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Exhibit 10.1
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MASTER LOAN AND
TRUST AGREEMENT
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among
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BUSINESS FINANCE
AUTHORITY OF THE STATE OF NEW HAMPSHIRE
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and
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PENNICHUCK WATER
WORKS, INC.
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and
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THE BANK OF
NEW YORK TRUST COMPANY, N.A.,
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as Trustee
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$49,485,000
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Business Finance
Authority of the
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State of
New Hampshire Water Facility Revenue Bonds
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(Pennichuck Water
Works, Inc. Project)
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2005 Series A
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2005 Series B
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2005 Series C
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Dated as of
October 1, 2005
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<PAGE>
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TABLE OF CONTENTS
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Page
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ARTICLE I
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INTRODUCTION AND
DEFINITIONS
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Section 1.01.
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Description of the Agreement and the Parties
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1
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Section 1.02.
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Definitions
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2
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Section 1.03.
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Number and Gender; Connectives and Disjunctives
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5
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Section 1.04.
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Exhibits Incorporated by Reference
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5
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ARTICLE II
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THE ASSIGNMENT AND
PLEDGE
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Section 2.01.
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Assignment and Pledge of the Authority
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6
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Section 2.02.
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Recording; Further Assurance
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6
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Section 2.03.
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Defeasance
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6
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Section 2.04.
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Corporate Existence
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7
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Section 2.05.
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Indemnification by the Borrower
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7
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ARTICLE III
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THE BORROWING
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Section 3.01.
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The Bonds
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8
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Section 3.02.
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Bond Fund
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27
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Section 3.03.
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Application of Moneys
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28
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Section 3.04.
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Payments by the Escrow Agent and the Borrower
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28
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Section 3.05.
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Unconditional Obligation
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29
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Section 3.06.
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Redemption of the Bonds
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29
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Section 3.07.
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Purchase of Bonds in Lieu of Redemption
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33
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Section 3.08.
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Investment of Moneys in Funds
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33
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Section 3.09.
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Tax-exempt Status of Bonds
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34
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Section 3.10.
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Rebate
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34
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Section 3.11.
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Bond Insurance Payment Procedures
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35
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Section 3.12.
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Rights of Bond Insurer
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36
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Section 3.13.
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Continuing Disclosure
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39
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ARTICLE IV
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THE PROJECT
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Section 4.01.
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Project Fund
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39
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Section 4.02.
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Disbursements From Project Fund
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39
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Section 4.03.
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Certificate of Completion
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40
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Section 4.04.
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Carrying Out the Project
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40
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Section 4.05.
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Compliance With Law
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40
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Section 4.06.
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Disposition
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40
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<PAGE>
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Section 4.07.
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Current Expenses
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40
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Section 4.08.
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Repair
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Section 4.09.
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Insurance
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Section 4.10.
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Right of Access to the Project
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41
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Section 4.11.
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Condition of the Project
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41
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ARTICLE V
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COVENANTS OF THE
BORROWER
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Section 5.01.
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Amendment
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42
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Section 5.02.
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Special Definitions
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42
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Section 5.03.
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Merger or Consolidation
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43
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Section 5.04.
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Other Covenants
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43
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Section 5.05.
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Liens
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44
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Section 5.06.
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Borrowings
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45
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Section 5.07.
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First Mortgage Bonds
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45
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ARTICLE VI
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DEFAULT AND
REMEDIES
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Section 6.01.
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Events of Default
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46
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Section 6.02.
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Waiver
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48
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Section 6.03.
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Remedies for Events of Default
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48
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Section 6.04.
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Application of Money Collected
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48
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Section 6.05.
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Performance of the Borrower's Obligations
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49
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Section 6.06.
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Remedies Cumulative
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49
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Section 6.07.
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Consent of the Bond Insurer Upon Default
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49
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ARTICLE VII
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THE TRUSTEE AND
REMARKETING AGENT
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Section 7.01.
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Rights and Duties of the Trustee
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Section 7.02.
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Fees and Expenses of the Trustee
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51
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Section 7.03.
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Resignation or Removal of the Trustee
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51
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Section 7.04.
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Successor Trustee
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51
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Section 7.05.
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Appointment of Remarketing Agent
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52
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ARTICLE VIII
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THE AUTHORITY
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Section 8.01.
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Limited Obligation
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52
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Section 8.02.
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Rights and Duties of the Authority
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53
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Section 8.03.
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Expenses of the Authority
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54
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Section 8.04.
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Matters To Be Considered by Authority
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54
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Section 8.05.
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Actions by Authority
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55
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<PAGE> ii
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ARTICLE IX
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THE BONDOWNERS
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Section 9.01.
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Action by Bondowners
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55
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Section 9.02.
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Proceedings by Bondowners
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55
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ARTICLE X
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MISCELLANEOUS
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Section 10.01.
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Amendment
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Section 10.02.
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Successors and Assigns
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57
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Section 10.03.
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Notices
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57
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Section 10.04.
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Agreement Not for the Benefit of Other Parties
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57
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Section 10.05.
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Severability
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57
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Section 10.06.
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Counterparts
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57
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Section 10.07.
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Captions
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57
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Section 10.08.
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Governing Law
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57
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EXHIBIT A
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INTEREST RATE MODE PROVISIONS
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EXHIBIT B
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AUCTION PROVISIONS
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EXHIBIT C-1
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FORM OF BORROWER'S PRELIMINARY LOAN REQUEST CERTIFICATE
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EXHIBIT C-2
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FORM OF BORROWER'S LOAN REQUEST CERTIFICATE
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<PAGE> iii
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MASTER LOAN AND
TRUST AGREEMENT
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THIS MASTER LOAN AND
TRUST AGREEMENT (this "Master Agreement") dated as of
October 1, 2005 is among the BUSINESS FINANCE AUTHORITY OF
THE STATE OF NEW HAMPSHIRE (the "Authority"), a body
corporate and politic created under New Hampshire
RSA l62-A:3, PENNICHUCK WATER WORKS, INC. (the
"Borrower"), a public utility corporation organized under the laws
of the State of New Hampshire, and THE BANK OF
NEW YORK TRUST COMPANY, N.A. (with any successor Trustee
hereunder, the "Trustee"), a national banking association, as
Trustee and Paying Agent. This Agreement is a financing document
combined with a security document as one instrument in accordance
with the Act and, together with individual Loan Request
Certificates of the Borrower (the "Loan Request Certificates," and,
in each instance collectively with the Master Agreement, this
"Agreement") respectively relating to each subseries of the Bonds,
provides for the following transactions:
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ARTICLE I
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INTRODUCTION AND
DEFINITIONS
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Section 1.01. Description
of the Agreement and the Parties .
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(a) the
Authority's issue of the Bonds;
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(b) the
deposit of the proceeds of one or more subseries of the Bonds in
escrow under the Escrow Agreement pending the loan from time to
time of such proceeds to the Borrower pursuant to a related Loan
Request Certificate;
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(c) the
Authority's loan on the Issue Date and on Escrow Mandatory Purchase
Dates, as the case may be, pursuant to Loan Request Certificates of
the proceeds of the Bonds of each subseries to the Borrower for the
purpose of financing the Project;
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(d) the
payment of all amounts necessary to pay each subseries of the Bonds
issued by the Authority from (i) the proceeds, if any, of such
subseries on deposit under the Escrow Agreement and the investment
earnings thereon, and, (ii) from and after the date of the loan of
such proceeds to the Borrower pursuant to a Loan Request
Certificate, the revenues received from the Borrower in repayment
of such loan; and
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(e) the
Authority's assignment to the Trustee, in trust for the benefit and
security of the Bondowners, of the Authority's rights under this
Agreement, the Escrow Agreement, the investment earnings to be
received pursuant to the Escrow Agreement and this Agreement, and
the revenues to be received from the Borrower, except as otherwise
provided herein.
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In connection with the issue
of the Bonds, Ambac Assurance Corporation shall issue its financial
guaranty insurance policy to secure payment of the Bonds.
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<PAGE>
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In
consideration of the mutual agreements contained in this Agreement
and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Borrower, the Authority and the Trustee
agree as set forth herein for their own benefit and for the benefit
of the Bondowners.
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Section 1.02. Definitions . In addition to terms
defined elsewhere herein, including in particular in
Exhibits A and B hereto, the following terms have the
following meanings in this Agreement, unless the context otherwise
requires:
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" Act " means
New Hampshire RSA 162-I, as amended.
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" Agreement " means
each of the three separate, but substantially identical, agreements
consisting of this Master Agreement together with the duly executed
and delivered Loan Request Certificate corresponding to a subseries
of the Bonds.
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" Authority's Service
Charge " means payments to the Authority for its own use
consisting of $187,500, payable on the date of original issuance of
the Bonds, plus $93,750, payable on October 2, 2006, and $93,750,
payable on October 1, 2007.
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" Bond Counsel "
means a firm of nationally recognized attorneys-at-law experienced
in legal work relating to the financing of facilities for nonexempt
persons through the issuance of tax-exempt revenue bonds.
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" Bond Fund " means
the fund of that name established under Section 3.02
hereof.
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" 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.
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" Bond Insurer "
means Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance company.
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" Bond Insurer Event of
Insolvency " means the occurrence and continuance of one or
more of the following events: (a) the issuance, under the laws
of the state of formation of or the laws of the state having
primary regulatory jurisdiction over the Bond Insurer or any
successor provision thereto (or any other law under which the Bond
Insurer is at the time organized), of an order for relief,
rehabilitation, reorganization, conservation, liquidation or
dissolution of the Bond Insurer that is not dismissed within
30 days; (b) the commencement by the Bond Insurer of a
voluntary case or other proceeding seeking an order for relief,
liquidation, rehabilitation, conservation, reorganization or
dissolution with respect to itself or its debts under the laws of
the state of incorporation or formation of the Bond Insurer or any
bankruptcy, insolvency or other similar law now or hereafter in
effect, including, without limitation, the appointment of a
trustee, receiver, liquidator, custodian or other similar official
for itself or any substantial part of its property; (c) the
consent of the Bond Insurer to any relief referred to in the
preceding clause (b) in an involuntary case or other
proceeding commenced against it; (d) the making by the Bond
Insurer of an assignment for the benefit of creditors; (e) the
failure of the Bond Insurer to generally pay its debts or claims as
they become due; or (f) the initiation by the Bond Insurer of
any actions to authorize any of the foregoing.
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<PAGE> 2
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" Bondowners " or "
Owners " means the registered owners of the Bonds from time
to time as shown in the bond register kept by the Trustee.
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" Bonds " means,
collectively, the Subseries A Bonds, the Subseries B
Bonds and the Subseries C Bonds.
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" Book-Entry System "
means a book-entry system established and operated for the
recordation of Beneficial Owners of the Bonds pursuant to
Section 3.01(e).
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" Borrower
Representative " means William Patterson or an alternate or
successor appointed by the Borrower with notice to the Trustee.
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" Continuing Disclosure
Agreement " means the Continuing Disclosure Agreement between
the Borrower and the Trustee, as dissemination agent, dated as of
October 20, 2005, as originally executed and as it may be
amended from time to time in accordance with the terms thereof.
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" Determination of
Taxability " means a determination that the interest income on
any Bond does not qualify for exclusion from the gross income of a
holder thereof for federal tax purposes ("exempt interest") under
IRC Section 103(a), for any reason other than that such holder
is a "substantial user" of the facility being financed with the
Bond proceeds or a "related person" under IRC Section 147(a),
which determination shall be deemed to have been made upon the
occurrence of the first to occur of the following:
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(a) the
date on which the Borrower determines that the interest income on
any Bond does not qualify as exempt interest, if such determination
is supported by a written opinion to that effect of Bond Counsel
satisfactory to the Trustee;
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(b) the
date on which any change in law or regulation becomes effective or
on which the Internal Revenue Service has issued any private
ruling, technical advice or any other written communication to the
effect that the interest income on any Bond does not qualify as
exempt interest;
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(c) the
date on which the Borrower shall receive written notice from the
Trustee in writing that the Trustee has been advised by any
Bondowner that the Internal Revenue Service has issued a 30-day
letter or other notice which asserts that the interest on such Bond
does not qualify as exempt interest; or
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(d) the
date on which the Trustee receives written notice that the Borrower
or the Authority has taken any action inconsistent with, or has
failed to act consistently with, the tax exempt status of the Bonds
(unless the Trustee receives an opinion of Bond Counsel
satisfactory to it to the effect that, notwithstanding such action
or failure to act, the interest on the Bonds continues to qualify
as exempt interest).
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" Escrow Agreement "
means the Escrow Agreement dated as of October 1, 2005 between
the Authority and The Bank of New York Trust Company, N.A., as
Escrow Agent.
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<PAGE> 3
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" Escrow Bonds "
means, in the cases of the Subseries B Bonds and the
Subseries C Bonds, the Bonds of a subseries during the period
commencing on the Issue Date and ending on the related Escrow
Mandatory Purchase Date.
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" Escrow Mandatory
Purchase Date " means October 2, 2006, in the case of the
Subseries B Bonds, and October 1, 2007, in the case of
the Subseries C Bonds, or such new date or dates as may be
designated pursuant to Section 3.01(c)(iv), each such date
being a Mandatory Purchase Date described by Section 3.04 of
Exhibit A.
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" Event of Default "
has the meaning stated in Section 6.01, and "default" means
any Event of Default hereunder without regard to any lapse of time
or notice.
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" IRC " means the
Internal Revenue Code of 1986, as amended and the
United States Treasury Regulations promulgated with respect
thereto.
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" Issue Date " means
the date of original execution, sale and delivery of the Bonds.
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" Loan Request
Certificate " means a Loan Request Certificate of the Borrower
in substantially the form attached as Exhibit C-2.
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" Outstanding ," when
used to modify Bonds, refers to Bonds issued under this Agreement,
excluding (i) Bonds which have been exchanged or replaced, or
delivered to the Trustee for credit against a principal payment;
(ii) Bonds which have been paid in full; (iii) Bonds
which have become due and for the payment of which moneys have been
duly provided; and (iv) Bonds for which there have been
irrevocably set aside sufficient funds, or obligations issued or
guaranteed by the United States bearing interest at such rates
and with such maturities as will provide sufficient funds, to pay
the principal of and interest on such Bonds; provided, however,
that if any such Bonds are to be redeemed prior to maturity, the
Borrower shall have taken all action necessary to redeem such Bonds
and notice of such redemption shall have been duly mailed in
accordance with this Agreement or irrevocable instructions so to
mail shall have been given to the Trustee; and provided, further,
that Escrow Bonds (except under the circumstances described by
clause (i) above), and Bonds paid with the proceeds of the
Bond Insurance Policy shall remain Outstanding for all purposes
hereunder. Bonds purchased by the Trustee on behalf of the Borrower
or by the Borrower pursuant to optional tenders or mandatory
purchases under Article III of Exhibit A or in lieu of
redemption under Section 3.07 hereof will continue to be
Outstanding until the Borrower directs the Trustee in writing to
cancel them. Bonds purchased pursuant to optional tenders or
mandatory purchases under Article III of Exhibit A and
not delivered to the Trustee for payment are not Outstanding, but
there will be Outstanding Bonds authenticated and delivered in lieu
of such undelivered Bonds as provided in Section 3.08 of
Exhibit A.
