents as may be reasonably necessary to
accomplish the purposes of this subsection.
(C) The Borrower, the Authority and the Trustee shall
cooperate and consult with each other in all matters pertaining to the
settlement or adjustment of any and all claims and demands for damages
on account of any taking or condemnation of the Project Realty or the
Project Equipment or pertaining to the settlement, compromising or
arbitration of any claim on account of any damage or destruction
thereof.
-27-
ARTICLE VI
COVENANTS
Section 6.1. The Borrower to Maintain its Corporate
--------------------------------------
Existence; Conditions under which Exceptions Permitted. (A) The
------------------------------------------------------
Borrower covenants and agrees that, during the Term of this Agreement
it will maintain its corporate existence, will continue to be a
corporation either organized under the laws of or duly qualified to do
business as a foreign corporation in the State and in all
jurisdictions necessary in the operation of its business, will not
dissolve or otherwise dispose of all or substantially all of its
assets and will not consolidate with or merge into another corporation
or permit one or more other corporations to consolidate with or merge
into it, except as permitted by the Mortgage while the Mortgage is in
effect.
(B) The Borrower may, however, without violating the
agreements contained in this Section, consolidate with or merge into
another corporation or permit one or more other corporations to
consolidate with or merge into it, or sell or otherwise transfer to
another corporation all or substantially all of its assets as an
entity and thereafter liquidate or dissolve, if (a) the Borrower is
the surviving, resulting or transferee corporation, as the case may
be, or (b) in the event the Borrower is not the surviving, resulting
or transferee corporation, as the case may be, such corporation (i) is
a solvent corporation either organized under the laws of or duly
qualified to do business as a foreign corporation subject to service
of process in the State and (ii) assumes in writing all of the
obligations of the Borrower herein, and under the Note.
Section 6.2. Indemnification, Payment of Expenses, and
-----------------------------------------
Advances. (A) The Borrower agrees to protect, defend and hold
--------
harmless the Authority, the State, agencies of the State and their
members, servants, agents, directors, officers and employees (the
"Authority Indemnified Parties"), and the Paying Agent, the Trustee
and their officers, directors and employees (the "Indemnified
Parties") from any claim, demand, suit, action or other proceeding and
any liabilities, costs, and expenses whatsoever by any person or
entity whatsoever, arising or purportedly arising from or in
connection with the Financing Documents, the Indenture, the Bonds,
or the transactions contemplated thereby or acions taken thereunder
by any person (including without limitation the fiing of any
information, form or statement with the Internal Revenue
Service), except for any wilful and material misrepresentation,
wilful miconduct or gross negligence on the part of the Authority
Indemnified Parties or the Indemnified Parties and except for any
bad faith on the part of any Indemnified Party other than an
Authority Indemnified Party.
-28-
The Borrower agrees to indemnify and hold harmless any
ten information provided by the Borrower in connection with the issuance of
the Bonds or incorporated by reference therein or caused by any omission or
alleged omission from such information of any material fact required to be
stated therein or necessary in order to make the statements made therein
in the light of the circumstances under which they were made, not misleading.
(B) The Authority and the Trustee shall not be liable for
any damage or injury to the persons or property of the Borrower or its
members, directors, officers, agents, servants or employees, or any
other person who may be about the Project Realty and the Project
Equipment due to any act or omission of any person other than the
Authority or the Trustee or their respective members, directors,
officers, agents, servants and employees.
(C) The Borrower releases each Indemnified Party from,
agrees that no Indemnified Party shall be liable for, and agrees to
hold each Indemnified Party harmless against, any attorney fees and
expenses, expenses or damages incurred because of any investigation,
review or lawsuit commenced by the Trustee or the Authority in good
faith with respect to the Financing Documents, the Indenture, the
Bonds and the Project Realty and the Project Equipment, and the
Authority or the Trustee shall promptly give written notice to the
Borrower with respect thereto.
(D) All covenants, stipulations, promises, agreements and
obligations of the Authority and the Trustee contained herein shall be
deemed to be the covenants, stipulations, promises, agreements and
obligations of the Authority and the Trustee and not of any member,
director, officer or employee of the Authority or the Trustee in its
individual capacity, and no recourse shall be had for the payment of
the Bonds or for any claim based thereon or hereunder against any
member, director, officer or employee of the Authority or the Trustee
or any natural person executing the Bonds.
