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Exhibit 4.10
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT made this 9th day of February, 1996, between THE CRYSTAL
WATER COMPANY OF ▇▇▇▇▇▇▇▇▇, a public service company specially chartered by the
General Assembly of the State of Connecticut whose principal place of business
is ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (the "Debtor"), and NEW
LONDON TRUST, F.S.B., a federal savings bank organized and existing under the
laws of the United States of America and having an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Secured Party").
WITNESSETH:
In consideration of the mutual covenants and agreements contained herein
and for other good and valuable consideration, receipt of which is hereby
acknowledged, Debtor and Secured Party agree as follows:
1. COMMERCIAL MORTGAGE LOAN. Subject to the terms and conditions
contained in this Agreement, Secured Party agrees to make a commercial mortgage
loan (the "Loan") to Debtor in the principal amount of TWO MILLION SEVEN HUNDRED
THOUSAND DOLLARS ($2,700,000). In addition to this Agreement, the Loan shall be
evidenced by the Mortgage Note (the "Note"), a copy of which is attached hereto
as Exhibit A. The Loan will be payable in principal installments as set forth in
the Note.
2. INTEREST RATE. The Loan shall bear interest at the rates set forth
and described in the Note.
3. USE OF LOAN PROCEEDS. Loan proceeds shall be used to refinance
existing indebtedness with Citizens National Bank and The Connecticut
Development Authority ("CDA").
4. SECURITY INTEREST. To secure payment and performance of each and all
of the Obligations, Debtor hereby assigns and grants to Secured Party a
continuing security interest in all tangible and intangible personal property of
Debtor, including, without limitation, Accounts, Chattel Paper, Equipment,
General Intangibles, Instruments, and Inventory, together, in each instance,
with the renewals, substitutions, replacements, additions, accessories, rental
payments, products and proceeds (including, without limitation, insurance
proceeds) thereof, (hereinafter, collectively called the "Collateral").
5. DEFINITIONS.
(a) The term "Accounts" shall mean, any right to payment held
by Debtor, whether in the form of accounts receivable, notes, drafts,
acceptances or other forms of obligations and receivables now or hereafter
received by or belonging to Debtor for Inventory sold or leased by it or for
services rendered by it whether or not earned by performance, together with all
guarantees and security therefor and all proceeds thereof, whether cash proceeds
or otherwise, including, without limitation, all right, title and interest of
Debtor in the Inventory which gave rise to any such Accounts, including, without
limitation, the right of stoppage in transit and all returned, rejected,
rerouted or repossessed Inventory;
(b) The term "Chattel Paper" shall mean a writing or writings
which evidence both a monetary obligation and a security interest in or a lease
of specific goods, whether now or hereafter held by Debtor;
(c) The term "Equipment" shall mean all the machinery,
equipment, furniture, tools, goods and other tangible personal property,
excluding Motor Vehicles and Inventory, now owned or hereafter acquired by
Debtor;
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(d) The term "Financing Agreements" shall mean all agreements,
notes, instruments, mortgages, security agreements and documents evidencing,
securing or relating in any way to any and all loans, overdrafts, indebtedness,
obligations, guaranties and liabilities of Debtor or any guarantor of the Loan
to Secured Party of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising, including without limitation, this Agreement and the Note;
(e) The term "General Intangibles" shall mean any intangible
personal property (including, without limitation, things in action) now or
hereafter held by Debtor, other than Accounts, Chattel Paper and Instruments;
(f) The term "Guarantor" shall mean Crystal Water Utilities
Corporation.
