MASTER LOAN AGREEMENT
EXHIBIT
10.1
EXECUTION
COPY
MLA No.
RX0785
THIS MASTER LOAN AGREEMENT
(this “Agreement”) is
entered into as of June 29, 2009, between CONNECTICUT WATER SERVICE, INC.,
a Connecticut corporation (the “Company”), and CoBANK, ACB, a federally
chartered instrumentality of the United States (“CoBank”).
BACKGROUND
From time to time, the Company may
obtain loans and other financial accommodations from CoBank. In order to
facilitate the making of such loans and other financial accommodations, the
parties are entering into this Agreement.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE
1
DEFINITIONS
AND RULES OF INTERPRETATION
SECTION
1.01. Definitions. Capitalized
terms used in this Agreement and defined in Exhibit A hereto shall have the
meanings set forth in that Exhibit.
SECTION
1.02. Rules of Interpretation. The
rules of interpretation set forth in Exhibit A shall apply to this
Agreement.
ARTICLE
2
THE
SUPPLEMENTS
SECTION
2.01. Promissory Notes and
Supplements. In the event the Company desires to borrow from CoBank and
CoBank is willing to lend to the Company, or in the event the parties desire to
consolidate any existing loans hereunder, the parties will enter into a
promissory note and supplement hereto (each a "Promissory Note and
Supplement"). Each Promissory Note and Supplement will set forth CoBank’s
commitment to make a loan or loans to the Company, the amount of the loan(s),
the purpose of the loans(s), the interest rate or interest rate options
applicable to the loan(s), the Company's promise to repay the loans, and any
other terms and conditions applicable to the particular loan(s). Each loan will
be governed by the terms and conditions set forth in this Agreement and in the
Promissory Note and Supplement relating to that loan. In the absence of a
Promissory Note and Supplement hereto duly executed by CoBank, CoBank shall have
no obligation to make a loan to the Company under this Agreement.
SECTION 2.02.
Notice and Manner of Borrowing New
Loans. Except as otherwise provided in a Promissory Note and Supplement:
(A) loans will be made available on any Business Day upon the telephonic or
written request of an authorized employee of the Company; (B) requests for loans
must be received by 12:00 noon Company’s local time at least 5 Business Days
before the date on which the loan is to be made; and (C) loans will be made
available by wire transfer of immediately available funds to such account or
accounts as may be authorized by the Company on forms supplied by
CoBank.
SECTION
2.03. Method of Payment. The Company
shall make all payments to CoBank under this Agreement and each Promissory Note
and Supplement hereto by wire transfer of immediately available funds, by check,
or, if specified by separate agreement between the Company and CoBank, by
automated clearing house (ACH) or other similar cash handling
processes. Wire transfers shall be made to ABA No. 000000000 for
advice to and credit of "CoBANK" (or to such other account as CoBank may direct
by notice). The Company agrees to give CoBank telephonic notice no later than
12:00 noon Company’s local time of its intent to pay by wire, and funds received
after 3:00 p.m. Company’s local time shall be credited on the next Business
Day. Checks shall be mailed to XxXXXX, Xxxxxxxxxx 000, Xxxxxx,
Xxxxxxxx 00000-0000 (or to such other place as CoBank may direct by
notice). Credit for payment by check will not be given until the
latter of the next Business Day after receipt of the check or the Business Day
on which CoBank receives immediately available funds.
SECTION
2.04. Security. The
Company's obligations hereunder and under each other Loan Document to which the
Company is a party (whether executed contemporaneously herewith or at a later
date) shall be secured by a statutory first priority lien on all equity which
the Company may now own or hereafter acquire in CoBank and all proceeds thereof.
In addition, the Company’s obligations under each Promissory Note and Supplement
shall be secured to the extent (if any) set forth in the Promissory Note and
Supplement. The Company agrees to take such steps (including the execution and
recording of such instruments and documents) as CoBank may from time to time
reasonably require in order to enable CoBank to obtain, perfect and maintain its
Lien on the collateral for the loans.
ARTICLE
3
CONDITIONS
PRECEDENT
SECTION
3.01. Conditions Precedent to the Initial
Promissory Note and Supplement Hereto. CoBank's obligation to make a loan
or loans under the initial Promissory Note and Supplement hereto, is subject to
the following conditions precedent, which, in the case of instruments and
documents, must be in form and content reasonably acceptable to
CoBank:
(A) This Agreement. CoBank shall
have received a duly executed original of this Agreement.
(B) Secretary’s
Certificate. CoBank shall have received an original
certificate of the Secretary of the Company dated as of the date hereof (or as
of another date reasonably acceptable to CoBank), attaching and certifying as to
each of the following, all of which must be in form and content reasonably
acceptable to CoBank: (1) the Certificate of Incorporation of the Company,
certified by the Connecticut Secretary of State within 30 days of the date
hereof; (2) the Bylaws of the Company; and (3) a certificate of the Connecticut
Secretary of State issued within 30 days of the date hereof attesting to the
legal existence of the Company in the State of
Connecticut.
(C) Delegation and Wire Transfer
Form. CoBank shall have received an original, duly completed
and executed delegation, wire, and electronic authorization form.
SECTION
3.02. Conditions to Each Supplement.
CoBank’s obligation to make the initial loan under each Promissory Note
and Supplement hereto (including the initial Promissory Note) and Supplement
hereto) is subject to the following conditions precedent (which in the case of
instruments and documents, must be originals and in form and content reasonably
acceptable to CoBank):
(A) Supplement. CoBank shall have
received a duly executed Promissory Note and Supplement and all Loan Documents
required by the Promissory Note and Supplement.
(B) Evidence of Authority. CoBank
shall have received copies, certified by the Secretary of the Company as of the
date of the Promissory Note and Supplement (or as of another date approved by
CoBank), of such board resolutions, evidence of incumbency, and other evidence
as CoBank may reasonably require that the Promissory Note and Supplement and all
Loan Documents executed in connection therewith have been duly authorized,
executed and delivered.
(C) Consents and Approvals. CoBank
shall have received such evidence as CoBank may reasonably require that all
consents and approvals referred to in Section 4.10 hereof, have been obtained
and are in full force and effect.
(D) Fees and Other Charges. CoBank
shall have received all fees or other charges provided for herein or in the
Promissory Note and Supplement.
(E) Application. CoBank shall have
received a duly executed and completed application for the credit and all
instruments and documents required by the application for credit.
(F) Insurance. CoBank shall have
received such evidence as CoBank may reasonably require that the Company is in
compliance with Section 5.03 hereof.
(G) Security. If a Promissory Note
and Supplement provides for additional security, CoBank shall have received: (1)
such evidence as it shall reasonably require that the Company has taken all
steps (including the execution and/or recording of such mortgages, deeds of
trust, security agreements, UCC-1 financing statements, and other instruments
and documents) required by CoBank under Section 2.04 hereof in order for CoBank
to obtain, perfect and/or maintain its Lien on the Collateral; and (2) such Lien
searches as CoBank may reasonably require demonstrating that there are no other
Liens on the Collateral.
(H) Opinion of Counsel. CoBank
shall have received an opinion of counsel to the Company, which counsel and
opinion must be reasonably acceptable to CoBank.
