<PAGE>
Exhibit 4.29
REIMBURSEMENT AND CREDIT AGREEMENT
DATED AS OF AUGUST 1, 2004
BY AND BETWEEN
THE CONNECTICUT WATER COMPANY
AND
CITIZENS BANK OF RHODE ISLAND
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CONNECTICUT DEVELOPMENT AUTHORITY
$5,000,000 WATER FACILITIES REFUNDING REVENUE BONDS
(THE CONNECTICUT WATER COMPANY PROJECT - 2004A SERIES)
================================================================================
<PAGE>
Exhibit 4.29
REIMBURSEMENT AND CREDIT AGREEMENT (this "Agreement"), dated as of
August
1, 2004, by and between THE CONNECTICUT
WATER COMPANY, a corporation duly
organized and existing under the laws of
the State of Connecticut with an office
at 93 West Main Street, Clinton,
Connecticut 06413 (the "Borrower"), and
CITIZENS BANK OF RHODE ISLAND, with an
office at One Citizens Plaza, Providence,
Rhode Island 02903 (the "Bank").
WHEREAS,
the Borrower has requested financing from the Connecticut
Development Authority (the "CDA") to
finance the Project as defined in the
Indenture of Trust dated as of August 1,
2004 between the CDA and U.S. Bank
National Association, as Trustee (the
"Trustee") (the "Indenture").
WHEREAS,
the CDA has determined that it will issue $5,000,000 Water
Facilities Refunding Revenue Bonds (The
Connecticut Water Company Project -
2004A Series) (the "Bonds") in order to
lend funds to the Borrower pursuant to
the terms of the Indenture;
WHEREAS,
the Bonds are to be secured by a irrevocable direct pay letter
of
credit to be issued by the Bank for the
account of the Borrower pursuant to the
terms of this Agreement in the form of
Exhibit A hereto (the "Letter of
Credit");
WHEREAS,
in order to induce the Bank to issue the Letter of Credit, the
Borrower has executed and delivered this
Agreement to the Bank to provide for
the repayment to the Bank of (i) any
payment made under the Letter of Credit,
(ii) any other payment made hereunder and
(iii) certain other fees and expenses
of the Bank in connection with the Letter
of Credit; and
WHEREAS,
the Bank is willing, subject to the terms and conditions
contained herein, to issue the Letter of
Credit;
NOW,
THEREFORE, in consideration of the foregoing recitals and the
covenants contained herein, and in order to
induce the Bank to enter into this
Agreement and to issue the Letter of
Credit, the parties agree as follows:
SECTION 1. DEFINITIONS.
1.01
Certain Defined Terms. Certain accounting and other terms used
herein
shall have the meanings set forth below.
Unless otherwise defined in this
Agreement, all capitalized terms used
herein which are defined in the Indenture
shall have the meanings ascribed to them in
Section 1.1 of the Indenture.
"Account" or "Accounts" means, as the case may be, each or all
of
the accounts established in Section 5.1 of
the Indenture.
"Affiliate" as applied to any person or entity, means any other
person or entity directly or indirectly
through one or more intermediaries
controlling, controlled by, or under common
control with, that person or entity.
For the purposes of this definition,
"control" (including with correlative
meanings, the terms "controlling",
"controlled by" and "under common control
with"), as applied to any person or entity,
means the possession, directly or
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Exhibit 4.29
indirectly, of the power to direct or cause
the direction of the management and
policies of that person or entity, whether
through the ownership of voting
securities or by contract or otherwise.
"Base Rate" means a variable rate per annum equal to the LIBOR
Rate.
"Borrower Documents" means, collectively, this Agreement, the
Demand
Note and any and all other agreements,
instruments, certificates, or other
documents now or hereafter given or
executed or assumed by the Borrower to
evidence, guarantee or secure any of the
Borrower's Obligations under any of the
foregoing documents.
"Borrower's Counsel Opinion" shall have the meaning given in
Section
3.01(h) hereof.
"Business Day" means any day (a) that is not a Saturday or
Sunday;
(b) that is a day on which banks located in
Hartford, Connecticut and New York,
New York are not required or authorized to
remain closed; (c) that is a day on
which banking institutions in the cities in
which the principal offices of the
Trustee, the Bank, the Paying Agent and the
Remarketing Agent are located and
are not required or authorized to remain
closed and (d) that is a day on which
the New York Stock Exchange, Inc. is not
closed; (e) when such term is used to
describe a day on which a payment,
prepaying, or repaying is to be made, any day
which is: (i) neither a Saturday or Sunday
nor a legal holiday on which
commercial banks are authorized or required
to be closed in New York City; and
(ii) a London Banking Day; and (f) when
such term is used to describe a day on
which an interest rate determination is to
be made, any day which is a London
Banking Day.
"CDA" means the Connecticut Development Authority, a body
corporate
and politic constituting a public
instrumentality and political subdivision of
the State of Connecticut created pursuant
to Section 32-11a of the Connecticut
General Statutes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Letter" means that certain commitment letter from
the
Bank to the Borrower dated May 21, 2004 and
accepted by the Borrower on May 26,
2004.
"Contractual Obligation" of a Party means any debt or equity
security issued by that Party, and any
indenture, mortgage, deed of trust,
contract, undertaking, instrument or
agreement (written or oral) to which such
Party is a party or by which it is bound,
or to which any of its assets is
subject.
"Credit Facility Provider Bonds" means all Bonds at any time
purchased, in whole or in part, with the
proceeds of a draw on the Letter of
Credit upon tender of each such bond to the
Trustee by the Bondholder pursuant
to the Indenture, until sold by the
Bank.
"Date of Issuance" means the date on which the Letter of Credit
is
issued by the Bank and delivered to the
Trustee.