(g) The term "Instruments" shall mean a negotiable instrument
or a certificated security, as defined in the Uniform Commercial Code of
Connecticut, or any other writing which evidences a right to the payment of
money and is not itself a security agreement or lease and is of a type which, in
the ordinary course of business, is transferred by delivery with any necessary
endorsement or assignment, whether now or hereafter held by Debtor;
(h) The term "Inventory" shall mean all goods, merchandise,
raw materials, work in process, finished goods and products and other tangible
personal property now owned or hereafter acquired by Debtor and held for sale or
lease, or furnished or to be furnished under contracts of service or used or
consumed in Debtor's business;
(i) The term "Loan Account" shall mean the account on the
books of Secured Party in which will be recorded the Loan made by Secured Party
to Debtor pursuant to this Agreement, payments made on the Loan, and other
debits and credits as provided by this Agreement;
(j) The term "Obligations" shall mean any and all loans,
overdrafts, indebtedness, obligations, guaranties and liabilities of Debtor to
Secured Party of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
instrument they may be evidenced or whether evidenced by any agreement or
instrument, including, but not limited to, the Loan, and all costs, expenses,
fees, charges and attorneys' and other professional fees incurred by Secured
Party in connection with any of the foregoing, or in any way connected with or
related to the preservation, realization, enforcement, protection or defense of
the Collateral, this Agreement, the Note, and the other Financing Agreements,
and the rights and remedies hereunder or thereunder;
(k) The term "Subordinated Debt" shall mean such of the
liabilities of Debtor with respect to which payment has been subordinated to the
payment of the Obligations pursuant to a subordination agreement in form and
substance satisfactory to the Secured Party.
6. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to
Secured Party that:
(a) Financial Statements. The financial statements, as of
December 31, 1994 and prepared by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, previously furnished to
Secured Party, present fairly in all material respects the financial position at
such date and the results of operations of Debtor as of and for the periods then
ending, in conformity with generally accepted accounting principles, there has
been no material adverse change in the financial condition of Debtor since the
date thereof, and there are no liabilities, fixed or contingent, not disclosed
in such statements, except as incurred in the ordinary course of business since
the date thereof.
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(b) Business/Annual Report. Debtor's regular annual report and
its audited financial report to the Department of Public Utility Control of the
State of Connecticut ("DPUC") for its fiscal year ended December 31, 1994,
correctly describes the business, financial condition and properties of Debtor,
and the financial statements contained therein have been prepared in accordance
with generally accepted accounting principles, except to the extent such
principles are modified in accordance with the Uniform System of Accounts for
Class A Utilities duly adopted by the DPUC and then in effect.
(c) Ownership of Assets. Debtor has good and marketable title
to its assets, free from any liens, mortgages, security interests, pledges or
encumbrances, except: (i) as permitted in Section 8(a) hereof, and (ii) as shown
on Exhibit B attached hereto. Except as shown on Exhibit B, no financing
statements covering all or any part of Debtor's assets are on file in the office
of the Secretary of the State of Connecticut or in any other federal, state or
local governmental office, whether or not properly filed under applicable law.
(d) Corporate Organization. Debtor is, and will continue to
be, a corporation duly organized, validly existing and in good standing as a
public service company under the laws of the State of Connecticut, and is, and
will continue to be, duly qualified as a foreign corporation in good standing in
every jurisdiction in which such qualification is necessary. Debtor has
corporate power to enter into the Financing Agreements and to borrow hereunder,
and has all requisite authorizations and permits to own and operate Debtor's
properties and assets and to carry on Debtor's business as now being conducted.
(e) Litigation: Taxes. There are no actions, suits,
proceedings, or investigations pending, or judgments or orders outstanding, or,
to the knowledge of Debtor, threatened against Debtor, which, if adversely
decided against Debtor, could have a material adverse effect on the condition,
operations or prospects (financial or otherwise) of Debtor, and Debtor has filed
all required federal, state and local tax returns, and has paid all taxes as
shown on such returns, and has provided adequate reserves for payment of any tax
which is being contested.