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" Preliminary Loan
Request Certificate " means a Preliminary Loan Request
Certificate of the Borrower in substantially the form attached as
Exhibit C-1.
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" Principal Office "
means, initially, the office of the Trustee specified by
Section 10.03(b).
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<PAGE> 4
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" Project " means
capital improvements to the Borrower's water treatment, supply,
storage and distribution system in portions of the towns of
Amherst, Bedford, Derry, Epping, Hollis, Hudson, Merrimack,
Milford, Plaistow and Salem, New Hampshire and in the City of
Nashua, New Hampshire. Project also means the water facilities
which result or have resulted from the foregoing activities.
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" Project Costs "
means the cost of issuing the Bonds and the costs of carrying out
the Project which may be paid from Bond proceeds under the Act,
including interest during construction of the Project but excluding
the creation of reserves. Project Costs also shall be limited to
costs which are permitted to be paid or reimbursed from Bond
proceeds under the Tax Regulatory Agreement.
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" Rebate Year " means
the one-year period (or shorter period beginning on the date of
issue) ending on December 31.
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" State " means the
State of New Hampshire.
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" Subseries A
Bonds " means the $12,125,000 Business Finance Authority of the
State of New Hampshire Water Facility Revenue Bonds
(Pennichuck Water Works, Inc. Project) 2005 Series A,
dated October 1, 2005, and any bond or bonds duly issued in
exchange or replacement therefor.
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" Subseries B
Bonds " means the $17,865,000 Business Finance Authority of the
State of New Hampshire Water Facility Revenue Bonds
(Pennichuck Water Works, Inc. Project) 2005 Series B,
dated October 1, 2005, and any bond or bonds duly issued in
exchange or replacement therefor.
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" Subseries C
Bonds " means the $19,495,000 Business Finance Authority of the
State of New Hampshire Water Facility Revenue Bonds
(Pennichuck Water Works, Inc. Project) 2005 Series C,
dated October 1, 2005, and any bond or bonds duly issued in
exchange or replacement therefor.
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" Tax Regulatory
Agreement " means the Tax Regulatory Agreement dated as of
October 1, 2005 among the Authority, the Borrower and the
Trustee executed in connection with the issuance of the Bonds.
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" UCC " means the
New Hampshire Uniform Commercial Code, as amended.
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Section 1.03. Number and Gender; Connectives and
Disjunctives . Wherever appropriate (a) the singular and
plural forms of words, (b) words of different gender and
(c) the words "and" and "or" shall, for the purposes of
clauses (a) and (b), be deemed interchangeable.
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Section 1.04. Exhibits Incorporated by Reference
. Exhibits A and B hereto are incorporated by reference into
this Master Agreement.
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<PAGE> 5
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ARTICLE II
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THE ASSIGNMENT AND PLEDGE
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Section 2.01. Assignment and Pledge of the
Authority . The Authority, for consideration paid as
hereinabove acknowledged, assigns and pledges to the Trustee in
trust as provided above (a) the Escrow Agreement and all funds
and investments held from time to time pursuant to the Escrow
Agreement, all rights of the Authority to receive and enforce
payments under the Escrow Agreement and to enforce payment of the
Escrow Bonds and all proceeds of such rights and payments,
(b) all of the Authority's rights to receive and enforce
repayment of its loan to the Borrower under each Agreement and to
enforce payment of the Bonds and all proceeds of such rights and
loans, and (c) all funds and investments held from time to
time in the Bond Fund established under Section 3.02, but not
including funds received by the Authority for its own use, whether
as the Authority's Service Charge, reimbursement or indemnification
or the rights thereto. The Borrower joins in the pledge of such
funds and investments, but only to the extent of its interest
therein.
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Section 2.02. Recording; Further Assurance . The
Borrower will cause this Master Agreement, each Loan Request
Certificate and all amendments hereto and instruments of further
assurance, including all required financing statements and
continuation statements, to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed,
and will file such financing statements and cause to be issued and
filed such continuation statements, all to the extent and in such
manner and in such places as may be required by law fully to
preserve and protect the rights of the Trustee and the Bondowners
hereunder. The Borrower, the Authority and the Trustee will from
time to time execute, deliver and record and file such instruments
as the Trustee or the Bondowners may reasonably require to confirm,
perfect or maintain the security created hereby and the transfer,
assignment and grant of the rights hereunder.
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Section
2.03. Defeasance . When the Bonds have been paid or
redeemed in full or after there are in the Bond Fund sufficient
funds, or noncallable obligations issued or guaranteed by the
United States in such principal amounts, bearing interest at
such rates and with such maturities as will provide sufficient
funds, to pay the principal of and interest on the Bonds; when all
the rights hereunder of the Authority, the Trustee and the
Bondowners have been adequately provided for, including the payment
in full of the Authority's Service Charge and any amounts owing to
the Trustee pursuant to Section 2.05 or Sections 7.02;
and when the rebate, if any, due to the United States under
IRC Section 148 has been paid in full, the Bondowners and the
Authority shall cease to be entitled to any benefit or security
under this Master Agreement or this Agreement, as the case may be,
except the right to receive payment of any moneys deposited and
held for payment and other rights which by their nature cannot be
satisfied prior to or simultaneously with termination of the lien
hereof including rights under Section 3.04(b); the security
interests created by this Master Agreement or this Agreement shall
terminate; and the Trustee, upon the request of the Borrower, will
execute and deliver such instruments as may be necessary to
discharge any lien and security interests created hereunder;
provided, however, that if any such Bonds are to be redeemed prior
to the maturity thereof, the Borrower shall have taken all action
necessary to redeem such Bonds and notice of such redemption shall
have been duly mailed in accordance with this Agreement or
irrevocable instructions so to mail shall have been
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given to the Trustee. Upon such
defeasance, the funds and investments required to pay or redeem the
Bonds in full shall be irrevocably set aside for that purpose and
moneys held for defeasance shall be invested only as provided above
in this Section. Any moneys or property held by the Trustee and not
required for payment or redemption of the Bonds in full shall,
after satisfaction of all the rights of the Authority, the Escrow
Agent and the Trustee, be distributed to the Borrower upon such
indemnification, if any, as the Authority or the Trustee may
reasonably require, provided that such distribution shall be to the
Authority in the same proportion as the aggregate principal of the
Escrow Bonds Outstanding immediately prior to such defeasance bears
to the aggregate principal amount of the Bonds. If Bonds are not
presented for final payment when due and moneys are available in
the hands of the Trustee therefor, the Trustee will continue to
hold the moneys held for that purpose subject to
Section 3.02(c), and interest shall cease to accrue on the
principal amount represented thereby.
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Notwithstanding anything
herein to the contrary, in the event that the principal and/or
interest due on the Bonds shall be paid by the Bond Insurer
pursuant to the Bond Insurance Policy, the Bonds shall remain
Outstanding for all purposes, not be defeased or otherwise
satisfied and not be considered paid by the Authority, and the
assignment and pledge to the Trustee and all covenants, agreements
and other obligations as provided by this Agreement to the
registered owners shall continue to exist and shall run to the
benefit of the Bond Insurer, and the Bond Insurer shall be
subrogated to the rights of such registered owners.
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Section 2.04. Corporate Existence . The Borrower
will maintain its corporate existence and good standing and
qualification to do business in the State and will not, without the
prior consent of the Authority and subject to any additional
limitations contained in Article V merge or consolidate with
any other person or transfer or dispose of all or any substantial
portion of its assets.
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Section
2.05. Indemnification by the Borrower . The
Borrower, regardless of any agreement to maintain insurance, shall
and does hereby indemnify the Authority (including for the purpose
of this Section, its members, officers, agents, directors and
employees), the Bondowners and the Trustee (including for the
purposes of this Section, its members, officers, agents, directors
and employees), and shall hold each of them harmless, from and
against (a) any and all claims by any person arising out of
the participation of the Authority, the Trustee or the Bondowners
in the transactions contemplated by this Agreement, including,
without limitation, claims arising out of any condition of the
Project or the construction, use, occupancy or management thereof,
and including, without limitation, in the case of the Trustee, any
claim or matter arising under or relating to the administration of
this Master Agreement or this Agreement or any other agreement
described herein or the performance by the Trustee of its duties
hereunder or thereunder, other than as a result of the Trustee's
gross negligence or willful misconduct; any accident, injury or
damage to any person occurring in or about the Project site; any
breach by the Borrower of its obligations under this Agreement; any
act or omission of the Borrower or any of its agents, contractors,
servants, employees or licensees relative to this Agreement or the
Project; or, except as described in Section 3 of the Letter of
Representation from the Borrower to the Authority and Lehman
Brothers Inc., as manager for the underwriters, dated
October 13, 2005, the offering, issuance, sale or any resale
of the Bonds to the extent permitted by law, and (b) all
costs, counsel fees, expenses, damages or liabilities reasonably
incurred in connection with any such claim or matter described in
preceding clause (a) or any
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action or proceeding brought thereon,
provided that the person affected by any such claim cooperates with
the Borrower, and provided further that any such counsel of an
indemnified party is reasonably acceptable to the Borrower. In case
any action or proceeding is brought against the Authority, the
Trustee or any Bondowner by reason of any such claim, the Borrower
will defend the same at its expense upon notice from the affected
person, provided that such person cooperates with the Borrower, at
the expense of the Borrower in connection therewith. In such event,
the Authority, Trustee or any Bondowner shall use its best efforts
to cooperate with the Borrower in the prosecution, settlement or
other disposition of any such claim, action or proceedings. The
provisions of this Section shall not apply to any claim, action or
proceeding against the Trustee or any Bondowner which is based
solely on the negligence, willful misconduct, bad faith, fraud or
deceit of the Trustee and/or Bondowner. The indemnification and
agreement to hold harmless set forth in this Section shall survive
the termination of this Master Agreement.
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ARTICLE III
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THE BORROWING
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Section 3.01. The Bonds .
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(a)
Issue of Bonds; Application of Proceeds; Loan of
Proceeds .
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(i) Upon
the execution and delivery of this Master Agreement, the Authority
will issue, and upon written direction of the Authority, the
Trustee will authenticate and deliver, the Subseries A Bonds,
the Subseries B Bonds and the Subseries C Bonds in
substantially the form set out in Section 3.01(h);
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(ii) (1) On
the Issue Date, the Borrower shall be deemed to have executed and
delivered a Loan Request Certificate with respect to the proceeds
of the Subseries A Bonds, and the Authority will loan the
proceeds of the Subseries A Bonds to the Borrower. Such
proceeds will be delivered to the Trustee for deposit in the
Project Fund and will be used to pay Project Costs. Accrued
interest, if any, with respect to the Subseries A Bonds will
be deposited in the Bond Fund.
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(2) On
the Issue Date, the proceeds of the Subseries B Bonds and the
Subseries C Bonds will be transferred to the Escrow Agent for
investment and disposition in accordance with the Escrow Agreement,
provided that the Borrower has provided to the Authority and the
Trustee on or before the Issue Date an expertised verification
report of an accountant or firm of accountants acceptable to the
Authority to the effect that, with respect to each subseries of
Bonds the proceeds of which are deposited and invested in Permitted
Investments, as defined by Section 3.08(b), under and in
accordance with the Escrow Agreement, such proceeds together with
the investment earnings thereon and the contribution, if any, of
the Borrower will be at least sufficient timely to pay the interest
on such subseries of Bonds on each Interest Payment Date until the
respective Escrow Mandatory Purchase Date, and the Purchase Price
of such subseries of Bonds on
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such Escrow Mandatory Purchase Date. Unless and until there
shall be effective a Loan Request Certificate of the Borrower on
the Escrow Mandatory Purchase Date relating to the Subseries B
Bonds or the Subseries C Bonds, as the case may be, the
Authority shall not loan such proceeds to the Borrower, the
Borrower shall not borrow such proceeds and the Borrower shall have
no obligation with respect to the payment of the Subseries B
Bonds or the Subseries C Bonds. The payments required to be
made under Section 3.04(a)(i) and Section 3.04(a)(iii)
shall be nonrecourse to the Borrower.
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(iii) On
the Escrow Mandatory Purchase Date for a subseries of the Bonds,
the Owners of such Bonds shall tender their Bonds to the Trustee
for purchase on such date as provided by Section 3.04 of
Exhibit A.
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The Purchase Price of each
subseries of Bonds on the related Escrow Mandatory Purchase Date
shall be paid by the Trustee from the following sources:
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(1) If
there has become effective on such Escrow Mandatory Purchase Date
the Borrower's Loan Request Certificate in accordance with
clause (iv) or in the event that a new Escrow Mandatory
Purchase Date has been designated in accordance with
Section 3.01(c)(iv), from the sources as provided by
Section 3.06 of Exhibit A, except as otherwise provided
by Section 3.01(a)(iv); or
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(2) If
there has not become effective on such Escrow Mandatory Purchase
Date such Loan Request Certificate or if the conditions specified
for the designation of such new Escrow Mandatory Purchase Date have
not been satisfied, from the proceeds of such subseries of Bonds
and other moneys transferred by the Escrow Agent to the Trustee as
provided by Section 3.01(c)(iii). The Borrower shall have no
obligation with respect to the payment of the Purchase Price under
this Section 3.01(a)(iii)(2).
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(iv) On
the Escrow Mandatory Purchase Date, the Authority shall loan the
proceeds of the Subseries B Bonds or the Subseries C
Bonds, as the case may be, to the Borrower, but only if,
(1) on or before the 30 th day next preceding
the Escrow Mandatory Purchase Date relating to a subseries of the
Bonds, the Borrower shall have delivered (x) a fully executed
and completed Preliminary Loan Request Certificate to the
Authority, the Trustee, the Escrow Agent and the Remarketing Agent
and (y) a Mode Change Notice to the Authority, the Trustee,
the Escrow Agent and the Remarketing Agent of the Borrower's
intention on the Escrow Mandatory Purchase Date to effect a change
in the Mode of the affected subseries of Bonds from the Term Rate
Mode then in effect to another Mode or to continue the Term Rate
Mode for another Interest Period, and (2) on such Escrow
Mandatory Purchase Date, the Borrower shall have delivered
(I) a fully executed and completed final Loan Request
Certificate dated the Escrow Mandatory Purchase Date to the Issuer,
the Trustee, the Escrow Agent and the Remarketing Agent and
(II) such other documentation as shall be reasonably required
in the
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opinion of Bond Counsel to preserve the exclusion from gross
income of the interest on such subseries of Bonds.