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Exhibit 4.29
"Debt to Capitalization Ratio" shall have the meaning ascribed
thereto in Section 5.03(k) hereof.
"Default" means any of the events specified in Section 6 as
causing
an Event of Default, whether or not any
requirement for the giving of notice,
the lapse of time, or both, or any other
condition, has been satisfied.
"Default Rate" means a rate of interest equal to the Base Rate,
plus
four hundred (400) basis points per
annum.
"Demand Note" means the demand promissory note of the Borrower
in
favor of the Bank in the form of Exhibit
B.
"Drawing" shall mean any of an A-Drawing, B-Drawing or C-Drawing
as
described in the Letter of Credit.
"EBIT to Interest Ratio" shall have the meaning ascribed thereto
in
Section 5.03(l) hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974,
as amended from time to time.
"Event of Default" shall have the meaning ascribed thereto in
Section 6 hereof.
"Facilities" shall mean all of the real property, grounds and
improvements thereon of the Borrower.
"Financing Expenses" means all fees, charges and expenses
required
to be paid by the Borrower to the Bank, the
Trustee, the Remarketing Agent and
the Paying Agent and all other Parties in
connection with the issuance,
reissuance, sale, replacement, redemption
or transfer of the Bonds.
"First Mortgage Bonds" means any bonds issued under the First
Mortgage Indenture.
"First Mortgage Indenture" means the Indenture of Mortgage and
Trust
by and between the Borrower and The
Connecticut Bank and Trust Company, as
trustee (predecessor in interest to U.S.
Bank National Association), dated as of
June 1, 1956, as amended.
"Fund" or "Funds" means, as the case may be, each or all of the
Funds, and the Accounts therein established
in Section 5.1 of the Indenture
shall have the meaning ascribed to it in
the Indenture.
"GAAP" means generally accepted accounting principles
consistently
applied.
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<PAGE>
Exhibit 4.29
"Indenture" means the Indenture of Trust, dated as of August 1,
2004, between the CDA and the Trustee,
pursuant to which the Bonds are to be
issued by the CDA, as the same may from
time to time be amended or supplemented
by supplemental indentures.
"Interest Component" has the meaning assigned thereto in the
Letter
of Credit.
"Interest Periods" (a) initially, the period beginning on (and
including) the date on which a draw is made
on the Letter of Credit and is not
reimbursed the same day pursuant to Section
2.04 hereunder and ending on (but
excluding) the day which numerically
corresponds to such date one month
thereafter (or, if such month has no
numerically corresponding day, on the last
Business Day of such month; and (b)
thereafter, each period commencing on the
last day of the next preceding Interest
Period and ending one month thereafter;
PROVIDED, HOWEVER, that if such Interest
Period would otherwise end on a day
which is not a Business Day, such Interest
Period shall end on the next
following Business Day unless such day
falls in the next calendar month, in
which case such Interest Period shall end
on the first preceding Business Day
and no Interest Period may end later than
the termination of this Agreement.
"Legal Action" means any action, suit, investigation, proceeding
or
arbitration, at law or in equity, or before
or by any foreign or domestic court
or other government entity.
"Legal Requirement" applicable to any property or person means
(a)
all decisions, statutes, ordinances,
rulings, directions, rules, regulations,
orders, writs, decrees, injunctions,
permits, certificates, or other
requirements of any court or other
governmental or public entity in any way
applicable to or affecting such property or
such person or its business,
operations, or assets, (b) such person's
certificate of incorporation and
bylaws, and (c) all other material
Contractual Obligations of any nature
applicable to or affecting such property or
such person. As to the Facilities,
such term includes, without limitation, all
legal requirements relating to
acquisition, development, ownership, use,
occupancy, possession, operation,
maintenance, alteration and repair of the
Facilities, as well as all related
permits, easements, covenants, restrictions
and similar items.
"Letter of Credit Fee" means the fee payable quarterly to the
Bank,
for maintenance of the Letter of Credit,
which amount is payable by the Borrower
to the Bank in accordance with Section 2.03
hereof.
"Letter of Credit Termination Date" means the earlier of: (a)
September 1, 2009 or (b) the date upon
which the Letter of Credit shall expire
or terminate pursuant to its terms or (c)
the issuance of a Substitute Letter of
Credit, made in accordance with the
Indenture and this Agreement; provided,
however, Letter of Credit Termination Date
may be extended, from time to time,
either by extension or renewal of the
existing Letter of Credit in accordance
with Section 2.10 hereof.
"LIBOR Rate" shall mean the offered rate for deposits of U.S.
Dollars in an amount approximately equal to
Drawing or Drawings under this
Agreement for a term coextensive with the
designated Interest Period which the
British Bankers' Association fixes as
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Exhibit 4.29
its LIBOR rate and which appears on the
Telerate Page 3750 as of 11:00 a.m.
London time on the day which is two London
Banking Days prior to the beginning
of such Interest Period.
"Licenses and Permits" shall mean all material licenses,
permits,
authorizations and agreements issued by or
agreed to by any governmental
authority, or by a private party pursuant
to a Permitted Encumbrance, and
including, but not limited to, building
permits, occupancy permits and such
special permits, variances and other relief
as may be required pursuant to Legal
Requirements which may be applicable to the
Facilities.
"Loan Agreement" shall mean the Loan Agreement between the CDA
and
the Borrower, dated as of August 1, 2004,
as the same may be time to time
amended or supplemented.
"London Banking Day" shall mean a day on which dealings in US
dollar
deposits are transacted in the London
interbank market.
"Material Adverse Effect" a material adverse effect on (a) the
business, operations, property or condition
(financial or otherwise) of the
Borrower, (b) the ability of the Borrower
to perform the obligations of the
Borrower under this Agreement or the Letter
of Credit, or (c) the validity or
enforceability of this Agreement, the
Letter of Credit or the rights or remedies
of the Bank hereunder or thereunder.