(f) Authority. The execution, delivery and performance of this
Agreement, the Note, and each and every other agreement, instrument and document
required to be executed or delivered to Secured Party by Debtor in connection
with the Loan have been duly authorized by all necessary corporate action; the
execution, delivery and performance of said agreements, instruments and
documents, the consummation of the transactions therein contemplated, and the
fulfillment of or compliance with the terms and provisions therein, are within
Debtor's powers and are not in contravention of any provisions of Debtor's
Certificate of Incorporation/Charter or By-Laws. The execution, delivery and
performance of said agreements, instruments and documents will not result in a
violation of any laws, or a breach of, or constitute a default under, or result
in the creation of any lien, charge or encumbrance upon any of Debtor's assets
(other than the security interest granted to Secured Party hereunder) pursuant
to any of the terms, conditions or provisions of any agreement, instrument or
other undertaking to which Debtor is a party or by which Debtor is bound. No
consent, approval, authorization or other order of, or registration or filing
with any governmental body is required in connection with the execution,
delivery and performance of said agreements, instruments and documents.
(g) Defaults. Debtor is not in default under any agreement,
indenture, mortgage, deed of trust, or any other agreement or any court order or
other order issued by any governmental body to which Debtor is a party or by
which Debtor may be bound.
(h) Environmental, Health, Safety Laws. Debtor has not
received any notice, order, petition or similar document in connection with or
arising out of any violation of any environmental, health or safety law,
regulation, rule or order, and Debtor knows of no basis for any claim of such a
violation or of any threat thereof.
(i) Other Laws. Debtor is not in violation of any law,
regulation, rule or order including, but not limited to, the laws, regulations,
rules and orders described in subparagraph (g) above, which violation materially
and adversely affects the financial condition of Debtor or the ability of Debtor
to perform hereunder.
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(j) Business Location. The Collateral, the books and records
relating thereto, and the principal place of business of Debtor are all at the
address of Debtor first written above.
(k) Business Name. The name of Debtor has not changed for at
least the past ten (10) years and during such period, Debtor has conducted, and
currently conducts, its business solely in its own name without the use of a
tradename or the intervention of or through any entity of any kind, except as
shown on Exhibit B.
(l) Water Company, Franchise Area. Debtor is a water company
within the meaning of Section 16-1 (10), and conducts its business as such only
in the Connecticut Towns of Killingly, Plainfield, ▇▇▇▇▇▇▇▇ and Brooklyn.
(m) Permissible CDA Indebtedness. Secured Party has agreed to
accept liens on the Collateral, as well as liens on certain real estate and
properties located in the Towns of Killingly, Brooklyn and ▇▇▇▇▇▇▇▇,
respectively, owned by Debtor and property located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ owned by Guarantor (collectively, the "Real Estate
Collateral") reportedly subordinate to liens of the CDA only (the "CDA Liens").
Debtor hereby represents that the CDA Liens secure the repayment of indebtedness
in favor of the CDA in the present amount of $562,157.00 (the balance as of
fiscal year end December 31, 1994 and hereinafter referred to as the "Current
CDA Debt"). Debtor hereby acknowledges that Secured Party has agreed to
subordinate its liens and security interests to the CDA Liens only (that secure
the Current CDA Debt) and to no other liens whatsoever.
7. AFFIRMATIVE COVENANTS. Debtor covenants and agrees that, from the
date hereof until payment in full of the Loan and payment and performance of all
the Obligations, unless Secured Party otherwise agrees in writing, Debtor and
Guarantor (where indicated) shall:
(a) Financial Reports. Furnish to Secured Party:
(i) Within one hundred twenty (120) days after the
end of each fiscal year of Debtor and Guarantor, their respective audited
financial statements in form and substance acceptable to Secured Party, which
shall be prepared in conformity with generally accepted accounting principles,
and certified by the President or Treasurer of Debtor, as presenting fairly in
all material respects the financial position of Debtor and Guarantor, as the
case may be, as of the date of the period then ended and the results of
operations of Debtor and Guarantor, as the case may be, as of and for the
periods then ending, together with a statement that no Event of Default then
exists under this Agreement, the Note or Guarantor's guaranty.
