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Exhibit 4.9
LOAN AGREEMENT
among the
CONNECTICUT DEVELOPMENT AUTHORITY
THE CRYSTAL WATER COMPANY OF DANIELSON
and
CRYSTAL WATER UTILITIES CORPORATION
Dated as of April 19, 1990
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TABLE OF CONTENTS
Page
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Parties 1
Background 2
SECTION 1 - DEFINITIONS AND INTERPRETATION
1.1 - Definitions 3
1.2 - Interpretation 5
SECTION 2 - THE LOAN
2.1 - Loan 7
2.2 - The Closing 7
2.3 - Term 7
2.4 - Interest and Payments 7
2.5 - Late Charges 7
2.6 - Note 8
2.7 - Security 8
2.8 - Guaranty 8
2.9 - Prepayment 8
2.10 - Interest After Judgement 8
2.11 - Application of Payments 8
2.12 - Failure to Meet Conditions 9
SECTION 3 - CONDITIONS OF CLOSING
3.1 - Warranties and Representations True; No Prohibited Action 10
3.2 - Compliance with This Agreement 10
3.3 - Officers' Certificates 10
3.4 - Execution and Delivery of Financing Documents 10
3.5 - Perfection and Priority of Mortgage, Guaranty Mortgage
and Stock Pledge 10
3.6 - Opinion of Counsel 11
3.7 - Certification of Costs 11
3.8 - Department of Health Services Certification 12
3.9 - Completion of Project 12
3.10 - DPUC Approvals 12
3.11 - Site Plan and Zoning Compliance 12
3.12 - Insurance 12
3.13 - Good Standing Certificates; Tax Clearances 13
3.14 - Affirmative Action Plan 13
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SECTION 3 - CONDITIONS OF CLOSING (continued)
3.15 - Commitment Fee 13
3.16 - Compliance with Loan Authorization 13
3.17 - Proceedings Satisfactory 14
SECTION 4 - WARRANTIES AND REPRESENTATIONS OF THE
COMPANY AND GUARANTOR
4.1 - Corporate Existence and Authority 15
4.2 - Enforceability of Financing Documents; No
Prohibition or Consent 15
4.3 - DPUC Approvals 16
4.4 - Eligibility of the Company 16
4.5 - Use of Proceeds 17
4.6 - Real Estate 17
4.7 - Transmission Rights 17
4.8 - Property 17
4.9 - Perfection and Priority of Mortgage 17
4.10 - Compliance with Laws 18
4.11 - No Litigation 18
4.12 - Burdensome Contracts 18
4.13 - Taxes 18
4.14 - Financial Statements; No Adverse Change 18
SECTION 5 - COVENANTS OF THE COMPANY AND THE GUARANTOR
5.1 - Payment of Loan 19
5.2 - Expenses and Additional Indebtedness 19
5.3 - Indemnification 20
5.4 - Corporate Existence and Authority 20
5.5 - DPUC and Department of Health Services Compliance 20
5.6 - Taxes 20
5.7 - Maintenance of Property and Insurance 21
5.8 - Liens 21
5.9 - Compliance with Laws 21
5.10 - Financial Statements 22
5.11 - Protection of Mortgage and the Guaranty Mortgage 23
5.12 - Default Notification 23
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SECTION 6 - DEFAULT AND REMEDIES
6.1 - Events of Default 24
6.2 - Remedies upon Event of Default 25
6.3 - Reinstatement 26
6.4 - Marshalling 26
6.5 - Partial Release 26
6.6 - No Waiver 26
6.7 - Remedies Cumulative 27
6.8 - Waiver of Rights 27
SECTION 7 - MISCELLANEOUS
7.1 - Governing Laws 28
7.2 - Notices 28
7.3 - Amendment and Waiver 28
7.4 - Duplicate Originals 29
7.5 - Severability 29
7.6 - Binding Effect 29
7.7 - Term of this Agreement 29
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and dated as of April 19, 1990 among the
CONNECTICUT DEVELOPMENT AUTHORITY, with its principal office at 217 Washington
Street, Hartford, Connecticut, 06106 (the "Authority"), THE CRYSTAL WATER
COMPANY OF DANIELSON (the "Company") and CRYSTAL WATER UTILITIES CORPORATION
(the "Guarantor"), both with their principal office at 321 Main Street,
Danielson, Connecticut 06239.
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BACKGROUND
A. Pursuant to Title 32, Chapter 579, of the Connecticut General
Statutes, as amended (the "Act"), the Bond Commission of the State of
Connecticut has been granted the power, from time to time, to authorize the
issuance of bonds of the State of Connecticut to provide funds for low-interest
loans to investor-owned water companies which supply water to at least
twenty-five but fewer than ten thousand customers for the planning, design,
modification or construction of drinking water facilities of such companies made
necessary by the requirements of the Safe Drinking Water Act of 1974 (the "Safe
Drinking Water Act"), or by an order of the Department of Health Services of the
State of Connecticut deeming the water supplied by such companies to be
inadequate, which facilities include, but need not be limited to, collection
facilities, treatment facilities, wells, tanks, mains, pumps, transmission
facilities and any other machinery and equipment necessary to meet the
requirements of the Safe Drinking Water Act.
B. The Act provides that each loan made pursuant thereto shall be
authorized by the Authority or, if the Authority so determines, by a committee
of the Authority, one of whose members may be its Executive Director.
C. On May 4, 1988, the Company first applied to the Authority for a
loan under the Act to finance certain improvements to its drinking water
facilities made necessary by the requirements of the Safe Drinking Water Act or
an order of the Department of Health Services of the State of Connecticut.
D. By a Loan Authorization dated March 7, 1989 (the "Loan
Authorization") the Authority authorized a loan to the Company in an amount not
to exceed $587,000 on the terms and conditions therein set forth.
E. The Loan Authorization requires that the Guarantor guarantee the
loan.