"Obligations" means all obligations of the Borrower owed to the
Bank
under this Agreement and the Letter of
Credit.
"Original Stated Amount" means Five Million Sixty-Two Thousand
Five
Hundred and no/100 Dollars ($5,062,500.00)
or, if less, the amount available to
be drawn under the Letter of Credit as of
the Date of Issuance, as set forth in
the Letter of Credit.
"Other Accrued Amounts" means the sum of all amounts accrued or
deferred under the Borrower Documents and
payable by Borrower to the Bank for
the period commencing with and including
the Date of Issuance and ending with
and including the day preceding the date on
which payment is made.
"Party" and "Person" each shall include all individuals,
companies,
limited liability companies, firms,
associations, partnerships, joint ventures,
unincorporated trade and business
enterprises, trusts, estates, governments
(whether national, regional or local) and
agencies, instrumentalities and
officials thereof, and all other persons
and entities, of whatever nature or
form.
"Payment Obligations" means all obligations of the Borrower owed
to
the Bank under Section 2 hereof.
"Permitted Encumbrances" shall be those encumbrances listed on
Exhibit C.
"Permitted Indebtedness" means (i) existing indebtedness
described
in numbers 1 through 5 on Exhibit C; (ii)
indebtedness for borrowed money from
the Bank in connection with
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<PAGE>
Exhibit 4.29
the Bonds; (iii) indebtedness incurred
pursuant to this Agreement, (iv)
indebtedness constituting purchase money
mortgages and/or purchase money
security interests; (v) indebtedness to the
CDA, Connecticut Water Service, Inc.
or Borrower's Affiliates related to new
money bonds to be issued through the CDA
prior to March 4, 2006 not exceeding
Fifteen Million Dollars ($15,000,000) in
the aggregate; (vi) indebtedness, in
addition to the indebtedness described in
Subsection (v), to Connecticut Water
Service, Inc. or Borrower's Affiliates not
exceeding Six Million Dollars ($6,000,000)
in the aggregate; and (vii) any other
indebtedness for which the Borrower has
provided to the Bank prior to issuing
such indebtedness an officer's certificate
demonstrating that (a) Borrower's
Debt to Capitalization Ratio for the most
recent period would not have exceeded
70% assuming the incurrence of such debt at
the beginning of the period and (b)
the EBIT to Interest Ratio for the most
recent period would have been at least
2:1 assuming the incurrence of such debt at
the beginning of the period.
"Plan" means any plan described in ERISA.
"Principal
Component" shall have the meaning assigned thereto in the
Letter of Credit.
"Related Documents" means, collectively, the Borrower Documents,
the
Bonds, the Indenture, the Letter of Credit
and any other agreement, instrument
or other document relating to or executed
in connection with the transactions
contemplated by this Agreement, each as
amended in connection herewith and from
time to time hereafter.
"Remarketing Agent" shall have the meaning ascribed to it in
the
Indenture.
"Remarketing Draw" means a Drawing under the Letter of Credit
pursuant to a draft accompanied by a
certification in the form of Certificate A
to the Letter of Credit for the purchase
price of the Bonds tendered for
purchase pursuant to the Indenture.
"Stated Amount" means the Original Stated Amount, as reduced
from
time to time in accordance with the terms
of the Letter of Credit.
"Substitute Letter of Credit" means a letter of credit issued
to
replace the Letter of Credit in accordance
with the terms of the Indenture.
"Trustee" means U.S. Bank National Association, and any banking
corporation resulting from or surviving any
consolidation or merger to which it
or its successors may be a party and any
successor trustee appointed and at the
time serving as successor trustee pursuant
to the Indenture.
"Uniform Customs and Practice" means the Uniform Customs and
Practice for Documentary Credits (1993
Revision), International Chamber of
Commerce Publication No. 500.
1.02 Other Definitional Provisions. Accounting terms used
herein
that are not otherwise defined in this
Agreement will have the meanings assigned
to them in accordance with
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Exhibit 4.29
GAAP. For all purposes of this Agreement,
except as otherwise expressly provided
herein or unless the context otherwise
requires, generally accepted accounting
principles will be consistently applied
throughout the periods involved. Words
used in the singular will include the
plural and vice versa; words of any gender
will include the other gender and the
neuter; and references to dollars will be
to United States dollars. Reference to
"Sections", "Subsections", "Paragraphs",
"Subparagraphs", "Appendices", "Recitals",
and "Exhibits" shall be to Sections,
Subsections, Paragraphs, Subparagraphs,
Appendices, Recitals, and Exhibits of
this Agreement unless otherwise
specifically provided. Any of the terms defined
in Section 1.01 may be used in singular or
plural form. Except as otherwise
provided herein, references to any document
or instrument defined in Section
1.01 may be used in singular or plural
form. Except as otherwise provided
herein, references to any document or
instrument defined in Section 1.01 are to
such document or instrument as amended or
supplemented from time to time with
the Bank's consent or as otherwise
permitted by this Agreement. References made
herein to consents, approvals, elections or
other decisions to be made in the
Bank's "judgment", at the Bank's
"discretion", to the Bank's "satisfaction" or
"satisfactory to the Bank", shall be deemed
to entitle the Bank to exercise such
decision-making capacity in its discretion,
in good faith, except as otherwise
expressly set forth herein.
