LOAN AGREEMENT

Loan Agreement

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CONNECTICUT DEVELOPMENT AUTHORITY | THE CONNECTICUT WATER COMPANY

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Title: LOAN AGREEMENT
Governing Law: Connecticut Date: 3/12/2004
Industry: Water Utilities Sector: Utilities

LOAN AGREEMENT, Parties: connecticut development authority , the connecticut water company

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EXHIBIT 4.14

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CONNECTICUT DEVELOPMENT AUTHORITY

AND

THE CONNECTICUT WATER COMPANY

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LOAN AGREEMENT

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DATED AS OF OCTOBER 1, 2003

CONNECTICUT DEVELOPMENT AUTHORITY

$14,930,000 WATER FACILITIES REFUNDING REVENUE BONDS

(THE CONNECTICUT WATER COMPANY PROJECT - 2003C SERIES)

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TABLE OF CONTENTS

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PAGE

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PREAMBLE .................................................................................. 1

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. Definitions....................................................................... 3

Section 1.2. Interpretation.................................................................... 8

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1. Representations by the Authority.................................................. .9

Section 2.2. Representations by the Borrower................................................... 10

ARTICLE III

THE LOAN

Section 3.1. Loan Clauses...................................................................... 12

Section 3.2. Other Amounts Payable............................................................. 12

Section 3.3. Manner of Payment................................................................. 13

Section 3.4. Obligation Unconditional.......................................................... 13

Section 3.5. Securities Clauses................................................................ 13

Section 3.6. Issuance of Bonds................................................................. 13

Section 3.7. Effective Date and Term........................................................... 13

Section 3.8. No Additional Bonds............................................................... 14

ARTICLE IV

THE PROJECT

Section 4.1. Completion of the Project......................................................... 15

Section 4.2. Borrower Contribution............................................................. 15

Section 4.3. No Warranty Regarding Condition, Suitability or Cost of Project................... 15

Section 4.4. Taxes............................................................................. 15

Section 4.5. Insurance......................................................................... 16

Section 4.6. Compliance with Law............................................................... 16

Section 4.7. Maintenance and Repair............................................................ 16

Section 4.8. Disposition of Project Realty by Borrower......................................... 17

Section 4.9. Leasing of the Project Realty and the Project Equipment........................... 17

Section 4.10. Project Equipment................................................................ 17

ARTICLE V

CONDEMNATION DAMAGE AND DESTRUCTION

Section 5.1. No Abatement of Payments Hereunder................................................ 18

Section 5.2. Project Disposition Upon Condemnation, Damage or Destruction...................... 18

Section 5.3. Application of Net Proceeds of Insurance or Condemnation.......................... 18

ARTICLE VI

COVENANTS

Section 6.1. The Borrower to Maintain its Corporate Existence; Conditions under which

Exceptions Permitted.... ....................................................... 19

Section 6.2. Indemnification, Payment of Expenses, and Advances................................ 19

Section 6.3. Incorporation of Tax Regulatory Agreement; Payments Upon Taxability............... 21

Section 6.4. Public Purpose Covenants.......................................................... 22

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Section 6.5. Further Assurances and Corrective Instruments..................................... 22

Section 6.6. Covenant by Borrower as to Compliance with Indenture.............................. 22

Section 6.7. Assignment of Agreement or Note................................................... 22

Section 6.8. Inspection........................................................................ 23

Section 6.9. Default Notification.............................................................. 23

Section 6.10.Covenant Against Discrimination................................................... 23

Section 6.11.Covenant to Provide Disclosure.................................................... 23

Section 6.12.Covenant Against Issuing Additional Debt Secured by the Mortgage.................. 23

Section 6.13.Annual Reporting Requirements..................................................... 23

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.1. Events of Default................................................................. 24

Section 7.2. Remedies on Default............................................................... 25

Section 7.3. Remedies on Public Purpose Default................................................ 26

Section 7.4. No Duty to Mitigate Damages....................................................... 27

Section 7.5. Remedies Cumulative............................................................... 27

ARTICLE VIII

PREPAYMENT PROVISIONS

Section 8.1. Optional Prepayment............................................................... 28

Section 8.2. Notices and Sources of Prepayment................................................. 29

Section 8.3. Mandatory Prepayment on Taxability................................................ 29

Section 8.4. Mandatory Prepayment for Deceased Bondholder Redemption........................... 29

ARTICLE IX

GENERAL

Section 9.1. Indenture......................................................................... 30

Section 9.2. Benefit of and Enforcement by Bondholders......................................... 30

Section 9.3. Force Majeure..................................................................... 30

Section 9.4. Amendments........................................................................ 30

Section 9.5. Notices........................................................................... 30

Section 9.6. Prior Agreements Superseded....................................................... 31

Section 9.7. Execution of Counterparts......................................................... 31

Section 9.8. Time 31

Section 9.9. Separability of Invalid Provisions................................................ 31