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On the Escrow Mandatory
Purchase Date, the provisions of Section 2.07 of
Exhibit A shall apply, except that (A) no notice to the
Owners of the change in Mode shall be required and (B) if
there occurs on the Escrow Mandatory Purchase Date either
(x) a failed change in Mode because the applicable conditions
described in Section 2.07(a) or (b) of Exhibit A are not
satisfied or (y) an inability to remarket all or a portion of
the Bonds of the affected subseries, the Bonds of the affected
subseries (but only the unremarketed Bonds in the case of an
inability to remarket) shall be purchased on the Escrow Mandatory
Purchase Date as provided by Section 3.01(a)(iii)(2) as if the
Borrower had not delivered a Loan Request Certificate, and the
Bonds shall be delivered to the Trustee for cancellation.
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If for any reason the
Borrower does not deliver the final Loan Request Certificate on the
Escrow Mandatory Purchase Date, the Mode Change Notice accompanying
the Preliminary Loan Request Certificate shall be ineffective, the
requested change in Mode shall not occur and the Bonds of the
affected subseries shall be purchased on the Escrow Mandatory
Purchase Date as provided by Section 3.01(a)(iii)(2), and the
Bonds shall be delivered to the Trustee for cancellation.
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(b)
Details of the Bonds . Each subseries of Bonds shall
be issued in fully registered form and shall be numbered from AR1,
BR1 or CR1, as applicable, upwards in the order of their issuance,
or in any other manner determined by the Trustee. The Bonds of each
subseries shall be in an Authorized Denomination. The Bonds of each
subseries shall be dated October 1, 2005. The Bonds of each
subseries shall mature, subject to prior redemption, on the
Maturity Date and shall bear interest during each Interest Accrual
Period until payment of the principal or redemption price thereof
has been paid or provided for in accordance with Section 2.03
hereof.
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The Bonds of each subseries
shall bear a distinct CUSIP (if then generally in use) or other
identification number from Bonds of any other subseries. With
respect to a subseries of the Bonds, the Borrower's Mode Change
Notice for any Mode Change Date may direct that the Bonds of such
subseries be separated into sub-subseries with different Modes,
provided that the aggregate principal amount of a sub-subseries
shall be $5,000,000 or greater ($10,000,000 in the case of the
Auction Mode). The Bonds of each sub-subseries shall bear a
distinct CUSIP or other identification number from Bonds of any
other subseries or sub-subseries, and shall be numbered in any
manner determined by the Trustee.
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All Subseries A Bonds
shall bear interest as Fixed Rate Bonds from the Issue Date through
the Maturity Date at the rate of 4.70% per annum. All
Subseries B Bonds shall initially bear interest at a Term Rate
and all Subseries C Bonds shall initially bear interest at a
Term Rate in each case determined in accordance with
Section 2.04(a) of Exhibit A from the Issue Date to, but
not including, the applicable Escrow Mandatory
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Purchase Date. On such Escrow Mandatory Purchase Date, the Bonds
of the related subseries either shall be purchased and cancelled or
shall bear interest in the Mode designated by the Borrower in the
Mode Change Notice delivered in conjunction with a Preliminary Loan
Request Certificate to commence on the Escrow Mandatory Purchase
Date as provided by Section 3.01(a)(iv) and shall thereupon be
subject to the provisions of Exhibit A relating to such
Mode.
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In case any officer of the
Authority whose signature or a facsimile of whose signature shall
appear on any Bonds shall cease to be such officer before the
delivery thereof, such signature or facsimile shall nevertheless be
valid and sufficient for all purposes as if he or she had remained
in office until after such delivery. Additional details of the
Bonds shall be as stated in the Bond form in Section 3.01(h)
and Exhibits A and B hereto.
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(c)
Application of Bond Proceeds .
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(i) On
the Issue Date, (1) the proceeds of the Subseries A Bonds
shall be loaned to the Borrower and deposited in the Project Fund
as provided by Section 3.01(a)(ii)(1) and (2) the
proceeds of the Subseries B Bonds and the Subseries C
Bonds shall be transferred to the Escrow Agent for investment and
disposition in accordance with the Escrow Agreement as provided by
Section 3.01(a)(ii)(2).
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(ii) Proceeds
of each subseries of the Bonds with respect to which the Borrower
has delivered a Loan Request Certificate effective on the related
Escrow Mandatory Purchase Date shall be transferred by the Escrow
Agent from the Escrow Agreement to the Trustee for deposit in the
Project Fund and will be used to pay Project Costs, except as
provided by Section 3.01(a)(iv), in which case such proceeds
shall be deposited in the Purchase Fund for application to the
payment of the Purchase Price. The Bonds, if any, so purchased
shall be delivered to the Trustee for cancellation.
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(iii) Proceeds
of each subseries of the Bonds with respect to which the Borrower
has not delivered a Loan Request Certificate or has not requested
an escrow extension effective on the related Escrow Mandatory
Purchase Date (or the conditions to such an extension have not been
satisfied), as provided by Section 3.01(c)(iv)(2), shall be
transferred by the Escrow Agent from the Escrow Agreement to the
Trustee for deposit in the Purchase Fund for application to the
payment of the Purchase Price. Such Bonds shall be delivered to the
Trustee for cancellation.
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(iv) (1) Proceeds
of each subseries (including, for the purposes of this
Section 3.01(c)(iv), each sub-subseries, if any) of Bonds with
respect to which the conditions specified in
Section 3.01(c)(iv)(2) below have been satisfied shall be
retained by the Escrow Agent on the related Escrow Mandatory
Purchase Date for investment and disposition in accordance with the
Escrow Agreement, as amended so to provide.
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(2) A
new Escrow Mandatory Purchase Date for a subseries of Bonds
subsequent to a previously designated Escrow Mandatory Purchase
Date shall be designated upon the satisfaction of the following
conditions:
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(A) The
Borrower shall provide a written notice in lieu of a Preliminary
Loan Request Certificate not later than the 30 th day
next preceding the related Escrow Mandatory Purchase Date to the
Authority, the Trustee, the Escrow Agent and the Remarketing Agent
designating a new Escrow Mandatory Purchase Date, which shall be a
Business Day, requesting the Remarketing Agent to establish the
Term Rate to be in effect during the Interest Period commencing on
the original Escrow Mandatory Purchase Date and ending on the day
next preceding the new Escrow Mandatory Purchase Date, and
requesting an amendment of the Escrow Agreement to provide for the
investment and disposition of the proceeds of the Escrow Bonds for
the period ending on the new Escrow Mandatory Purchase Date.
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(B) By
not later than the fifth day next preceding the original Escrow
Mandatory Purchase Date, the Remarketing Agent shall provide to the
Authority, the Borrower, the Trustee and the Escrow Agent the
projected Term Rate for the new Term Rate Period.
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(C) By
not later than the fourth day next preceding the original Escrow
Mandatory Purchase Date, the Borrower shall designate the Permitted
Investments in which the proceeds of such subseries of Bonds shall
be invested until the new Escrow Mandatory Purchase Date.
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(D) By
not later than 11:00 a.m. on the original Escrow Mandatory
Purchase Date, the Borrower shall deliver to the Trustee an
expertised escrow verification report (which may assume the Term
Rate projected by the Remarketing Agent) as to the sufficiency of
the escrow investments to pay interest on such subseries to and
including the new Escrow Mandatory Purchase Date and the Purchase
Price of such subseries on such Date.
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(E) By
not later than 1:00 p.m. on the original Escrow Mandatory
Purchase Date, the Remarketing Agent shall give notice to the
Authority, the Borrower and the Escrow Agent to the effect that all
Bonds of such subseries have been remarketed for the new Term Rate
Period at a Term Rate not exceeding the Remarketing Agent's
projected Term Rate.
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(F) In
the event that the Term Rate determined by the Remarketing Agent
exceeds the maximum Term Rate permitted by
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the escrow verification report, the Borrower not later than
3:00 p.m. on the original Escrow Mandatory Purchase Date may
deposit with the Escrow Agent an amount sufficient, as shall be
verified by a supplemental escrow verification report concurrently
delivered by the Borrower, when added to the Escrow Bond proceeds
already on deposit to pay the interest on the Escrow Bonds to and
including the new Escrow Mandatory Purchase Date and the Purchase
Price thereof on the new Escrow Mandatory Purchase Date.
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(G) By
not later than 3:00 p.m. on the original Escrow Mandatory Purchase
Date, the Authority and the Escrow Agent shall have executed and
delivered an amendment to the Escrow Agreement providing for the
investment and disposition of the proceeds of the Escrow Bonds for
the period ending on the new Escrow Mandatory Purchase Date.
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(3) If
the conditions specified by Section 3.01(c)(iv)(2) above are
not satisfied, the Bonds of such subseries shall be purchased on
the original Escrow Mandatory Purchase Date as provided by
Section 3.01(c)(iii).
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(d)
Exchange and Replacement Bonds . The Bonds may be
exchanged as provided in the Bond form in Section 3.01(h), and
exchange Bonds shall be issued in fully registered form
substantially as set forth therein. Replacement Bonds shall be
issued pursuant to applicable law as a result of the destruction,
loss, wrongful taking or mutilation of the Bonds. The costs of any
replacement shall be paid or reimbursed by the registered owner of
the replacement Bond, who shall indemnify the Authority, the
Trustee and the Borrower in such manner as each such party may
require against all liability and expense in connection
therewith.
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Except in connection with
any purchase of Bonds in lieu of redemption pursuant to
Section 3.07 hereof, during the Term Rate Mode and the Fixed
Rate Mode for a subseries of Bonds, neither the Authority nor the
Trustee shall be required to make any such transfer or exchange of
any Bond during the period commencing on the Record Date for such
redemption to such redemption date or, with respect to a Bond,
after such Bond or any portion thereof has been selected for
redemption.
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(e)
Registration of Bonds in the Book-Entry System .
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(i) The
Authority, upon the direction of the Borrower, hereby provides that
Bonds of any subseries and in any Mode shall be issued pursuant to
a Book-Entry System administered by DTC, as securities depository,
with no physical distribution of Bond certificates to be made
except as provided in this Section 3.01(e). Notwithstanding
any inconsistent provision in this Agreement to the contrary, the
provisions of this Section 3.01(e) shall govern at any time
that the Bonds of a subseries are issued pursuant to a Book-Entry
System.
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(ii) Bonds
of a subseries issued pursuant to a Book-Entry System shall be
issued in the form of one certificate for each maturity of such
subseries in the aggregate principal amount of the Bonds of such
subseries Outstanding, which Bonds (except as provided in
subparagraph 3.01(e)(ix) below) shall be registered in the
name of Cede & Co., as nominee of DTC, provided that if
DTC shall request that the Bonds be registered in the name of a
different nominee, the Trustee shall exchange all or any portion of
the Bonds for an equal aggregate principal amount of Bonds of the
same subseries registered in the name of such other nominee or
nominees of DTC. Such Bond certificates shall be deposited with DTC
and held in its custody, or, in the alternative, shall be deposited
with the Trustee and held in its custody on behalf of DTC pursuant
to the FAST procedures of DTC. No person other than DTC or its
nominee shall be entitled to receive from the Authority or the
Trustee a Bond of a subseries or any other evidence of ownership of
such Bonds, or any right to receive any payment in respect thereof,
unless DTC or its nominee shall transfer record ownership of all or
any portion of the Bonds of such subseries on the Bond registration
books to be maintained by the Trustee pursuant to
Section 3.01(g) hereof, in connection with discontinuing the
book-entry system as provided in subparagraph 3.01(e)(ix)
below or otherwise.
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(iii) So
long as the Bonds of a subseries are registered in the name of DTC
or any nominee thereof, all payments of the Purchase Price of,
principal of, redemption price of or interest on such Bonds shall
be made to DTC or its nominee in immediately available funds on the
dates provided for such payments under this Agreement and at such
times as provided in the Letter of Representations entered into
between the Authority and DTC (the "Representation Letter"). Each
such payment to DTC or its nominee shall be valid and effective to
fully discharge all liability of the Borrower (which liability is
limited to Bonds that are not Escrow Bonds), the Authority or the
Trustee with respect to the Purchase Price of, principal of,
redemption price of or interest on such Bonds to the extent of the
sum or sums so paid. In the event of the redemption and prepayment
of less than all of the Outstanding Bonds of a subseries, the
Trustee shall not require surrender by DTC or its nominee of the
Bonds so prepaid, but DTC or its nominee may retain such Bonds and
make an appropriate notation thereon as to the amount of such
partial prepayment, provided that DTC shall deliver to the Trustee,
upon request, a written confirmation of such partial prepayment and
thereafter the records maintained by the Trustee shall be
conclusive as to the amount of the Bonds of such subseries which
have been prepaid.
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(iv) All
transfers of beneficial ownership interest in Bonds of a subseries
issued pursuant to a Book-Entry System shall be effected by the
procedures of DTC with its participants for recording and
transferring the ownership of beneficial interests in each such
subseries of Bonds. The requirement for physical delivery of Bonds
in connection with a demand for purchase or a mandatory purchase
shall be deemed satisfied when the ownership
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rights in the Bonds are transferred by participants of DTC on
DTC's records and followed by a book-entry credit of tendered Bonds
to the Trustee's DTC account.
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(v) The
Authority, the Borrower and the Trustee may treat DTC (or its
nominee) as the sole and exclusive Owner of the Bonds registered in
its name for the purposes of payment of the Purchase Price of,
principal of, redemption price of or interest on the Bonds,
selecting the Bonds or portions thereof to be optionally purchased
or prepaid, giving any notice permitted or required to be given to
Owners under this Agreement registering the transfer of Bonds,
obtaining any consent or other action to be taken by Owners and for
all other purposes whatsoever; and the Authority, the Borrower and
the Trustee shall not be affected by any notice to the contrary.
The Authority, the Borrower and the Trustee shall not have any
responsibility or obligation to any participant in DTC, any person
claiming a beneficial ownership interest in the Bonds under or
through DTC or any such participant, or any other person which is
not shown on the Bond registration books as being an Owner, with
respect to: (i) the Bonds; or (ii) the accuracy of any
records maintained by DTC or any such participant; or
(iii) the payment by DTC or any such participant of any amount
in respect of the Purchase Price of, principal of, prepayment price
of or interest on the Bonds; or (iv) any notice which is
permitted or required to be given to Owners under this Agreement;
or (v) the selection by DTC or any such participant of any
person to receive payment in the event of a partial purchase or
redemption of the Bonds; or (vi) any consent given or other
action taken by DTC as Owner.