(E) In case any action shall be brought against one or more
of the Indemnified Parties based upon any of the above and in respect
of which indemnity may be sought against the Borrower, such
Indemnified Party shall promptly notify the Borrower in writing,
enclosing a copy of all papers served, but the omission so to notify
the Borrower of any such action shall not relieve it of any liability
which it may have to any Indemnified Party otherwise than under this
Section 6.2. In
-29-
case any such action shall be brought against any
Indemnified Party and it shall notify the Borrower of the commencement
thereof, the Borrower shall be entitled to participate in and, to the
extent that it shall wish, to assume the defense thereof with counsel
satisfactory to such Indemnified Party, and after notice from the
Borrower to such Indemnified Party of the Borrower's election so to
assume the defense thereof, the Borrower shall not be liable to such
Indemnified Party for any subsequent legal or other expenses
attributable to such defense, except as set forth below, other than
reasonable costs of investigation subsequently incurred by such
Indemnified Party in connection with the defense thereof. The
Indemnified Party shall have the right to employ its own counsel in
any such action, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the employment of
counsel by such Indemnified Party has been authorized by the Borrower;
(ii) the Indemnified Party shall have reasonably concluded that there
may be a conflict of interest between the Borrower and the Indemnified
Party in the conduct of the defense of such action (in which case the
Borrower shall not have the right to direct the defense of such action
on behalf of the Indemnified Party); or (iii) the Borrower shall not
in fact have employed counsel reasonably satisfactory to the
Indemnified Party to assume defense of such action; provided, however,
that Borrower shall not be responsible for the fees and expenses of
more than one such law firm unless an Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between
such Indemnified Party and any other Indemnified Party requiring the
use of separate counsel, or Borrower has not employed counsel which is
satisfactory to each Indemnified Party. The Borrower shall not be
liable for any settlement of any action or claim effected without its
consent.
(F) The Borrower also agrees to pay all reasonable or
necessary out-of-pocket expenses of the Authority in connection with
the issuance of the Bonds, the administration of the Financing
Documents and the enforcement of its rights thereunder.
(G) In the event the Borrower fails to pay any amount or
perform any act under the Financing Documents, the Trustee or the
Authority may pay the amount or perform the act, in which event the
costs, disbursements, expenses and reasonable counsel fees and
expenses thereof, together with interest thereon from the date the
expense is paid or incurred at the prime interest rate generally
prevailing among banks in the State on the date of the advance plus 1%
shall be an additional obligation hereunder payable upon demand by the
Authority or the Trustee.
(H) Any obligation of the Borrower to the Authority under
this Section shall be separate from and independent of the other
obligations of the Borrower hereunder, and may be
-30-
enforced directly by the Authority against the Borrower irrespective
of any action taken by or on behalf of the owners of the Bonds.
(I) The obligations of the Borrower under this section,
notwithstanding any other provisions contained in the Financing
Documents, shall survive the termination of this Agreement and shall
be recourse to the Borrower, and for the enforcement thereof any
Indemnified Party shall have recourse to the general credit of the
Borrower.
Section 6.3. Incorporation of Tax Regulatory Agreement:
------------------------------------------
Payments Upon Taxability. (A) For purpose of this Section, the term
------------------------
owner means the Beneficial Owner of the Bonds so long as the
Book-Entry System is in effect.
(B) The representations, warranties, covenants and
statements of expectation of the Borrower set forth in the Tax
Regulatory Agreement are by this reference incorporated in this
Agreement as though fully set forth herein.
(C) If any owner of the Bonds receives from the Internal
Revenue Service a notice of assessment and demand for payment with
respect to interest on any Bond (except a notice and demand based upon
the assertion that the owner of the Bonds is a Substantial User or
Related Person), an appeal may be taken by the owner of the Bonds at
the option of the Borrower. Without limiting the generality of the
foregoing, the Borrower shall have the right to direct the Trustee to
direct the owner of the Bonds to take such appeal or not to take such
appeal. In that case all expenses of the appeal including reasonable
counsel fees and expenses shall be paid by the Borrower, and the owner
of the Bonds and the Borrower shall cooperate and consult with each
other in all matters pertaining to any such appeal, except that no
owner of the Bonds shall be required to disclose or furnish any
non-publicly disclosed information, including, without limitation,
financial information and tax returns.
(D) If any Bonds are paid at maturity, redeemed after the
date of a Determination of Taxability, or redeemed or sold during the
taxability period, the former owners of such Bonds, upon establishing
the ownership of such Bonds and upon establishing their tax liability
in connection with the interest payable on such Bonds, shall be
entitled to receive such amount equal to such liability.
(E) Not later than 180 days following a Determination of
Taxability, the Borrower shall pay to the Trustee an amount
sufficient, when added to the amount then in the Debt Service Fund and
available for such purpose, to retire and redeem all Bonds then
Outstanding, in accordance with Section 2.4 of the Indenture.
-31-
(F) The obligation of the Borrower to make the payments
provided for in this Section shall be absolute and unconditional, and
the failure of the Authority or the Trustee to execute or deliver or
cause to be executed or delivered any documents or to take any action
required under this Agreement or otherwise shall not relieve the
Borrower of its obligation under this Section. Notwithstanding any
other provision of this Agreement or the Indenture, the Borrower's
obligations under this Section shall survive the termination of this
Agreement and the Indenture.
(G) The occurrence of a Determination of Taxability shall
not be an Event of Default hereunder but shall require only the
performance of the obligations of the Borrower stated in this Section,
the breach of which shall constitute an Event of Default as provided
in Section 7.1 hereof.