Section 9.10.Third Party Beneficiaries......................................................... 31

Section 9.11.Governing Law..................................................................... 31

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APPENDICES

Appendix A - Form of Promissory Note

Appendix B - Description of Project Realty

Appendix C - Description of Project Equipment

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CONNECTICUT DEVELOPMENT AUTHORITY

THE CONNECTICUT WATER COMPANY

LOAN AGREEMENT

THIS LOAN AGREEMENT, made and dated as of October 1, 2003, by and

between the CONNECTICUT DEVELOPMENT AUTHORITY, a body corporate and politic

constituting a public instrumentality and political subdivision of the State of

Connecticut, and THE CONNECTICUT WATER COMPANY, a corporation organized and

existing under the laws of the State of Connecticut,

WITNESSETH THAT:

WHEREAS, the State Commerce Act, constituting Connecticut General

Statutes, Sections 32-1a through 32-23yy, as amended (the "Act"), declares that

there is a continuing need in the State (1) for industrial development and

activity to provide and maintain employment and tax revenues and to control,

abate and prevent pollution to protect the public health and safety, (2) for the

development of recreation facilities to promote tourism, provide and maintain

employment and tax revenues, and promote the public welfare, (3) for the

development of commercial and retail sales and service facilities in urban areas

to provide and maintain construction and permanent employment and tax revenues,

to improve conditions of deteriorated physical development, slow economic growth

and eroded financial health of the public and private sectors in urban areas and

to revitalize the economy of urban areas, and (4) for assistance to public

service businesses providing transportation and utility services in the State,

and that the availability of financial assistance and suitable facilities are

important inducements to industrial and commercial enterprises to remain or

locate in the State and to provide industrial, recreation, urban and public

service projects; and

WHEREAS, the Act provides that (1) the term "project" as used therein

means any facility, plant, works, system, building, structure, utility, fixture

or other real property improvement located in the State, and the land on which

it is located or which is reasonably necessary in connection therewith, which is

of a nature or which is to be used or occupied by any person for purposes which

would constitute it as an economic development project, recreation project,

urban project, public service project or health care project, and any real

property improvement reasonably related thereto, and (2) a project may also

include or consist exclusively of machinery, equipment or fixtures; and

WHEREAS, the Act provides that the Authority shall have power to

determine the location and character of, and extend credit or make loans to any

person for the planning, designing, acquiring, improving and equipping of, a

project which may be secured by loan, lease or sale agreements, contracts and

other instruments, upon such terms and conditions as the Authority shall

determine to be reasonable, to require the inclusion in any contract, loan

agreement or other instrument of such provisions for the construction, use,

operation, maintenance and financing of the project as the Authority may deem

necessary or desirable, to issue its bonds for such purposes, subject to the

approval of the Treasurer of the State, and, as security for the payment of the

principal or redemption price, if any, of and interest on any such bonds, to

pledge or assign such a loan, lease or sale agreement and the revenues and

receipts derived by the Authority from such a project; and

WHEREAS, the Authority has heretofore issued and sold $15,000,000 of

its Water Facilities Refunding Revenue Bonds (The Connecticut Water Company

Project - 1992 Series) ($14,640,000 of which were outstanding as of the date of

this Loan Agreement) (the "Prior Obligations"), the proceeds of which were used

to refund in full the Authority's Water Facilities Revenue Bonds (The

Connecticut

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Water Company Project - 1987 Series) (the "1987 Bonds"), the proceeds of which

were used to finance various capital improvements constituting a portion of the

Borrower's existing water system (the "Project"); and

WHEREAS, the Authority has by a resolution adopted June 18, 2003

authorized the issuance of $15,000,000 principal amount of its Water Facilities

Refunding Revenue Bonds (The Connecticut Water Company Project - 2003C Series)

for the purpose of refunding in full the Prior Obligations; and

WHEREAS, pursuant to such resolution the Bonds (as hereinafter defined)

are to be secured by an Indenture of Trust of even date herewith, by and between

the Authority and U.S. Bank National Association, as Trustee; and

WHEREAS, the Bonds shall be special obligations of the Authority,

payable solely from the revenues or other receipts, funds or monies to be

derived by the Authority under this Agreement or the Indenture and from any

amounts otherwise available under the Indenture for the payment of the Bonds;

and

WHEREAS, the Authority proposes with the proceeds of the Bonds to make

a loan to the Borrower and the Borrower proposes to borrow such proceeds from

the Authority for the purpose of refunding the Prior Obligations issued by the

Authority to refund the 1987 Bonds, which 1987 Bonds were issued to finance the

acquisition, construction and installation of the Project; and

WHEREAS, the Borrower acknowledges that the Authority is providing

refinancing for the Project in furtherance of the Authority's corporate purposes

under the Act, that the accomplishment of these purposes is dependent upon the

compliance of the Borrower with its covenants contained in this Agreement, that

the Authority has a resulting interest in the Project, and that the Borrower's

use of and interest in the Project as provided hereby are in furtherance of the

discharge of a public purpose; and

WHEREAS, the Connecticut Department of Public Utility Control (the

"DPUC") has approved the issuance of the Note;