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(vi) So
long as the Bonds of a subseries are registered in the name of DTC
or any nominee thereof, all notices required or permitted to be
given to the Owners under this Agreement shall be given to DTC as
provided in the Representation Letter in form and content
satisfactory to DTC, the Borrower and the Trustee.
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(vii) In
connection with any notice or other communication to be provided to
Owners pursuant to this Agreement by the Authority, the Borrower or
the Trustee with respect to any consent or other action to be taken
by Owners, DTC shall consider the date of receipt of notice
requesting such consent or other action as the record date for such
consent or other action, provided that the Authority, the Borrower
or the Trustee shall give DTC notice of such special record date
not less than 15 calendar days in advance of such special record
date to the extent possible.
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(viii) Any
successor Trustee, in its written acceptance of its duties under
this Agreement, shall agree to take any actions necessary from time
to time to comply with the requirements of DTC.
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(ix) The
Book-Entry System with respect to the Bonds of a subseries may be
discontinued at any time if: (A) after notice to the Authority
or the Trustee, DTC determines to resign as securities depository
for the Bonds or a subseries thereof; or (B) after notice to
DTC, the Authority, the Trustee, the
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<PAGE> 15
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Remarketing Agent and the Auction Agent, the Borrower determines
that a continuation of the system of book-entry transfers through
DTC (or through a successor securities depository) for the Bonds or
a subseries thereof is not in the best interests of the Borrower;
or (C) after notice to the Authority or the Trustee, DTC
determines that the current system of book-entry transfers through
DTC does not permit DTC to act as a securities depository for the
Bonds or a subseries thereof during the time that the Bonds or such
subseries are in a particular Mode. In each of such events (unless,
in the cases described in clause (A) or (C) above, the
Borrower appoints a successor securities depository), the Bonds or
a subseries thereof shall be delivered in registered certificate
form to such persons, and in such principal amounts, as may be
designated by DTC, but without any liability on the part of the
Authority, the Trustee or the Borrower for the accuracy of such
designation. Whenever DTC requests the Authority and the Trustee to
do so, the Authority and the Trustee shall cooperate with DTC in
taking appropriate action after reasonable notice to arrange for
another securities depository to maintain custody of certificates
evidencing the Bonds.
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(x) To
exercise any optional tender pursuant to Section 3.01 of
Exhibit A, in addition to notifying the Remarketing Agent and
the Trustee, if applicable, a Beneficial Owner must notify its DTC
participant, if the Remarketing Agent is not such Beneficial
Owner's DTC participant, of its decision to demand the purchase of
its Bonds as provided herein.
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(xi) In
the event that the Remarketing Agent fails to remarket all of the
Bonds on a Purchase Date or Mandatory Purchase Date, such
Beneficial Owner's DTC participant shall cause such Bonds to be
transferred to an account of the Trustee at DTC and the Trustee,
upon receipt of proceeds, shall cause the Purchase Price of the
Bonds to be transferred to an account of such Beneficial Owner's
DTC participant against receipt of such Bonds.
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(xii) Upon
remarketing of Bonds, payment of the Purchase Price thereof shall
be made to DTC and no physical delivery or surrender of Bonds is
expected to be required; such delivery or surrender of the Bonds
shall be accomplished through DTC's Book-Entry System. Such sales
shall be made through DTC participants (which may include the
Remarketing Agent) and the DTC participants shall transmit payment
to the Beneficial Owners whose Bonds were purchased pursuant to a
remarketing. The Authority, the Trustee, the Borrower and the
Remarketing Agent are not responsible for transfers of payment to
DTC participants or Beneficial Owners.
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(xiii) The
Authority (at the request of the Borrower if the Authority has
loaned the proceeds of the related subseries of Bonds to the
Borrower) hereafter may adopt, and the Trustee may accept,
supplemental agreements without notice to or consent of the Owners
of any of the Bonds in order (i) to offer to the Beneficial
Owners of the Bonds the option of receiving any Bonds in
certificated form or (ii) to require the execution and
delivery of certificated Bonds representing a portion or all of the
Bonds, (A) if DTC shall cease to serve as
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<PAGE> 16
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securities depository and no successor securities depository can
be found to serve upon terms satisfactory to the Borrower, or
(B) if the Borrower determines that it would be in its best
interest or in the best interests of the Beneficial Owners of the
Bonds that they obtain certificated Bonds, provided that any such
provision is in form reasonably satisfactory to the Trustee and the
Authority and that if the Bonds or a subseries thereof are in an
Auction Mode, written notice shall be given to the Auction
Agent.
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(f)
CUSIP Numbers . On the Issue Date, the Bonds of each
subseries shall bear CUSIP numbers as provided in
Section 3.01(b) and Section 2.02 of Exhibit A. So
long as the Bonds of a subseries bear CUSIP numbers, the Trustee
shall use such numbers in notices of redemption as a convenience to
Owners, provided that any such notice may state that no
representation is made as to the correctness of such numbers either
as printed on such Bonds or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Bonds, and any such
redemption shall not be affected by any defect in or omission of
such numbers. The Borrower will promptly notify the Trustee in
writing of any change in the CUSIP numbers for the Bonds of a
subseries.
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(g)
Bond Register . The Trustee will keep or cause to be
kept at its Principal Office sufficient books for the registration
and transfer of the Bonds, which shall at all reasonable times be
open to inspection by the Authority and the Borrower; and, upon
presentation for such purpose, the Trustee shall, under such
reasonable regulations as it may prescribe, register or transfer or
cause to be registered or transferred, on said books, Bonds as
hereinbefore provided.
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(h)
Form of Bonds . The Bonds of each subseries shall be
in substantially the following form:
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$__________
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No. [A][B][C]R-1
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THE STATE OF
NEW HAMPSHIRE
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BUSINESS FINANCE
AUTHORITY
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OF THE STATE OF
NEW HAMPSHIRE
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WATER FACILITY REVENUE
BOND
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(PENNICHUCK WATER
WORKS, INC. PROJECT) 2005 SERIES [A][B][C]
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REGISTERED OWNER:
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CEDE & CO.
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CUSIP:
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PRINCIPAL AMOUNT:
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_____________DOLLARS
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MATURITY DATE:
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October 1, 2035
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DATE OF THIS BOND:
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October 20, 2005 (Date as of which bonds of this issue were
initially issued)
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THIS BOND DOES NOT
CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE OR OF
THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED
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<PAGE> 17
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BY NEW HAMPSHIRE RSA 162-I. ALL AMOUNTS OWED HEREUNDER
ARE PAYABLE ONLY FROM THE SOURCES PROVIDED IN THE AGREEMENT
DESCRIBED BELOW, AND NO PUBLIC FUNDS MAY BE USED FOR THAT
PURPOSE.
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The Business Finance
Authority of the State of New Hampshire (the "Authority"), for
value received, promises to pay to the Registered Owner or
registered assigns, but only from the special funds hereinafter
described, upon presentation and surrender hereof, in lawful money
of the United States of America, the Principal Amount on the
Maturity Date, with interest computed at the interest rates per
annum as provided in this bond until the date on which this bond
becomes due, whether at maturity, upon redemption, by acceleration
or otherwise. Interest payments on this bond shall be made by The
Bank of New York Trust Company, N.A. as Trustee (the "Trustee"), to
the Registered Owner hereof as of the close of business on the
Record Date with respect to such Interest Payment Date for unpaid
interest accrued during the current Interest Accrual Period, all as
set forth in the Agreement, as hereinafter defined. Capitalized
terms used in this bond and not otherwise defined shall have the
respective meanings given in the Agreement. Certain of the
provisions relating thereto are set forth below:
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"Interest Accrual Period"
means the period of time during which the Bonds of a subseries
accrue the amount of interest (or, with respect to a subseries of
Bonds in the Commercial Paper Mode, a Commercial Paper Bond accrues
the amount of interest) which is payable on any Interest Payment
Date. With respect to Bonds in the Daily Mode, the Interest Accrual
Period shall commence on (and include) the first day of each month
and shall extend through (and include) the last day of such month;
provided, that if such month is the month in which the Bonds were
authenticated and delivered or were changed to the Daily Mode, the
Interest Accrual Period shall commence on the date of
authentication and delivery of the Bonds or the Mode Change Date,
as the case may be; provided, further, that if no interest has been
paid on Bonds in the Daily Mode, interest shall accrue from the
date of original authentication and delivery of the Bonds or the
Mode Change Date, as appropriate. With respect to Bonds in the
Auction Mode, the Interest Accrual Period is as set forth in the
definition of Auction Period. With respect to Bonds in all Modes
other than the Daily Mode and the Auction Mode, the Interest
Accrual Period shall commence on (and include) the last Interest
Payment Date to which interest has been paid (or, if no interest
has been paid in such Mode, from the date of original
authentication and delivery of the Bonds, or the Mode Change Date,
as the case may be) to, but not including, the Interest Payment
Date on which interest is to be paid.
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The principal of and
premium, if any, on each Bond will be payable on the applicable
Principal Payment Date upon its surrender at the Principal Office
of the Trustee (or such other office of the Trustee designated by
the Trustee for such purpose). The Purchase Price of a Bond will be
payable as described below and in the Agreement. Interest on Bonds
in the Commercial Paper Mode, the Daily Mode or the Weekly Mode
will be paid by the Paying Agent by wire transfer of immediately
available funds to an account within the continental
United States specified by the Registered Owner on the
applicable Record Date and, on Bonds in the Auction Mode, the Term
Rate Mode or the Fixed Rate Mode, will be paid by check mailed by
the Trustee to the Registered Owner at the address appearing in the
registration books of the Trustee on the applicable Record Date.
Payment of interest to Registered Owners of $1,000,000 or more in
aggregate principal amount of Bonds of a subseries in the Term Rate
Mode, the Fixed Rate Mode or the Auction Mode may be made by wire
transfer as provided in the Agreement.
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<PAGE> 18
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Notwithstanding the foregoing, the Bonds shall initially be
issued in a Book-Entry System and the provisions of such Book-Entry
System with respect to the Bonds shall govern while such Book-Entry
System is in effect.
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Interest is payable by check
or draft mailed by the Trustee to the Registered Owner, determined
as of the close of business on the applicable Record Date, at its
address as shown on the registration books maintained by the
Trustee.
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This bond is one of three
subseries of an issue of bonds (the "Bonds") representing an
aggregate borrowing of $49,485,000 under New Hampshire
RSA 162-I and issued pursuant to a Master Loan and Trust
Agreement (the "Master Agreement") dated as of October 1, 2005
among Pennichuck Water Works, Inc. (the "Borrower"), the Authority
and the Trustee. The Bonds of a subseries, the proceeds of which
have been loaned by the Authority to the Borrower, are secured on a
parity with the Bonds of each other subseries, the proceeds of
which have been loaned by the Authority to the Borrower. The Bonds
of a subseries the proceeds of which are invested under the Escrow
Agreement dated as of October 1, 2005 (the "Escrow Agreement")
among the Authority, the Borrower, the Trustee and The Bank of
New York Trust Company, N.A., as Escrow Agent, are referred to
as the "Escrow Bonds." The proceeds of the Subseries A Bonds
will be loaned to the Borrower on the Date of this bond and will
not be invested under the Escrow Agreement. Until the Escrow
Mandatory Purchase Date (as defined below), the principal of and
interest on the Escrow Bonds of each subseries will be repaid
solely from moneys available for such purpose under the Escrow
Agreement. The Borrower may submit a Loan Request Certificate
requesting the Authority to loan the proceeds of such subseries of
the Bonds to the Borrower (the Master Agreement and the Loan
Request Certificate for a subseries of Bonds being collectively
referred to herein as the "Agreement") on the Escrow Mandatory
Purchase Date for a subseries of the Bonds. Pursuant to the
Agreement, the Borrower agrees to repay such loan in the amounts
and at the times necessary to enable the Authority to pay the
principal and interest on this bond. The Borrower has no obligation
with respect to the payment of the principal of, interest or
purchase price of this bond during the period, if any, while this
bond is an Escrow Bond. The Authority has pledged the Escrow
Agreement and the moneys received thereunder and the Agreement and
the moneys received thereunder to the Trustee for the benefit of
the Bondowners. Reference is hereby made to the Escrow Agreement
and the Agreement for the respective provisions thereof with
respect to the rights, limitations of rights, duties, obligations
and immunities of the Borrower, the Authority, the Escrow Agent,
the Trustee and the registered owner hereof, including the order of
payments in the event of insufficient funds, the disposition of
unclaimed moneys held by the Trustee and restrictions on the rights
of the registered owner to bring suit. The Escrow Agreement and the
Agreement may be amended to the extent and in the manner provided
therein.
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Upon the occurrence of an
Event of Default, the then outstanding principal amount of this
bond together with accrued interest thereon may be declared due and
payable in the manner and with the effect provided in the
Agreement.
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Payment of the principal of
and interest on the Bonds when due is insured by a financial
guaranty insurance policy issued by Ambac Assurance
Corporation.
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<PAGE> 19
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Interest on the
Subseries A Bonds will be paid at a Fixed Rate until the
Maturity Date. Interest on the Subseries B Bonds and
Subseries C Bonds initially will be paid at Term Rates for the
Interest Accrual Periods ending on the day before the respective
Escrow Mandatory Purchase Dates. From and after an Escrow Mandatory
Purchase Date, the interest on the Bonds of the corresponding
subseries will be paid at a Fixed Rate, a Commercial Paper Rate, a
Daily Rate, a Weekly Rate, a Term Rate or an Auction Rate as
selected by the Borrower and as determined in accordance with the
Agreement. In no event shall the interest rate on the Bonds be
higher than (i) during the Daily, Weekly or Commercial Paper
Mode, the lesser of (a) 12% per annum, (b) the rate
otherwise agreed to by the provider of any liquidity facility then
in effect or (c) the maximum rate then permitted by applicable
law; (ii) during the Auction Mode, the lesser of (a) 15%
per annum or (b) the maximum rate permitted by applicable law
and (iii) during the Term Rate or Fixed Rate Mode, the lesser
of (a) 12% per annum or (b) the maximum rate then
permitted by applicable law. The Borrower may change the Mode (and
may direct that the Bonds of a subseries be in more than one Mode)
from time to time as provided in the Agreement, which change will
result in a mandatory purchase of the Bonds (see "Mandatory
Purchases" below).