SECTION 2. TERMS OF LETTER OF CREDIT AND REIMBURSEMENT
2.01 The
Letter of Credit. At the request of the Borrower, the Bank
agrees, on the terms and conditions
hereinafter set forth, to issue the Letter
of Credit, in the form of Exhibit A
attached hereto, in the Original Stated
Amount for the account of the Borrower and
deliver the Letter of Credit to the
Trustee. The Letter of Credit is to be used
by Borrower solely to provide
liquidity and credit enhancement for the
Bonds. The Letter of Credit shall
expire on the Letter of Credit Termination
Date. The Bank shall make payments on
the Letter of Credit from the Bank's own
funds.
2.02
Issuing the Letter of Credit. The Letter of Credit shall be
issued
upon fulfillment of the conditions set
forth in Section 3 hereof.
2.03
Commitment Fee and Letter of Credit Fee. The Borrower has paid at
or
prior to the Date of Issuance a commitment
fee of Fifteen Thousand Dollars
($15,000.00), which is the commitment fee
for both this Letter of Credit and the
letter of credit for the $4,550,000 Water
Facilities Refunding Revenue Bonds
(The Connecticut Water Company Project -
2004B Series). The Borrower hereby
agrees to pay to the Bank in advance the
Letter of Credit Fee on a quarterly
basis in an amount equal to 50 basis points
of the Stated Amount of the Letter
of Credit per annum, unless the Borrower
has a downgrade by any of Moody's
Investors Services, Standard & Poor's
or Fitch Rating to Baa1, BBB+ or BBB+,
respectively, or lower, in which case the
Letter of Credit Fee will be an amount
equal to 60 basis points of the Stated
Amount of the Letter of Credit per annum.
Such Letter of Credit Fee shall be
calculated on the basis of the actual number
of days elapsed in a year of 365 days and
be payable quarterly in advance on
each January 1, April 1, July 1 and October
1, with the initial payment covering
the period from the Date of Issuance
through September 30, 2004 due on the Date
of Issuance.
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Exhibit 4.29
2.04
Reimbursement and Other Payments.
(a) The Borrower hereby agrees to reimburse or pay to the Bank
(to
the extent not already paid) immediately
and on the same Business Day on which
the Bank shall be required to pay any draft
presented under the Letter of Credit
with respect to any Drawing a sum equal to
(i) the amount paid by the Bank under
the Letter of Credit and (ii) the amount of
any taxes, fees, charges or other
costs and expenses incurred by the Bank in
connection with any payment made by
the Bank under or with respect to the
Letter of Credit. Notwithstanding the
provisions of the immediately preceding
sentence, in the event that any draw
under the Letter of Credit is a Remarketing
Draw, outside the control of the
Borrower and such event is not an Event of
Default, the Bank agrees that the
Borrower will not be obliged to repay any
such amounts drawn down until the
earlier to occur of (i) demand upon the
occurrence of an Event of Default, (ii)
upon receipt of the proceeds from the
resale of Bonds acquired under the
Remarketing Draw or (iii) the Letter of
Credit Termination Date. Interest shall
accrue on all such amounts drawn down at
the rate of the Base Rate plus one
hundred (100) basis points and shall be
paid monthly in arrears on the first
Business Day of each month. In the event
that the Bonds remain nonmarketable for
longer than 180 days, interest shall accrue
on all such amounts at the rate of
the Base Rate plus one hundred and fifty
(150) basis points and shall be paid
monthly in arrears on the first Business
Day of each month.
(b) Whenever an Event of Default shall have occurred under this
Agreement, the Bank shall have the option
to increase the rate of interest on
the unpaid principal to the Default Rate,
and if it does so, the Borrower agrees
to pay interest on the unpaid principal at
a rate per annum equal to the Default
Rate. The Borrower also agrees that if the
entire amount of any Obligation
hereunder is not paid in full within ten
(10) days of the date when due, the
Borrower shall pay to the Bank a late fee
equal to thirty-five dollars ($35.00).
(c) If after the date of issuance of the Letter of Credit, any
change in any law or regulation or in the
interpretation thereof by any court or
administrative or governmental authority
charged with the administration thereof
shall impose, modify or deem applicable any
reserve, special deposit or similar
requirement which would impose on the Bank
any additional costs (i) generally
upon the issuance or maintenance of so
called letters of credit by the Bank, or
(ii) specifically in respect of the Letter
of Credit documents or the Letter of
Credit, and the result of such imposition
or additional costs upon either clause
(i) or (ii) above shall be to increase the
cost of the Bank of issuing or
maintaining the Letter of Credit (which
increase in cost shall be the result of
the Bank's reasonable allocation of the
aggregate of such cost increases
resulting from such events), then (x) the
Bank shall so notify Borrower and (y)
upon receipt of such notice from the Bank,
accompanied by a certificate as to
such increased costs, Borrower shall pay as
of the effective date of such change
or interpretation all additional amounts
which are necessary to compensate the
Bank for such increased costs incurred by
the Bank. The Borrower may review and
comment on the Bank's reasons for, and
calculation of, the increased costs,
which comments the Bank shall consider in
good faith in making its final
certification. However, the final
certification of the Bank as to such increased
costs shall be conclusive (absent manifest
error) as to the amount thereof. For
purposes of this Section 2.04(c), all
references to the "Bank" shall be deemed
to include any participant in the Letter of
Credit; provided, however, that in
the case of a participation, such amount
shall not exceed the amount that the
Borrower would have had to pay
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Exhibit 4.29
under this Section 2.04(c) if the Bank had
not sold the participation but had
retained such participation for the Bank's
own account. The Bank will furnish
the Borrower with notice of any change of
law or regulation or interpretation
thereof referred to above promptly after
having actual knowledge of the
application thereof or promptly upon its
receipt of written notice with respect
thereof from any participant.
(d) The Borrower hereby agrees to pay to the Bank a fee of
$150.00
upon each drawing under the Letter of
Credit.