F. The Authority, in reliance on the representations and warranties of
the Company and the Guarantor in the loan application and herein, is willing to
make the loan to the Company authorized in the Loan Authorization, all on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
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SECTION 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
For purposes of this Agreement, the following words and terms shall
have the respective meanings set forth below or in the Section of this Agreement
referenced below:
"Act" is defined in the recitals of this Agreement.
"Agreement" means this Loan Agreement and any amendments or supplements
thereto.
"Authority" is defined in the recitals to this Agreement.
"Closing" is defined in Section 2.2.
"Closing Date" is defined in Section 2.2.
"Company" is defined in the first paragraph of this Agreement.
"Default" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.
"Department of Health Services" means the Department of Health Services
of the State of Connecticut.
"DPUC" means the Department of Public Utility Control of the State of
Connecticut.
"Equipment" means tangible Property which is not Real Estate.
"Event of Default" is defined in Section 6.1.
"Financing Documents" means this Agreement, the Note, the Mortgage, the
Guaranty, the Guaranty Mortgage, the Stock Pledge, and all other documents or
agreements executed and/or delivered in connection with the Loan.
"General Statutes" means the General Statutes of Connecticut, revision
of 1958, as amended.
"Guarantor" is defined in the first paragraph of this Agreement.
"Guaranty" is defined in Section 2.8.
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"Guaranty Mortgage" is defined in Section 2.8.
"Indebtedness" means the Note, any amounts due from the Company and the
Guarantor to the Authority under Sections 2.5, 5.2 and 5.3, and all other
indebtedness, obligations and liabilities of the Company and the Guarantor to
the Authority, whether arising under the Note, this Agreement, any of the other
Financing Documents, or otherwise.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purpose of this Agreement, the Company and the Guarantor each shall be deemed to
be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes, and such retention or vesting shall constitute a Lien.
"Loan" means the loan in the original principal amount of $587,000 made
by the Authority to the Company pursuant to this Agreement.
"Loan Application" means the initial loan application of the Company to
the Authority dated May 4, 1988 together with all amendments, supplements and
modifications thereto thereafter submitted by the Company to the Authority, and
including all correspondence, exhibits, schedules, financial statements, cost
estimates and other documents furnished by or on behalf of the Company or the
Guarantor with respect thereto.
"Loan Authorization" means the Loan Authorization from the Authority to
the Company dated March 7, 1989 and any amendments or supplements thereto.
"Mortgage" is defined in Section 2.7.
"Note" is defined in Section 2.6.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, government, government agency or governmental
subdivision.
"Project" means the improvements to the Company's drinking water
facilities more particularly described in Exhibit A to this Agreement.
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"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible, and whether now owned
or hereafter acquired, and includes, without limitation, the Project, Real
Estate, Equipment, and Transmission Rights.
"Real Estate" means realty and other interests in real property,
including buildings and improvements thereon and fixtures related thereto,
whether owned, leased or subject to other right of use or occupancy, but does
not otherwise include Transmission Rights.
"Safe Drinking Water Act" means the Federal Safe Drinking Water Act of
1974, 42 U.S.C. Sections 300f et seq.
"Stock Pledge" is defined in Section 2.8.
"Transmission Rights" means easements, rights-of-way, and other rights
or interests in or through Real Estate of others for purposes of laying and
maintaining water mains, pipes, pumping stations or other water transmission
facilities, whether arising by contract or otherwise and whether recorded or
unrecorded.
1.2 Interpretation
(a) References to a "Section" or "Sections" herein refer to this
Agreement unless otherwise stated.
(b) Words of the masculine gender mean and include correlative words of
the feminine and neuter genders and words importing the singular number mean and
include the plural number and vice versa.
(c) Any headings preceding the texts of the several Sections of this
Agreement, and any table of contents or list of exhibits appended to copies
hereof, shall be solely for convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
(d) All approvals, consents and acceptances required to be given or
made by any party hereunder shall be at the sole discretion of the party whose
approval, consent, or acceptance is required.
(e) All notices to be given hereunder shall be given in writing within
a reasonable time unless otherwise specifically provided.
(f) If a reference to a provision of the General Statutes appears in a
Section intended to have effect after the date of this Agreement, such reference
shall be deemed to include successor statutes of similar import.
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(g) Where any provision of this Agreement refers to action to be taken
by any Person, or which any Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by such
Person.
(h) Each Exhibit referred to in this Agreement shall be considered a
part of this Agreement as if fully set forth herein.
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SECTION 2
THE LOAN
2.1 Loan
The Authority agrees to lend to the Company, and the Company agrees to
borrow from the Authority on the Closing Date, in accordance with and subject to
the terms and conditions of this Agreement, the sum of Five Hundred Eighty-Seven
Thousand Dollars ($587,000).
2.2 The Closing
The closing (the "Closing") of the Loan shall be conducted by the
Authority's special counsel, Shipman & Goodwin. The Closing shall be held on
such date as shall be mutually agreed to by the Company and the Authority (the
"Closing Date"), at 10 a.m. local time at the offices of Shipman & Goodwin, 799
Main Street, Hartford, Connecticut, or such other place as the parties hereto
shall mutually agree. At the Closing the Company will deliver to the Authority
the Note, dated the Closing Date, in the stated principal amount of $587,000,
against payment by the Authority to the Company of such amount.
2.3 Term
The Loan will mature and be finally due and payable on July 1, 2020.
2.4 Interest and Payments
The Loan will bear interest on the unpaid principal balance thereof
from (and including) the Closing Date at an annual rate of seven and eighty-two
hundredths percent (7.82%). Interest on the unpaid principal balance from (and
including) the Closing Date through June 30, 1990 shall be paid at the Closing.
Thereafter, the Loan shall be repaid over a term of 30 years in equal quarterly
payments of principal and interest, beginning October 1, 1990, all as more fully
set forth in the Note.