NOW, THEREFORE, in consideration of the premises and of the mutual

representations, covenants and agreements herein set forth, the Authority and

the Borrower, each binding itself, its successors and assigns, do mutually

promise, covenant and agree as follows (provided that in the performance of the

agreements of the Authority herein contained, any obligation it may incur for

the payment of money shall not be an obligation, debt or liability of the State

or any municipality thereof and neither the State nor any municipality thereof

shall be liable on any obligation so incurred, but any such obligation shall be

payable solely out of the revenues or other receipts, funds or monies to be

derived by the Authority under this Agreement or the Indenture and from any

amounts otherwise available under the Indenture for the payment of the Bonds):

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ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1. DEFINITIONS. For the purposes of this Agreement, the

following words and terms shall have the respective meanings set forth as

follows, and any capitalized word or term used but not defined herein is used as

defined in the Indenture:

"Act" means the State Commerce Act, constituting Connecticut General

Statutes, Sections 32-la through 32-23yy, as amended.

"Agreement" means this Loan Agreement and any amendments and

supplements hereto.

"Authority" means the Connecticut Development Authority, a body

corporate and politic constituting a public instrumentality and political

subdivision of the State of Connecticut, duly organized and existing under the

laws of the State, and any body, board, authority, agency or other political

subdivision or instrumentality of the State which shall hereafter succeed to the

powers, duties and functions thereof.

"Authorized Representative" means, in the case of the Authority, the

Chairman or Vice Chairman, the President, any Executive Vice President, Deputy

Director or any Senior Vice President or any Vice President thereof and, in the

case of the Borrower, the Chairman, the President and Chief Executive Officer,

the Vice President-Chief Financial Officer and Treasurer, and any Vice

President, Assistant Treasurer or Secretary thereof and, when used with

reference to the performance of any act, the discharge of any duty or the

execution of any certificate or other document, any officer, employee or other

person authorized to perform such act, discharge such duty or execute such

certificate or other document.

"Beneficial Owner" shall have the meaning specified in Section 2.3(F)

of the Indenture. If any person claims to the Trustee to be a Beneficial Owner,

for purposes of Section 2.4(C) of the Indenture, such person shall prove such

claim to the satisfaction of the Trustee with such documentation and signature

guaranties as the Trustee may request.

"Bonds" means the $14,930,000 Water Facilities Refunding Revenue Bonds

(The Connecticut Water Company Project - 2003C Series) authorized and issued

pursuant to Section 2.3 of the Indenture.

"Bond Counsel" means Winston & Strawn LLP or such other nationally

recognized bond counsel selected by the Authority and reasonably satisfactory to

the Borrower and the Trustee.

"Bond Insurance Policy" means the financial guaranty insurance policy

issued by the Bond Insurer insuring the payment when due of the principal of and

interest on the Bonds as provided therein.

"Bond Insurer" means XL Capital Assurance Inc., a financial guaranty

insurance company incorporated under the laws of the State of New York, and its

successors and assigns.

"Borrower" means (i) The Connecticut Water Company, a corporation

organized and existing under the laws of the State of Connecticut, and its

successors and assigns and (ii) any surviving, resulting or transferee

corporation as provided in Section 6.1 hereof.

"Business Day" means any day (i) that is not a Saturday or Sunday, (ii)

that is a day on which banks located in Hartford, Connecticut and New York, New

York are not required or authorized to remain closed, (iii) that is a day on

which banking institutions in all of the cities in which the principal offices

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the Trustee and the Paying Agent are located and are not required or authorized

to remain closed and (iv) that is a day on which the New York Stock Exchange,

Inc. is not closed.

"Code" means the Internal Revenue Code of 1986, as amended and

regulations promulgated thereunder.

"Debt Service Fund" means the special trust fund so designated,

established pursuant to Section 5.1 of the Indenture.

"DTC" or "The Depository Trust Company" shall mean the limited-purpose

trust company organized under the laws of the State of New York which shall act

as securities depository for the Bonds, and any successor thereto.

"Determination of Taxability" means with respect to the Bonds (1) a

ruling by the Internal Revenue Service, (2) the receipt by the owner of any of

the Bonds from the Internal Revenue Service of a notice of assessment and demand

for payment and (provided the Borrower has been afforded the opportunity to

participate at its own expense in all appeals and proceedings to which such

owner of the Bonds is a party relating to such assessment and demand for

payment) the expiration of the appeal period provided therein if no appeal is

taken or, if an appeal is taken by such owner as provided in Section 6.3 of this

Agreement within the applicable appeal period which has the effect of staying

the demand for payment, a final unappealable decision by a court of competent

jurisdiction, or (3) the admission in writing by the Borrower, in any case to

the effect that the interest on any Bonds is includable in the gross income for

federal income tax purposes (other than for purposes of any alternative minimum

tax, environmental tax or foreign branch profits tax) of an owner or former

owner thereof, other than for a period during which such owner or former owner

is or was a "Substantial User" of the Project financed by such Bonds or a

"Related Person" as such terms are defined in the Code. For purposes of this

definition, the term owner means the Beneficial Owner of the Bonds so long as

the Book-Entry System is in effect.