SECTION
3.03. Conditions to Each Loan.
CoBank’s obligation under each Promissory Note and Supplement (including
the initial Promissory Note(s) and Supplement(s) hereto) to make any loan to the
Company thereunder, including the initial loan, is subject to the conditions
precedent that: (A) no Default or Event of Default shall have occurred and be
continuing; (B) each of the representations and warranties of the Company set
forth herein, in the Promissory Note and Supplement, and in all other Loan
Documents shall be true and correct as of the date of the loan; and
(C) the Company shall have satisfied all conditions and requirements set forth
in the Promissory Note and Supplement relating to that loan.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES
To induce CoBank to enter into each
Promissory Note and Supplement and make each loan thereunder, the Company
represents and warrants that:
SECTION
4.01. Organization, Etc. The
Company: (A) is a publically traded corporation listed on the NASDAQ; (B) is
duly organized and validly existing under the Laws of the State of Connecticut;
(C) has the power and authority to own its assets and to transact the business
in which it is engaged or proposes to engage and to enter into and perform the
Loan Documents; and (D) is duly qualified to do business in, and is in good
standing, where applicable, under the Laws of, each jurisdiction in which such
qualification is required.
SECTION
4.02. Loan Documents. This
Agreement, the Promissory Notes and Supplements, and all other Loan Documents:
(1) have been duly authorized, executed and delivered by the Company and each
other Person that is a party thereto; and (2) create legal, valid and binding
obligations of the Company and each other Person that is a party thereto which
are enforceable in accordance with their terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency or similar Laws
affecting creditors’ rights generally.
SECTION
4.03. Operation of Business. The
Company and each Subsidiary possesses all licenses, certificates, permits,
authorizations, approvals, franchises, patents, copyrights, trademarks, trade
names, rights thereto, or the like which are material to the operation of its
business or required by Law, and neither the Company nor any Subsidiary is in
violation of the rights of others with respect thereto. Without
limiting the foregoing, CWC has all certificates of convenience and necessity
and other governmental authorizations required by the Connecticut Department of
Public Utility Control (the “CPUC”), other
applicable governmental authorities, and Law in order for it to operate its
business as presently operated and as proposed to be operated.
SECTION
4.04. Litigation. Except as disclosed in
any application submitted in connection with the Promissory Note and Supplement,
there are no pending or, to the knowledge of the Company, threatened actions or
proceedings against or affecting the Company or any Subsidiary before any court,
governmental agency, mediator, arbitrator, or the like which could, in any one
case or in the aggregate, if adversely decided, have a Material Adverse
Effect.
SECTION
4.05. Subsidiaries.
(A) Schedule 4.05
contains complete and correct lists of the Company’s: (1) Subsidiaries, showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital stock or
similar equity interests outstanding owned by the Company and each other
Subsidiary, and (2) Affiliates, other than Subsidiaries.
(B) All
of the outstanding shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 4.05 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any
Lien.
(C) Each
Subsidiary identified in Schedule 4.05 is a corporation or other legal
entity duly organized, validly existing and in good standing, where applicable,
under the laws of its jurisdiction of organization, and is duly qualified as a
foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law. Each
such Subsidiary has the corporate or other power and authority to own or hold
under lease the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to transact.
(D) No
Subsidiary is a party to, or otherwise subject to any legal restriction or any
agreement (other than customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
SECTION
4.06. Financial Statements. The
Financial Statements are complete and correct and fairly present the financial
condition of the Company and its consolidated Subsidiaries, and the results of
its and their operations as of the date and for the periods covered by such
Financial Statements, all in accordance with GAAP consistently applied (or the
appropriate standards of the regulatory agency having jurisdiction over the
Company). There are no liabilities known to the Company which are material but
not reflected in the Financial Statements or in the notes thereto. Since the
date of the most recent annual Financial Statement, there has been no material
adverse change in the condition, financial or otherwise, business or operations
of the Company.
SECTION
4.07. Ownership and Liens. The
Company and its Subsidiaries have title to all of its and their properties, real
and personal, including the property reflected in the Financial Statements
(other than any property disposed of in the ordinary course of business), and,
to its knowledge (without having conducted a lien search to determine if any
involuntary or unauthorized Liens have been filed) none of its or their
properties are subject to any Lien, except such as may be permitted under
Section 6.02 of this Agreement.
SECTION
4.08. Compliance with
Law. The Company and its Subsidiaries are operating its and
their businesses in compliance in all material respects with all applicable Laws
(including all Laws relating to the environment).
SECTION
4.09. Environment. Except as
disclosed in any application submitted in connection with the Promissory Note
and Supplement: (A) all property owned or leased by the Company or any
Subsidiary or proposed to be acquired with the proceeds of the Promissory Note
and Supplement, and all of its and their operations are in compliance in all
material respects with all Laws relating to the environment; (B) no property
owned or leased by the Company or any Subsidiary is being used, or to its
knowledge, has been used for the disposal, treatment, processing or handling of
hazardous waste or materials (as defined under any applicable environmental
Law); (C) except in the ordinary course of business of the Company and each
Subsidiary and in material compliance with all applicable Laws relating to the
environment, the Company has not used or stored hazardous wastes or materials on
its properties; (D) no investigation, claim, litigation, proceedings, order,
judgment, decree, settlement, Lien or the like with respect to any environmental
matter is in existence or, to the Company’s knowledge, proposed, threatened, or
anticipated with respect to the properties or operations of the Company or any
Subsidiary; and (E) to the Company’s knowledge, no environmental
contamination or condition currently exists on any property of the Company or
any Subsidiary which could delay the sale or other disposition of such property
or could have, or already has had, an adverse effect on the value of such
property.
SECTION
4.10. Consents and Approvals.
Except for such as shall have been obtained and are in full
force and effect, no consent, permission, authorization, order or license of any
governmental authority or of any party to any agreement to which the Company or
any Subsidiary is a party or by which it or any of its property may be bound or
affected, is necessary in connection with: (A) the execution, delivery,
performance or enforcement of the Loan Documents; and (B) the activity being
financed by the Promissory Note and Supplement.
SECTION
4.11. Conflicting
Agreements. None of the Loan Documents conflicts with, or
constitutes (with or without the giving of notice and/or the passage of time
and/or the occurrence of any other condition) a default under, any other
agreement to which the Company or any Subsidiary is or expects to become a party
or by which the Company or any Subsidiary or any of its or their properties may
be bound, and do not conflict with any provision of the articles of
incorporation, bylaws, or other organizational documents of the Company or any
Subsidiary.
SECTION
4.12. Compliance and No Default. The
Company and its Subsidiaries are operating their businesses in compliance with
all of the terms of the Loan Documents, and no Default or Event of Default
exists.
SECTION
4.13. Applications. Each
representation and warranty and all information set forth in the application
submitted in connection with, or to induce CoBank to enter into, the Promissory
Note and Supplement is correct in all material respects.
SECTION
4.14. Budgets, Etc. All
budgets, projections, feasibility studies, and other documentation submitted by
or on behalf of the Company to CoBank in connection with, or to induce CoBank to
enter into, the Promissory Note and Supplement, are based upon assumptions that
are reasonable and realistic, and no fact has come to light, and, to the
knowledge of the Company, no event has occurred, which would cause any material
assumption made therein to not be reasonable or realistic.
SECTION
4.15. Taxes. The Company
and each of its Subsidiaries has timely and properly filed all tax returns
(federal, state and local) that were required to be filed, and has paid any
taxes, assessments, and other governmental charges, including interest and
penalties. There are no audits pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary.
SECTION
4.16. Water Rights. CWC: (A) has
water rights with such amounts, priorities and qualities as are necessary to
adequately serve its customers; (B) controls, owns, or has access to all such
water rights free and clear of the interests of any third party; and (C) has not
suffered or permitted any transfer or encumbrance of such water rights, or any
of them, and has not done any act or thing which would impair or cause the loss
of any such water rights.
SECTION
4.17. Facilities. CWC’s utility
facilities: (A) meet present demand in all material respects; (B) are
constructed in a good and professional manner; (C) are in good working order and
condition; and (D) comply in all material respects with all applicable
Laws.