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When a Commercial Paper
Mode, a Daily Mode or a Weekly Mode is in effect, interest will be
calculated on the basis of a 365/366-day year for the actual number
of days elapsed, and when a Term Rate Mode or Fixed Rate Mode is in
effect, on the basis of a 360-day year comprised of twelve 30-day
months. When an Auction Mode is in effect, interest on Bonds in an
Auction Period of 180 days or less will be computed on the
basis of actual days over 360 and in an Auction Period greater than
180 days will be calculated on the basis of a 360-day year of
twelve 30-day months.
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The Bonds shall be
deliverable in the form of registered Bonds without coupons in
Authorized Denominations. Authorized Denominations means: in the
Commercial Paper Mode, the Daily Mode or the Weekly Mode, $100,000
and any integral multiple of $5,000 in excess thereof; and in the
Auction Mode, the Term Rate Mode or the Fixed Rate Mode, $5,000 and
any integral multiples thereof. A Registered Owner may transfer or
exchange Bonds in accordance with the Agreement. The Trustee may
require the payment by any Registered Owner requesting such
transfer or exchange of any tax or other governmental charge
required to be paid as provided in the Agreement. Except in
connection with the purchase of Bonds in lieu of redemption, during
the Term Rate Mode or the Fixed Rate Mode, neither the Authority
nor the Trustee will be required to transfer or exchange any Bond
during the period beginning 10 days prior to the redemption
date or any Bond during the period beginning 15 days preceding
any Interest Payment Date.
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As provided in the
Agreement, the Borrower has the right to purchase Bonds (but not
Escrow Bonds) in lieu of the optional redemptions described in the
immediately succeeding four paragraphs and, with the prior written
approval of the Bond Insurer, in lieu of the mandatory redemption
described below as "Mandatory Redemption Upon Condemnation of
Principal Assets." BY ACCEPTANCE OF THIS BOND, THE OWNER AGREES TO
SELL AND SURRENDER THIS BOND, PROPERLY ENDORSED, TO THE BORROWER IN
LIEU OF REDEMPTION UNDER THE CONDITIONS DESCRIBED IN THE AGREEMENT.
All redemptions (and purchases in lieu of redemption) will be at a
price of 100% of the principal amount of the Bonds being redeemed
(or purchased by the Borrower) together with any premium
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<PAGE> 20
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required as provided below, plus interest accrued, if any, to
the redemption date (or purchase date). Bonds tendered for purchase
on a date after a call for redemption but before the redemption
date will be purchased pursuant to the tender. No purchase of Bonds
by the Borrower shall be deemed to be a payment or redemption of
the Bonds or of any portion thereof and such purchase will not
operate to extinguish or discharge the indebtedness evidenced by
such Bonds.
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Optional
Redemption-Commercial Paper Mode . When this bond is in the
Commercial Paper Mode, it is subject to optional redemption at the
written direction of the Borrower, in whole, or in part in
Authorized Denominations, on the day next succeeding the last day
of its current Interest Period, at a redemption price equal to 100%
of the principal amount thereof to be redeemed.
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Optional
Redemption-Daily Mode and Weekly Mode . When this bond is in
the Daily Mode or the Weekly Mode, it is subject to optional
redemption at the written direction of the Borrower, in whole, or
in part in Authorized Denominations, on any date, at a redemption
price equal to 100% of the principal amount thereof to be redeemed,
plus accrued and unpaid interest, if any, to the redemption
date.
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Optional
Redemption-Auction Mode . When this bond is in the Auction
Mode, it is subject to optional redemption at the written direction
of the Borrower, in whole, or in part in Authorized Denominations,
on the Business Day immediately following the end of an Auction
Period, at a redemption price equal to 100% of the principal amount
thereof to be redeemed, plus accrued and unpaid interest, if any,
to the redemption date.
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Optional Redemption-Term
Rate Mode and Fixed Rate Mode . The Subseries A Bonds in the
Fixed Rate Mode are subject to optional redemption, at the option
of the Borrower, in whole, or in part in Authorized Denominations,
on any date on or after October 1, 2015, at a redemption price
equal to 100% of the principal amount thereof to be redeemed, plus
accrued and unpaid interest, if any, to the redemption date.
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The Subseries B Bonds and
the Subseries C Bonds (except for Escrow Bonds, which shall not be
subject to this redemption) in the Term Rate Mode or Fixed Rate
Mode are subject to optional redemption at the written direction of
the Borrower, in whole, or in part in Authorized Denominations, on
any date, at the times (measured from the related Mode Change
Date), and at the redemption prices set forth below, plus accrued
and unpaid interest, if any, to the redemption date:
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<PAGE> 21
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Length of Term
Rate
Mode or Fixed Rate Mode
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Redemption Dates and Prices
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Greater than 10 years
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At any time on or after the eighth anniversary of the Mode
Change Date at 101% declining 1% annually to 100%
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Greater than seven years and less than or equal to
10 years
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At any time on or after the fifth anniversary of the Mode Change
Date at 101% declining 1% annually to 100%
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Greater than five years and less than or equal to seven
years
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At any time on or after the fifth anniversary of the Mode Change
Date at 100%
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Equal to or less than five years
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Not redeemable
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The Borrower, in connection
with a change to a Term Rate Mode or a Fixed Rate Mode, may specify
in the Mode Change Notice given prior to the commencement of such
Mode, redemption prices and periods other than those set forth
above for Bonds not then called for redemption; provided, however,
that such notice shall be accompanied by a Favorable Opinion of
Bond Counsel addressed to the Authority, the Trustee and the
Remarketing Agent.
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Mandatory Redemption
Upon Determination of Taxability . The Bonds in the Term Rate
Mode or Fixed Rate Mode are subject to redemption as a whole at any
time if a Determination of Taxability (as defined in the Agreement)
occurs at a redemption price equal to 100% of their principal
amounts plus accrued interest to the redemption date, which
redemption shall be within 15 days following receipt by the
Trustee of written notice from the Borrower of a Determination of
Taxability.
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Mandatory Redemption
Upon Condemnation of Principal Assets . The Bonds (except for
Escrow Bonds, which shall not be subject to this redemption) in the
Term Rate Mode or Fixed Rate Mode are subject to redemption as a
whole, or in part in Authorized Denominations, at any time when
title to, or the temporary use of, all or substantially all of the
tangible property of the Borrower used or useful in the Borrower's
business as a water company shall have been taken under the
exercise of the power of eminent domain by any governmental body or
by any person, acting under governmental authority (or a bona fide
sale in lieu of such taking shall have occurred), which redemption
shall be within 15 days following receipt by the Trustee of
written notice from the Borrower of such a taking or sale. The
Bonds shall be redeemed under this paragraph (i) if redeemed during
any period during which the Bonds are not subject to optional
redemption, at a redemption price equal to 101% of the principal
amount of the Bonds plus accrued interest to the redemption date
and (ii) if redeemed during any period during which the Bonds are
subject to optional redemption, at the optional redemption price
then applicable to the Bonds plus accrued interest to the
redemption date.
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Special Optional
Redemption . The Bonds (except for Escrow Bonds, which shall
not be subject to this redemption) are subject to redemption at the
option of the Borrower at any time at their principal amounts,
without premium, plus accrued interest to the redemption date as
a
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<PAGE> 22
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whole or in part from excess moneys in the Project Fund
established by the Agreement or as a whole in the event the Project
financed by the Bonds suffers substantial loss or becomes
uneconomic, as provided in the Agreement.
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If less than all of the
outstanding Bonds are to be called for redemption, the Bonds to be
redeemed will be selected by the Trustee by lot or in any customary
manner as determined by the Trustee.
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Except as otherwise provided
in the cases of a redemption upon Determination of Taxability or
upon a condemnation of the Borrower's principal assets, in the
event this bond is called for redemption, notice will be given by
the Trustee by first-class mail, postage prepaid, not more than 60
nor less than 15 days (30 days if this bond is in the Term
Rate Mode or Fixed Rate Mode) prior to the redemption date to the
Registered Owner at its address as shown on the registration books.
Failure to mail notice to the owner of any other bond or any defect
in the notice to such an owner shall not affect the redemption of
this bond.
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If this bond is of a
denomination in excess of the minimum Authorized Denomination,
portions of the principal amount in the amount of any Authorized
Denomination of this bond may be redeemed; provided that, if the
unredeemed portion of the principal amount would be less than the
minimum Authorized Denomination, that portion shall also be
redeemed. If less than all of the principal amount is to be
redeemed, upon surrender of this bond to the Trustee, there will be
issued to the Registered Owner at its option, without charge, a new
bond or bonds for the unredeemed principal amount.
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Notice of redemption having
been duly given, this bond, or the portion called for redemption,
will become due and payable on the redemption date at the
applicable redemption price and, moneys for the redemption having
been deposited with the Trustee, from and after the date fixed for
redemption interest on this bond (or such portion) will no longer
accrue.
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Optional Tenders .
When this bond is in the Daily Mode or the Weekly Mode, the
Registered Owner may elect to have it, or any portion thereof in an
Authorized Denomination, purchased on any Business Day selected by
the Owner (a "Purchase Date") at a price equal to its principal
amount plus accrued interest, if any, by delivering:
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(i) (A) in
the case of the Daily Mode, an irrevocable notice of tender to the
Remarketing Agent by Electronic Means acceptable to the Remarketing
Agent not later than 11:00 a.m., New York City time, on
the Purchase Date specified by the Registered Owner in such notice,
and, (B) in the case of the Weekly Mode, to the Remarketing
Agent an irrevocable written notice of tender or an irrevocable
notice of tender by Electronic Means acceptable to the Remarketing
Agent, promptly confirmed in writing to the Trustee, by
4:00 p.m., New York City time, on a Business Day not less
than seven days before the Purchase Date specified by the
Registered Owner in such notice, stating, in each such case, the
CUSIP number, Bond number, the principal amount to be purchased,
and the Purchase Date; and
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(ii) in
either case but subject to the provisions of the Book-Entry System,
the Bond (with all necessary endorsements) to the office of the
Trustee, at or before noon, New York City time, on the
Purchase Date.
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Payment of the Purchase
Price shall be made as described above only if the Bond so
delivered conforms in all respects to the description thereof in
the notice of optional tender.
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SO LONG AS THE BONDS ARE
REGISTERED IN THE NAME OF DTC OR ANY NOMINEE THEREOF, TO EXERCISE
AN OPTIONAL TENDER, A BENEFICIAL OWNER MUST NOTIFY ITS DTC
PARTICIPANT, IF THE REMARKETING AGENT IS NOT SUCH BENEFICIAL
OWNER'S DTC PARTICIPANT, IN ADDITION TO THE REMARKETING AGENT AND
THE TRUSTEE, AS THE CASE MAY BE, OF ITS DECISION TO DEMAND THE
PURCHASE OF ITS BONDS AS PROVIDED IN THE AGREEMENT. BY ACCEPTANCE
OF THIS BOND, THE BENEFICIAL OWNER AGREES TO SELL AND SURRENDER
THIS BOND, WITH ALL NECESSARY ENDORSEMENTS, TO THE TRUSTEE AFTER
THE GIVING OF IRREVOCABLE NOTICE OF OPTIONAL TENDER FOR PURCHASE AS
DESCRIBED ABOVE.
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Mandatory Purchases
. This bond must be delivered to the office of the Trustee for
purchase at the Purchase Price specified in the Agreement (which
may include a premium in the case of (iii) below in certain
circumstances) at or before noon, New York City time, on the
following dates:
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(i) on
October 2, 2006, in the case of the Subseries B Bonds,
and October 1, 2007, in the case of the Subseries C
Bonds, and on any new mandatory purchase date designated as
provided by the Agreement with respect to Escrow Bonds (each, an
"Escrow Mandatory Purchase Date");
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(ii) if
the Bond is in the Commercial Paper Mode, on the day next
succeeding the last day of the current Interest Period for such
Bond;
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(iii) on
any date that the Mode of the Bond is changed; and
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(iv) if
the Bond is in the Term Rate Mode, on the day next succeeding the
last day of the current Interest Period for such Bond.
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BY ACCEPTANCE OF THIS BOND,
THE REGISTERED OWNER AGREES TO TENDER THIS BOND FOR PURCHASE ON ANY
DATE (THE "MANDATORY PURCHASE DATE") DESCRIBED ABOVE AND
ACKNOWLEDGES THAT INTEREST WILL CEASE TO ACCRUE ON THE BOND ON SUCH
MANDATORY PURCHASE DATE, PROVIDED THAT PROCEEDS TRANSFERRED FROM
THE ESCROW AGREEMENT OR REMARKETING PROCEEDS (OR OTHER FUNDS IF
ALLOWED UNDER THE AGREEMENT) SUFFICIENT FOR SUCH PURCHASE ARE ON
DEPOSIT WITH THE TRUSTEE ON SUCH MANDATORY PURCHASE DATE.
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Payment of Purchase
Price . The Purchase Price of a Bond delivered for purchase as
described above (with all necessary endorsements) will be paid by
the Trustee by wire transfer of immediately available funds by the
close of business on the applicable purchase date. THE
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<PAGE> 24
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PURCHASE PRICE OF BONDS MUST BE MADE WITH BOND PROCEEDS AND
OTHER FUNDS (AND INVESTMENT EARNINGS THEREON) ON DEPOSIT UNDER THE
ESCROW AGREEMENT OR REMARKETING PROCEEDS, OR AS OTHERWISE PROVIDED
IN THE AGREEMENT. IN THE EVENT THAT REMARKETING PROCEEDS ARE NOT
AVAILABLE WHEN REQUIRED, THE AGREEMENT GENERALLY PROVIDES THAT THE
BONDS WILL REMAIN OUTSTANDING IN THEIR CURRENT MODE AT INTEREST
RATES DESCRIBED IN THE AGREEMENT. SEE THE AGREEMENT FOR A COMPLETE
DESCRIPTION OF THE CONSEQUENCES OF A FAILED REMARKETING.
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Delivery Address .
Notices in respect of optional tenders must be delivered to the
Remarketing Agent and, if this bond is in a Weekly Mode, to the
Trustee at the notice addresses specified in the Agreement. Bonds
tendered for optional or mandatory purchase must be delivered to
the Trustee at the address provided in the Agreement, subject to
the provisions of the Book-Entry System.