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

"Disclosure Agreement" means the agreement by and between the Borrower

and U.S. Bank National Association, as dissemination agent, dated the date of

the initial delivery of the Bonds, providing for the provision of certain

information subsequent to the issuance of the Bonds.

"Event of Default" means an Event of Default as defined in subsection

7.1 hereof.

"Favorable Opinion of Bond Counsel" means an opinion of Bond Counsel

addressed to the Authority, the Bond Insurer, the Bank and the Trustee to the

effect that the action proposed to be taken is not prohibited by the laws of the

State or the Indenture and will not adversely affect any exclusion of interest

on the Bonds from gross income for federal income tax purposes.

"Financing Documents" (1) when used with respect to the Borrower, means

this Agreement, the Tax Regulatory Agreement, the Note, the Disclosure Agreement

and the general certificate of the Borrower delivered in connection with the

issuance of the Bonds, but shall not include the Mortgage, and (2) when used

with respect to the Authority, means any of the foregoing documents and

agreements to which the Authority is a direct party. The Financing Documents do

not include any documents or agreements to which the Borrower is not a direct

party, including the Bonds or the Indenture.

"Indenture" means the Indenture of Trust relating to the Bonds, of even

date herewith, by and between the Authority and the Trustee, together with all

indentures supplemental thereto made and entered into in accordance therewith.

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"Interest Payment Date" shall mean March 1, 2004 and each March 1 and

September 1 thereafter on which interest is payable on the Bonds as provided in

the forms of the Bonds.

"Moody's" means Moody's Investors Services, Inc., a corporation

organized and existing under the laws of the State of Delaware, its successors

and their assigns, and if such corporation shall be dissolved or liquidated or

shall no longer perform the functions of a securities rating agency, "Moody's"

shall be deemed to refer to any other nationally recognized securities rating

agency designated by the Authority, at the direction of the Borrower, by notice

to the Trustee and the Borrower.

"Mortgage" means the Indenture of Mortgage and Deed of Trust, dated as

of June 1, 1956, between the Borrower and U.S. Bank National Association

(successor to The Connecticut Bank and Trust Company), as Mortgage Bond

Indenture Trustee, as amended as of the date hereof and as may be amended

hereafter.

"Mortgage Bond Indenture Trustee" means U.S. Bank National Association,

acting as Mortgage Bond Indenture Trustee pursuant to the Mortgage.

"Net Proceeds" when used with respect to any insurance or condemnation

award, means the gross proceeds from such award less all expenses (including

attorney's fees and expenses and any extraordinary expenses) incurred by the

Trustee in the collection thereof.

"Note" means the promissory note of the Borrower to the Authority,

dated the date of initial delivery of the Bonds in the form attached as Appendix

A to this Agreement, and any amendments or supplements made in conformity with

this Agreement and the Indenture.

"Outstanding", when used with reference to a Bond or Bonds, as of any

particular date, means all Bonds which have been authenticated and delivered

under the Indenture, except:

(1) any Bonds canceled by the Trustee because of payment

or redemption prior to maturity or surrendered to the Trustee for

cancellation;

(2) any Bond (or portion of a Bond) paid or redeemed or

for the payment or redemption of which there has been separately set

aside and held in the Debt Service Fund either:

(a) monies in an amount sufficient to effect

payment of the principal or applicable Redemption Price

thereof, together with accrued interest on such Bond to the

payment or redemption date, which payment or redemption date

shall be specified in irrevocable instructions given to the

Trustee to apply such monies to such payment on the date so

specified; or

(b) obligations of the kind described in

subsection 12.1(B) of the Indenture in such principal amounts,

of such maturities, bearing such interest and otherwise having

such terms and qualifications as shall be necessary to provide

monies in an amount sufficient to effect payment of the

principal or applicable Redemption Price of such Bond,

together with accrued interest on such Bond to the payment or

redemption date, which payment or redemption date shall be

specified in irrevocable instructions given to the Trustee to

apply such obligations to such payment on the date so

specified; or

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(3) Bonds in exchange for or in lieu of which other Bonds

shall have been authenticated and delivered under Article III of the

Indenture; and

(4) any Bond deemed to have been paid as provided in

subsection 12.1 of the Indenture.

"Paying Agent" means any paying agent for the Bonds appointed pursuant

to Section 9.10 of the Indenture (and may include the Trustee), and its

successor or successors and any other corporation which may at any time be

substituted in its place in accordance with the Indenture.