(e) The Borrower shall execute and deliver to the Bank a Demand
Note
evidencing amounts due under paragraphs (a)
or (b) above, such Demand Note to be
substantially in the form of Exhibit B
attached hereto, but in the absence of
any such Demand Note, the obligation of the
Borrower to repay amounts due
thereunder shall be conclusively evidenced
hereby and by the Bank's records of
disbursements and payments.
(f) Any payments the Borrower makes to the Bank pursuant to the
terms of any Purchased Bonds (as defined in
the Indenture) shall reduce amounts
owed hereunder and corresponding amounts
under the Demand Note.
2.05
Payments and Computations. (a) Payments received by the Bank from
the
Trustee pursuant to Sections 2.7(E), 5.3(E)
and 12.1 of the Indenture shall be
treated as payments made by the Borrower
hereunder. To the extent the Bank has
not received payments from the Trustee
under Sections 2.7(E), 5.3(E) and 12.1 of
the Indenture sufficient to cover a draw on
the Letter of Credit, and in all
other instances where reimbursement
payments are required hereunder, the
Borrower shall make each payment hereunder
not later than 12:00 noon (New York
City time) on the day when due in lawful
money of the United States of America
and in immediately available funds to the
Bank at the Bank's office specified in
Section 9. Funds received after such time
shall be deemed received on the next
succeeding Business Day. All computations
of interest hereunder shall be made by
the Bank on the basis of a year of 360 days
and the actual number of days
elapsed. All computations of Letter of
Credit Fees hereunder shall be made by
the Bank on the basis of a year of 365 days
and the actual number of days
elapsed.
(b) All sums payable by the Borrower hereunder, whether of
principal, interest, fees, expense or
otherwise, shall be paid in full, without
any deduction or withholding whatsoever. In
the event that the Borrower is
compelled by law to make any such deduction
or withholding, then the Borrower
shall pay to the Bank such additional
amount as will result in the receipt by
the Bank of a net sum equal to the sum it
would have received had no such
deduction or withholding been required to
be made. In the event such law,
regulation or condition shall be revoked,
rescinded, declared invalid or
inapplicable or otherwise rescinded, the
Bank shall forthwith refund to the
Borrower any and all amounts repaid to it
upon or after such rescission which
are attributable to payments made by the
Borrower to the Bank pursuant to this
Section.
(c) In the event any fees payable under the terms hereof are
not
paid on or before the date the same are due
and payable, the payment of such
fees shall be accompanied by interest
thereon, at the Default Rate, from the
date such payment becomes due until paid in
full.
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Exhibit 4.29
2.06
Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a
day that is not a Business Day, such
payment shall be made on the next
succeeding Business Day, and interest and any
applicable fees other than late fees shall
accrue during such extension through
and including the date of payment.
2.07
Obligations Absolute. The Obligations of the Borrower under
this
Agreement shall be primary, unconditional
and irrevocable, and shall be paid
strictly in accordance with the terms of
this Agreement notwithstanding:
(a) any lack of validity or enforceability of this Agreement,
the
Letter of Credit, the Indenture or any
other Related Document;
(b) any amendment or waiver of or any consent to or actual
departure
from all or any of the Related
Documents;
(c) the existence of any claim, set-off, defense or other right
which the Borrower, any entity owned
(directly or indirectly) by the Borrower or
any entity that owns (directly or
indirectly) any interest (whether equitable,
beneficial or otherwise) in the Borrower
may have at any time against the CDA,
the Trustee or any other beneficiary or any
transferee of the Letter of Credit
(or any persons or entities for which the
Trustee or any such beneficiary or any
such transferee may be acting), the Bank,
or any other person or entity, whether
in connection with this Agreement, the
transactions contemplated herein or in
the Related Documents, or in any unrelated
transaction;
(d) any statement or any other document presented under the
Letter
of Credit proving to be forged, fraudulent,
or insufficient in any respect or
any statement therein being untrue or
inaccurate in any respect, provided that
the Bank's liability (if any) therefor
shall be determined in accordance with
Section 9.05(b) hereof;
(e) any breach of contract or other dispute between the Borrower
and
any Person;
(f) any payment by the Bank under the Letter of Credit against
presentation of a sight draft or
certificate which does not comply with the
terms of the Letter of Credit, provided
that the Bank's liability (if any)
therefor shall be determined in accordance
with Section 9.05(b) hereof;
(g) any delay, extension of time, renewal, compromise or other
indulgence agreed to by the Bank, with or
without notice to or approval by the
Borrower in respect of any of the
Borrower's indebtedness to the Bank under this
Agreement;
(h) any other circumstance or happening whatsoever, whether or
not
similar to any of the foregoing; provided,
however, that this Section 2.07 shall
not prevent the assertion by the Borrower
of a claim, if any, under Section
9.05(b) hereof but the assertion of any
such claim shall in no event be made as
a set-off, counterclaim or defense to the
Borrower's obligations hereunder.