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This bond is transferable by
the Registered Owner, in person or by its attorney duly authorized
in writing, at the designated corporate trust office of the
Trustee, upon surrender of this bond to the Trustee for
cancellation. Upon the transfer, a new bond or bonds of the same
aggregate principal amount in Authorized Denominations will be
issued to the transferee at the same office. No transfer will be
effective unless represented by such surrender and reissue. The
Authority has established the Book-Entry System of registration for
the Bonds, pursuant to which it will deliver a single bond
certificate for each maturity of each subseries of the Bonds to The
Depository Trust Company ("DTC"), as securities depository. Except
as specifically provided otherwise in the Agreement, DTC, or its
nominee, will be the Registered Owner of this bond. By acceptance
of a confirmation of purchase and/or delivery of transfer, the
Beneficial Owner (if any) of this bond shall be deemed to have
agreed to this arrangement. If DTC (or its nominee) is the
Registered Owner of this bond, it shall be treated as the owner of
it for all purposes. This bond may also be exchanged at the
corporate trust office of the Trustee for a new bond or bonds of
the same aggregate principal amount in Authorized Denominations
without transfer to a new registered owner. Exchanges and transfers
will be without expense to the owner except for applicable taxes or
other governmental charges, if any. The Trustee will not be
required to make an exchange or transfer of this bond during the
45 days preceding any date fixed for redemption if this bond
(or any part thereof) is eligible to be selected or has been
selected for redemption.
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The Bonds are issuable only
in fully registered form in Authorized Denominations as defined by
the Agreement.
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The Authority and the
Trustee may treat the Registered Owner as the absolute owner of
this bond for all purposes, notwithstanding any notice to the
contrary.
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No director, officer,
employee or agent of the Authority nor any person executing this
bond shall be personally liable, either jointly or severally,
hereon or be subject to any personal liability or accountability by
reason of the issuance hereof.
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<PAGE> 25
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This bond shall not be valid
until the certificate of authentication hereon shall have been
signed by the Trustee.
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IN WITNESS WHEREOF, the
Business Finance Authority of the State of New Hampshire has
caused its seal to be affixed hereto and this bond to be signed by
its authorized officers.
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Dated:
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BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
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(Seal)
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By
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Chairman
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By
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Executive Director
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CERTIFICATE OF
TRUSTEE
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This bond is one of the
Bonds described in the Master Agreement.
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THE BANK OF NEW YORK TRUST COMPANY, N.A., Trustee
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By
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Authorized Officer
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Date of Registration:
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ASSIGNMENT
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For value received the
undersigned sells, assigns and transfers this bond to
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(Name and Address of Assignee)
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Social Security or Other Identifying Number of Assignee
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and irrevocably appoints _________________ attorney-in-fact to
transfer it on the books kept for registration of the bond, with
full power of substitution.
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<PAGE> 26
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NOTE:
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The signature to this assignment must correspond with the name
as written on the face of the bond without alteration or
enlargement or other change.
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Date:
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Signature Guaranteed:
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Participant in a Recognized
Signature Guarantee Medallion Program
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By
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Authorized Signature
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<PAGE> 27
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STATEMENT OF
INSURANCE
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Financial Guaranty Insurance
Policy No. 24656BE (the "Policy") with respect to payments due
for principal of and interest on this bond has been issued by Ambac
Assurance Corporation ("Ambac Assurance"). The Policy has been
delivered to The Bank of New York, New York, New York, as
the Insurance Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee. The Policy is
on file and available for inspection at the principal office of the
Insurance Trustee and a copy thereof may be secured from Ambac
Assurance or the Insurance Trustee. All payments required to be
made under the Policy shall be made in accordance with the
provisions thereof. The owner of this bond acknowledges and
consents to the subrogation rights of Ambac Assurance as more fully
set forth in the Policy.
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[END OF BOND FORM]
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Section 3.02. Bond Fund .
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(a)
Establishment and Purpose . A Bond Fund is hereby
established with the Trustee, and therein a Subaccount for each
subseries of the Bonds. Moneys shall be deposited in the Bond Fund
as provided in this Agreement. The moneys in the Bond Fund and any
investments held as part of such Fund shall be held in trust and,
except as otherwise provided, shall be applied by the Trustee
solely to the payment of the principal of and interest on the Bonds
and to the charges and disbursements of the Trustee and the
Authority in accordance with this Agreement. When moneys in the
Bond Fund are to be applied to the payment of the Bonds, such
moneys shall be transferred by the Trustee to itself for the
account of the Authority and shall then be so applied.
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(b)
Excess in Bond Fund . If at any time the amount in
the Bond Fund exceeds the amount necessary to pay or redeem the
Bonds in full, and all amounts owing or to be owing to the Trustee,
the Authority, the Escrow Agent and the Bondowners under this
Agreement have been paid or provided for to the satisfaction of the
Trustee, the Authority, the Escrow Agent and the Bondowners, as the
case may be, the excess, in the case of a subseries of Bonds the
proceeds of which the Authority has loaned to the Borrower, shall
be paid to the Borrower, and, in other cases, shall be paid to the
Authority.
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(c)
Unclaimed Moneys . Except as may otherwise be
required by applicable law, in case any moneys deposited with the
Trustee for the payment of the principal of, or interest on, any
Bond remain unclaimed for three years after such principal or
interest has become due and payable, the Trustee, in the case of a
subseries of Bonds the proceeds of which the Authority has loaned
to the Borrower, may and upon receipt of a request of the Borrower
will pay over to the Borrower the amount so deposited and thereupon
the Trustee and the Authority shall be released from any further
liability with respect to the payment of principal or interest and
the owner of such Bond shall be entitled (subject to any applicable
statute of limitations) to look only to the Borrower as an
unsecured creditor for the payment thereof.
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<PAGE> 28
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Section 3.03. Application of Moneys . If
available moneys are not sufficient on any day to pay all principal
and interest on the Bonds then due or overdue, they shall, after
payment of all other amounts owing to the Trustee and the Authority
under this Agreement, be applied first to the payment of interest,
including interest on overdue principal, in the order in which the
same became due and second to the payment of principal without
regard to the order in which the same became due, in each case pro
rata among Bondowners. Whenever moneys are to be applied by the
Trustee pursuant to this Section, such moneys shall be applied by
the Trustee at such times, and from time to time, as the Trustee in
its discretion shall determine, having due regard to the amount of
such moneys available for application and the likelihood of
additional moneys becoming available for such application in the
future. Whenever the Trustee shall exercise such discretion it
shall fix the date (which shall be the first day of a month unless
the Trustee shall deem another date more suitable) upon which such
application is to be made, and upon such date interest on the
amounts of principal paid on such date shall cease to accrue. The
Trustee shall give such notice as it may deem appropriate of the
fixing of any such date. When only interest or a portion of the
principal is to be paid on an overdue Bond, the Trustee may require
presentation of the Bond for endorsement of the payment.
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Section 3.04. Payments by the Escrow Agent and the
Borrower .
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(a)
Debt Service and Purchase Price Payments .
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(i) While
the proceeds of a subseries are on deposit under the Escrow
Agreement, the Escrow Agent, on or before each date specified by
the Escrow Agreement, will pay to the Trustee for deposit in the
related Subaccount of the Bond Fund the amount specified by the
Escrow Agreement. The Borrower shall have no obligation with
respect to the sufficiency or timeliness of such payments by the
Escrow Agent.
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(ii) From
and after the effective date of the Loan Request Certificate
relating to the subseries of the Bonds, the Borrower will pay to
the Trustee for deposit in the related Subaccount of the Bond Fund
at least two Business Days before each date on which any payment of
principal of and interest on the Bonds shall become due, whether at
maturity, upon redemption, upon acceleration or otherwise, an
amount in funds available on such Bond payment date equal to the
payment then coming due less the amount, if any, then in the Bond
Fund and available to pay the same. At any time when any principal
of the Bonds is overdue, the Borrower shall also have a continuing
obligation to pay to the Trustee for deposit in the Bond Fund an
amount equal to interest on the overdue principal, but the payments
required under this Section shall not otherwise bear interest. The
Borrower may make payments to the Bond Fund earlier than required
by this Section, but such payments shall not affect the accrual of
interest except to the extent that Bonds are prepaid. If at any
time there are insufficient funds to pay or prepay principal of and
interest on the Bonds when due, the Borrower shall supply the
deficiency.
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(iii) On
the Escrow Mandatory Purchase Date with respect to a subseries of
Bonds and under the circumstances described by
Section 3.01(c)(iii),
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<PAGE> 29
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the Escrow Agent will make the transfer to the Trustee required
by Section 3.01(c)(iii) or Section 3.01(c)(iv)(3) in
respect of the Purchase Price of such subseries. The Borrower shall
have no obligation with respect to the sufficiency or timeliness of
such payments by the Escrow Agent.
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(iv) Not
later than 1:30 p.m. on each Purchase Date (not including an
Escrow Mandatory Purchase Date described by
clause 3.04(a)(iii) above), the Borrower will pay to the
Trustee for payment of the Purchase Price of the Bonds of a
subseries the amount, if any, that, when added to the moneys on
deposit in the related subaccount of the Remarketing Proceeds
Account pursuant to Section 3.10(b) of Exhibit A will be
sufficient timely to pay the Purchase Price of the Bonds tendered
for purchase on such Purchase Date as provided by Section 3.06
of Exhibit A.
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(b)
Additional Payments . In addition to the payments
required under Section 3.04(a)(ii) and (iv), the Borrower will
pay to the Trustee, the Authority and the Bondowners when due all
amounts owing to them respectively under this Agreement, including
without limitation in the case of the Authority, the Authority's
Service Charge and all other amounts which the Authority is
entitled to receive hereunder as reimbursement or indemnity.
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Section 3.05. Unconditional Obligation . The
obligations of the Borrower hereunder, including the obligation of
the Borrower to make all payments required of it under
Section 3.04(a)(ii) and (iv), shall be unconditional and shall
be binding and enforceable in all circumstances whatsoever as
provided in the Act and shall not be subject to setoff, recoupment
or counterclaim. As more fully provided by
Section 3.01(a)(ii)(2), the payments required to be made with
respect to Escrow Bonds under Section 3.04(a)(i) and
Section 3.04(a)(iii) shall be nonrecourse to the Borrower and
the Borrower shall have no obligation with respect thereto. The
Borrower shall be obligated to make the payments required of it
under Section 3.04(a)(ii) and (iv) whether or not the Project
has come into existence or become functional and whether or not the
Project has ceased to exist or to be functional to any extent and
from any cause whatsoever. The Borrower shall be obligated to make
such payments regardless of whether the Borrower is in possession
or is entitled to be in possession of the Project or any part
thereof.
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Section 3.06. Redemption of the Bonds . The Bonds
shall be subject to redemption prior to maturity under the
circumstances, in the manner and subject to the conditions provided
in this Section and in the form of Bonds. Whenever Bonds are called
for redemption, the accrued interest thereon shall become due on
the redemption date. Transfers and payments for the purpose of
redeeming Bonds under this Agreement shall be made on behalf of the
Authority, and the Authority hereby consents to any redemption of
Bonds in accordance herewith. If less than all of the Bonds are to
be redeemed, the Bonds to be redeemed shall be selected by the
Trustee by lot or in any customary manner as determined by the
Trustee. For this purpose each minimum Authorized Denomination of a
Bond shall be treated as a separate Bond.
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(a)
Redemption Upon Certain Deposits Into Bond Fund . If
moneys are transferred to the Bond Fund pursuant to
Section 4.03, the same shall be used to the maximum extent
possible to redeem Bonds in Authorized Denominations on the
earliest
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<PAGE> 30
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date permitted by the notice requirements of subsection (e)
at their principal amounts, without premium, plus accrued interest
to the redemption date without regard to Section 3.03;
provided, however, that if the aggregate amount of such moneys to
be so applied at any one time is less than the applicable minimum
Authorized Denomination, such moneys (as well as amounts in excess
of such minimum) shall be applied on the next Interest Payment Date
to the payment of principal or interest on the Bonds then coming
due. Any moneys held in the Bond Fund for redemption under this
subsection shall be invested at a yield (as defined in IRC
Section 148(f)) at or below the yield on the Bonds.
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(b)
Redemption Upon Determination of Taxability . The
Bonds shall be redeemed as a whole within 15 days following
receipt by the Trustee of written notice of the occurrence of a
Determination of Taxability, at a redemption price equal to 100% of
their principal amounts plus accrued interest to the redemption
date.
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(c)
Redemption Upon Condemnation of Principal Assets .
The Bonds (except for Escrow Bonds, if any, which shall not be
subject to this redemption) are subject to redemption as a whole,
or in part in Authorized Denominations, within 15 days
following receipt by the Trustee of written notice from the
Borrower that title to, or the temporary use of, all or
substantially all of the Project, or any substantial part of the
Capital Properties (as defined in Section 5.02 hereof) of the
Borrower, has been taken under the exercise of the power of eminent
domain by any governmental body or by any person, acting under
governmental authority (or a bona fide sale in lieu of such taking
has occurred). In such event, the Bonds shall be redeemed
(i) if redeemed during any period during which the Bonds are
not subject to optional redemption, at a redemption price equal to
101% of the principal amount of the Bonds plus accrued interest to
the redemption date and (ii) if redeemed during any period
during which the Bonds are subject to optional redemption, at the
optional redemption price then applicable to the Bonds plus accrued
interest to the redemption date.
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(d)
Optional Redemption . The Escrow Bonds are not
subject to optional redemption. The Bonds other than the Escrow
Bonds are subject to redemption at the option of the Borrower as
follows:
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(i)
Optional Redemption of Commercial Paper Bonds . Bonds of a
subseries in the Commercial Paper Mode are not subject to optional
redemption prior to their respective Mandatory Purchase Dates
pursuant to Section 3.02 hereof. Bonds of a subseries in the
Commercial Paper Mode are subject to optional redemption at the
written direction of the Borrower in whole, or in part in
Authorized Denominations, on their respective Mandatory Purchase
Dates (i.e., the day next succeeding the last day of their
respective current Interest Periods) at a redemption price equal to
100% of the principal amount thereof to be redeemed.
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(ii)
Optional Redemption of Bonds in the Daily Mode or the Weekly
Mode . Bonds of a subseries in the Daily Mode or the Weekly
Mode are subject to optional redemption at the written direction of
the Borrower, in whole, or in part in Authorized Denominations, on
any date, at a redemption price equal to 100% of the principal
amount thereof to be redeemed, plus accrued and unpaid interest, if
any, to the redemption date.
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<PAGE> 31
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(iii)
Optional Redemption of Bonds in the Auction Mode . Bonds of
a subseries in the Auction Mode are subject to optional redemption
at the written direction of the Borrower, in whole, or in part in
Authorized Denominations, on the Business Day immediately following
the end of an Auction Period, at a redemption price equal to 100%
of the principal amount thereof to be redeemed, plus accrued and
unpaid interest, if any, to the redemption date.