2.5 Late Charges
The Authority may assess a late charge not to exceed an amount equal to
five percent (5%) of any scheduled quarterly payment of principal and interest
on the Note which is not paid within ten (10) days of the day on which such
payment is due in order to cover the extra expenses involved in handling such
delinquent payment.
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2.6 Note
The Loan will be evidenced by the Company's 7.82% Secured Promissory
Note due July 1, 2020 (the "Note") substantially in the form set forth as
Exhibit B to this Agreement.
2.7 Security
The Loan will be Secured by a first security interest in all
of the Company's Property under a Mortgage and Security Agreement (the
"Mortgage") substantially in the form set forth in Exhibit C to this Agreement.
2.8 Guaranty
The Loan will be guaranteed by agreement of the Guarantor (the
"Guaranty"), substantially in the form set forth in Exhibit D to this Agreement.
The Guaranty will be secured by a Guaranty Mortgage and Security Agreement (the
"Guaranty Mortgage") and a Stock Pledge Agreement (the "Stock Pledge"), from the
Guarantor, substantially in the forms set forth in Exhibits E and F to this
Agreement, respectively.
2.9 Prepayment
The principal balance of the Loan may be prepaid in whole or in part
without premium or penalty as of the due date of any scheduled quarterly payment
of principal and interest. The Authority may require that any partial prepayment
be in the amount of $10,000 or a multiple thereof.
2.10 Interest After Judgment
If the Authority should obtain a judgment against the Company
with respect to the Indebtedness, interest shall accrue on such judgment at the
interest rate provided for in the Note or as provided by statute, whichever is
greater at the time.
2.11 Application of Payments
(a) So long as no Default has occurred and is continuing:
i) regularly scheduled quarterly payments on the Note shall
be applied first to accrued interest and then to principal as set forth in the
Note;
ii) partial prepayments of principal on the Note, including
the proceeds of insurance on the Company's Property paid to and retained by the
Authority, shall be applied to the then outstanding principal balance on the
Note, but will not delay the due date or change the amount of any scheduled
quarterly payment required under the Note, except to the extent that the
Authority agrees to such delay or change in writing; and
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iii) amounts paid to the Authority pursuant to Sections 5.2
or 5.3 or late charges assessed under Section 2.5 shall be applied consistent
with the invoice, statement or demand made for such payment.
(b) While a Default exists, all payments and other amounts received by
the Authority with respect to the Indebtedness, whether regular payment,
prepayment or otherwise, including the proceeds of the sale or other disposition
of any of the Company's or the Guarantor's Property, or of insurance with
respect thereto, paid to and retained by the Authority, may be applied by the
Authority to pay the Indebtedness in such manner, order and amount as the
Authority in its sole discretion may determine, notwithstanding any
characterization thereof by the Company or the Guarantor or any entry with
respect thereto on the books and records of the Company or the Guarantor.
2.12 Failure to Meet Conditions
If at the Closing the Company fails to deliver the Note to the
Authority, or if any of the conditions specified in Section 3 have not been
fulfilled, the Authority may thereupon elect to be relieved of all further
obligations under this Agreement.
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SECTION 3
CONDITIONS OF CLOSING
The Authority's obligation to make the Loan at the Closing on
the Closing Date is subject to the following conditions precedent:
3.1 Warranties and Representations True; No Prohibited Action
(a) The warranties and representations of the Company and the
Guarantor contained in Section 4 shall be true in all respects on the Closing
Date with the same effect as though made on and as of that date.
(b) The Company and the Guarantor shall not have taken any
action or permitted any condition to exist which would have been prohibited by
Sections 5.4 to 5.9, inclusive, had such Sections been binding and effective at
all times during the period from the date of the Company's Loan Application to
and including the Closing Date.
3.2 Compliance with this Agreement
The Company and the Guarantor shall have performed and
complied with all agreements and conditions contained herein which are required
to be performed or complied with before or at the Closing.
3.3 Officers' Certificates
The Authority shall have received certificates dated the
Closing Date and signed, respectively, by the Secretary of the Company and the
Secretary of the Guarantor, substantially in the forms of Exhibits G and H, to
this Agreement, respectively, with respect to certain corporate matters.
3.4 Execution and Delivery of Financing Documents
The Company and the Guarantor each shall have duly executed
and delivered to the Authority the Financing Documents to which they are a
party.
3.5 Perfection and Priority of Mortgage, Guaranty Mortgage and Stock Pledge
(a) On or before the Closing Date, the Company shall cause an
original counterpart of the Mortgage to be filed with the town clerks of all
towns in which the Company owns Real Estate and the Guarantor shall cause an
original counterpart of the Guaranty Mortgage to be filed with the town clerks
of all towns in which the Guarantor owns Real Estate.
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(b) The Company shall furnish to the Authority at the Closing, at the
company's expense, a policy of title insurance, in a form and issued by a title
insurance company acceptable to the Authority, insuring that the Mortgage is a
valid lien with respect to the Company's Real Estate, subject to no Lien except
as may be approved by the Authority. The Guarantor shall furnish to the
Authority at the Closing, at the Guarantor's expense, a policy of title
insurance in a form and issued by a title insurance Company acceptable to the
Authority, insuring that the Guaranty Mortgage is a valid lien with respect to
the Guarantor's Real Estate, subject to no lien except as may be approved by the
Authority.
(c) The Company and the Guarantor shall each furnish to the
Authority a current search on Form UCC-11 of the records of the Uniform
Commercial Code Division of the office of the Secretary of the State of
Connecticut showing no Liens on the Company's Property and Guarantor's Property,
respectively, except as may be approved by the Authority.
(d) The Guarantor shall deliver to the Authority, pursuant to
the Stock Pledge, any shares of stock of the Borrower held by the Guarantor.