(H) At any time after the issuance of the Bonds, the
Authority shall, upon (1) the release of a published Revenue Ruling by
the Internal Revenue Service and the receipt by the Authority of an
opinion of Bond Counsel to the effect that such ruling may adversely
affect the exclusion of interest on the Bonds from gross income for
federal income tax purposes, and (2) receipt from the Borrower, within
30 days after the Authority has mailed copies of such ruling and such
opinion to the Borrower, of a written request to proceed in accordance
with this Section, proceed to apply for and use its best efforts to
obtain a ruling from the Internal Revenue Service, pursuant to Revenue
Procedure 88-33 or any other procedures subsequently established by
the Internal Revenue Service, as to the qualification or continued
qualification of interest on the Bonds for exclusion from gross income
for federal income tax purposes. The Authority and the Borrower shall
cooperate and consult with each other in all matters pertaining to
such ruling request. All expenses of the Authority in connection with
such application including reasonable counsel fees shall be paid by
the Borrower.
Section 6.4. Further Assurances and Corrective Instruments.
----------------------------------------------
The Authority and the Borrower agree that they will, from time to
time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any
inadequate or incorrect description of the Project Realty or Project
Equipment or for carrying out the intention of or facilitating the
performance of this Agreement.
Section 6.5. Covenant by Borrower as to Compliance with
-------------------------------------------
Indenture. The Borrower covenants and agrees that it will comply with
---------
the provisions of the Indenture with respect to the Borrower and that
the Trustee and the Bondholders shall have the power and authority
provided in the Indenture. The Borrower further agrees to aid in the
furnishing to the
-32-
Authority or the Trustee of opinions that may be
required under the Indenture. The Borrower covenants and agrees that
the Trustee shall be entitled to and shall have all the rights,
including the right to enforce against the Borrower the provisions of
the Financing Documents, pertaining to the Trustee notwithstanding the
fact that the Trustee is not a party to the Financing Documents.
Section 6.6. Assignment of Agreement or Note. (A) The
--------------------------------
Borrower may not assign its rights, interests or obligations hereunder
or under the Note except as may be permitted pursuant to Section
6.1(B) hereof.
(B) The Authority agrees that it will not assign or
transfer any of the Financing Documents or the revenues and other
receipts, funds and monies to be received thereunder during the Term
except to the Trustee as provided in this Agreement and the Indenture.
Section 6.7. Inspection. The Authority, the Trustee and
----------
their duly authorized agents shall have (1) the right at all
reasonable times to enter upon and to examine and inspect the Project
Realty and the Project Equipment and (2) such rights of access thereto
as may be reasonably necessary for the proper maintenance and repair
thereof in the event of failure by the Borrower to perform its
obligations under this Agreement. The Authority and the Trustee shall
also be permitted, at all reasonable times, to examine the books and
records of the Borrower with respect to the Project Realty and the
Project Equipment.
Section 6.8. Default Notification. Upon becoming aware of
--------------------
any condition or event which constitutes, or with the giving of notice
or the passage of time would constitute, an Event of Default, the
Borrower shall deliver to the Authority and the Trustee a notice
stating the existence and nature thereof and specifying the corrective
steps, if any, the Borrower is taking with respect thereto.
Section 6.9. Covenant Against Discrimination. (A) The
-------------------------------
Borrower in the performance of this Agreement will not discriminate or
permit discrimination against any person or group of persons on the
grounds of race, color, religion, national origin, age, sex, sexual
orientation, marital status, physical or learning disability,
political beliefs, mental retardation or history of mental disorder in
any manner prohibited by the laws of the United States or of the
State.
(B) The Borrower will comply with the provisions of the
resolution adopted by the Authority on June 14, 1977, as amended, and
the policy of the Authority implemented pursuant thereto concerning
the promotion of equal employment opportunity through affirmative
action plans. The resolution requires that all borrowers receiving
financial assistance
-33-
from the Authority adopt and implement an
affirmative action plan prior to the closing of the loan. The plan
shall be updated annually as long as the Bonds remain Outstanding.
Section 6.10. Authority Costs and Expenses. The Authority
----------------------------
agrees that it shall in all instances act in good faith in incurring
costs, expenses and legal fees in connection with the transactions
contemplated by this Agreement and the Indenture.
Section 6.11. Continuing Disclosure. The Borrower hereby
---------------------
covenants and agrees that it will comply with and carry out all of the
provisions of the Continuing Disclosure Agreement. Notwithstanding
any other provision of this Loan Agreement, failure of the Borrower to
comply with the Continuing Disclosure Agreement shall not be
considered an Event of Default hereunder; however, the Trustee may
(and, at the request of any Participating Underwriter (as defined in
the Continuing Disclosure Agreement) or the Holders of at least 25%
aggregate principal amount in Outstanding Bonds, shall) or any
Bondholder or Beneficial Owner may take such actions as may be
necessary and appropriate, including seeking specific performance by
court order, to cause the Borrower to comply with its obligations
under this Section 6.11. For purposes of this Section, "Beneficial
Owner" means any person which (a) has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of
ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries), or (b) is treated as
the owner of any Bonds for federal income tax purposes.