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(iv)
Optional Redemption of Bonds in the Term Rate Mode or the Fixed
Rate Mode . The Subseries A Bonds in the Fixed Rate Mode are
subject to optional redemption, at the written direction of the
Borrower, in whole, or in part in Authorized Denominations, on any
date on or after October 1, 2015, at a redemption price equal to
100% of the principal amount thereof to be redeemed, plus accrued
and unpaid interest, if any, to the redemption date. The
Subseries B Bonds and the Subseries C Bonds, if converted
to a different Term Rate Mode or to the Fixed Rate Mode, are
subject to optional redemption at the written direction of the
Borrower in whole, or in part in Authorized Denominations, on any
date, at the times (measured from the Mode Change Date), and at the
redemption prices set forth below, plus accrued and unpaid
interest, if any, to the redemption date:
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Length of Term
Rate
Mode or Fixed Rate Mode
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Redemption Dates and Prices
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Greater than 10 years
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At any time on or after the eighth anniversary of the Mode
Change Date at 101% declining 1% annually to 100%
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Greater than seven years and less than or equal to
10 years
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At any time on or after the fifth anniversary of the Mode Change
Date at 101% declining 1% annually to 100%
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Greater than five years and less than or equal to seven
years
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At any time on or after the fifth anniversary of the Mode Change
Date at 100%
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Equal to or less than five years
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Not redeemable
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The Borrower, in connection
with a change to a Term Rate Mode or a Fixed Rate Mode, may specify
in the notice required by Section 2.07(a)(i) or
Section 2.08(c)(ii) of Exhibit A with respect to the Term
Rate Mode or by Section 2.07(b) or Section 2.08(d)(ii) of
Exhibit A with respect to the Fixed Rate Mode redemption
prices and periods other than those set forth above for Bonds not
then called for redemption; provided, however, that such notice
shall be accompanied by a Favorable Opinion of Bond Counsel
addressed to the Authority, the Trustee, and the Remarketing
Agent.
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<PAGE> 32
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(e)
Special Redemption . The Bonds (except for the Escrow
Bonds, if any, which shall not be subject to this redemption) are
subject to special redemption at the written direction of the
Borrower as a whole at any time at their principal amounts plus
accrued interest to the redemption date following the occurrence of
any of the following events:
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(i) the
Project shall have been damaged or destroyed to such extent that,
in the Borrower's judgment, (A) it cannot be reasonably
restored within a period of 12 months to substantially the
same condition existing immediately preceding such damage or
destruction, (B) the normal operations of the Project will
thereby be prevented for a period of 12 months or more, or
(C) the cost of restoration thereof would exceed by $100,000
the net proceeds of insurance carried thereon, plus amounts
deductible under such insurance; or
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(ii) any
federal, state or local body exercising governmental or judicial
authority shall have taken any action which results in unreasonable
burdens or excessive liabilities, including without limitation
taxes not presently levied, with respect to the Project or the
ownership or operation thereof which in the Borrower's judgment
render the Project impractical or uneconomic or if, in each case,
as a result the Project is rendered unusable by the Borrower or is
abandoned by the Borrower.
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(f)
Notice of Redemption . To cause Bonds to be redeemed
pursuant to Section 3.06(a), (b), (c), (d) or (e), the
Borrower shall furnish to the Trustee and the Authority a written
direction specifying the principal amount of Bonds to be redeemed
(if all Bonds are not required to be redeemed) and an appropriate
redemption date which allows the Trustee sufficient time to provide
the Bondholders with any required notice (and, in the case of a
redemption pursuant to Section 3.06(e), certifying as to the
occurrence of the applicable event described in
Section 3.06(e) on which such redemption is based). Such
notice shall be given to the Trustee not less than five Business
Days prior to the date notice of redemption must be given by the
Trustee to the Owners of the Bonds to be redeemed as provided in
the next succeeding paragraph (unless the Borrower and the Trustee
shall agree to a shorter period).
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Except as otherwise provided
herein, notice of redemption shall be given by mail by the Trustee
to the Authority, the Remarketing Agent, the Auction Agent and the
Owners of any Bonds of a subseries designated for redemption in
whole or in part at the addresses shown on the registration books
not less than 15 days (30 days if the Bonds of such
subseries to be redeemed are in the Term Rate Mode or the Fixed
Rate Mode), nor more than 60 days prior to the redemption
date.
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When Bonds are to be
redeemed, the Trustee shall give notice as provided in the form of
Bond in the name of the Authority. Each notice of redemption shall
state the redemption date, the redemption price, the place of
redemption and manner of payment, the principal amount, the
subseries of Bonds and, if less than all of the Bonds of a
subseries are to be redeemed, the distinctive numbers (including
CUSIP numbers) of the Bonds of the subseries to be redeemed, and
that on said date there will become due and
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<PAGE> 33
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payable on each of said Bonds the principal amount thereof to be
redeemed, interest accrued thereon to the redemption date and the
premium, if any, thereon (such premium to be specified) and that
thereafter interest ceases to accrue and that the holders of said
Bonds shall cease to be entitled to any lien, benefit or security
hereunder.
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Section 3.07. Purchase of Bonds in Lieu of
Redemption . When Bonds are called for redemption pursuant to
Section 3.06(d)(i), (ii), (iii) or (iv), or, but only with the
prior written approval of the Bond Insurer, Section 3.06(c),
the Borrower may purchase some of or all of the Bonds called for
redemption if it (or the Remarketing Agent) gives a written notice
by Electronic Means to the Trustee, the Remarketing Agent and the
Auction Agent, if applicable, not later than the day before the
redemption date that it wishes to purchase the Bonds, the principal
amount of which is specified in the notice at a Purchase Price
equal to the redemption price, and furnishes the Trustee sufficient
remarketing proceeds (or as otherwise permitted in Exhibit A)
in sufficient time for the Trustee to make the purchase on the
redemption date. The Trustee will purchase the Bonds pursuant to
this Section only as provided in Exhibit A. Any such purchase
of Bonds by the Borrower shall not be deemed to be a payment or
redemption of the Bonds or any portion thereof and such purchase
shall not operate to extinguish or discharge the indebtedness
evidenced by such Bonds.
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Section 3.08. Investment of Moneys in Funds
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(a)
Investment . The proceeds of the Subseries B
Bonds and the Subseries C Bonds shall be invested as provided
by the Escrow Agreement and Section 3.01(a)(ii)(2) until the
respective Escrow Mandatory Purchase Dates, which escrow
investments are hereby determined to be Permitted Investments.
Pending their use under this Agreement, moneys in the Bond Fund and
Project Fund, including the proceeds of the Subseries A Bonds
deposited in the Bond Fund and Project Fund on the Issue Date and
the proceeds of the Subseries B Bonds and Subseries C
Bonds deposited in the Project Fund on the respective Escrow
Mandatory Purchase Dates, shall be invested by the Trustee, upon
the written direction of the Borrower, in one or more Permitted
Investments described in subsection (b), with maturities or
subject to redemption or put at the option of the Trustee at or
before the time when such moneys are required to be available if no
Event of Default known to the Trustee then exists. If an Event of
Default known to the Trustee exists, the Trustee may, but shall be
under no obligation to make any such investment, but its holding
and investment of such moneys shall be subject to such actual or
imputed yield restrictions as Bond Counsel may determine are
necessary to preserve the exemption of interest on the Bonds from
federal income taxation. Any interest realized on, and any profit
realized upon the sale or other disposition of, investments in the
Bond Fund and the Project Fund shall be credited to the Bond Fund
or the Project Fund, as the case may be, and any loss shall be
charged thereto. The Trustee shall have no liability for any loss
on any such investment made pursuant to direction of the Borrower
as provided above, and shall be under no duty to invest funds held
hereunder in the absence of such written investment instructions
from the Borrower as provided above.
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(b)
Permitted Investments . Permitted Investments are (in
addition to the escrow investment as provided by clause (a) of this
Section):
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(i) obligations
issued or guaranteed by the United States;
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(ii) dollar-denominated
certificates of deposit of, banker's acceptances drawn on and
accepted by and interest-bearing deposit accounts of a bank or
trust company organized in the United States which has a
rating on its short-term certificates of deposit on the date of
purchase of "A-1" or "A-1+" by Standard & Poor's Ratings
Group ("S&P") and "P-1" by Moody's Investors Services, Inc.
("Moody's") and which mature within 360 days of their date of
purchase;
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(iii) investment
agreements, repurchase agreements or other forms of investment
approved in writing by the Bond Insurer;
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(iv) commercial
paper rated at least "A-1+" by S&P and "P-1" by Moody's at the
time of the acquisition thereof and maturing within 270 days
after the acquisition thereof; and
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(v) shares
of any so-called money market fund that rated "AAAm" or "AAAm-G" or
better by S&P;
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provided, however, that permitted investments shall not include
the following investments except to the extent that the Trustee is
advised by Bond Counsel that such investment would not result in a
"prohibited payment," as defined in applicable regulations under
Section 103(c)(6) of the Internal Revenue Code of 1954 or
other applicable regulations:
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(A) obligations
issued or guaranteed by the United States or any agency of the
United States, certificates of deposit and banker's
acceptances, in each case with yields lower than the yield
available on comparable obligations offered by the
United States Treasury;
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(B) interest-bearing
bank accounts exceeding an aggregate amount of $25,000 at any time,
taking into account all funds invested under this Agreement;
and
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(C) repurchase
agreements and shares of any money market fund which has more than
10% of its assets invested in repurchase agreements.
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Any investment may be
purchased from or through the Trustee (or any of its affiliates) or
any Bondowner or any affiliate of any of them.
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Section
3.09. Tax-exempt Status of Bonds . The Borrower will
perform its obligations and agreements contained in the Tax
Regulatory Agreement as if they were set forth herein. The
Authority will cooperate with the Bondowners to the extent deemed
necessary or permitted by
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<PAGE> 35
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law in the opinion of Bond Counsel to
the Authority in order to preserve the tax-exempt status of the
Bonds.
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Section 3.10. Rebate . A Rebate Fund (and therein
a "Rebate Income Account" and a "Rebate Principal Account") is
hereby established with the Trustee for the account of the
Borrower. The Borrower covenants to pay when due any rebate due to
the United States under IRC Section 148(f) in accordance
with the requirements set out by the Tax Regulatory Agreement. The
Trustee shall not be responsible for compliance by the Borrower
with the requirements of IRC Section 148(f).
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Section 3.11. Bond Insurance Payment Procedures .
As long as the Bond Insurance Policy shall be in full force and
effect, the Borrower, the Trustee and any Paying Agent agree to
comply with the following provisions:
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(a) At
least one day prior to any date on which principal or interest is
due on the Bonds the Trustee will determine whether there will be
sufficient funds in the Bond Fund to pay the principal of or
interest on the Bonds on such date. If the Trustee determines that
there will be insufficient funds in such Fund, the Trustee shall so
notify the Bond Insurer. Such notice shall specify the amount of
the anticipated deficiency, the Bonds to which such deficiency is
applicable and whether such Bonds will be deficient as to principal
or interest, or both. If the Trustee has not so notified the Bond
Insurer at least one day prior to a payment date, the Bond Insurer
will make payments of principal or interest due on the Bonds on or
before the first day next following the date on which the Bond
Insurer shall have received notice of nonpayment from the
Trustee.
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(b) The
Trustee or Paying Agent shall, after giving notice to the Bond
Insurer as provided in (a) above, make available to the Bond
Insurer and, at its direction, to The Bank of New York Trust
Company, as insurance trustee for the Bond Insurer or any successor
insurance trustee (the "Insurance Trustee"), the registration books
maintained by the Trustee or Paying Agent, and the Trustee and the
Authority will provide all records relating to the funds maintained
under this Agreement.
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(c) The
Trustee or Paying Agent shall provide the Bond Insurer and the
Insurance Trustee with a list of registered owners of Bonds
entitled to receive principal or interest payments from the Bond
Insurer under the terms of the Bond Insurance Policy and shall make
arrangements with the Insurance Trustee (i) to mail checks or
drafts to the registered owners of Bonds entitled to receive full
or partial interest payments from the Bond Insurer and (ii) to
pay principal upon Bonds surrendered to the Insurance Trustee by
the registered owners of Bonds entitled to receive full or partial
principal payments from the Bond Insurer.
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(d) The
Trustee shall, at the time of notice to the Bond Insurer pursuant
to (a) above, notify registered owners of Bonds entitled to receive
the payment of principal or interest thereon from the Bond Insurer
(i) as to the fact of such entitlement, (ii) that the
Bond Insurer will remit to them all or a part of the interest
payments next coming due upon proof of Bondholder entitlement to
interest payments and delivery to the Insurance Trustee, in form
satisfactory to the Insurance Trustee, of an appropriate assignment
of the
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registered owner's right to payment, (iii) that should they
be entitled to receive full payment of principal from the Bond
Insurer, they must surrender their Bonds (along with an appropriate
instrument of assignment in form satisfactory to the Insurance
Trustee to permit ownership of such Bonds to be registered in the
name of the Bond Insurer) for payment to the Insurance Trustee, and
not the Trustee or Paying Agent, and (iv) that should they be
entitled to receive partial payment of principal from the Bond
Insurer, they must surrender their Bonds for payment thereon first
to the Trustee or Paying Agent, who shall note on such Bonds the
portion of the principal paid by the Trustee or Paying Agent, and
then, along with an appropriate instrument of assignment in form
satisfactory to the Insurance Trustee, to the Insurance Trustee,
which will then pay the unpaid portion of principal.
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(e) In
the event that the Trustee or Paying Agent has notice that any
payment of principal of or interest on a Bond which has become due
for payment and which is made to a Bondowner has been deemed a
preferential transfer and theretofore recovered from its registered
owner pursuant to the United States Bankruptcy Code by a
trustee in bankruptcy in accordance with the final, nonappealable
order of a court having competent jurisdiction, the Trustee shall,
at the time the Bond Insurer is notified pursuant to (a) above,
notify all registered owners that in the event that any registered
owner's payment is so recovered, such registered owner will be
entitled to payment from the Bond Insurer to the extent of such
recovery if sufficient funds are not otherwise available, and the
Trustee or Paying Agent shall furnish to the Bond Insurer its
records evidencing the payments of principal of and interest on the
Bonds which have been made by the Trustee or Paying Agent and
subsequently recovered from registered owners and the dates on
which such payments were made.