SECTION
4.18. Rate Matters. (A) CWC’s rates
for water are regulated by, and have been approved by, the CPUC; and (B) there
is no pending and, to the Company's knowledge, threatened action or proceeding
before the CPUC, any court, or any other governmental authority, the objective
or result of which is or could be to: (1) reduce or otherwise adversely change
any of CWC’s rates for the provision of water and/or wastewater services, except
as contemplated pursuant to CPUC Docket No. 06-07-08RE01, Application of The
Connecticut Water Company to Amend Rate Schedules – Temporary Rate Reduction;
(2) limit or revoke any of CWC’s permits or other authorizations to conduct
business; or (3) otherwise have a Material Adverse Effect.
SECTION
4.19. Enforcement Actions. Neither
the Company nor any Subsidiary is subject to any Enforcement
Action.
SECTION
4.20. ERISA. Compliance with
ERISA.
(A) The
Company and each ERISA Affiliate have operated and administered each Plan in
compliance with all applicable Laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to section 401(a)(29)
or 412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate material.
(B) The
present value of the aggregate benefit liabilities under each of the Plans
(other than Multiemployer Plans), determined as of the end of such Plan’s most
recently ended plan year for which an actuarial valuation report is available
and on the basis of the actuarial assumptions specified for funding purposes in
such Plan’s most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities. The terms “benefit liabilities” has the meaning
specified in section 4001 of ERISA and the terms “current value” and
“present value” have the meaning specified in section 3 of
ERISA.
(C) The
Company and its ERISA Affiliates have not incurred any withdrawal liabilities
(and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are material.
(D) The
expected post-retirement benefit obligation (determined as of the last day of
the Company’s most recently ended fiscal year in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by section 4980B of the
Code) of the Company and its Subsidiaries is not material.
ARTICLE
5
AFFIRMATIVE
COVENANTS
Unless otherwise agreed to in writing
by CoBank, while this Agreement is in effect, the Company agrees to and, with
respect to Sections 5.01 through 5.05 and Section 5.08 hereof, agrees to cause
each Subsidiary to:
SECTION
5.01. Maintenance of Existence,
Etc. Preserve and maintain its existence in the jurisdiction
of its formation, qualify and remain qualified to transact business in all
jurisdictions where such qualification is required, and obtain and maintain all
licenses, permits, franchises, patents, copyrights, trademarks, tradenames, or
rights thereto which are material to the conduct of its business or required by
Law.
SECTION
5.02. Compliance With
Laws. Comply in all material respects with all applicable Laws
(including all Laws relating to the environment), and cause all Persons
occupying or present on any of its properties to comply in all material respects
with all such Laws.
SECTION
5.03. Insurance. Maintain
insurance with financially sound and reputable insurance companies or
associations reasonably acceptable to CoBank in such amounts and covering such
risks as are usually carried by companies engaged in the same business and
similarly situated, and make such increases in the amounts or coverage thereof
as CoBank may from time to time reasonably require. Without limiting the
foregoing, in the event any property is located in a flood zone, then the
Company shall obtain or cause its Subsidiaries to obtain such flood insurance as
may be reasonably required by CoBank. All policies insuring any collateral shall
have lender or mortgagee loss payable clauses or endorsements in form and
content acceptable to CoBank. At CoBank’s request, the Company agrees
to deliver to CoBank such proof of compliance with this Section as CoBank may
require..
SECTION
5.04. Property
Maintenance. Maintain all of its properties that are necessary
to or useful in the proper conduct of its business in good repair, working order
and condition, ordinary wear and tear excepted, and make all alterations,
improvements and replacements thereto as may from time to time be necessary in
order to ensure that its properties remain in good working order and condition.
The Company agrees that at the CoBank’s request, which request may not be made
more than once during any 12 month period, the Company will furnish to CoBank a
report on the condition of CWC’s property and prepared by a professional
engineer reasonably satisfactory to CoBank.
SECTION
5.05. Books and Records. Keep
records and books of account in which complete entries will be made in
accordance with GAAP (or the appropriate standards of the regulatory agency
having jurisdiction over the Company).
SECTION
5.06. Reports and Notices. Furnish
to CoBank:
(A) Annual Financial Statements.
As soon as available, but in no event more than 120 days after the end of
each fiscal year of the Company occurring during the term hereof, a copy
of:
(i) a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such year, and
(ii)
consolidated statements of income, changes in shareholders’ equity, and cash
flows of the Company and its Subsidiaries, for such year,
setting
forth, in each case, in comparative form, the figures for the previous fiscal
year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an unqualified opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances;
provided that the
delivery within the time period specified above of the Company’s Annual Report
on Form 10-K for such fiscal year (together with the Company’s annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange
Act) prepared in accordance with the requirements therefor and filed with the
Securities and Exchange Commission, together with the accountant’s certificate
described above, shall be deemed to satisfy the requirements of this
Section 5.06(A);
(B) Quarterly
Statements. As soon as available, but in no event more than 60
days after the end of each fiscal quarter of the Company occurring during the
term hereof (other than the last quarterly fiscal period of each such fiscal
year), a copy of the Company’s Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission;
(C) Annual
Compliance Certificate. Together with each set of financial
statements delivered to CoBank pursuant to Subsection (A) of this Section 5.06,
a certificate of the chief financial officer or general manager of the Company
in the form attached hereto as Exhibit B.
(D) [Intentionally
Omitted]
(E) Notice of Default. Promptly
after becoming aware thereof, notice of the occurrence of a Default or an Event
of Default.
(F) Notice of Litigation, Material
Matters, Etc. Promptly after becoming aware thereof, notice
of: (1) the commencement of any action, suit or proceeding before any court,
governmental instrumentality, arbitrator, mediator or the like which, if
adversely decided, could have a Material Adverse Effect; (2) the commencement of
any Enforcement Action against the Company or any Subsidiary; (3) the receipt of
any notice, indictment, pleading, or other communication alleging a condition
that may require the Company or any Subsidiary to undertake or to contribute to
a clean-up or other response under any environmental Law, or which seeks
penalties, damages, injunctive relief, or other relief as a result of an alleged
violation of any such Law, or which claims personal injury or property damage as
a result of environmental factors or conditions; and (4) the occurrence of any
other event or matter (including the rendering of any order, judgment, ruling
and the like) which could have a Material Adverse Effect.
(G) Notice of Certain Events. At
least 60 days prior thereto notice of any change in the office where the
Company’s books and records are kept.
(H) Other Notices. Such other
notices as may be required by any Promissory Note and Supplement or any other
Loan Document.
(I) Other
Information. Such other information regarding the condition or
operations, financial or otherwise, of the Company or any of its Subsidiaries as
CoBank may from time to time reasonably request, including, but not limited to,
budgets, interim financial statements, and copies of all pleadings, notices and
communications referred to in Section 5.06(F) hereof.
(J) ERISA Matters. Promptly, and
in any event within five days after a Responsible Officer becoming aware of any
of the following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:
(i) with
respect to any Plan, any reportable event, as defined in section 4043(c) of
ERISA and the regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date hereof;
or
(ii) the
taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan, or the receipt by
the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by the PBGC with respect to such Multiemployer Plan;
or
(iii) any
event, transaction or condition that could result in the incurrence of any
liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect;
SECTION
5.07. Inspection. Permit
CoBank, and/or its agents, upon reasonable notice and during normal business
hours or at such other times as the parties may agree, to examine the
properties, books and records of the Company and its Subsidiaries, and to
discuss its and their affairs, finances and accounts with its and their
officers, directors, and independent certified public accountants; provided that
CoBank agrees to abide by all Company safety and privacy policies while doing
so.