Section 6.12. Covenant Against Issuing Additional Debt
----------------------------------------
Secured By The Mortgage. The Borrower will not issue any additional
-----------------------
debt secured by the Mortgage unless the Bonds are equally and ratably
secured by the Mortgage.
-34-
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Any on or more of
-----------------
the following shall constitute an "Eent of Default" hereunder.
(1) Any material representation or warranty made by the
Borrower in the Financing Documents or any certificate,
statement, data or information furnished in writing to the
Authority or the Trustee by the Borrower in connection with the
closing of the initial issue of the Bonds or included by the
Borrower in its application to the Authority for assistance
proves at any time to have been incorrect when made in any
material respect.
(2) Failure by the Borrower to pay any interest, principal
or premium, if any, that has become due and payable with respect
to the Bonds and the continuance of such failure for more than
five Business Days.
(3) Failure by the Borrower to pay any amount that has
become due and payable with respect to the Bonds or any other
amount due and payable pursuant to the Financing Documents and
the continuance of such failure for more than thirty days.
(4) Failure by the Borrower to comply with the default
notification provisions of Section 6.8 hereof.
(5) The occurrence of an "Event of Default" under Section
8.1(A) of the Indenture (other than an occurrence under Section
8.1(A)(2)(a)).
(6) Failure by the Borrower to observe or perform any
covenant, condition or agreement hereunder or under the Financing
Documents (except those referred to above) and (a) continuance of
such failure for a period of sixty days after receipt by the
Borrower of written notice specifying the nature of such failure
or (b) if by reason of the nature of such failure the same cannot
be remedied within the sixty day period, the Borrower fails to
proceed with reasonable diligence after receipt of the notice to
cure the failure.
(7) The Borrower shall (a) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or
the like of itself or of its property, (b) admit in writing its
inability to pay its debts generally as they become due, (c) make
a general assignment for the benefit of creditors, (d) be
adjudicated a bankrupt or insolvent, or (e) commence a voluntary
case under the Federal bankruptcy laws of the
-35-
United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for
relief or seeking to take advantage of any insolvency law or file
an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency
proceeding; or corporate action shall be taken by it for the
purpose of effecting any of the foregoing; or if without the
application, approval or consent of the Borrower, a proceeding
shall be instituted in any court of competent jurisdiction,
seeking in respect of the Borrower an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Borrower or of all or any
substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Borrower in good faith, the
same shall continue undismissed, or pending and unstayed, for any
period of 90 consecutive days.
Section 7.2. Remedies on Default. (A) Whenever any Event
-------------------
of Default shall have occurred, the Trustee, or the Authority where so
provided herein, may take any one or more of the following actions:
(1) The Trustee, as and to the extent provided in Article
VIII of the Indenture, may cause all amounts payable under the
Financing Documents to be immediately due and payable without
notice or demand of any kind, whereupon the same shall become
immediately due and payable.
(2) The Authority, without the consent of the Trustee or
any Bondholder, may proceed to enforce the obligations of the
Borrower to the Authority under this Agreement.
(3) The Trustee may take whatever action at law or in
equity it may have to collect the amounts then due and thereafter
to become due, or to enforce the performance or observance of the
obligations, agreements, and covenants of the Borrower under the
Financing Documents.
(4) The Trustee may exercise any and all rights it may have
under the Financing Documents.
(B) In the event that any Event of Default or any
proceeding taken by the Authority (or by the Trustee on behalf of the
Authority) thereon shall be waived or determined adversely to the
Authority, then the Event of Default shall be annulled and the
Authority and the Borrower shall be restored
-36-
to their former rights hereunder, but no such waiver or determination
shall extend to any subsequent or other default or impair any right
consequent thereon.
Section 7.3. No Duty to Mitigate Damages. Unless otherwise
---------------------------
required by law, neither the Authority, the Trustee nor any Bondholder
shall be obligated to do any act whatsoever or exercise any diligence
whatsoever to mitigate the damages to the Borrower if an Event of
Default shall occur.
Section 7.4. Remedies Cumulative. No remedy herein
-------------------
conferred upon or reserved to the Authority or the Trustee is intended
to be exclusive of any other available remedy or remedies but each and
every such remedy shall be cumulative and shall be in addition to
every remedy given under this Agreement or now or hereafter existing
at law or in equity or by statute. Delay or omission to exercise any
right or power accruing upon any default or failure by the Authority
or the Trustee to insist upon the strict performance of any of the
covenants and agreements herein set forth or to exercise any rights or
remedies upon default by the Borrower hereunder shall not impair any
such right or power or be considered or taken as a waiver or
relinquishment for the future of the right to insist upon and to
enforce, by injunction or other appropriate legal or equitable remedy,
strict compliance by the Borrower with all of the covenants and
conditions hereof, or of the right to exercise any such rights or
remedies, if such default by the Borrower be continued or repeated.