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<PAGE>
Exhibit 4.29
2.08 The
Uniform Customs and Practice and Modification Consent. (a) The
Uniform Customs and Practice shall be
binding on the Borrower and the Bank with
respect to the Letter of Credit, except as
otherwise provided in the Letter of
Credit, and except to the extent otherwise
from time to time agreed to by the
Bank and the Borrower in writing. With
regard to the Bank, the Borrower assumes
all risks of the acts or omissions of the
beneficiary of the Letter of Credit
with respect to the Letter of Credit. In
furtherance of, and not in limitation
of the Bank's rights and powers under the
Uniform Customs and Practice, but
subject to all other provisions of this
Section 2.08, it is understood and
agreed that the Bank shall not have any
liability for and that the Borrower
assumes, with regard to the Bank, all
responsibility for: (i) the genuineness of
any signature; (ii) the form, sufficiency,
accuracy, genuineness, falsification
or legal effect of any draft, certification
or other document required by the
Letter of Credit or the authority of the
person signing the same; (iii) the
failure of any instrument to bear any
reference or adequate reference to the
Letter of Credit or the failure of any
persons to note the amount of any
instrument on the reverse of the Letter of
Credit or to surrender the Letter of
Credit; (iv) the good faith or acts of any
person other than the Bank and its
agents and employees; (v) the existence,
form, sufficiency or breach of or
default under any agreement or instrument
(other than the Letter of Credit) of
any nature whatsoever; (vi) any delay in
giving or failure to give any notice,
demand or protest; and (vii) any error,
omission, delay in or nondelivery of any
notice or other communication, however
sent, provided, however, that the Bank is
and remains responsible for any of the
above caused solely by its own gross
negligence or willful misconduct. The
determination as to whether the required
documents are presented prior to the
expiration of the Letter of Credit and
whether such other documents are in proper
and sufficient form for compliance
with the Letter of Credit shall be made by
the Bank in its sole discretion,
which determination shall be prima facie
evidence of compliance. Any negative
determination as to proper and sufficient
form for compliance with the Letter of
Credit shall be promptly stated to the
Borrower in order to provide an
opportunity to cure (if such cure meets
each and all of the terms and conditions
of the Letter of Credit). It is agreed that
the Bank may honor, as complying
with the terms of the Letter of Credit and
this Agreement, any documents which
appear on their face to be in accordance
with the terms and conditions of the
Letter of Credit, and signed or issued by
the beneficiary thereof, provided that
the Bank's liability (if any) therefor
shall be determined in accordance with
Section 9.05(b) hereof. Any action,
inaction or omission, or payment or failure
to pay, on the part of the Bank under or in
connection with the Letter of
Credit, drawings thereon or reinstatement
thereof, if in good faith and in
conformity with such laws, regulations,
usage of trade or commercial or banking
customs as may be applicable, shall be
binding upon the Borrower, shall not
place the Bank under any liability to the
Borrower, and shall not affect, impair
or prevent the vesting of any of the Bank's
rights or powers hereunder or the
Borrower's obligation to make full
reimbursement, provided such act or omission
did not arise due to the gross negligence
of the Bank.
(b) If the Borrower, either in writing or orally (confirmed by
either party in writing), requests or
consents to any modification or extension
of the Letter of Credit or waives failure
of any draft, certificate or other
documents to comply with the terms of the
Letter of Credit, the Bank shall be
deemed to have relied and be entitled to
rely on such request,
-11-
<PAGE>
Exhibit 4.29
consent or waiver with respect to any
action taken or omitted by the Bank
pursuant to any such request, consent or
waiver, and such extension,
modification or waiver shall be binding
upon the Borrower.
2.09
Reinstatement of Letter of Credit.
(a) After any A-Drawing, the Principal Component shall be
reinstated
upon delivery of a certificate in the form
of Annex 2 to the Letter of Credit.
(b) With respect to a C-Drawing made in respect of interest
payable
on an Interest Payment Date as a scheduled
periodic payment of interest on the
Bonds or as a portion of the purchase price
of Bonds being purchased with the
proceeds of an A-Drawing pursuant to
Section 2.10, 2.11, 2.12, 2.15 or 2.16 of
the Indenture, if the Trustee has not
received, within ten (10) calendar days
after any payment in respect of a
C-Drawing, notice from the Bank to the effect
that (1) an Event of Default hereunder has
occurred and is continuing, and (2)
the Letter of Credit will not be reinstated
as of the date thereof, then the
Interest Component will automatically be
reinstated, as of the close of business
on such tenth (10th) calendar day, and
shall be equal to forty-five (45) days
accrued interest (computed at the rate of
ten percent (10%) per annum on the
basis of a 360-day year notwithstanding the
actual rate of interest borne from
time to time by the Bonds) on the then
applicable Principal Component. The
Interest Component will not be reinstated
for any C-Drawing made to pay interest
except as specified in the preceding
sentence.
2.10
Extension of the Letter of Credit Expiration Date. The Letter
of
Credit shall terminate at the Termination
Date, as defined in the Letter of
Credit, provided, however, that the Letter
of Credit may be renewed for a period
of one year (or such other period to which
the Bank may agree, in its sole
discretion) from such Termination Date (or
any future extended expiration date)
if (i) a written request for renewal is
received by the Bank between September
2, 2007 and 180 days prior to the
Termination Date (or at least 180 days prior
to any future extended expiration date) and
(ii) the Bank, in its sole
discretion, elects to grant the request for
renewal in writing prior to such
Termination Date (or prior to any future
extended expiration date). The Bank
agrees to use its best efforts to reply to
a request for extension in writing
within sixty (60) days of the request.
2.11
Application of Funds. Upon the occurrence and during the
continuance
of any Event of Default, any payment
received hereunder or pursuant to any of
the Related Documents may be applied by the
Bank to such Obligations of the
Borrower and in such order (without any
duty to marshal), as the Bank may elect
in its sole and absolute discretion, so
long as such applications are not in
conflict with the terms of the Indenture or
the First Mortgage.
2.12
Substitute Letter of Credit. At the request of the Borrower made
in
compliance with the provisions of the Loan
Agreement, the Indenture and Section
2.13, the Bank shall cooperate in order
that a Substitute Letter of Credit may
be obtained and substituted for the Letter
of Credit, and the Bank take such
actions as reasonably requested by the
Borrower or the Trustee with respect
thereto (at the sole expense of the
Borrower). The Letter of Credit Fee paid to
the Bank shall accrue and be payable
through the end of the quarter in which the
substitution is made as if no substitution
had taken place.