SECTION
5.08. Water Rights, Title to Property,
Etc. Cause CWC to: (A) obtain and maintain
water rights and discharge rights in such amounts, priorities and qualities as
are necessary at all times to meet the needs of its customers; (B) obtain and
maintain title to, valid leasehold interests in, or other valid interests
(including easements, licenses and servitudes) in, all real property on which
all water xxxxx, reservoirs, water and wastewater treatment plants, and
warehouse and storage facilities are located; (C) keep all water rights and
discharge rights free and clear of any interest of any third party; and (D) not
suffer or permit any transfer or encumbrance of any water rights or discharge
rights, or abandon any water rights or discharge rights, or do any act or thing
which would impair or cause the loss of any water rights or discharge rights if
same could reasonably be expected to have a Material Adverse
Effect.
ARTICLE
6
NEGATIVE
COVENANTS
Unless otherwise agreed to in writing
by CoBank, while this Agreement is in effect, the Company will not:
SECTION
6.01. Borrowings. Create, incur,
assume, or allow to exist, directly or indirectly, any indebtedness or liability
for borrowed money, letters of credit, or the deferred purchase price of
property or services (including any Capital Lease), except for: (A)
accounts payable to trade creditors incurred in the ordinary course of business;
(B) current operating liabilities (other than for borrowed money) incurred
in the ordinary course of business; (C) purchase money indebtedness or Capital
Leases; (D) unsecured indebtedness to CoBank and/or other lenders; and (E)
secured indebtedness to other lenders, provided that CoBank is given a pari
passu Lien in the collateral; provided, however, that in the case of Subsections
(C) through (E) hereof, the Company will, after giving effect thereto, be in
compliance with Section 7.01 hereof.
SECTION
6.02. Liens. Create,
incur, assume, or allow to exist any Liens, except
for: (A) Liens in favor of CoBank and other lenders as
contemplated in Section 6.01(E) hereof; (B) Liens for taxes, assessments,
or governmental charges that are not past due; (C) pledges and deposits
under workers' compensation, unemployment insurance, and social security Laws;
(D) pledges and deposits to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money), and like obligations
arising in the ordinary course of business as conducted on the date hereof;
(D) Liens imposed by Law in favor of mechanics, material suppliers,
warehouses, and like persons that secure obligations that are not past due;
(E) Liens to secure debt permitted under Section 6.01(C) hereof, as long as
such Liens attach only to the property being acquired; and (F) easements,
rights-of-way, restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use, and enjoyment
of the Company’s property or assets encumbered thereby in the normal course of
business or materially impair the value of the property subject thereto.
SECTION
6.03. Mergers, Etc. (A)
Merge or consolidate with any other Person or permit and Subsidiary to merge or
consolidate with any other Person, unless the Company or the Subsidiary is the
surviving entity; or (B) commence operations or permit any Subsidiary
to commence operations under any other organization or entity, including any
joint venture, or permit any Subsidiary to do the same; or (C) change its name
unless: (1) the Company has given CoBank not less than 30 days prior written
notice; and (2) the Company enters into such amendments hereto and to the other
Loan Documents as CoBank may reasonably require in order to reflect the new
name.
SECTION
6.04. Disposition of Assets. Sell,
transfer, lease or otherwise dispose of, or permit any Subsidiary to sell,
transfer, lease or otherwise dispose of, any of its assets except in the
ordinary course of business. Without limiting the foregoing, the sale of any
equity in any Subsidiary or the sale of any assets in connection with the
discontinuance of any portion of the Company’s or any Subsidiary’s business
shall be considered to be outside of the ordinary course of
business.
SECTION
6.05. Loans and
Investments. Make any loan or advance to, or make any
investment in, or make any capital contribution to, or purchase or make any
commitment to purchase any stock, bonds, notes, or other securities of, any
Person, except for: (A) securities or deposits issued, guaranteed or fully
insured as to payment by the United States of America or any agency thereof; (B)
loans and investments in its Subsidiaries; and (C) as long as no Default or
Event of Default would arise, the acquisition of a majority of the voting stock
or other equity interests in another regulated water utility.
SECTION
6.06. Contingent
Liabilities. Assume, guarantee, become liable as a surety,
endorse, contingently agree to purchase, or otherwise be or become liable,
directly or indirectly (including, but not limited to, by means of a maintenance
agreement, an asset or stock purchase agreement, or any other agreement designed
to ensure any creditor against loss), for or on account of the obligation of any
person or entity, except: (A) by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business; and (B) for a Guaranty from the Company to U.S. Bank National
Association, as Trustee, dated as of October 1, 2005 granted in connection with
the issuance of Connecticut Development Authority $5,000,000 Water Facilities
Revenue Bonds (The Crystal Water Company of Xxxxxxxxx Project – 2005A
Series).
SECTION
6.07. Change in
Business. Engage in any business activities or operations
substantially different from or unrelated to its present business activities or
operations or make any change in the Company's name, structure,
jurisdiction of formation, or organizational number (if any).
SECTION
6.08. Dividends. Declare
or pay, directly or indirectly, any Distributions if before and after giving
effect thereto, a Default or Event of Default exists.
SECTION
6.09. Transactions with
Affiliates. Enter into any transaction with any Affiliate
except in the ordinary course of and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms no less favorable to it than
would obtain in a comparable arm’s-length transaction with a person or entity
that was not an Affiliate.
SECTION
6.10. Subsidiary Restrictions. The
Company will not permit any Subsidiary to enter into or be a party to any
agreement that restricts or prohibits the Subsidiary from making any
Distributions to the Company or repaying any loans made by the Company to the
Subsidiary. For the avoidance of doubt, this Section 6.10 does not
prohibit the restrictions on the ability of CWC to incur indebtedness contained
in the Reimbursement and Credit Agreements with Citizens Bank of Rhode Island
dated March 1, 2004 and August 1, 2004, as each has been amended.
ARTICLE
7
FINANCIAL
COVENANTS
Unless otherwise agreed to in writing
by CoBank, while this Agreement is in effect:
SECTION
7.01. Total Debt to Capitalization
Ratio. The Company and its consolidated Subsidiaries shall
have at all times a ratio of Total Debt to Total Capitalization of not more than
..65 to 1.00.
SECTION
7.02. Fiscal Year. The Company will
not change its fiscal year.
ARTICLE
8
EVENTS
OF DEFAULT
Each of the following shall constitute
an “Event of Default” hereunder:
SECTION 8.01.
Payment
Default. The Company should fail to make when due any payment
to CoBank hereunder, under any Promissory Note and Supplement, or under any
other Loan Document.
SECTION 8.02.
Representations and Warranties, Etc.
Any opinion, certificate or like document furnished to CoBank by or on
behalf of the Company, or any representation or warranty made or deemed made by
the Company herein or in any other Loan Document, shall prove to have been false
or misleading in any material respect on or as of the date furnished, made or
deemed made.
SECTION 8.03.
Covenants. The
Company should fail to perform or comply with any covenant set forth in Article
5 hereof (other than Sections 5.01 and 5.06(E)) and such failure continues for
30 days after written notice thereof shall have been delivered to the Company by
CoBank.
SECTION 8.04.
Other
Covenants and Agreements. The Company should fail to perform
or comply with Sections 5.01 or 5.06(E), or any other covenant or agreement
contained herein or in any Promissory Note and Supplement, or shall use the
proceeds of any loan for any unauthorized purpose.
SECTION 8.05.