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(f) In
addition to those rights granted the Bond Insurer under this
Agreement, the Bond Insurer shall, to the extent it makes payment
of principal of or interest on Bonds, become subrogated to the
rights of the recipients of such payments in accordance with the
terms of the Bond Insurance Policy, and to evidence such
subrogation (i) in the case of subrogation as to claims for
past-due interest, the Trustee or Paying Agent, if any, shall note
the Bond Insurer's rights as subrogee on the registration books
maintained by the Trustee or Paying Agent upon receipt from the
Bond Insurer of proof of the payment of interest thereon to the
registered owners of the Bonds, and (ii) in the case of
subrogation as to claims for past-due principal, the Trustee or
Paying Agent shall note the Bond Insurer's rights as subrogee on
the registration books maintained by the Trustee or Paying Agent
upon surrender of the Bonds by the registered owners thereof
together with proof of the payment of principal thereof.
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Section 3.12. Rights of Bond Insurer .
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(a) Notwithstanding
Section 6.03, for so long as the Bond Insurance Policy shall
be in full force and effect, the Bonds shall not be subject to
acceleration upon the occurrence of an Event of Default without the
prior written consent of the Bond Insurer.
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(b) For
so long as the Bond Insurance Policy shall be in full force and
effect, the Trustee shall promptly give notice to the Bond Insurer
at its address as specified in
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this Section of the occurrence of any Event of Default as
defined in Section 6.01 of which it has knowledge or the
occurrence of any event of which it has knowledge which, with the
passage of time, would become an Event of Default.
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(c) To
the extent that this Agreement confers upon or gives or grants to
the Bond Insurer any right, remedy or claim under or by reason of
this Agreement, the Bond Insurer is hereby explicitly recognized as
being a third-party beneficiary hereunder and may enforce any such
right, remedy or claim conferred, given or granted hereunder.
Nothing in this Agreement expressed or implied is intended or shall
be construed to confer upon, or to give or grant to, any person or
entity, other than the Authority, the Borrower, the Trustee, the
Bond Insurer, the Paying Agent and the registered owners of the
Bonds, any right, remedy or claim under or by reason of this
Agreement or any covenant, condition or stipulation hereof, and all
covenants, stipulations, promises and agreements in this Agreement
contained by and on behalf of the Authority or the Borrower shall
be for the sole and exclusive benefit of the Authority, the
Borrower, the Trustee, the Bond Insurer, the Paying Agent and the
registered owners of the Bonds.
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(d) Any
provision of this Agreement expressly recognizing or granting
rights in or to the Bond Insurer may not be amended in any manner
which affects the rights of the Bond Insurer hereunder without the
prior written consent of the Bond Insurer.
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(e) The
Trustee or Paying Agent may be removed at any time, at the request
of the Bond Insurer, for any breach of the trust set forth herein.
The Bond Insurer shall receive prior written notice of any Trustee
or Paying Agent resignation. Any successor Paying Agent, if
applicable, shall not be appointed unless the Bond Insurer approves
such successor in writing. Notwithstanding any other provision of
this Agreement, no removal, resignation or termination of the
Trustee or Paying Agent shall take effect until a successor,
acceptable to the Bond Insurer, shall be appointed. The Bond
Insurer's consent shall be required for removal of the Trustee or
Paying Agent and selection and appointment of any successor trustee
or paying agent.
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(f) For
as long as the Bond Insurance Policy shall be in full force and
effect, the registration books maintained by the Trustee or Paying
Agent shall be available at any reasonable time to the Bond Insurer
and its designated agent for inspection and copying.
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(g) Notwithstanding
anything in this Agreement to the contrary, for so long as the Bond
Insurance Policy shall be in full force and effect and provided
that the Bond Insurer shall not have defaulted on its obligations
under the Bond Insurance Policy, (i) the Bond Insurer shall be
deemed to be the sole owner of all Bonds, for all purposes of
Article VI, Section 7.01(d) and Section 8.02(b) of
this Agreement, (ii) the Bond Insurer shall be entitled to
control and direct the enforcement of all rights and remedies
granted to the Trustee, and (iii) the Bond Insurer shall be
deemed to be the sole owner of all Bonds at all times for the
purpose of giving consent when consent of the Bondowners is
required by this Agreement, other than for the purpose of making
amendments which, pursuant to Section 10.01 of this Agreement,
require the consent of the individual owners of each Bond which
would be affected by such change.
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(h) Any
reorganization or liquidation plan with respect to the Borrower
must be acceptable to the Bond Insurer. In the event of any
reorganization or liquidation, the Bond Insurer shall have the
right to vote on behalf of all Bondowners absent a default by the
Bond Insurer under the Bond Insurance Policy.
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(i) The
provisions contained in this Section and the Bond Insurer's rights
to consents, approvals and waivers, but not its rights to receive
notices, shall be suspended during the continuation of any of the
following: (i) a Bond Insurer Event of Insolvency, except to
the extent of payments made by the Bond Insurer under the Bond
Insurance Policy which are not voidable preferences; or
(ii) continuing failure of the Bond Insurer to pay in
accordance with the Bond Insurance Policy.
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(j) The
Trustee shall not take the Bond Insurance Policy into account when
determining whether the Bondowners are adversely affected or
benefited by actions taken under this Agreement.
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(k) The
Bond Insurer shall be furnished with information or given notice,
addressed to it at Ambac Assurance Corporation, One State Street
Plaza, New York, New York 10004 (Attention: Surveillance
Department-Utilities), or such other address as it shall have
furnished to the person giving notice, as follows:
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(i) The
Borrower shall furnish:
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(A) as
soon as practicable after the filing thereof, a copy of any annual
or quarterly financial statement of the Borrower and a copy of any
annual audit and annual report of the Borrower; and
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(B) such
additional information it may reasonably request.
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(ii) The
Trustee shall notify the Bond Insurer of any failure of the
Borrower to provide notices, certificates and other information
required to be provided by the Borrower hereunder, and shall
furnish to the Bond Insurer a copy of any notice to be given to the
registered owners of the Bonds, including, without limitation,
notice of any redemption of or defeasance of the Bonds, any Mode
Change Notice and any certificate rendered pursuant to this
Agreement relating to the security for the Bonds.
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(iii) The
Borrower will permit the Bond Insurer to discuss the affairs,
finances and accounts of the Borrower or any information the Bond
Insurer may reasonably request regarding the security for the Bonds
with appropriate officers of the Borrower. The Trustee, the
Authority or the Borrower, as appropriate, will permit the Bond
Insurer to have access to the Project and have access to and to
make copies of all books and records in their respective control
relating to the Bonds at any reasonable time.
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(iv) The
Bond Insurer shall have the right to direct an accounting at the
Borrower's expense, and the Borrower's failure to comply with such
direction within thirty (30) days after receipt of written
notice of the direction from the
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<PAGE> 39
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Bond Insurer shall be deemed a default hereunder; provided,
however, that if compliance cannot occur within such period, then
such period will be extended so long as compliance is begun within
such period and diligently pursued, but only if such extension
would not materially adversely affect the interests of any
registered owner of the Bonds.
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(v) Notwithstanding
any other provision of this Agreement, the Trustee shall
immediately notify the Bond Insurer if at any time there are
insufficient moneys to make any payments of principal and/or
interest as required and immediately upon the occurrence of any
Event of Default known to the Trustee hereunder.
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(vi) The
Bond Insurer shall be included as a party to be notified under the
Continuing Disclosure Agreement.
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(l) The
Borrower must maintain a liquidity facility with terms, and from a
provider, acceptable to the Bond Insurer as a condition to a
conversion to or being in any Interest Mode that obligates the
Borrower to pay the Purchase Price of the Bonds upon the mandatory
tender thereof if remarketing proceeds are insufficient for such
purpose.
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(m) The
Escrow Agreement shall not be repealed, revoked, rescinded,
altered, amended or supplemented in whole or in part, nor shall any
of its provisions be waived by any party thereto, without the prior
written consent of the Bond Insurer.
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Section 3.13. Continuing Disclosure . The
Borrower and the Trustee hereby covenant and agree that each will
comply with and carry out all of the provisions of the Continuing
Disclosure Agreement applicable to it. The Authority shall have no
liability to the owners of the Bonds or any other person with
respect to such disclosure matters. Notwithstanding any other
provision of this Agreement, failure of the Borrower or the Trustee
to comply with the Continuing Disclosure Agreement shall not be
considered an Event of Default; however, the Trustee may (and at
the request of the owners of at least 25% aggregate principal
amount of Outstanding Bonds, shall), or any owner (including a
Beneficial Owner) of Bonds may, seek specific performance of the
Borrower's obligations to comply with its obligations under the
Continuing Disclosure Agreement or this Section 3.13 and not
for money damages in any amount.
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ARTICLE IV
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THE PROJECT
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Section
4.01. Project Fund . A Project Fund is hereby
established with the Trustee for the account of the Borrower. The
Borrower shall be deemed to have executed and delivered a Loan
Request Certificate with respect to the Subseries A Bonds on
the Issue Date, whereupon the proceeds thereof (except accrued
interest, if any, which shall be deposited in the Bond Fund, and
$187,500 in respect of the Authority's Service Charge and
$294,124.05 in respect of the Bond Insurance Policy premium, which
shall be paid directly to the Authority and the Bond Insurer,
respectively, from the proceeds of the Subseries A Bonds) shall be
deposited in the
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Project Fund. Upon the execution and
delivery by the Borrower of Loan Request Certificates with respect
to the Subseries B Bonds and the Subseries C Bonds,
respectively, the proceeds of the sale of the Subseries B
Bonds and the Subseries C Bonds, as the case may be (except
accrued interest, if any, which shall be deposited in the Bond Fund
on the Issue Date), shall be promptly transferred, together with
investment earnings thereon, by the Escrow Agent to the Trustee and
deposited in the Project Fund (except as otherwise provided by
Section 3.01(a)(iv)) and shall constitute the loan of the
proceeds of such subseries by the Authority to the Borrower. The
Borrower shall have no repayment obligation with respect to the
proceeds of any subseries of the Bonds that are Escrow Bonds until
the proceeds of such subseries have been loaned to the Borrower and
deposited in the Project Fund. The moneys in the Project Fund and
any investments held as part of such Fund shall be held in trust
and, except as otherwise provided in this Agreement, shall be
applied by the Trustee solely to the payment or reimbursement of
Project Costs in accordance with Section 4.02.
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Section 4.02. Disbursements From Project Fund .
The Trustee will pay from the Project Fund established under
Section 4.01 upon and as directed by written instructions of
the Borrower, the costs of issuing the Bonds, including the fees
and expenses of Bond Counsel and the Authority and any recording or
similar fees, and the fees and expenses of the Trustee in
connection with the issue of the Bonds and interest on the Bonds
not otherwise provided for incurred prior to the completion of the
Project in accordance with this Agreement. Other disbursements from
the Project Fund shall be made by the Trustee to pay directly or to
reimburse the Borrower for Project Costs or indebtedness incurred
to pay Project Costs, as directed by requisitions signed on behalf
of the Borrower by the Borrower Representative setting forth the
amount of the payment or reimbursement due, the nature of the goods
or other property or services received in reasonable detail, and
the name and address of the person to whom payment or reimbursement
is due. Each requisition shall include a certificate signed on
behalf of the Borrower by the Borrower Representative that
(a) after giving effect to the payment of the requisition, the
use of all funds disbursed from the Project Fund complies with the
limitations contained in the Tax Regulatory Agreement;
(b) such payment or reimbursement is for Project Costs and the
obligations have not been the basis for a prior requisition which
has been paid; (c) no Event of Default hereunder and no event
or condition which, after notice or lapse of time or both, would
become an Event of Default hereunder, exists; and (d) the
payment or reimbursement requested by the requisition is due for
work actually performed or materials or property actually supplied
prior to the date of the requisition.
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Section 4.03. Certificate of Completion .
Completion of the Project shall be evidenced by the filing with the
Trustee of a certificate signed by the Borrower Representative
stating that the Project has been substantially completed and paid
for. The date of filing of such certificate shall be treated as the
close of a "Rebate Year" for purposes of Section 3.10. The
balance, if any, in the Project Fund after any transfer to the
Rebate Fund required by Section 3.10 shall be transferred to
the Bond Fund to be applied in accordance with
Section 3.06(a).
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Section 4.04. Carrying Out the Project . The
Borrower will diligently carry out the Project. Contracts for
carrying out the Project and purchases in connection therewith
shall be made by the Borrower in its own name. To the extent that
the Project Fund is insufficient to complete the Project, the
Borrower shall use its best efforts to complete the Project at its
own expense.
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Section 4.05. Compliance With Law . In the
maintenance, improvement and operation of the Project, the Borrower
will comply in all material respects with all applicable building,
zoning, subdivision, environmental protection, sanitary and safety
and other land use laws, rules and regulations and will not permit
any nuisance thereon. It shall not be a breach of this section if
the Borrower fails to comply with such laws, rules and regulations
during any period in which the Borrower shall in good faith be
diligently contesting the validity thereof.
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Section 4.06. Disposition . Without the prior
written consent of the Trustee and the Authority, the Borrower will
not sell, lease or otherwise dispose of, or place any other person
in possession of, the real property included in the Project or any
portion thereof or interest therein or make any material change in
the purposes for which the Project is used.
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Section 4.07. Current Expenses . The Borrower
will pay all costs and expenses of operation, maintenance and
upkeep of the Project, including, without limitation, all taxes,
excises and other governmental charges lawfully levied thereon or
with respect to the Borrower's interest therein or use thereof. It
shall not be a breach of this Section if the Borrower fails to pay
any such taxes or charges during any period in which the Borrower
shall in good faith be diligently contesting the validity or amount
thereof, unless the procedures applicable to such contest require
payment thereof and proceedings for their refund or
abatement.
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Section 4.08. Repair . The Borrower will keep the
Project in good order, repair and condition, damage from casualty
expressly not excepted, and not permit or commit waste thereon. The
Borrower may at its own expense alter, remodel or improve the
Project, provided that such alteration or remodeling shall not
damage the basic structure thereof or materially decrease its value
or cause the Project to violate zoning or other land use
restrictions in any material respect.
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Section 4.09. Insurance .
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(a)
Coverage . The Borrower will maintain insurance
against liability for injuries to and death of persons in the
minimum amount of $1,000,000 per occurrence and for damages to
property in the minimum amount of $500,000 per occurrence. Any such
policy may exclude the first $25,000 of loss so that the Borrower
is its own insurer to that extent. Substitutions for or omissions
from the required coverage may be made with the consent of the
Trustee.
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(b)
Policies . A duplicate copy or certificate of each
policy of insurance shall be furnished to the Trustee and, at its
request, to the Authority. All insurance carried under this Section
shall be in the appropriate New Hampshire standard form and
shall be with responsible and reputable companies authorized to
transact business in New Hampshire reasonably satisfactory to
the Trustee. The parties acknowled
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