-37-
ARTICLE VIII
PREPAYMENT PROVISIONS
Section 8.1. Optional Prepayment. (A) The Borrower shall
-------------------
have, and is hereby granted, the option to prepay its loan obligation
and to cause the corresponding optional redemption of the Bonds
pursuant to Section 2.4(A) of the Indenture at such times, in such
amounts, and with such premium, if any, for such optional redemption
as set forth in the form of the Bond, by delivering a written notice
to the Trustee in accordance with Section 8.2 hereof, with a copy to
the Authority, setting forth the amount to be prepaid, the amount of
Bonds requested to be redeemed with the proceeds of such prepayment,
and the date on which such Bonds are to be redeemed. Such prepayment
must be sufficient to provide monies for the payment of interest and
Redemption Price in accordance with the terms of the Bonds requested
to be redeemed with such prepayment and all other amounts then due
under the Financing Documents. In the event of any complete
prepayment of its loan obligation, the Borrower shall, at the time of
such prepayment, also pay or provide for the payment of all reasonable
or necessary fees and expenses of the Authority, the Trustee and the
Paying Agent accrued and to accrue through the final payment of all
the Bonds. Any such prepayments shall be applied to the redemption of
Bonds in the manner provided in Section 6.2 of the Indenture, and
credited against payments due hereunder in the same manner.
(B) The Borrower shall have, and is hereby granted, the
option to prepay its loan obligation in full at any time without
premium if any of the following events shall have occurred, as
evidenced in each case by the filing with the Trustee of a certificate
of an Authorized Representative of the Borrower to the effect that one
of such events has occurred and is continuing, and describing the
same:
(1) The Project shall have been damaged or destroyed to
such extent that (a) the Project cannot be reasonably restored
within a period of six months from the date of such damage or
destruction to the condition thereof immediately preceding such
damage or destruction, or (b) the Borrower is thereby prevented
or likely to be prevented from carrying on its normal operation
of the Project for a period of six months from the date of such
damage or destruction.
(2) Title to or the temporary use of all or substantially
all of the Project shall have been taken or condemned by a
competent authority, which taking or condemnation results or is
likely to result in the Borrower being thereby prevented or
likely to be prevented from carrying on its normal operation of
the Project for a period of six months.
-38-
(3) A change in the Constitution of the State or of the
United States of America or legislative or executive action
(whether local, state, or federal) or a final decree, judgment or
order of any court or administrative body (whether local, state,
or federal) that causes this Agreement to become void or
unenforceable or impossible of performance in accordance with the
intent and purpose of the parties as expressed herein or, imposes
unreasonable burdens or excessive liabilities upon the Borrower
with respect to the Project or the operation thereof.
(4) The operation of any of the Project shall have been
enjoined or shall otherwise have been prohibited by any order,
decree, rule or regulation of any court or of any local, state,
or federal regulatory body, administrative agency or other
governmental body for a period of not less than six months.
(5) Changes in the economic availability of raw materials,
operating supplies or facilities necessary for the operation of
the Project or technological or other changes shall have occurred
which the Borrower cannot reasonably overcome or control and
which in the Borrower's reasonable judgment renders the Project
unsuitable or uneconomic for the purposes herein specified or any
tax shall be levied upon payments due under the Note in an amount
which the Borrower in its reasonable judgment believes imposes an
unreasonable burden upon the Borrower.
In any such case the final loan payment shall be a sum sufficient,
together with other funds deposited with Trustee and available for
such purpose, to redeem all Bonds then outstanding under the Indenture
at the redemption price of 100% of the principal amount thereof plus
accrued interest to the redemption date or dates and all other amounts
then due under the Financing Documents, and the Borrower shall also
pay or provide for all reasonable or necessary fees and expenses of
the Authority, the Trustee and Paying Agent and the Remarketing Agent
accrued and to accrue through final payment for the Bonds. The
Borrower shall deliver a written notice to the Trustee, with a copy to
the Authority, requesting the redemption of the Bonds under the
Indenture, which notice shall have attached thereto the applicable
certificate of the Authorized Representative of the Borrower.
Section 8.2. Notices and Sources of Prepayment. To
---------------------------------
exercise any options granted in this Article, or to consummate the
acceleration of the loan payments as set forth in this Article, the
written notice to the Trustee shall be signed by an Authorized
Representative of the Borrower to the Trustee, the Authority and the
Paying Agent and shall specify therein the date of prepayment, which
date shall be not less than
-39-
forty-five days nor more than ninety days
from the date the notice is mailed. A duplicate copy of any written
notice hereunder shall also be filed with the Authority.
Section 8.3. Mandatory Prepayment on Taxability. The
----------------------------------
Borrower shall pay or cause the prepayment of its loan obligation
following a Determination of Taxability in the manner provided in
Section 6.3 of this Agreement.
-40-
ARTICLE IX
GENERAL
Section 9.1. Indenture. (A) Monies received from the sale
---------
of the Bonds and all loan payments made by the Borrower and all other
monies received by the Authority or the Trustee under the Financing
Documents shall be applied solely and exclusively in the manner and
for the purposes expressed and specified in the Indenture and in the
Bonds and as provided in this Agreement.