Cross
Default. The Company should, after any applicable grace period,
breach or be in default under the terms of any other Loan Document, or the
Company or any Subsidiary should, after any applicable grace period, breach or
be in default under the terms of any other agreement with CoBank or any
Affiliate of CoBank, including Farm Credit Leasing Services
Corporation.
SECTION 8.06.
Other
Indebtedness. The Company or any Subsidiary should fail to pay when
due any indebtedness in excess of $100,000 to any other Person for borrowed
money or any long-term obligation in excess of $100,000 for the deferred
purchase price of property (including any Capital Lease), or any other event
occurs which, under any agreement or instrument relating to such indebtedness or
obligation, has the effect of accelerating or permitting the acceleration of
such indebtedness or obligation, whether or not such indebtedness or obligation
is actually accelerated or the right to accelerate is conditioned on the giving
of notice, the passage of time, or otherwise.
SECTION
8.07. Judgments. A
judgment, decree, or order for the payment of money in excess of $100,000 shall
have been rendered against the Company, CWC, or, if same could reasonably be
expected to have a Material Adverse Effect, any other Subsidiary and either: (A)
enforcement proceedings shall have been commenced; (B) a Lien prohibited hereby
shall have been obtained; or (C) such judgment, decree, or order shall continue
unsatisfied and in effect for a period of 30 consecutive days without being
vacated, bonded, discharged, satisfied, or stayed pending appeal.
SECTION
8.08. Insolvency, Etc. The Company,
CWC, or, if same could reasonably be expected to have a Material Adverse Effect
any other Subsidiary, shall: (A) become insolvent or shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due; or (B) suspend its business operations or a material part
thereof; or (C) apply for, consent to, or acquiesce in the appointment of a
trustee, receiver, or other custodian for it or any of its property; or (D) have
commenced against it any action or proceeding for the appointment of a trustee,
receiver, or other custodian, and such proceeding is not dismissed within 45
days following its inception or a trustee, receiver, or other custodian is
appointed for all or any part of its property; (E) have commenced against it any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, or liquidation law of any jurisdiction and such proceeding is
not dismissed within 45 days following its inception; or (F) make an assignment
for the benefit of creditors or commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
law of any jurisdiction.
SECTION
8.09. Casualty or
Condemnation. All or a material portion of the assets of the
Company, CWC, or, if same could reasonably be expected to have a Material
Adverse Effect, any Subsidiary: (1) are destroyed in a casualty or like event
(regardless of the cause); or (2) are taken in a condemnation action or
proceeding or in a like proceeding or are sold or otherwise transferred in lieu
thereof or pursuant to any right of any governmental authority to direct the
sale of transfer thereof.
SECTION
8.10. Material Adverse
Change. Any material adverse change occurs, as reasonably
determined by CoBank, in the condition, financial or otherwise, operations,
business or properties of the Company or any of its Subsidiaries or in the
Company’s ability to perform its obligations hereunder, under any security
instrument or document, or under any other Loan Document.
SECTION
8.11. Changes in
Ownership. More than 25% of the voting stock in the Company is
acquired by a Person and its Affiliates.
ARTICLE
9
REMEDIES
UPON DEFAULT
SECTION
9.01. Remedies. Upon the
occurrence and during the continuance of a Default or Event of Default, CoBank
shall have no obligation to make any loan to the Company and may discontinue
doing so at any time without prior notice. In addition, upon the occurrence and
during the continuance of an Event of Default, CoBank may, upon notice to the
Company:
(A) Termination and Acceleration.
Terminate any commitment and declare the unpaid principal balance of the loans,
all accrued interest thereon, and all other amounts payable under this
Agreement, the Promissory Notes and Supplements, and all other Loan Documents to
be immediately due and payable; provided, however, that upon the occurrence of
an Event of Default under Section 8.08(F), any commitments shall automatically
be terminated and all such amounts shall automatically become due and payable.
Upon such a declaration (or automatically, as provided above), the unpaid
principal balance of the loans and all such other amounts shall become
immediately due and payable, without protest, presentment, demand, or further
notice of any kind, all of which are hereby expressly waived by the
Company.
(B) Enforcement. Proceed to
protect, exercise, and enforce such rights and remedies as may be provided by
this Agreement, any other Loan Document, or under Law. Each and every one of
such rights and remedies shall be cumulative and may be exercised from time to
time, and no failure on the part of CoBank to exercise, and no delay in
exercising, any right or remedy shall operate as a waiver thereof, and no single
or partial exercise of any right or remedy shall preclude any future or other
exercise thereof, or the exercise of any other right. Without limiting the
foregoing, CoBank may hold and/or set off and apply against the Company’s
obligations to CoBank the proceeds of any equity in CoBank and any balances held
in any account maintained at CoBank (whether or not such balances are then
due).
(C) Application of
Funds. Apply all payments received by it to the Company’s
obligations to CoBank in such order and manner as CoBank may elect in its sole
discretion.
In
addition to the rights and remedies set forth above and notwithstanding the
terms of any Promissory Note and Supplement, upon the occurrence and during the
continuance of an Event of Default, the unpaid principal balance of the loans
and, to the extent permitted by Law, overdue interest, fees and other charges,
shall, at CoBank’s option in each instance (and automatically following an
acceleration), accrue interest at the Default Rate.
ARTICLE
10
MISCELLANEOUS
SECTION
10.01. Broken Funding
Surcharge. Notwithstanding the terms of any Promissory Note
and Supplement giving the Company the right to repay any loan prior to the date
it would otherwise be due and payable, the Company agrees to provide three
Business Days’ prior written notice in the event the Company desires to prepay
any balance bearing interest at a fixed rate and to pay to CoBank a broken
funding surcharge in the amount set forth below in the event the
Company: (1) repays any fixed rate balance prior to the last day
of its fixed rate period (whether such payment is made voluntarily, as a result
of an acceleration, or otherwise); (2) converts any fixed rate balance to
another fixed rate or to a variable rate prior to the last day of the fixed rate
period applicable to such balance; or (3) fails to borrow any fixed rate
balance on the date scheduled therefor. The surcharge shall be in an
amount equal to the greater of (i) the sum of: (a) the present
value of any funding losses imputed by CoBank to have been incurred as a result
of such payment, conversion or failure; plus (b) a per annum yield of 1/2
of 1% of the amount repaid, converted or not borrowed for the period such amount
was scheduled to have been outstanding at such fixed rate, or (ii) $300. Such
surcharge shall be determined and calculated in accordance with methodology
established by CoBank, a copy of which will be made available upon request.
Notwithstanding the foregoing, in the event of a conflict between the provisions
of this subsection and of the broken funding charge section of a forward fix
agreement between CoBank and the Company, the provisions of the forward fix
agreement shall control.
SECTION
10.02. Complete Agreement, Amendments,
Etc. The Loan Documents are intended by the parties to be a complete
and final expression of their agreement. NO AMENDMENT, MODIFICATION, OR WAIVER
OF ANY PROVISION OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, AND NO CONSENT
TO ANY DEPARTURE BY THE COMPANY HEREFROM OR THEREFROM, SHALL BE EFFECTIVE UNLESS
APPROVED BY COBANK AND CONTAINED IN A WRITING SIGNED BY OR ON BEHALF OF COBANK
AND COBANK, AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE
SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH
GIVEN. In the event this Agreement is amended or restated,
each such amendment or restatement shall be applicable to all Promissory Notes
and Supplements hereto. Each Promissory Note and Supplement shall be
deemed to incorporate all of the terms and conditions of this Agreement as if
fully set forth therein. Without limiting the foregoing, any
capitalized term utilized in any Promissory Note and Supplement (or in any
amendment to this Agreement or Promissory Note and Supplement) and not otherwise
defined in the Promissory Note and Supplement (or amendment) shall have the
meaning set forth herein.