(e) The Authority agrees that the Mortgage shall be subject to
two prior mortgages to the State of Connecticut and the Guaranty Mortgage shall
be subject to a prior mortgage to The Brooklyn Savings Bank. The priority of the
Mortgage, Guaranty Mortgage and Stock Pledge with respect to certain liens
granted to The Citizens National Bank ("Citizens Bank") to secure the Citizens
Bank Loan (as hereafter defined) shall be determined pursuant to a Subordination
and Intercreditor Agreement between the Authority and Citizens Bank of even date
herewith.
(f) The Company and the Guarantor, each shall execute and
deliver to the Authority at the Closing such other financing statements,
certificates and other documents as the Authority may reasonably request in
order to give effect to and perfect its security interest under the Mortgage and
the Guaranty Mortgage.
3.6 Opinion of Counsel
The Authority shall have received from counsel to the Company
and the Guarantor a closing opinion dated the Closing Date and in a form
prescribed by the Authority.
3.7 Certification of Costs
The Authority shall have received a certificate dated the
Closing Date and signed by the President of the Company as to the actual cost of
the Project, substantially in the form prescribed by the Authority, together
with copies of appropriate bills of sale, construction contracts, invoices,
receipts and other evidence of such costs if the Authority so requests, and an
opinion of the Company's independent public accountant with respect thereto
substantially in the form prescribed by the Authority.
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3.8 Department of Health Services Certification
The Authority shall have received a certification from the
Department of Health Services, substantially in the form prescribed by the
Authority, with respect to the completion of the Project and its compliance with
the Safe Drinking Water Act, and certain other matters.
3.9 Completion of Project
The Authority shall be satisfied that the Project has been
completed substantially in accordance with the Loan Application and the Loan
Authorization.
3.10 DPUC Approvals
The Company shall have obtained favorable final decisions from
the DPUC with respect to the Company's application to the DPUC to undertake the
Loan and concurrent financing in the amount of $1,250,000.00 (the "Citizens Bank
Loan"), and the Company's application to the DPUC to amend its rates. Each such
final decision shall be satisfactory in form and substance to the Authority and
shall include no burdensome conditions or restrictions. A certified copy of each
such final decision shall be furnished by the Company to the Authority at the
Closing. The Company shall also have furnished to the Authority certification
from the DPUC that the costs of the Project are reasonable.
3.11 Site Plan and Zoning Compliance
If required by the Authority, the Company shall have furnished
the Authority with a site plan locating the Project in place, together with a
certificate from the zoning enforcement officer of the town in which the Project
is located to the effect that the Project is in compliance with the state
building code and all local land use regulations, including those relating to
zoning, subdivisions and inland wetlands.
3.12 Insurance
The Company and the Guarantor each shall have furnished the
Authority with a lender's certificate of insurance and copies of the policies of
insurance referred to therein, establishing to the satisfaction of the Authority
that the Company and the Guarantor each has obtained property and liability
insurance in such amounts and with such coverages as is customary and reasonable
for similarly situated, investor-owned water companies from such insurers as
shall be reasonably satisfactory to the Authority. The Authority shall be named
under standard, non-contributory mortgagee and loss payee clauses with respect
to the Company's Property and the Guarantor's Property.
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3.13 Good Standing Certificates; Tax Clearances
The Company shall furnish the Authority with:
(a) reasonably current long-form certificates of the Secretary of the
State of Connecticut with respect to the corporate existence and good standing
of the Company and the Guarantor;
(b) a reasonably current certificate of the DPUC to the effect that the
Company is a public service company subject to DPUC jurisdiction and has filed
all required annual reports and is in good standing with the DPUC;
(c) a letter from the tax collector of each town in which Property of
the Company and the Guarantor is located confirming that the Company and the
Guarantor are current in the payment of all municipal real and personal property
taxes assessed against them there; and
(d) a letter from the Department of Revenue Services of the State of
Connecticut confirming that the Company and the Guarantor has filed all
corporation business tax returns and gross earnings tax returns required to the
date thereof and has paid the taxes shown as due thereon.
3.14 Affirmative Action Plan
The Company shall have filed with the Authority and the Authority shall
have approved an appropriate Affirmative Action Plan for the Company.
3.15 Commitment Fee
Any balance owing with respect to the commitment fee due to the
Authority from the company pursuant to the terms of the Loan Authorization shall
have been paid.
3.16 Compliance with Loan Authorization
Except to the extent expressly modified by this Agreement, the Company
and the Guarantor each shall have performed and complied with all agreements and
conditions contained in the Loan Authorization which are required to be
performed or complied with before or at the Closing.
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3.17 Proceedings Satisfactory
All proceedings taken in connection with the transactions contemplated
by this Agreement and all documents relating to the transactions contemplated by
this Agreement shall be satisfactory to the Authority and its special counsel.
The Authority shall have received such additional documents not inconsistent
with the terms of this Agreement as the Authority or its special counsel may
reasonably request.
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SECTION 4
WARRANTIES AND REPRESENTATIONS
OF THE COMPANY AND GUARANTOR
The Company and Guarantor each hereby represents and warrants as follows:
4.1 Corporate Existence and Authority
(a) The Company and the Guarantor each is a validly organized and
existing corporation in good standing under the laws of the State of Connecticut
and is not in violation of any provisions of its, charter, certificate of
incorporation or bylaws.
(b) The execution, delivery and performance of the Financing Documents
are within the corporate powers of the Company and the Guarantor, have been duly
authorized and approved by the boards of directors of the Company and the
Guarantor, and require no stockholder approval or other corporate authorization.
(c) The Company is a "public service company" and a "water company"
within the meaning of Section 16-1 of the General Statutes, subject to the
jurisdiction of the DPUC. The Company is current in filing all required reports
and financial statements and is in good standing with the DPUC.
(d) The Company is legally authorized to own and operate its
properties, to lay and maintain its mains and to supply water for public and
domestic use in the town(s) of Killingly, Brooklyn, Thompson and Plainfield, and
the Company is the sole company supplying water for such use in said town(s).