(B) The Borrower shall have and may exercise all the
rights, powers and authority given the Borrower in the Indenture and
in the Bonds, and the Indenture and the Bonds shall not be modified,
altered or amended in any manner which adversely affects such rights,
powers and authority or otherwise adversely affects the Borrower
without the prior written consent of the Borrower.
Section 9.2. Benefit of and Enforcement by Bondholders.
-----------------------------------------
The Authority and the Borrower agree that this Agreement is executed
in part to induce the purchase by others of the Bonds and for the
further securing of the Bonds, and accordingly that all covenants and
agreements on the part of the Authority and the Borrower as to the
amounts payable with respect to the Bonds hereunder are hereby
declared to be for the benefit of the holders from time to time of the
Bonds and may be enforced as provided in the Indenture on behalf of
the Bondholders by the Trustee.
Section 9.3. Force Majeure. In case by reason of force
-------------
majeure either party hereto shall be rendered unable wholly or in part
to carry out its obligations under this Agreement, then except as
otherwise expressly provided in this Agreement, if such party shall
give notice and full particulars of such force majeure in writing to
the other party within a reasonable time after occurrence of the event
or cause relied on, the obligations of the party giving such notice,
other than the obligation of the Borrower to make the payments
required under the terms hereof or of the Note, so far as they are
affected by such force majeure, shall be suspended during the
continuance of the inability then claimed which shall include a
reasonable time for the removal of the effect thereof, but for no
longer period, and such parties shall endeavor to remove or overcome
such inability with all reasonable dispatch. The term "force
majeure", as employed herein, means acts of God, strikes, lockouts or
other industrial disturbances, acts of the public enemy, orders of any
kind of the Government of the United States, of the State or any civil
or military authority, insurrections, riots, epidemics, landslides,
lightning, earthquakes, volcanoes, fires, hurricanes, tornadoes,
storms, floods, washouts, droughts, arrests, restraining of government
and people, civil
-41-
disturbances, explosions, partial or entire failure
of utilities, shortages of labor, material, supplies or
transportation, or any other similar or different cause not reasonably
within the control of the party claiming such inability. It is
understood and agreed that the settlement of existing or impending
strikes, lockouts or other industrial disturbances shall be entirely
within the discretion of the party having the difficulty and that the
above requirements that any force majeure shall be reasonably beyond
the control of the party and shall be remedied with all reasonable
dispatch shall be deemed to be fulfilled even though such existing or
impending strikes, lockouts and other industrial disturbances may not
be settled and could have been settled by acceding to the demands of
the opposing person or persons.
Section 9.4. Amendments. This Agreement may be amended
----------
only with the concurring written consent of the Trustee and, if
required by the Indenture, of the owners of the Bonds given in
accordance with the provisions of the Indenture.
Section 9.5. Notices. All notices, certificates or other
-------
communications hereunder shall be sufficiently given and shall be
deemed given when delivered or when mailed by registered or certified
mail, postage prepaid, addressed as follows: if to the Authority, at
000 Xxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxxx 00000, Attention: Program
Manager - Loan Administration; if to the Borrower, 000 Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000 Attention: Treasurer; if to the Paying
Agent, Fleet National Bank, 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx,
Attention: Corporate Trust Operations CT/MO/0224; and if to the
Trustee, Fleet National Bank, 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx,
Attention: Corporate Trust Administration CT/MO/0238. A duplicate
copy of each notice, certificate or other communication given
hereunder by either the Authority or the Borrower to the other shall
also be given to the Trustee. The Authority, the Borrower, the
Remarketing Agent, the Paying Agent and the Trustee may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be
sent.
Section 9.6. Prior Agreements Superseded. This Agreement,
---------------------------
together with all agreements executed by the parties concurrently
herewith or in conjunction with the sale of the Bonds, shall
completely and fully supersede all other prior understandings or
agreements, both written and oral, between the Authority and the
Borrower relating to the lending of money and the Project, including
those contained in any commitment letter executed in anticipation of
the issuance of the Bonds but excluding agreements entered into in
connection with the financing of the Project with other bonds
previously issued by the Authority.
-42-
Section 9.7. Execution of Counterparts. This Agreement may
-------------------------
be executed simultaneously in several counterparts each of which shall
be an original and all of which shall constitute but one and the same
instrument.
Section 9.8. Time. All references to times of day in this
----
Agreement are references to New York City time.
Section 9.9. Separability of Invalid Provisions. In case
----------------------------------
any one or more of the provisions contained in this Loan Agreement or
in the Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.
-43-
IN WITNESS WHEREOF, the Authority has caused this Agreement
to be executed in its corporate name by a duly Authorized
Representative, and the Borrower has caused this Agreement to be
executed in its corporate name by its duly authorized officer all as
of the date first above written.