SECTION
10.03. Applicable Law,
Jurisdiction. Except to the extent governed by applicable federal
Law, the Laws of the State of Colorado, without reference to choice of law
doctrine, shall govern: (A) this Agreement, each Promissory Note and Supplement,
and any other Loan Document for which Colorado is specified as the applicable
law; (B) all disputes and matters between the parties to this Agreement; (C) the
rights and obligations of the parties to this Agreement or any other Loan
Document by and between the parties for which Colorado is specified as the
applicable law. The parties agree to submit to the non-exclusive jurisdiction of
any federal or state court sitting in Colorado for any action or proceeding
arising out of or relating to this Agreement or any other Loan Document. The
Company hereby waives any objection that it may have to any such action or
proceeding on the basis of forum non-conveniens.
SECTION
10.04. Notices. All notices
hereunder shall be in writing and shall be deemed to have been duly given upon
delivery if personally delivered or sent by facsimile or similar transmission,
or 3 days after mailing if sent by express, certified or registered mail, to the
parties at the following addresses (or such other address as either party may
specify by like notice):
|
If
to Company, as follows:
Connecticut
Water Service
00
Xxxx Xxxx Xxxxxx
Xxxxxxx,
XX 00000
Facsimile: 000-000-0000
Attn: President
|
If
to the CoBank, as follows:
CoBank,
ACB
0000
Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000)
000-0000
Attention: Credit
Information Services
|
SECTION
10.05. Costs, Expenses, and
Taxes. To the extent allowed by Law, the Company agrees to pay
all reasonable out-of-pocket costs and expenses (including the reasonable fees
and expenses of counsel retained or employed by CoBank) incurred by CoBank and
any participants in connection with the origination, administration,
interpretation, collection, and enforcement of this Agreement and the other Loan
Documents, including, without limitation, all costs and expenses incurred in
perfecting, maintaining, determining the priority of, and releasing any security
for the Company’s obligations to CoBank, all title insurance premiums and other
charges, and any stamp, intangible, transfer or like tax incurred in connection
with this Agreement or any other Loan Document or the recording hereof or
thereof.
SECTION
10.06. Effectiveness and
Severability. This Agreement shall continue in effect until:
(A) all indebtedness and obligations of the Company under this Agreement and the
other Loan Documents shall have been paid or satisfied; (B) CoBank has no
commitment to extend credit to or for the account of the Company under any
Promissory Note and Supplement; (C) all Promissory Notes and Supplements shall
have been terminated; and (D) either party sends written notice to the other
party terminating this Agreement. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof.
SECTION
10.07. Successors and
Assigns. This Agreement and the other Loan Documents shall be
binding upon and inure to the benefit of the Company and CoBank and their
respective successors and assigns, except that the Company may not assign or
transfer its rights or obligations under this Agreement or the other Loan
Documents without the prior written consent of CoBank. CoBank may sell or assign
its rights and obligations hereunder and under the other Loan Documents or may
sell participations in its rights and obligations hereunder and under the Loan
Documents to any Person, and, in connection therewith, disclose financial and
other information on the Company and its Affiliates provided that such
participant or prospective participant agrees (subject to normal qualifications)
to keep such information confidential and, in the case of assignments, such
party has the same as or a higher credit rating than CoBank. Patronage
distributions in the event of a sale of a participation interest shall be
governed by CoBank’s Bylaws and Capital Plan (as each may be amended from time
to time). A sale of a participation interest may include certain
voting rights of the participants regarding the loans hereunder (including
without limitation the administration, servicing and enforcement
thereof). CoBank agrees to give written notification to the Company
of any sale hereunder.
SECTION
10.08. Indemnification. The
Company agrees to indemnify, defend and hold harmless CoBank, its participants,
and its and their respective officers, directors, shareholders, employees, and
agents (collectively, the “Indemnitees”) from
and against any and all claims, obligations, liabilities, losses, damages,
injuries (to persons or property), penalties, actions, suits, judgments, costs
and expenses (including reasonable attorney’s fees) of whatever kind or nature,
whether or not well founded, meritorious or unmeritorious, which are demanded,
asserted or claimed against any such Indemnitee in any way relating to, or
arising out of, or in connection with this Agreement or the other Loan
Documents, including: (A) all claims arising in connection with the release,
presence, removal, and disposal of all Hazardous Materials located on any
property of the Company; (B) any claims, suits, or liabilities against the
Company; and (C) the failure to pay any taxes as and when due. The foregoing
indemnities shall not apply with respect to an Indemnitee to the extent arising
as a result of the gross negligence or willful misconduct of such Indemnitee.
The indemnification provided for hereunder shall survive the termination of this
Agreement.
SECTION
10.09. Other Types of
Credit. From time to time, CoBank may issue letters of credit
or extend other types of credit to or for the account of the
Company. In the event the parties desire to do so under the terms of
this Agreement, then the agreement of the parties with respect thereto may be
set forth in a Promissory Note and Supplement to this Agreement and this
Agreement shall be applicable thereto.
SECTION
10.10. Patriot Act
Notice. CoBank hereby notifies the Company that pursuant to
the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed
into law October 26, 2001) (the “Patriot Act”), it and
its affiliates are required to obtain, verify and record information that
identifies the Company, which information includes the name, address, tax
identification number and other information regarding the Company that will
allow CoBank to identify the Company in accordance with the Patriot
Act. This notice is given in accordance with the requirements of the
Patriot Act and is effective for CoBank and its affiliates.
SECTION
10.11. Counterparts; Electronic
Delivery.
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
addition, if agreeable to CoBank, signature pages may be delivered by
facsimile.
(signature
pages follow)
IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their duly authorized
officers as of the date shown above.
|
CoBANK,
ACB
|
CONNECTICUT
WATER SERVICE, INC.
|
|||
|
By:
|
/s/
Xxxxx Xxxxx
|
By:
|
/s/
Xxxxx X. Xxxxxx
|
|
|
Name:
|
Xxxxx
Xxxxx
|
Name:
|
Xxxxx
X. Xxxxxx
|
|
|
Title:
|
Assistant
Corporate Secretary
|
Title:
|
Vice
President-CFO
|
|
EXHIBIT
A
DEFINITIONS
AND RULES OF INTERPRETATION
SECTION
1.01 Definitions. As used in the
Agreement, any amendment thereto, or in any Promissory Note and Supplement, the
following terms shall have the following meanings:
Affiliate shall mean any
Person: (1) which directly or indirectly controls, or is controlled by, or is
under common control with, the Company; (2) which directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of, or other interests in, the Company; or (3) five percent (5%) or more
of the voting stock of, or other interest in, which is directly or indirectly
beneficially owned or held by the Company. The term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement shall mean this
Master Loan Agreement.
Borrower Default shall mean
the occurrence of an event which with the giving of notice or the passage of
time or the occurrence of any other condition would become a Borrower Event of
Default.
Borrower Event of Default
shall mean an “Event of Default” as defined in any Company Loan Document
or, in the event such documents do not have defined “Events of Default”, the
breach of any Company Loan Document.
Business Day means any day
other than a Saturday, Sunday, or other day on which CoBank, any of the Federal
Reserve Banks, or Connecticut banking institutions are closed for
business.
Capital Lease shall mean a
lease which should be capitalized on the books of the lessee in accordance with
GAAP.
CoBank shall mean CoBank, ACB
and its successors and assigns.
Code shall means the Internal
Revenue Code of 1986, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time.
Collateral shall have the
meaning set forth in Section 2.04 of the Agreement.
Company shall have the meaning
set forth in the introductory paragraph of the Agreement.