(ii) Within thirty (30) days after the end of each
six-month period, Debtor-prepared financial statements in form and substance
satisfactory to Secured Party.
(iii) Copies of all income tax returns of the Debtor
and Guarantor, and any requests for extensions of filing deadlines, within ten
(10) days of the filing of such returns or requests for extensions.
(iv) Within fifteen (15) days of each filing date,
all reports and applications filed with the DPUC, including, without limitation,
Debtor's annual report and also any DPUC decisions concerning Debtor within
fifteen (15) days of the draft of final decision.
(v) Promptly upon Secured Party's written request,
such other information about the financial condition, operations, and business
of Debtor, or Guarantor, as Secured Party may, from time to time, request.
(b) Taxes and Other Liens. File all required federal, state
and local tax returns and pay when due all taxes, assessments and other charges
of every nature which may be levied or assessed against Debtor or its assets,
including without limitation, claims for labor, supplies and rent, except those
liabilities being contested in good faith and for which Debtor maintains
reserves in amount and form satisfactory to Secured Party.
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(c) Casualty Insurance. Keep its properties insured against
fire and other hazards (so-called "All Risk" coverage) in amounts and with
insurers satisfactory to Secured Party, which insurance shall by the terms of
the policy be payable to Secured Party as its interest may appear pursuant to a
loss payee/mortgagee clause satisfactory to Secured Party. Secured Party shall
have the right to apply the proceeds of any such insurance in reduction of the
Obligations, whether or not then due and payable, in such manner as Secured
Party in its sole discretion may determine. Without limiting the generality of
the foregoing, such insurance must provide that it may not be canceled without
30 days prior written notice to Secured Party. Debtor hereby appoints Secured
Party its attorney-in-fact, coupled with an interest, to settle, adjust and
compromise any insurance losses, to collect and receive payments of insurance,
and to endorse Debtor's name on all documents, checks and drafts in connection
therewith.
(d) Maintain Collateral. Maintain and preserve the Collateral
in good repair, working order and condition, and make all needed and proper
repairs, renewals, replacements, additions or improvements thereto, and
immediately notify Secured Party of any event causing material loss or
depreciation in the value of the Collateral and the amount of such loss or
depreciation.
(e) Inspection. Allow Secured Party by or through any of its
officers, agents, attorneys, or accountants designated by it, to enter the
offices and plants of Debtor to examine, inspect and make copies of the books
and records of Debtor and to inspect the Collateral, all at such times and as
often as Secured Party may reasonably request.
(f) Liability Insurance. Maintain general public liability
insurance against claims for personal injury, death or property damage in
respect to the Real Estate Collateral in an aggregate amount of no less than
$1,000,000, with companies satisfactory to Secured Party and in forms
satisfactory to Secured Party, and workmen's compensation insurance, employment
or similar insurance, as required by applicable law.
(g) Defend Collateral. Defend the Collateral against all
liens, claims and demands of all persons, and allow Secured Party, at the
expense of Debtor, to contest or defend any such liens, claims and demands in
Debtor's name. Cause the security interest of Secured Party to be properly noted
on all certificates of title issued or outstanding with respect to any of the
Collateral, and deposit same with Secured Party.
(h) Financing Statements. From time to time, at the request of
Secured Party, execute, deliver and file one or more financing statements,
assignments, and other agreements, instruments or documents, and amendments and
renewals thereof, and do all other acts as Secured Party deems necessary or
desirable to create and maintain a valid and enforceable second priority
security interest in the Collateral, and pay, upon demand, Secured Party's
costs, charges and expenses, including without limitation, attorneys' fees
incurred by Secured Party in connection therewith. Debtor hereby irrevocably
appoints Secured Party as Debtor's attorney-in-fact, coupled with an interest,
to execute and file one or more financing statements, amendments and renewals
thereof on Debtor's behalf.