Connecticut Development Authority
By_________________________________
Name: Xxxxxxx X. Xxxxxxxxx
Authorized Representative
Bridgeport Hydraulic Company
By_________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
-44-
APPENDIX A
Bridgeport Hydraulic Company
FORM OF
PROMISSORY NOTE
No. 1 $30,000,000
Bridgeport Hydraulic Company, a corporation organized and
existing under the laws of the State of Connecticut (the "Borrower"),
for value received, hereby promises to pay to the order of the
Connecticut Development Authority (the "Authority"), the principal sum
of $30,000,000.00 together with interest on the unpaid principal
balance thereof from the date hereof until fully and finally paid, on
the applicable Interest Payment Dates together with all taxes levied
or assessed on this Note or the debt evidenced hereby against the
holder hereof. This Note shall bear interest at the rate or rates
determined in accordance with Section 2.3 of the Indenture (as
hereinafter defined) and, as long as the Bonds bear interest at the
Multiannual Rate or on and after the Fixed Rate Conversion Date, shall
be computed on the basis of a 360-day year of twelve 30-day months
and, as long as the Bonds bear interest at the Weekly, Flexible or
Daily Rate shall be computed on the basis of a 365- or 366-day year,
as appropriate for the actual number of days elapsed. In no event
shall the interest rate hereon exceed the maximum rate permitted by
law.
This Note has been executed under and pursuant to a Loan
Agreement dated as of September 1, 1996 between the Authority and the
Borrower (the "Agreement"). This Note is issued to evidence the
obligation of the Borrower under the Agreement to repay the loan made
by the Authority from the proceeds of its $30,000,000 6.00% Water
Facilities Revenue Bonds (Bridgeport Hydraulic Company Project - 1996
Series) (the "Bonds"), together with interest thereon and all other
amounts, fees, penalties, premiums, adjustments, expenses, counsel
fees and other payments of any kind required to be paid by the
Borrower under the Agreement. The Agreement includes provision for
mandatory and optional prepayment of this Note as a whole or in part.
Advances made pursuant to Section 6.2 of the Agreement shall bear
interest at the rate specified in accordance therewith.
The Agreement and this Note (hereinafter, together with the
Tax Regulatory Agreement, collectively referred to as the "Financing
Documents") have been assigned to Fleet National Bank (the "Trustee")
acting pursuant to an Indenture of Trust dated as of September 1, 1996
(the "Indenture") between the Authority and the Trustee. Such
assignment is
-45-
made as security for the payment of the Bonds issued by
the Authority pursuant to the Indenture.
As provided in the Agreement and subject to the provisions
thereof, payments hereon are to be made at the principal office of the
Trustee in Hartford, Connecticut, or at the office designated for such
payment by any successor trustee in an amount which, together with
other moneys available therefor pursuant to the Indenture, will equal
the amount payable as principal or Redemption Price, if any, of and
interest on the Bonds outstanding under the Indenture on each such due
date.
The Borrower shall make payments on this Note on the dates
and in the amounts specified herein and in the Agreement and in
addition shall make such other payments as are required pursuant to
the Financing Documents, the Indenture and the Bonds. Upon the
occurrence of an Event of Default, as defined in any of the Financing
Documents, the principal of and interest on this Note may be declared
immediately due and payable as provided in the Agreement. Upon any
such declaration the Borrower shall pay all cost, disbursements,
expenses and reasonable counsel fees of the Authority and the Trustee
in seeking to enforce their rights under any of the Financing
Documents.
THE BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS
NOTE IS A COMMERCIAL TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND
HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS
OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH THE HOLDER HEREOF MAY DESIRE TO USE. The
Borrower further (1) waives diligence, demand, presentment for
payment, notice of nonpayment, protest and notice of protest, notice
of any renewals or extension of this Note, and all rights under any
statute of limitations, (2) agrees that the time for payment of this
Note may be changed and extended at the sole discretion of the Trustee
without impairing its liability hereon, and (3) consents to the
release of all or any part of the security for the payment thereof at
the discretion of the Trustee or the release of any party liable for
this obligation without affecting the liability of the other parties
hereto. Any delay on the part of the Authority or the Trustee in
exercising any right hereunder shall not operate as a waiver of any
such right, and any waiver granted with respect to one default shall
not operate as a waiver in the event of any subsequent default.
IN WITNESS WHEREOF, Bridgeport Hydraulic Company has caused
this Note to be executed in its corporate name by its duly authorized
officer, dated September 1, 1996.
Bridgeport Hydraulic Company
-46-
By:___________________________
Name: Xxxxx X. Xxxxxx
Authorized Representative
-47-
AUTHORITY ENDORSEMENT
Pay to the order of Fleet National Bank, as Trustee, without
recourse.