"Permitted Encumbrances" mean, as of any particular date, (i) the lien

of the Mortgage, (ii) liens and encumbrances permitted by the Mortgage, (iii)

liens for taxes not yet due and payable, (iv) any lien created by this Agreement

and the Indenture, (v) utility, access and other easements and rights-of-way,

that will not interfere with or impair the value or use of the Project as herein

provided, (vi) any mechanic's, laborer's, materialman's, supplier's or vendor's

lien or right in respect thereof if payment is not yet due and payable and for

which statutory lien rights exist, (vii) such minor defects, irregularities,

easements, and rights-of- way (including agreements with any railroad the

purpose of which is to service the railroad siding) as normally exist with

respect to property similar in character to the Project and which do not

materially impair the value or use of the property affected thereby for the

purpose for which it was acquired hereunder, and (viii) any mortgage, lien,

security interest or other encumbrance to which the Authority and the Bond

Insurer may consent as provided in Section 4.8 hereof.

"Principal User" means any principal user of the Project within the

meaning of Section 144(a)(2)(B) of the Code, including without limitation any

person who is a greater-than-10-percent-owner (or if none, the person(s) who

holds the largest ownership interest in the Project), lessee or user of more

than 10% of the Project measured either by occupiable space or fair rental value

under any formal or informal agreement or, under the particular facts and

circumstances, anyone who is a principal customer of the Project. The term

"principal customer" means any person, who purchases output of the Project under

a contract if the percentage of output taken or to be taken by such person,

multiplied by a fraction the numerator of which is the term of such contract and

the denominator of which is the economic life of the Project, exceeds 10%. In

the case of a person who purchases output of an electric or thermal energy, gas,

water or other similar facility, such person is a principal customer if the

total output purchased by such person during any one year period beginning with

the date the facility is placed in service is more than 10 percent of the

facility's output during each such period. Co-owners or co-lessees who are

shareholders in a corporation or who are collectively treated as a partnership

subject to subchapter K under section 761(a) of the Code are not treated as

Principal Users merely by reason of their ownership of corporate or partnership

interests.

"Prior Obligations" means the $14,640,000 aggregate principal amount of

the Authority's Water Facilities Refunding Revenue Bonds (The Connecticut Water

Company Project - 1992 Series).

"Project" means the Borrower's interest in the Project Realty and other

interests in the real property, and in all Project Equipment wherever located

and whether now owned or hereafter acquired or refinanced in whole or in part

with the proceeds of the Bonds and any additions and accessions thereto,

substitutions therefor and replacements, improvements, extensions and

restorations thereof, described in the appendices hereto, as amended from time

to time in accordance with this Agreement.

"Project Equipment" means all personal property, goods, leasehold

improvements, machinery, equipment, furnishings, furniture, fixtures, tools and

attachments wherever located and whether now owned or hereafter acquired,

refinanced in whole or in part with the proceeds of the Bonds, and any additions

and accessions thereto, substitutions therefor and replacements thereof,

including, without

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limitation the Project Equipment described in Appendix C hereto, as amended from

time to time in accordance herewith.

"Project Realty" means the realty and other interests in the real

property refinanced in whole or in part from the proceeds of the Bonds, together

with all replacements, improvements, extensions, substitutions, restorations and

additions thereto which are made pursuant hereto, including without limitation,

the Project Realty described in Appendix B, as amended from time to time in

accordance herewith.

"Redemption Price" means, when used with respect to a Bond or a portion

thereof, the principal amount of such Bond or portion thereof plus the

applicable premium, if any, payable upon redemption thereof pursuant to the

Indenture.

"Related Person" means, with respect to any Principal User, a person

which is a related person (as defined in Section 144(a)(3) of the Code, and by

reference to Sections 267, 707(b) and 1563(a) of the Code, except that 50% is to

be substituted for 80% in Section 1563(a)).

"S&P" means Standard & Poor's Ratings Services, a division of McGraw

Hill, Inc., a corporation organized and existing under the laws of the State of

New York, its successors and their assigns, and, if such corporation or division

shall be dissolved, eliminated, reorganized, or liquidated or shall no longer

perform the functions of a securities rating agency, "S&P" shall be deemed to

refer to any other nationally recognized securities rating agency designated by

the Authority at the direction of the Borrower, by notice to the Trustee and the

Borrower.

"State" means the State of Connecticut.

"Substantial User" means any substantial user of the Project within the

meaning of Section 147(a) of the Code.

"Supplemental Indenture" means any indenture supplemental to the

Indenture or amendatory of the Indenture, adopted by the Authority in accordance

with Article X of the Indenture.

"Tax Incidence Date" means the date as of which interest on the Bonds

becomes or became includable in the gross income of the recipient thereof (other

than the Borrower or another Substantial User or Related Person) for federal

income tax purposes for any cause, as determined by a Determination of

Taxability.

"Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated as

of the date of initial issuance and delivery of the Bonds, among the Authority,

the Borrower and the Trustee, and any amendments and supplements thereto.

"Term", when used with reference to this Agreement, means the term of

this Agreement determined as provided in Article III hereof.

"Trustee" means U.S. Bank National Association, and its successor or

successors hereafter appointed in the manner provided in the Indenture.

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SECTION 1.2. INTERPRETATION. IN THIS AGREEMENT:

(1) The terms "hereby", "hereof", "hereto", "herein",

"hereunder" and any similar terms, as used in this Agreement, refer to

this Agreement, and the term "hereafter" means after, and the term

"heretofore" means before, the date of this Agreement.

(2) Words of the masculine gender mean and include

correlative words of the feminine and neuter genders and words

importing the singular number mean and include the plural number and

vice versa.

(3) Words importing persons include firms, associations,

partnerships (including limited partnerships), trusts, corporations and

other legal entities, including public bodies, as well as natural

persons.

(4) Any headings preceding the texts of the several

Articles and Sections of this Agreement, and any table of contents

appended to copies hereof, shall be solely for convenience of reference

and shall not constitute a part of this Agreement, nor shall they

affect its meaning, construction or effect.

(5) Nothing contained in this Agreement shall be

construed to cause the Borrower to become the agent for the Authority

or the Trustee for any purpose whatsoever, nor shall the Authority or

the Trustee be responsible for any shortage, discrepancy, damage, loss

or destruction of any part of the Project wherever located or for

whatever cause.

(6) All approvals, consents and acceptances required to

be given or made by any person or party hereunder shall be at the sole

discretion of the party whose approval, consent or acceptance is

required.

(7) All notices to be given hereunder shall be given in

writing within a reasonable time unless otherwise specifically

provided.

(8) If any provision of this Agreement shall be ruled

invalid by any court of competent jurisdiction, the invalidity of such

provision shall not affect any of the remaining provisions hereof.

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

SECTION 2.1. REPRESENTATIONS BY THE AUTHORITY.

The Authority represents and warrants that:

(1) It is a body corporate and politic constituting a

public instrumentality and political subdivision of the State, duly

organized and existing under the laws of the State including the Act.

The Authority is authorized to issue the Bonds in accordance with the

Act and to use the proceeds thereof to refund in full the Prior

Obligations and refinance the Project.

(2) The Authority has complied with the provisions of the

Act and has full power and authority pursuant to the Act to consummate

all transactions contemplated by the Bonds, the Indenture and the

Financing Documents.

(3) By resolution duly adopted by the Authority and still

in full force and effect, the Authority has authorized the execution,

delivery and due performance of the Bonds, the Indenture and the

Financing Documents, and the taking of any and all action as may be

required on the part of the Authority to carry out, give effect to and

consummate the transactions contemplated by this Agreement and the

Indenture, and all approvals necessary in connection with the foregoing

have been received.

(4) The Bonds have been duly authorized, executed,

authenticated, issued and delivered, constitute valid and binding

special obligations of the Authority payable solely from revenues or

other receipts, funds or monies pledged therefor under the Indenture

and from any amounts otherwise available under the Indenture, and are

entitled to the benefit of the Indenture. Neither the State nor any

municipality thereof is obligated to pay the Bonds or the interest

thereon. Neither the faith and credit nor the taxing power of the State

nor any municipality thereof is pledged for the payment of the

principal, and premium, if any, of and interest on the Bonds.

(5) The execution and delivery of the Bonds, the

Indenture and the Financing Documents and compliance with the

provisions thereof, will not conflict with or constitute on the part of

the Authority a violation of, breach of or default under its by-laws or

any statute, indenture, mortgage, deed of trust, note agreement or

other agreement or instrument to which the Authority is a party or by

which the Authority is bound, or, to the knowledge of the Authority,

any order, rule or regulation of any court or governmental agency or

body having jurisdiction over the Authority or any of its activities or

properties, and all consents, approvals, authorizations and orders of

governmental or regulatory authorities which are required for the

consummation by the Authority of the transactions contemplated thereby

have been obtained.

(6) Subject to the provisions of this Agreement and the

Indenture, the Authority will apply the proceeds of the Bonds to the

purposes specified in the Indenture and the Financing Documents.

(7) There is no action, suit, proceeding or investigation

at law or in equity before or by any court, public board or body

pending or threatened against or affecting the Authority, or to the

best knowledge of the Authority, any basis therefor, wherein an

unfavorable decision, ruling or finding would adversely affect the

transactions contemplated hereby or by the Indenture, or which, in any

way, would adversely affect the validity of the Bonds, or the validity

of or

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<PAGE>

enforceability of the Indenture or the Financing Documents, or any

agreement or instrument to which the Authority is a party and which is

used or contemplated for use in consummation of the transactions

contemplated hereby and by the Indenture.