(e) The Company has valid and sufficient franchises to engage in the
taking, collection, distribution and sale of water in the area served by it, the
right to install and maintain pipes and conduits in public highways and grounds,
and the power of eminent domain, which franchises, right and power are free from
burdensome restrictions and unlimited as to time.
4.2 Enforceability of Financing Documents; No Prohibition or Consent
(a) The Financing Documents constitute valid and legally binding
agreements of the Company and the Guarantor, enforceable in accordance with
their respective terms.
(b) Neither the execution and delivery of the Financing Documents, the
consummation of the transactions contemplated thereby, nor the fulfillment by
the Company and the Guarantor of or compliance by the Company and the Guarantor
with the terms and conditions thereof is in contravention of the Company's or
the Guarantor's certificate of incorporation, charter or bylaws or any
applicable law, regulation, order or
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judgment, or is prevented or limited by or conflicts with or will result in a
breach of or default under the terms, conditions or provisions of any
contractual or other restriction on the Company or the Guarantor, evidence of
its indebtedness or agreement or instrument of whatever nature to which the
Company or the Guarantor is a party or by which it or any of its Property is
bound. No event has occurred and no condition exists which, upon the execution
and delivery of any of the Financing Documents, would constitute a Default.
(c) There is no action or proceeding pending or, to the knowledge of
the Company or the Guarantor, threatened against or affecting the Company or the
Guarantor before any court, administrative agency or arbitration board that
would materially and adversely affect the ability of the Company or the
Guarantor to perform its obligations under the Financing Documents. All
authorizations, approvals and consents of governmental bodies or agencies
required in connection with the execution, delivery and performance of the
Financing Documents have been obtained, and no authorization, approval or
consent of any other Person is required therefor.
4.3 DPUC Approvals
(a) The DPUC, by final decision dated November 20, 1989 approved an
amended schedule of rates for the Company allowing the costs of the Project to
be included in the Company's rate base and designed to produce increases in the
Company's annual revenues of approximately $238,973.
(b) The DPUC, by final decision dated November 20, 1989, approved the
Loan, including the grant by the Company to the Authority of a security interest
in its Property as contemplated by the Mortgage, and approved the Citizens Bank
Loan.
4.4 Eligibility of the Company
(a) The Company is a "water facility" as defined in Section 32-23x of
the General Statutes. All of the outstanding capital stock of the Company is
owned by the Guarantor.
(b) The Company provides water service on a daily basis to at least
twenty-five but fewer than ten thousand customers.
(c) The Company is subject to the provisions of the Safe Drinking Water
Act. The Project was necessary in order that the Company might comply with the
provisions of the Safe Drinking Water Act and of an order of the Department of
Health Services deeming the water supplied by the Company to be inadequate. The
Project has been satisfactorily completed, and by virtue thereof the Company now
is in compliance with the provisions of the Safe Drinking Water Act and such
order.
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4.5 Use of Proceeds
All of the proceeds of the Loan will be used by the Company to pay the
costs of planning, design, modification or construction of eligible drinking
water facilities within the meaning of the Act.
4.6 Real Estate
Except as set forth in Exhibit I to this Agreement, none of the
Company's or the Guarantor's Real Estate is subject to any Lien which either (a)
secures an obligation with respect to borrowed money or (b) is of a nature or
character which materially impairs the value of the Real Estate or interferes
with the use of the Real Estate in the Company's or the Guarantor's operations.
4.7 Transmission Rights
The Company has Transmission Rights sufficient to permit it adequately
to serve the town(s) of Killingly, Brooklyn, Thompson and Plainfield. The
Company's Transmission Rights are free from burdensome restrictions and are
unlimited as to time.
4.8 Property
The Company and the Guarantor each owns all Property which it purports
to own and which is used by it in the conduct of its business. None of its
Property is subject to any Lien, except as set forth in Exhibit J to this
Agreement.
4.9 Perfection and Priority of Mortgage
The Mortgage has been duly recorded with the Town Clerk of the town(s)
of Killingly, Brooklyn, Thompson and Plainfield, and the Guaranty Mortgage has
been duly recorded with the Town Clerk of the town of Killingly. Financing
Statements naming the Company as debtor and the Authority as secured party, and
describing the Company's Property as collateral, have been filed with the office
of the Secretary of the State of Connecticut and the Town Clerk of the towns of
Killingly, Brooklyn, Thompson and Plainfield. Financing Statements naming the
Guarantor as debtor and the Authority as secured party, and describing the
Guarantor's Property as collateral, have been filed with the Office of the
Secretary of the State of Connecticut and the Town Clerk of the town of
Killingly. No further action is necessary to perfect or make effective the
security interest in the Property of the Company and the Guarantor intended to
be created by the Mortgage and the Guaranty Mortgage, and the Mortgage and
Guaranty Mortgage create valid and direct liens on all of the Property of the
Company and the Guarantor, respectively, subject only to those Liens
contemplated by this Agreement or described in an Exhibit attached hereto.
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4.10 Compliance with Laws
The Company and Guarantor each is in compliance with all applicable
federal, state and local laws and regulations affecting it, its Property and its
business, including those relating to land use, including zoning, subdivision
and inland wetlands; health; occupational safety; and environmental quality.
4.11 No Litigation
There is no action or proceeding pending or, to the knowledge of the
Company or the Guarantor, threatened against or affecting the Company or the
Guarantor before any court, administrative agency or arbitration board.
4.12 Burdensome Contracts
Neither the Company nor the Guarantor is a party to any burdensome
contract or agreement which could or might materially and adversely affect its
business operations or financial condition.
4.13 Taxes
All tax returns required to be filed by the Company and the Guarantor
in any jurisdiction have in fact been filed, and all taxes, assessments, fees
and other governmental charges upon the Company and the Guarantor, or upon any
of their Property, income or franchises which are due and payable have been
paid. Each of the Company and the Guarantor knows of no proposed additional tax
assessment against it, and each has adequately provided or reserved on its books
for taxes for all open years and for its current fiscal year.