Connecticut Development Authority
By:________________________________
Name: Xxxxxxx X. Xxxxxxxxx
Authorized Representative
-48-
TABLE OF CONTENTS
Page
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . 5
Section 1.2. Interpretation . . . . . . . . . . . . . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the Authority . . . . . . . . . 8
Section 2.2. Representations by the Borrower . . . . . . . . . 9
ARTICLE III
THE LOAN
Section 3.1. Loan Clauses . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Other Amounts Payable . . . . . . . . . . . . . . 14
Section 3.3. Manner of Payment . . . . . . . . . . . . . . . . 14
Section 3.4. Obligation Unconditional . . . . . . . . . . . . . 15
Section 3.5. Securities Clauses . . . . . . . . . . . . . . . . 15
Section 3.6. Issuance of Bonds . . . . . . . . . . . . . . . . 15
Section 3.7. Use of Priority Amounts . . . . . . . . . . . . . 15
Section 3.8. Effect of Drawings Under Credit Facility . . . . . 16
Section 3.9. Effective Date and Term . . . . . . . . . . . . . 16
Section 3.10. Borrower's Purchase of Bonds . . . . . . . . . . . 16
Section 3.11. Credit Facility . . . . . . . . . . . . . . . . . 16
Section 3.12. Requirements for Delivery of a Substitute
Credit Facility . . . . . . . . . . . . . . . . . 17
Section 3.13. Securities Laws . . . . . . . . . . . . . . . . . 19
Section 3.14. No Additional Bonds . . . . . . . . . . . . . . . 19
ARTICLE IV
THE PROJECT
Section 4.1. Completion of the Project . . . . . . . . . . . . 20
Section 4.2. Payment of Additional Project Costs by Borrower . 21
Section 4.3. No Warranty Regarding Condition, Suitability or
Cost of Project . . . . . . . . . . . . . . . . . 21
Section 4.4. Taxes . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.5. Insurance . . . . . . . . . . . . . . . . . . . . 22
Section 4.6. Compliance with Law . . . . . . . . . . . . . . . 23
Section 4.7. Maintenance and Repair . . . . . . . . . . . . . . 24
Section 4.8. Disposition of Project by Borrower . . . . . . . . 24
Section 4.9. Leasing of the Project Realty and the
Project Equipment . . . . . . . . . . . . . . . . 24
Section 4.10. Project Equipment . . . . . . . . . . . . . . . . 25
-i-
ARTICLE V
CONDEMNATION
DAMAGE AND DESTRUCTION
Section 5.1. No Abatement of Payments Hereunder . . . . . . . . 26
Section 5.2. Project Disposition Upon Condemnation, Damage
or Destruction . . . . . . . . . . . . . . . . . . 26
Section 5.3. Application of Net Proceeds of Insurance
or Condemnation . . . . . . . . . . . . . . . . . 26
ARTICLE VI
COVENANTS
Section 6.1. The Borrower to Maintain its Corporate
Existence; Conditions under which Exceptions
Permitted . . . . . . . . . . . . . . . . . . . . 28
Section 6.2. Indemnification, Payment of Expenses, and
Advances . . . . . . . . . . . . . . . . . . . . . 28
Section 6.3. Incorporation of Tax Regulatory Agreement:
Payments Upon Taxability . . . . . . . . . . . . . 31
Section 6.4. Further Assurances and Corrective Instruments . . 32
Section 6.5. Covenant by Borrower as to Compliance with
Indenture . . . . . . . . . . . . . . . . . . . . 33
Section 6.6. Assignment of Agreement or Note . . . . . . . . . 33
Section 6.7. Inspection . . . . . . . . . . . . . . . . . . . . 33
Section 6.8. Default Notification . . . . . . . . . . . . . . . 33
Section 6.9. Covenant Against Discrimination . . . . . . . . . 33
Section 6.10. Authority Costs and Expenses . . . . . . . . . . . 34
Section 6.11. Continuing Disclosure . . . . . . . . . . . . . . 34
Section 6.12. Covenant Against Issuing Additional Debt Secured
By The Mortgage . . . . . . . . . . . . . . . . . 34
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default . . . . . . . . . . . . . . . . 35
Section 7.2. Remedies on Default . . . . . . . . . . . . . . . 36
Section 7.3. No Duty to Mitigate Damages . . . . . . . . . . . 37
Section 7.4. Remedies Cumulative . . . . . . . . . . . . . . . 37
ARTICLE VIII
PREPAYMENT PROVISIONS
Section 8.1. Optional Prepayment . . . . . . . . . . . . . . . 38
Section 8.2. Notices and Sources of Prepayment. . . . . . . . . 39
Section 8.3. Mandatory Prepayment on Taxability . . . . . . . . 40
ARTICLE IX
GENERAL
Section 9.1. Indenture . . . . . . . . . . . . . . . . . . . . 41
Section 9.2. Benefit of and Enforcement by Bondholders . . . . 41
Section 9.3. Force Majeure . . . . . . . . . . . . . . . . . . 41
Section 9.4. Amendments . . . . . . . . . . . . . . . . . . . . 42
Section 9.5. Notices . . . . . . . . . . . . . . . . . . . . . 42
Section 9.6. Prior Agreements Superseded . . . . . . . . . . . 42
Section 9.7. Execution of Counterparts . . . . . . . . . . . . 43
Section 9.8. Time . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.9. Separability of Invalid Provisions . . . . . . . . 43
-ii-
APPENDICES
Appendix A - Form of Promissory Note
Appendix B - Description of Project Realty
Appendix C - Description of Project Equipment