(8) It has not made any commitment or taken any action

which will result in a valid claim for any finders or similar fees or

commitments in respect of the transactions contemplated by this

Agreement.

(9) The representations of the Authority set forth in the Tax

Regulatory Agreement are by this reference incorporated in this

Agreement as though fully set forth herein.

SECTION 2.2. REPRESENTATIONS BY THE BORROWER.

The Borrower represents and warrants that:

(1) The Borrower has been duly incorporated and validly

exists as a corporation under the laws of the State of Connecticut, is

not in violation of any provision of its certificate of incorporation

or its by-laws, has corporate power to enter into and perform the

Financing Documents, and by proper corporate action has duly authorized

the execution and delivery of the Financing Documents.

(2) The Financing Documents constitute valid and legally

binding obligations of the Borrower, enforceable in accordance with

their respective terms, except to the extent that such enforceability

may be limited by bankruptcy or insolvency or other laws affecting

creditors' rights generally or by general principles of equity.

(3) Neither the execution and delivery of the Financing

Documents, the consummation of the transactions contemplated thereby,

nor the fulfillment by the Borrower of or compliance by the Borrower

with the terms and conditions thereof is prevented or limited by or

conflicts with or results in a breach of, or default under the terms,

conditions or provisions of any contractual or other restriction of the

Borrower, evidence of its indebtedness or agreement or instrument of

whatever nature to which the Borrower is now a party or by which it is

bound, or constitutes a material default under any of the foregoing. No

event has occurred and no condition exists which, upon the execution

and delivery of any Financing Documents, constitutes an Event of

Default hereunder or an Event of Default thereunder or, but for the

lapse of time or the giving of notice, would constitute an Event of

Default hereunder or an Event of Default thereunder.

(4) There is no action or proceeding pending or, to the

knowledge of the Borrower, threatened against the Borrower before any

court, administrative agency or arbitration board that may materially

and adversely affect the ability of the Borrower to perform its

obligations under the Financing Documents and all authorizations,

consents and approvals of governmental bodies or agencies required in

connection with the execution and delivery of the Financing Documents

and in connection with the performance of the Borrower's obligations

hereunder or thereunder have been obtained.

(5) The execution, delivery and performance of the

Financing Documents and any other instrument delivered by the Borrower

pursuant to the terms hereof or thereof are within the corporate powers

of the Borrower and have been duly authorized and approved by the board

of directors of the Borrower and are not in contravention of law or of

the Borrower's certificate of incorporation or by-laws, as amended to

date, or of any undertaking or agreement to which the Borrower is a

party or by which it is bound.

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<PAGE>

(6) The Borrower represents that it has not made any

commitment or taken any action which will result in a valid claim for

any finders' or similar fees or commitments in respect of the

transactions described in this Agreement other than the fees to various

parties to the transactions contemplated hereby which have been

heretofore paid or provided.

(7) The Project is included within the definition of a

"project" in the Act. The Borrower intends the Project to continue to

be an authorized project under the Act during the Term of this

Agreement.

(8) All amounts shown in Schedule D of the Tax Regulatory

Agreement are eligible costs of a project financed by bonds issued by

the Authority under the Act, and may be refinanced by amounts in the

Refunding Fund under the Indenture. None of the proceeds of the Bonds

will be used directly or indirectly as working capital or to finance

inventory.

(9) The Project is in material compliance with all

applicable federal, State and local laws and ordinances (including

rules and regulations) relating to zoning, building, safety and

environmental quality.

(10) The availability of financial assistance from the

Authority, among other factors, has induced the Borrower to locate the

Project in the State. The Borrower does not presently intend to lease

the Project.

(11) The Borrower will not take or omit to take any action

which action or omission will in any way cause the proceeds of the

Bonds to be applied in a manner contrary to that provided in the

Indenture and the Financing Documents as in force from time to time.

(12) The Borrower has not taken and will not take any

action and knows of no action that any other person, firm or

corporation has taken or intends to take, which would cause interest on

the Bonds to be includable in the gross income of the recipients

thereof for federal income tax purposes. The representations,

certifications and statements of reasonable expectation made by the

Borrower in the Tax Regulatory Agreement and relating to Project

description, composite issues, bond maturity and average asset economic

life, use of Bond proceeds, arbitrage and related matters are hereby

incorporated by this reference as though fully set forth herein.

(13) The Borrower has good and marketable title in fee

simple to the Project Realty subject only to Permitted Encumbrances and

to irregularities or defects in title which may exist which do not

materially impair the use of such properties in the Borrower's

business.

(14) The Borrower has good and merchantable title to the

Project Equipment owned by the Borrower as of the date hereof, free and

clear of liens and encumbrances, other than Permitted Encumbrances.