4.14 Financial Statements; No Adverse Change
(a) The financial statements of the Company and the Guarantor furnished
to the Authority as part of the Loan Application or thereafter in connection
with the Loan have been prepared in accordance with generally accepted
accounting principles and present in a complete and fair manner the financial
position of the Company and the Guarantor, respectively, and the results of
their operations for the fiscal periods covered thereby.
(b) Since the end of the last fiscal period for which financial
statements have been furnished to the Authority, there has been no material and
adverse change in the Company's and the Guarantor's business, Property or
financial condition.
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SECTION 5
COVENANTS OF THE COMPANY AND THE GUARANTOR
The Company and Guarantor each covenants that on and after the Closing
Date, and for so long as any part of the Indebtedness shall remain outstanding:
5.1 Payment of Loan
The Company will pay the Note according to its terms and the Company
and Guarantor each will comply with each provision of this Agreement and each
provision of the other Financing Documents binding upon it.
5.2 Expenses and Additional Indebtedness
(a) The Company and the Guarantor (promptly, and in any event within
thirty (30) days of receiving any invoice, statement or demand therefor) will
pay all of the out-of-pocket expenses of the Authority, including the reasonable
fees and disbursements of special counsel to the Authority, relating to:
i) this Agreement and the transactions contemplated hereby,
including the Closing;
ii) perfecting, sustaining or defending the security interest
of the Authority in the Company's and the Guarantor's Property;
iii) protecting, maintaining and preserving the Company's and
the Guarantor's Property following an Event of Default, including the payment by
the Authority as deemed necessary by it in its sole discretion of insurance
premiums, taxes, expenses of maintenance and repair, and the fees and
disbursements of custodians, receivers, appraisers, liquidators and others
retained with respect to the Property; and
iv) collection of the Note and enforcement of the rights of
the Authority under the Financing Documents following an Event of Default,
including foreclosure of the Mortgage or the Guaranty Mortgage.
(b) The Company and the Guarantor shall pay the reasonable fees and
expenses of special counsel to the Authority in connection with the preparation
of the Financing Documents whether or not the Loan is made.
(c) Amounts due to the Authority under this Section 5.2 remaining
unpaid thirty (30) days after the Company has received an invoice, statement or
demand therefor shall bear interest at the rate provided for in the Note and
shall be considered an addition to the principal balance on the Note, secured by
and entitled to the benefit of the Mortgage.
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5.3 Indemnification
The Company and Guarantor each, jointly and severally, agrees to
protect, defend and hold harmless the Authority and the members, officers and
employees thereof from any claim, demand, suit, action or other proceeding
whatsoever by any Person, arising or purportedly arising from or in connection
with the Financing Documents, the transactions contemplated thereby or actions
taken thereunder (except for any willful misconduct or gross negligence of any
such indemnified party), or the construction, use or operation of the Project.
5.4 Corporate Existence and Authority
(a) The Company will maintain its corporate existence in Connecticut
and its status as a "public service company" and a "water company" within the
meaning of Section 16-1 of the General Statutes and as a "water facility" within
the meaning of the Act, and will preserve and keep in existence all of its
rights and franchises. The Guarantor will maintain its corporate existence in
Connecticut.
(b) Without the prior written consent of the Authority, neither the
Company nor the Guarantor will consolidate with, merge with or into or sell or
transfer all or a significant part of their Property to any other Person, or
issue any additional shares of their capital stock.
5.5 DPUC and Department of Health Services Compliance
(a) The Company will file with the DPUC in a timely fashion all
required reports and financial statements and will comply with all laws and
regulations relating to its status as a public service company and all DPUC
decisions, rulings, and orders applicable to the Company.
(b) The Company will comply with all laws and regulations administered
by the Department of Health Services and applicable to the Company, and all
applicable orders of the Department of Health Services.
5.6 Taxes
The Company and the Guarantor each will file in a timely fashion all
tax returns required of it in any jurisdiction and will pay, before they become
delinquent, all taxes, assessments, fees and other governmental charges upon it,
or upon any of its Property, income or franchises; provided that such items need
not be paid while being contested by it in good faith and by appropriate legal
proceedings so long as adequate book reserves have been established with respect
thereto and its title to, and its right to use, its Property is not materially
and adversely affected thereby.
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5.7 Maintenance of Property and Insurance
(a) The Company and the Guarantor each will maintain its Property in
good condition and make all necessary renewals, replacements, additions,
betterments and improvements thereto, and the Company will maintain Transmission
Rights sufficient adequately to provide water to its service area.
(b) The Company and the Guarantor will maintain, with such insurers as
shall be reasonably satisfactory to the Authority, casualty and liability
insurance in such amounts and with such coverages as is customary and reasonable
for similarly situated companies. Without limiting the foregoing, the Company
shall maintain casualty insurance with respect to its Property in an aggregate
amount not less than the outstanding principal balance of the Loan, and public
liability insurance with an aggregate limit not less than $1,000,000.
5.8 Liens
The Company and the Guarantor each will not agree to, cause, or permit
any of its Property to be subject to any Lien, except:
(a) Liens contemplated by this Agreement or described in an Exhibit
attached hereto;
(b) Liens securing taxes, assessments, fees or governmental charges,
provided the payment thereof is not required by Section 5.6;
(c) attachments, judgments and other similar Liens arising in
connection with court proceedings, provided the execution or other enforcement
of such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings; and
(d) reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting Real Estate, provided they neither (i) secure an
obligation with respect to borrowed money, nor (ii) are of a nature or character
which materially impairs the value of the Real Estate or interferes with the use
of the Real Estate in the Company's or the Guarantor's operations.
5.9 Compliance with Laws
The Company and the Guarantor each will comply with all applicable
federal, state and local laws and regulations affecting it, its Property and its
business, including those relating to land use, including zoning, subdivision
and inland wetlands; health; occupational safety; and environmental quality.