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<PAGE>
Exhibit 4.29
2.13
Optional Termination of the Letter of Credit. Borrower has the
option, in its sole discretion, to
terminate the Letter of Credit, without
penalty, by notifying the Bank and the
Trustee, in writing, sixty (60) days
prior to the date it wishes to terminate
the Letter of Credit. If the
termination is due to a downgrade of the
Bank's credit rating, the Bank shall
have the right to provide a confirming
letter of credit within sixty (60) days
of the downgrade, with a financial
institution with a credit rating at least
equal to the rating prior to the downgrade.
If no such confirmation is provided,
Borrower may terminate the Letter of Credit
without penalty.
SECTION 3. CONDITIONS PRECEDENT.
3.01
Execution and Delivery of Closing Documents. On or before the Date
of
Issuance, the Bank shall have received and
approved the following documents,
each of which shall be in form and
substance reasonably satisfactory to the Bank
and duly executed (and acknowledged where
necessary) and delivered by the
appropriate parties thereto (issuance by
the Bank of the Letter of Credit to be
conclusive evidence of the Bank's receipt
and approval):
(a) This
Agreement
(b) Demand
Note;
(c)
Indenture;
(d) Loan
Agreement;
(e) Remarketing
Agreement;
(f) All documents relating to the formation, existence and
governance of Borrower;
(g) Evidence that the Borrower has taken all necessary action
to
authorize it to execute, deliver and be
bound by the documents to which it is a
signatory, including, without limitation,
certified resolutions authorizing such
execution and delivery, with incumbency
certificates attached;
(h) An opinion of Bond Counsel, and if appropriate, a
supplemental
opinion of Bond Counsel, substantially in
the form required by the CDA and the
Bank, in each case dated the Date of
Issuance and either addressed to the Bank
or accompanied by a letter satisfactory to
the Bank entitling the Bank, and any
of its successors or assigns to rely on
such opinion to the same extent as if
addressed to such persons;
(i) Payment of legal fees and disbursements of Bank's counsel;
-13-
<PAGE>
Exhibit 4.29
(j) An opinion of counsel for the Borrower ("Borrower's Counsel
Opinion") dated the Date of Issuance and
addressed to the CDA, the Bank and the
Trustee with respect to such matters as the
Bank may reasonably request; and
(k) Such other documents and instruments as the Bank may
reasonably
require including, without limitation,
corporate documentation.
3.02 Other
Requirements. On or before the Date of Issuance:
(a) No legislation, rule, order or decree shall, in the opinion
of
counsel for the Bank, reasonably purport to
prohibit or restrain the issuance of
the Letter of Credit;
(b) The Borrower's representations and warranties contained
herein
shall be correct in all material respects
and the Borrower shall be in
compliance in all material respects with
all covenants and agreements contained
herein and applicable to the Borrower;
(c) No material adverse change shall have occurred in the
financial
condition, business, affairs, operations or
control of the Borrower since the
date of its financial statements most
recently delivered to the Bank, taking
into account seasonal fluctuations in the
Borrower's income stream;
(d) All real estate taxes, personal property taxes and other
municipal charges relating to the
Facilities shall be current;
(e) The Borrower shall have secured and delivered (i) all
Borrower
Documents duly executed and in form and
substance satisfactory to Bank, (ii)
other documents ancillary to the Borrower
Documents required by the Bank, and
(iii) all consents, waivers,
acknowledgments and other agreements from third
persons which Bank may deem necessary or
desirable in order to effectuate the
provisions of the Borrower Documents;
(f) Except as permitted by the Bank, any and all other
conditions
contained in the Commitment Letter shall
have been satisfied to the satisfaction
of the Bank.
SECTION 4. SECURITY
4.01
Additional Bonds. If the Borrower issues additional First
Mortgage
Bonds or bonds are issued to refund any of
the Borrower's existing bonds or new
bonds are issued which in either case are
secured, this Agreement and the Letter
of Credit will be secured on parity with
such bonds issued. The Borrower shall
provide to the Bank notice of any proposed
bonds at least thirty (30) days prior
to the pricing of such bonds. The Borrower
shall also provide to the Bank within
five (5) days, or when available, any
information related to any such bond
closing that the Bank reasonably requests.
The relevant bond documents shall
contain provisions regarding and
acknowledging the Bank's parity status. In
addition, the Bank and the Borrower shall
also execute an amendment to this
Agreement and the Borrower shall execute
such additional
-14-
<PAGE>
Exhibit 4.29
documents, in forms approved by the Bank,
adding and evidencing such security to
secure the obligations of the Borrower to
the Bank under this Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE BORROWER
5.01
Representations and Warranties. As a material inducement to the
Bank
to issue the Letter of Credit hereunder,
the Borrower hereby represents,
warrants and covenants to Bank, as of the
date hereof, the following, and all
representations, warranties and covenants
contained in this Agreement shall
survive until the later of (i) (A) the
Letter of Credit Termination Date, or (B)
payment in full of all amounts due and
owing or payable to the Bank under this
Agreement and the other Borrower Documents,
and (ii) the release of the Bank to
its sole satisfaction of all obligations
under the Letter of Credit, unless the
Bank otherwise expressly consents in
writing:
(a) No Violation. Borrower is and shall remain in compliance in
all
material respects with all federal, state
and local laws and regulations,
including, without limitation, the American
with Disabilities Act of 1990, all
federal, state and local laws and
ordinances related to access and all rules,
regulations and orders issued pursuant
thereto, including without limitation,
the Americans with Disabilities Act
Accessibility Guidelines for Buildings and
Facilities. The payment and performance by
the Borrower of the Obligations of
the Borrower hereunder or under any other
Related Documents do not constitute a
violation of any law, order, regulation,
material contract, or material
agreement to which the Borrower is a party
or by which the Borrower or the
Borrower's property may reasonably be
bound; and do not require any filing or
registration with, or any permit, license,
consent, or approval of, any
governmental agency or regulatory authority
other than those that have been
obtained.