CPUC shall have the meaning
set forth in Section 4.03 hereof.
CWC shall mean the Connecticut
Water Company, a Connecticut corporation.
Default shall mean the
occurrence of any event which with the giving of notice or the passage of time
or the occurrence of any other condition would become an Event of Default under
the Agreement, including the occurrence of any event which, with the giving of
notice or the passage of time or the occurrence of any other condition would
become a Borrower Event of Default.
Default Rate shall mean: (1)
in the case of principal, 2% per annum in excess of the rate(s) that would
otherwise be in effect on the loans under the Promissory Notes and Supplements;
and (2) in the case of overdue interest, fees and other charges, 2% per annum in
excess of the CoBank Base Rate, as in effect from time to time.
Distribution shall mean the
payment of any dividend or distribution of any kind to its shareholders or other
owners, whether in cash, assets, obligations or otherwise, and whether paid
directly or indirectly, such as by a reduction in or a rebate of rates or the
purchase or redemption of any equity or other securities or interests in the
Company, or the purchase of any assets or services for a price that exceeds the
fair market value thereof.
Dollars and the sign “$” shall mean lawful money of
the United States of America.
Enforcement Action shall mean
a formal judicial or administrative proceeding filed by any governmental
authority to enforce any Law.
ERISA shall mean the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations and published interpretations thereof.
ERISA Affiliate shall mean any
trade or business (whether or not incorporated) that is treated as a single
employer together with the Company under section 414 of the
Code.
ERISA Plans shall have the
meaning set forth in Section 4.20 of the Agreement.
Event of Default shall mean
any of the events specified in Article 8 of this Agreement and any event
specified in any Promissory Note and Supplement or other Loan Document as an
Event of Default.
Financial Statements shall
mean: (1) in the case of the initial Promissory Note(s) and Supplement(s) to the
Agreement, the Company’s Annual Report on Form 10-K for the fiscal year ending
on December 31, 2008, and the Form 10-Q for the fiscal quarter ending on March
31, 2009.; and (2) in the case of each other Promissory Note and Supplement to
the Agreement, the most recent annual financial statements furnished to CoBank
pursuant to Sections 5.06(A) of the Agreement.
GAAP shall mean generally
accepted accounting principles in the United States.
Laws shall mean all laws,
rules, regulations, codes, orders and the like.
Lien shall mean any mortgage,
deed of trust, pledge, security interest, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement, charge or encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement).
Loan Documents shall mean this
Agreement, all Promissory Notes and Supplements, and all instruments or
documents relating to this Agreement or the Promissory Notes and Supplements,
including, without limitation, all applications, certificates, opinions of
counsel, mortgages, deeds of trust, security agreements, guaranties, pledge
agreements, assignments, and third party consents.
Long-Term Debt shall mean, for
the Company, on a consolidated basis, the sum of (a) all indebtedness for
borrowed money, (b) obligations which are evidenced by notes, bonds, debentures
or similar instruments, and (c) that portion of obligations with respect to
capital leases or other capitalized agreements that are properly classified as a
liability on the balance sheet in conformity with GAAP or which are treated as
operating leases under regulations applicable to them but which otherwise would
be required to be capitalized under GAAP, in each case having a maturity of more
than one year from the date of its creation or having a maturity within one year
from such date but that is renewable or extendible, at the Company’s option, to
a date more than one year from such date or that arises under a revolving credit
or similar agreement that obligates the lender(s) to extend credit during a
period of more than one year from such date, including all current maturities in
respect of such indebtedness whether or not required to be paid within one year
from the date of its creation.
Material Adverse Effect shall
mean a material adverse effect on the condition, financial or otherwise,
operations, properties, margins or business of the Company or any Subsidiary or
on the ability of the Company or any Subsidiary to perform its obligations under
the Loan Documents.
Multiemployer Plan shall mean
any Plan that is a “multiemployer plan” (as such term is defined in
section 4001(a)(3) of ERISA).
Net Worth shall mean the
difference between total assets less total liabilities (both as determined on a
consolidated basis in accordance with GAAP consistently applied).
PBGC shall mean the Pension
Benefit Guaranty Corporation referred to and defined in ERISA or any successor
thereto.
Person shall mean an
individual, partnership, limited liability company, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
Plan shall mean an “employee
benefit plan” (as defined in section 3(3) of ERISA) that is or, within the
preceding five years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.
Promissory Note and Supplement
shall have the meaning set forth in Section 2.01 of the Agreement.
Responsible Officer shall mean
any Senior Financial Officer and any other officer of the Company with
responsibility for the administration of the relevant portion of this
Agreement.
Subsidiary shall mean, as to
the Company, a corporation, partnership, limited liability company, joint
venture, or other Person of which shares of stock or other equity interests
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation, partnership, limited liability company,
joint venture, or other Person are at the time owned, or the management of which
is otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by the Company.
Total Capitalization shall
mean Total Debt plus Net Worth, except that in determining Total Capitalization,
contributions in aid of construction, advances for construction, customer
deposits, or similar items reducing rate base calculations shall be
excluded.
Total Debt shall mean the sum
of the following (all as calculated on a consolidated basis in accordance with
GAAP): (a) all indebtedness for borrowed money or for the deferred purchase
price of property or services (other than accounts payable to trade creditors
incurred in the ordinary course of business), (b) obligations which are
evidenced by notes, bonds, debentures or similar instruments, (c) that portion
of obligations with respect to Capital Leases or other capitalized agreements
that are properly classified as a liability on the balance sheet in conformity
with GAAP or which are treated as operating leases under regulations applicable
to them but which otherwise would be required to be capitalized under GAAP; (d)
debt secured by a Lien on any assets of the Company or any Subsidiary (whether
or not the debt has been assumed); and (e) all obligations guarantied by the
Company or any Subsidiary.
SECTION
1.02 Rules of
Interpretation. The following rules of interpretation shall
apply to the Agreement, all Promissory Notes and Supplements, and all amendments
to either of the foregoing:
Accounting Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
Number. All terms
stated in the singular shall include the plural, and all terms stated in the
plural shall include the singular.
Including. The term
"including" shall mean including, but not limited to.
Default. The expression "while
any Default or Event of Default shall have occurred and be continuing" (or like
expression) shall be deemed to include the period following any acceleration of
the obligations (unless such acceleration is rescinded).
Permitted Encumbrances.
CoBank's consent to the Company having one or more Liens on all or any
portion of its assets, shall not be construed to be an agreement to subordinate
its Lien on those assets to the extent that such Lien is not otherwise entitled
to priority under Law.
Headings. Captions and
headings used in this Agreement are for reference and convenience of the parties
only, and shall not constitute a part of this Agreement.
EXECUTION
COPY
Loan No.
RX0785S1
PROMISSORY
NOTE AND SUPPLEMENT
THIS PROMISSORY NOTE AND SUPPLEMENT
(this "Promissory Note and
Supplement") is entered into as of June 29, 2009 between CONNECTICUT WATER SERVICE, INC.,
a Connecticut corporation (the “Company”) and COBANK, ACB, a federally
chartered instrumentality of the United States (the "Lender"), and
supplements the Master Loan Agreement between the parties dated as of June 29,
2009 (as amended or restated from time to time, the “MLA”). Capitalized
terms used herein and not defined herein shall have the meanings given to those
terms in the MLA..
SECTION
1. 364 Day Revolving Credit Commitment. On the
terms and subject to the conditions set forth in the MLA and this Promissory
Note and Supplement, CoBank agrees to make loans (the “Loans”) to the
Company from time to time during the period set froth below, in an aggregate
principal amount not to exceed, at any one time outstanding, $15,000,000 (the
“Commitment”).