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5.10 Financial Statements
(a) The Company and the Guarantor each will at all times keep accurate
and complete records and books of account with respect to all of the its
business activities, in accordance with sound accounting practices and generally
accepted accounting principles, such records and accounts to be maintained at
the address set forth on the first page of this Agreement.
(b) The Company and Guarantor each shall furnish to the Authority (i)
within 90 days after the end of each fiscal year, its balance sheet as of the
end of such fiscal year, and the related statements of earnings and retained
earnings and changes in financial position for the year then ended, setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year in reasonable detail, including all supporting schedules
and comments, all of which shall be prepared in accordance with generally
accepted accounting principles consistently maintained, and certified by
independent public accountants of recognized standing, satisfactory to the
Authority; (ii) within 90 days after the end of each fiscal year, a statement
from its independent public accountants indicating that, in the preparation of
such statements, said accountants have obtained no knowledge of any default in
any obligation to the Authority, or disclosing all defaults of which the
accountants have obtained knowledge; (iii) such quarterly financial statements
as the Authority may from time to time request; and (iv) such other financial
information and statements relating to the Company or the Guarantor as the
Authority reasonably may request.
(c) The Authority, or any Person designated by it, shall have the right
(to be exercised in a reasonable manner), from time to time, to call at the
Company's and Guarantor's place or places of business during reasonable business
hours, and, without hindrance or delay, to inspect, audit, check and make
extracts from the books, records, journals, orders, receipts and any
correspondence and other data relating to the Company's or the Guarantor's
business or to any transactions between the parties hereto, and shall have the
right to make such verification concerning the Company's and the Guarantor's
Property as the Authority may consider reasonable under the circumstances, all
at the Company's expense.
(d) The Company shall deliver to the Authority copies of all financial
statements, reports, rate requests, applications or other filings with the DPUC
within 15 days of such filing and, within 15 days of receipt, copies of all DPUC
rulings and orders with respect to the Company.
(e) The Company and the Guarantor each shall deliver to the Authority
copies of all reports or other communications to its shareholders within 15 days
of the mailing thereof.
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5.11 Protection of Mortgage and the Guaranty Mortgage
The Company and the Guarantor each from time to time as the Authority
may request will execute such additional financing statements, certificates and
other documents as the Authority reasonably may require in order to continue in
effect, perfect, preserve, and maintain the priority of the security interest
intended to be afforded by the Mortgage and the Guaranty Mortgage.
5.12 Default Notification
Upon becoming aware of the existence or occurrence of a Default under
this Agreement, the Company or the Guarantor immediately shall provide to the
Authority written notice identifying the Default and specifying the corrective
action it is taking with respect thereto.
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SECTION 6
DEFAULT AND REMEDIES
6.1 Events of Default
Each of the following is an Event of Default under this Agreement:
(a) the failure of the Company to make payment of any installment of
principal and/or interest due under the Note within ten (10) days of its due
date;
(b) the failure of the Company or the Guarantor to pay any amount due
the Authority pursuant to Section 2.5, Section 5.2 or Section 5.3 or any other
Indebtedness within the time prescribed by this Agreement, and if no time is
prescribed, within thirty (30) days of demand therefor made by the Authority;
(c) the failure of the Company or the Guarantor to keep in force any
insurance required by this Agreement or any of the other Financing Documents;
(d) the actual or threatened waste, removal or demolition of, or
material alteration to any significant part of the Company's or the Guarantor's
Property;
(e) the inaccuracy in any material respect of any representation made
by or on behalf of the Company or the Guarantor in the Loan Application, this
Agreement Or any of the other Financing Documents;
(f) the material breach by the Company or the Guarantor of any its
warranties in Section 4 of this Agreement;
(g) the failure, for thirty (30) days after notice thereof from the
Authority, of the Company or the Guarantor to observe or perform any other
covenant or agreement in this Agreement, including but not limited to Section 5,
or in any of the other Financing Documents;
(h) without the prior written consent of the Authority, a change in the
stock ownership or control of the Company or the Guarantor;
(i) any default or event of default under any note, mortgage, security
agreement or other instrument evidencing, securing or guarantying the Citizens
Bank Loan or any modification, supplement or refinancing thereof;
(j) the failure, for thirty (30) days after notice thereof from the
Authority, of the Company or the Guarantor to observe and perform any of its
covenants or agreements under any other note, mortgage, security agreement or
other instrument evidencing, securing or guaranteeing a debt of the Company or
the Guarantor, other than the Loan
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(including, without limitation, the Citizens Bank Loan) to any Person, or the
acceleration after default in the payment of any indebtedness due thereunder;
(k) the failure of the Company or the Guarantor generally to pay its
debts as such debts become due;
(1) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Company or the Guarantor in an involuntary case
under the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or the Guarantor or for any
substantial part of the its property, or the issuance of an order for the
winding-up or liquidation of the affairs of the Company or the Guarantor and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; or upon the commencement by the Company or the Guarantor of
a voluntary case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency or
other similar law, or the consent by the Company or the Guarantor to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Company or
the Guarantor or for any substantial part of the property of the Company or the
Guarantor or the making by the Company or the Guarantor of any assignment for
the benefit of creditors, or the taking of corporate action by the Company or
the Guarantor in furtherance of any of the foregoing;
(m) the revocation under Section 16-10a of the General Statutes of all
or any part of the Company's franchise to operate as a public service company;
(n) without the prior written consent of the Authority, the filing by
the Company with the DPUC pursuant to Section 16-43 or Section 16-46 of the
General Statutes of any application to merge or consolidate, sell, lease,
assign, mortgage or dispose of an essential part of its franchise or Property,
or dissolve or terminate its corporate existence; and
(o) an Event of Default under any other Financing Document.