(15) As of the date of hereof, except for the Mortgage,

neither the Borrower, nor to its knowledge anyone acting on behalf of

the Borrower, has entered into negotiations with any person for the

purpose of undertaking any borrowing concurrently with or subsequent to

the issuance of the Bonds and to be secured wholly or partially by a

lien or encumbrance on the Project or any part thereof, and the

Borrower has no present intention of undertaking any such borrowing.

(16) The Borrower will use all of the proceeds of the

Bonds to refund in full the Prior Obligations and to pay a portion of

the costs of issuance of the Bonds.

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<PAGE>

ARTICLE III

THE LOAN

SECTION 3.1. LOAN CLAUSES. (A) Subject to the conditions and in

accordance with the terms of this Agreement, the Authority agrees to make a loan

to the Borrower from the proceeds of the Bonds in the amount of $14,930,000 and

the Borrower agrees to borrow such amount from the Authority.

(B) The loan shall be made at the time of delivery of the Bonds

and receipt of payment therefor by the Authority against receipt by the

Authority of the Note duly executed and delivered to evidence the pecuniary

indebtedness of the Borrower hereunder. As and for the loan the Authority shall

apply the proceeds of the Bonds as provided in the Indenture on the terms and

conditions therein prescribed.

due date for the payment of the principal of or interest on the Bonds, until the

principal or Redemption Price, if any, of and interest on the Bonds shall have

been fully paid or provision for the payment thereof shall have been made in

accordance with the Indenture, the Borrower shall make loan payments to the

Trustee for the account of the Authority in an amount which, when added to any

moneys then on deposit in the Debt Service Fund and available therefor, shall be

equal to the amount payable on such due date with respect to the Bonds as

provided in Section 5.3 of the Indenture, including amounts due for the payment

of the principal of and interest on the Bonds. In addition, the Borrower shall

pay to the Trustee, as and when the same shall become due, all other amounts due

under the Financing Documents, together with interest thereon at the then

applicable rate as set forth herein in Section 6.2(G). The Borrower shall have

the option to prepay its loan obligation in whole or in part at the times and in

the manner provided in Article VIII hereof.

(D) Anything herein to the contrary notwithstanding any amount at

any time held in the Principal and Interest Account of the Debt Service Fund by

the Trustee pursuant to this Section shall be credited against the next

succeeding loan payment obligation of the Borrower as provided in subsection

3.1(C) hereof. If, on any due date for payments with respect to the Bonds, the

balance in the Debt Service Fund is insufficient to make such payments, the

Borrower agrees forthwith to pay to the Trustee by no later than 11:00 a.m. on

such due date the amount of the deficiency. If at any time the amount held by

the Trustee in the Debt Service Fund shall be sufficient to pay or provide for

the payment of the Bonds in accordance with Section 12.1 of the Indenture, the

Borrower shall not be obligated to make any further payments under the foregoing

provisions.

SECTION 3.2. OTHER AMOUNTS PAYABLE. (A) The Borrower hereby further

expressly agrees to pay to the Trustee as and when the same shall become due,

(i) an amount equal to the initial and annual fees of the Trustee for the

ordinary services of the Trustee rendered and its ordinary expenses incurred

under the Indenture, including fees and expenses as Paying Agent and the

reasonable fees and expenses of Trustee's counsel, including fees and expenses

as registrar and in connection with preparation and delivery of new Bonds upon

exchanges or transfers, (ii) the reasonable fees and expenses of the Trustee and

any Paying Agents on the Bonds for acting as paying agents as provided in the

Indenture, including reasonable fees and expenses of its counsel, (iii) the

reasonable fees and charges of the Trustee for extraordinary services rendered

by it and extraordinary expenses incurred by it under the Indenture, including

reasonable counsel fees and expenses, and (iv) reasonable fees and expenses of

Bond Counsel and the Authority for any future action requested of either.

(B) The Borrower also agrees to pay all amounts payable by it

under the Financing Documents at the time and in the manner therein provided.

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<PAGE>

penalties, if any) due to the United States of America pursuant to Section 148

(f) of the Code.

(D) The Borrower also agrees to pay directly to the Authority on

the date of issuance and delivery of the Bonds and on the second anniversary

date of the date of issuance and delivery of the Bonds and each anniversary date

thereafter, a fee equal to 1/8th of 1% of the principal amount of the Bonds

Outstanding, such fee to be payable without notice, demand or invoice of any

kind at the Authority's address as set forth herein or at such other address and

to the attention of such other person, or to such account as the Authority may

stipulate by written notice to the Borrower.

SECTION 3.3. MANNER OF PAYMENT. The payments provided for in Section

3.1 hereof shall be made by any reasonable method providing immediately

available funds at the time and place of payment directly to the Trustee for the

account of the Authority and shall be deposited in the Debt Service Fund. The

additional payments provided for in Section 3.2 shall be made in the same manner

directly to the entitled party or to the Trustee for its own use or disbursement

to the Paying Agents, as the case may be.

SECTION 3.4. OBLIGATION UNCONDITIONAL. The obligations of the Borrower

und

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