(b) No Litigation. There is no litigation or arbitration pending
or,
to the best of the Borrower's knowledge,
threatened against the Borrower which,
if adversely decided, could materially
impair the ability of the Borrower to pay
and perform Obligations of the Borrower
under any Related Document.
(c) Entity Matters. The Borrower is and shall remain a duly
organized, validly existing corporation and
shall have all requisite corporate
power and authority to conduct its business
and to own its property as the same
is and shall be conducted or owned, and is
and shall remain qualified to do
business in all jurisdictions where the
nature and extent of its business is or
may be such that qualification is required
by law, except where the failure to
so qualify would not have a material and
adverse effect on the Borrower, its
properties or business, provided, however,
that the Borrower may merge with any
of its Affiliates or with any regulated
water utility, without the Bank's
consent, as long as the surviving entity
shall have all of Borrower's
obligations under the Related Documents.
The execution of the Borrower Documents
by the Borrower does not require any
consent(s) which have not otherwise been
obtained, whether of the Borrower's
creditors or otherwise; and does not violate
Borrower's certificate of incorporation,
by-laws or similar documents or
agreements of creation, governance, or
management.
-15-
<PAGE>
Exhibit 4.29
(d) Borrower Documents and Related Documents Enforceable. The
Borrower Documents were duly authorized,
executed, and delivered by the Borrower
and are legal, valid, and binding
instruments, enforceable against the Borrower
in accordance with their respective terms,
except as such enforceability may be
limited by applicable bankruptcy,
reorganization, moratorium, insolvency or
other similar laws affecting the
enforcement of creditors' rights generally and
except as limited by general equitable
principles.
(e) No Default. The Borrower is not in default in the payment of
any
monies borrowed from or otherwise owed to
any third party. The Borrower is not
in default under any order, award, or
decree of any court, arbitrator, or
governmental authority which may materially
adversely affect the ability of the
Borrower to carry on its business as
presently conducted or to perform its
Obligations under any Related Document.
(f) No Notice of Violations. The Borrower has no knowledge and
has
not received any notice or communication
(i) from any governmental authority
that the Facilities do not comply, in all
material respects, with zoning or that
there exists any condition which violates
any municipal, state, or federal law,
rule, or regulation that has not been
remedied; (ii) from any insurance carrier
insuring the Facilities or any other party
regarding any dangerous, illegal, or
other condition requiring corrective action
that has not been corrected; (iii)
regarding any litigation or proceeding,
pending or specifically threatened in
writing, against or relating to the
Facilities or the Borrower, other than
immaterial litigation or proceedings,
except as otherwise disclosed in writing
to the Bank; or (iv) regarding any taking,
condemnation, or assessment, actual
or proposed, with respect to the
Facilities.
(g) Financial Statements. All financial statements of the
Borrower
delivered to the Bank by the Borrower or
its accountants fairly present, in all
material respects, the financial position
of the Borrower as of such date and
the results of its operations for such
period, in accordance with GAAP.
(h) Licenses and Permits. The Borrower has obtained all Licenses
and
Permits and private approvals of every
nature whatsoever, if any, as may be
reasonably required to conduct or transact
its business or to own, lease or
operate its property, and no violations
with respect thereto, except where the
failure to do so, or such violations, would
not have a Material Adverse Effect.
(i) Full Disclosure. The representations and warranties made by
Borrower in this Agreement do not contain
any untrue statement of a material
fact, and do not omit to state a material
fact necessary to make the statements
contained in such representations and
warranties not misleading, in light of the
circumstances under which they were
made.
(j) Environmental Matters. To the best of Borrower's knowledge:
(i) None of the Facilities contains or has previously
contained, any hazardous or toxic waste or
substances or underground storage
tanks, except to the extent the same are in
compliance with applicable laws and
regulations.
-16-
<PAGE>
Exhibit 4.29
(ii) The Facilities are in compliance in all material respects
with all applicable federal, state and
local environmental standards and
requirements affecting such real property,
and there are no environmental
conditions which could interfere with the
continued use of the Facilities.
(iii) The Borrower has not received any notices of any
material violations or advisory action by
regulatory agencies regarding
environmental control matters or permit
compliance.
(iv) Hazardous waste has not been transferred from any of the
Facilities to any other locations except in
compliance with all applicable
environmental laws, regulations or permit
requirements.
(v) With respect to the Facilities, there are no proceedings,
governmental administrative actions or
judicial proceedings pending or
contemplated under any federal, state or
local law regulating the discharge of
hazardous or toxic materials or substances
into the environment, to which the
Borrower is named as a party.
(k) Governmental Authority Consents.
(i) The Borrower represents, warrants and covenants that the
Borrower possesses or is the beneficiary of
all material permits, licenses,
authorizations, approvals and consents of
governmental or public bodies or
authorities, federal, state and local,
including, without limitation, all
material licenses, authorizations and
permits relating to environmental matters
(hereinafter referred to collectively as
the "Governmental Consents") necessary
for: (i) the activities and business of the
Borrower as currently conducted and
as proposed to be conducted, and (ii) the
ownership, use, operation and
maintenance by the Borrower of its
properties and assets, and such Governmental
Consents are the only Governmental Consents
required for the foregoing purposes
where failure to obtain such consents would
have a Material Adverse Effect.
(ii) The Borrower represents, warrants and covenants that the
Borrower has received all of such
Governmental Consents with respect to its
assets, properties and operations, and (ii)
all of such Governmental Consents
have been duly and validly granted by the
governmental authorities in the
jurisdictions where its operations are
located, are in full force and effect and
have not been amended, modified, rescinded,
revoked or assigned, except to the