6.2 Remedies upon Event of Default
In addition to, and not in limitation of, any other term of this
Agreement or any other right or remedy hereunder or in accordance with law, upon
the occurrence of any Event of Default:
(a) the whole of the principal sum and accrued interest on the Note,
and all other Indebtedness, at the option of the Authority and without notice,
demand or legal process of any kind, shall become immediately due and payable;
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(b) the Authority may proceed to enforce the performance or observance
of any obligations, agreements, or covenants of the Company or the Guarantor in
this Agreement or any of the other Financing Documents, to collect the amounts
then due and thereafter to become due, and to foreclose the Mortgage or the
Guaranty Mortgage, or the Stock Pledge, or otherwise enforce and realize upon
its security interest in the Company's or the Guarantor's Property; and
(c) in connection with any of the foregoing, the Authority may from
time to time exercise any rights and remedies and take any action available to
it at law or in equity, including the Uniform Commercial Code, in addition to
and not in lieu of, any rights and remedies provided for in this Agreement or in
any of the other Financing Documents.
6.3 Reinstatement
In the event that any Event of Default is waived in writing by the
Authority, then such Event of Default shall be annulled and the parties hereto
shall be restored to their former rights hereunder, but no such waiver shall
extend to any subsequent or other Event of Default or impair any other right of
the Authority.
6.4 Marshalling
The Authority shall not be compelled to release, or be prevented from
foreclosing or enforcing the Mortgage upon all or any part of the Company's
Property or the Guaranty Mortgage upon all or any part of the Guarantor's
Property unless the entire Indebtedness shall be paid, and shall not be required
to accept any part of the Company's or the Guarantor's Property, as
distinguished from the whole, as payment of or upon the Indebtedness or to allow
any apportionment of the Indebtedness to or among any separate parts of the
Company's or the Guarantor's Property.
6.5 Partial Release
The Authority, without notice, and without regard to the consideration,
if any, paid therefor, and notwithstanding the existence at that time of any
inferior liens thereon, may release any part of the Company's or Guarantor's
Property from its security interests or any Person primarily or contingently
liable for the Indebtedness, or may agree to extend the time for payment
thereof, without in any way affecting the existence or priority of its security
interest or the liability of any Person not expressly released.
6.6 No Waiver
No delay or failure on the part of the Authority in the exercise of any
right or remedy under this Agreement or any of the other Financing Documents
shall operate as a waiver thereof, and no single or partial exercise by the
Authority of any such right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
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6.7 Remedies Cumulative
The rights and remedies provided in this Agreement and the other
Financing Documents are cumulative and the Authority may recover judgment
thereon, issue execution therefor, and resort to every other right or remedy
available at law or in equity, without first exhausting and without impairing or
affecting the security of or any right or remedy afforded by this Agreement or
any of the other Financing Documents, and no enumerated or special rights or
powers herein shall be construed to limit any grant of general rights or powers
or take away or limit any rights of the Authority under applicable law.
6.8 Waiver of Rights
THE COMPANY AND THE GUARANTOR EACH ACKNOWLEDGES THAT THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT IS A COMMERCIAL TRANSACTION, AND VOLUNTARILY AND
KNOWINGLY WAIVES ANY RIGHT IT MAY HAVE TO NOTICE AND HEARING UNDER CHAPTER 903A
OF THE GENERAL STATUTES OR AS OTHERWISE ALLOWED BY LAW WITH RESPECT TO ANY
PREJUDGMENT REMEDY.
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SECTION 7
MISCELLANEOUS
7.1 Governing Laws
This Agreement and each of the other Financing Documents shall be
governed and construed in accordance with the laws of the State of Connecticut.
7.2 Notices
Notices and other communications under this Agreement or any of the
other Financing Documents shall be deemed sufficiently given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
addressed as follows:
(a) if to the Authority:
Connecticut Development Authority
217 Washington Street
Hartford, CT 06106
Attention: Water Company Loans
or to such other address as the Authority shall have furnished
in writing to the Company, or
(b) if to the Company or Guarantor at:
321 Main Street
P.O. Box 648
Danielson, CT 06239
or to such other address as the Company or the Guarantor shall
have furnished in writing to the Authority.
7.3 Amendment and Waiver
(a) This Agreement and any of the other Financing Documents may be
amended, and the observance of any provision hereof or thereof may be waived,
but only by an appropriate instrument in writing signed, in the case of an
amendment, by all of the parties hereto, and in the case of a waiver, by the
party against whom the waiver is to operate.
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(b) No such amendment or waiver shall extend to or affect any provision
of this Agreement or any of the other Financing Documents, or any Default or
Event of Default, not expressly amended or waived.
7.4 Duplicate Originals
This Agreement and each of the other Financing Documents may be signed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
7.5 Severability
If any provision of this Agreement or any of the other Financing
Documents or the application thereof to any Person or circumstance, shall to any
extent be invalid or unenforceable, the remainder of this Agreement or such
Financing Document, or the application of such provision to other Persons or
circumstances, shall not be affected thereby, and each provision shall be valid
and enforceable to the fullest extent permitted by law.
7.6 Binding Effect
This Agreement and each of the other Financing Documents shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
7.7 Term of this Agreement
This Agreement and the other Financing Documents shall continue in full
force and effect as long as any Indebtedness remains outstanding.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ATTEST [SEAL] THE CRYSTAL WATER COMPANY
OF DANIELSON
By: /s/ Randolph Kempain By: /s/ Roger Engle
---------------------- -----------------
Randolph Kempain Roger Engle
Its Secretary Its President
ATTEST [SEAL] CRYSTAL WATER UTILITIES
CORPORATION
By: /s/ Randolph Kempain By: /s/ Roger Engle
---------------------- -----------------
Randolph Kempain Roger Engle
Its Secretary Its President
CONNECTICUT DEVELOPMENT
AUTHORITY
By: /s/ Brian Day
---------------
Its Loan Officer
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