Within the limits and during the term of the Commitment, the Company can borrow,
prepay and reborrow..
SECTION
2. Purpose. The
purpose of the Commitment is to finance capital expenditures and general
corporate needs of the Company, CWC, and the other regulated water companies
that are Subsidiaries of the Company.
SECTION
4. Availability. The Loans will
be made available as provided in Section 2.02 of the MLA.
SECTION
5. Interest.
(A) Rate Options. The Company
agrees to pay interest on the unpaid balance of the Loans in accordance with one
of more of the following interest rate options, as selected by the
Company:
(1) Weekly Variable Rate Option.
At a rate per annum equal to the rate of interest established by CoBank
on the first Business Day of each week (the “Variable Rate Option”). The rate
established by CoBank shall be effective until the first Business Day of the
next week and each change in the rate shall be applicable to all balances
subject to this option. Information about the then current rate shall be made
available upon telephonic request.
(2) Quoted Rate
Option. At a fixed rate per annum to be quoted by CoBank in
its sole discretion in each instance (the “Quoted Fixed Rate Option”). Under
this option, rates may be fixed on such balances and for such periods (each, a
“Quoted Fixed Rate Period”), as may be
agreeable to CoBank in its sole discretion in each instance, provided
that: (1) rates may not be fixed for Quoted Fixed Rate Periods of
less than 30 days; (2) rates may only be fixed on balances of $100,000.00 or in
multiples thereof; and (3) the maximum number of balances that may be subject to
this option at any one time shall be five (5).
(3) LIBOR Option. At a fixed rate
per annum equal to "LIBOR" (as hereinafter defined) plus 1.75% per annum (the
“LIBOR Option”). Under this
option rates may be fixed: (A) for "Interest Periods" (as hereinafter defined)
of 1,2, 3, and 6 months, as selected by the Company; provided, however,
that: in no event may rates be fixed for Interest Periods expiring
after the Maturity Date; (B) on balances of $500,000 or in increments of
$500,000; (C) on a "Banking Day" (as hereinafter defined) on 3 Banking Days’
prior notice; and (D) on not more than five (5) separate balances at any one
time. For purposes hereof: (a) "LIBOR" shall mean the rate (rounded upward to
the nearest sixteenth of a percentage point and adjusted for reserves required
on “Eurocurrency Liabilities” (as hereinafter defined) for banks subject to “FRB
Regulation D” (as hereinafter defined) or required by any other federal law or
regulation) quoted by the British Bankers Association (“BBA”) at 11:00 a.m.
London time 2 Banking Days before the commencement of the Interest Period for
the offering of U.S. dollar deposits in the London interbank market for the
Interest Period designated by the Company, as published by Bloomberg or another
major information vendor listed on BBA’s official website; (b) "Banking Day" shall mean a day
on which CoBank is open for business, dealings in U.S. dollar deposits are being
carried out in the London interbank market, and banks are open for business in
New York City and London, England; and (c) "Interest Period" shall mean a
period commencing on the date this option is to take effect and ending on the
numerically corresponding day in the next calendar month or the month that is 2,
3, or 6 months thereafter, as the case may be; provided, however, that: (i) in
the event such ending day is not a Banking Day, such period shall be extended to
the next Banking Day unless such next Banking Day falls in the next calendar
month, in which case it shall end on the preceding Banking Day; and (ii) if
there is no numerically corresponding day in the month, then such period shall
end on the last Banking Day in the relevant month; (d) “Eurocurrency Liabilities” shall
have meaning as set forth in FRB Regulation D; and (e) “FRB Regulation D” shall mean
Regulation D as promulgated by the Board of Governors of the Federal Reserve
System, 12 CFR Part 204, as amended.
(B) Elections. Subject to the
limitations set forth above, the Company: (1) shall select the applicable rate
option(s) at the time it requests a Loan; (2) may, on any Business Day, elect to
convert balances bearing interest at the Variable Rate Option to the Quoted
Fixed Rate Option; (3) may, on the last day of any Quoted Fixed Rate Period,
elect to refix the rate under the Quoted Fixed Rate Option or convert the
balance to the Variable Rate Option; (4) may, on the last day of any Interest
Period, elect to convert balances bearing interest at the LIBOR Option to the
Variable Rate Option or Quoted Fixed Rate Option; and (5) may, on three Banking
Days' prior notice, elect to convert balances bearing interest at the Variable
Rate Option or the Quoted Fixed Rate Option to the LIBOR Option or refix a rate
under the LIBOR Option; provided, however, that balances bearing interest at the
Quoted Fixed Rate Option or the LIBOR Option may not be converted or continued
until the last day of the Quoted Fixed Rate Period or Interest Period applicable
thereto. In the absence of an election provided for herein, the Company shall be
deemed to have elected the Variable Rate Option. All elections provided for
herein may be made telephonically, in writing, or, if agreed to in a separate
agreement, electronically, and must be received by 12:00 noon Company’s local
time on the applicable Business Day. Any election made telephonically, shall be
promptly confirmed in writing if so requested by CoBank.
(C) Calculation and
Payment. Interest shall be calculated on the actual number of
days each Loan is outstanding on the basis of a year consisting of 360
days. In calculating interest, the date each Loan is made shall be
included and the date each Loan is repaid shall, if received before 3:00 P.M.
Mountain time, be excluded. Interest shall be: (1) calculated quarterly in
arrears as of the end of each calendar quarter and on the Maturity Date; and (2)
due and payable on the 20th day of
each April, July, October, and January, and on the Maturity Date.
Notwithstanding the foregoing, at CoBank’s option, interest on balances bearing
interest at the LIBOR Option shall be payable on the last day of the Interest
Period or, in the case of Interest Periods of longer than three months, at three
month intervals.
(D) Additional Provisions Regarding LIBOR
Option. Notwithstanding any other provision hereof, CoBank shall have the
right to temporarily suspend or permanently terminate the Company’s ability to
fix rates under the LIBOR Option or for one or more Interest Periods if, for any
reason whatsoever (including a change in Law): (1) LIBOR is no longer being
quoted in the London interbank market or is no longer being quoted for an
Interest Period; (2) CoBank is prohibited from offering rates based on LIBOR; or
(3) CoBank’s cost to fund balances bearing interest at the LIBOR Option (as
determined by CoBank in its sole discretion) increases beyond any corresponding
increase in LIBOR or decreases less than any corresponding decrease in LIBOR. In
addition, if as a result of a change in Law or otherwise, CoBank is required to
allocate additional capital to, or otherwise bear increase costs as a result of
maintaining balances under, the LIBOR Option, the Company agrees to indemnify
CoBank upon demand against all such costs.
SECTION
6. Fees. [Waived
By CoBank]
SECTION
7. Promissory Note. The
Company promises to pay to repay the Loans to CoBank on the Maturity Date. In
addition to the above, the Company promises to pay interest on the unpaid
principal balance of the Loans at the times and in accordance with the rate
options set forth above. If any date on which principal or interest
is due is not a Business Day, then such payment shall be due and payable on the
next Business Day and, in the case of principal, interest shall continue to
accrue on the amount thereof.
SECTION
8. Prepayment. Subject
to Section 10.01 of the MLA, the Company may prepay the Loans in whole or
part.
(signature
pages follow)
IN WITNESS WHEREOF, the
parties have caused this Promissory Note and Supplement to be executed by their
duly authorized officers as of the date shown above.
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CoBANK,
ACB
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CONNECTICUT
WATER SERVICE, INC.
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By:
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/s/
Xxxxx Xxxxx
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
Xxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Assistant
Corporate Secretary
|
Title:
|
Vice
President-CFO
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