(i) Books and Records. Maintain complete and accurate books
and records relating to its financial affairs at all times in accordance with
generally accepted accounting principles, the Collateral, the Obligations, and
Debtor's covenants hereunder.
(j) Compliance with Laws. Comply with all laws, orders, rules
and regulations applicable to Debtor of any governmental body or agency,
including without limitation, environmental and health and safety laws, orders,
rules and regulations.
(k) Notification of Default. Give prompt written notice to
Secured Party upon the occurrence of an Event of Default, or of any state of
facts which would constitute an Event of Default hereunder or, which, but for
the giving of notice or passage of time, or both, would constitute an Event of
Default.
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(l) Notification of Litigation. Give prompt written notice to
Secured Party of the commencement or threat of litigation, including arbitration
proceedings, and any proceedings before any governmental agency, or the
occurrence of any other event, which, if decided adversely to Debtor, could have
an adverse effect upon the condition, operations or prospects (financial or
otherwise) of Debtor.
(m) ERISA; Labor Disputes. Give prompt written notice to
Secured Party of: (i) any event which causes Debtor to become subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") and, upon becoming
subject thereto, comply in all respects with ERISA; and (ii) any labor dispute
or controversy resulting or likely to result in a strike or work stoppage
against Debtor.
8. FINANCIAL AND OTHER COVENANTS. Debtor covenants and agrees that,
from the date hereof until payment in full of the Loan and payment and
performance of all the Obligations, unless Secured Party otherwise agrees in
writing, Debtor shall:
(a) Encumbrances. Not create or permit to exist any lien,
mortgage, encumbrance or security interest against any of its assets, whether
now owned or hereafter acquired, except for (i) security interests in favor of
Secured Party, (ii) liens for taxes not yet due and payable, (iii) pledges or
deposits in connection with or to secure worker's compensation, unemployment or
liability insurance, and (iv) the CDA Liens.
(b) Limitation on Indebtedness. Not create or assume any
liability for borrowed money from any person or entity other than Secured Party
(excluding the Current CDA Debt).
(c) Name; Collateral. Not change Debtor's name, adopt any
trade names or conduct Debtor's business under any trade name or style other
than as shown on Exhibit B, or change Debtor's place of business or the present
location of the Collateral, or any records relating to the Collateral.
(d) Margin Stock. Not use any part of the proceeds of the
Loan, directly or indirectly, for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, or to extend credit to any entity or person for the
purpose of purchasing or carrying any such margin stock.
(e) Depository Accounts. Establish and maintain all of its
depository accounts with the Secured Party.
(f) Net Worth. Maintain a net worth (i.e., total assets less
total liabilities) of $500,000 or greater on an annual basis.
(g) Debt Service Coverage Ratio. Not permit its debt service
coverage ratio to fall below 1.2 at any time (debt service coverage ratio is
defined as annual net income plus depreciation, interest and deferred federal
income taxes divided by the annual debt service payment).
(h) Total Assets. Not permit its total assets to fall below
$5,000,000 at any time during the term of the Loan.
9. PAYMENTS BY SECURED PARTY. At its option, but without any liability
for failing to do so, Secured Party may pay for insurance on the Collateral and
taxes, assessments or other charges which Debtor fails to pay in accordance with
the provisions hereof, or of the other Financing Agreements, and may discharge
any security interest in or lien upon the Collateral. No such payment or
discharge of any such security interest or lien shall be deemed to constitute a
waiver by Secured Party of the violation of any covenant hereunder by Debtor as
a result of Debtor's failure to make any such payment or Debtor's suffering of
any such security interest or lien. Any payment made, or expense incurred by
Secured Party, pursuant to this or any other Section of this Agreement shall be
added to and become a part of the Obligations, shall bear interest at the
Default Rate, and shall be charged to the Loan Account.
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10. EVENTS OF DEFAULT. Secured Party shall have the right at its option
to terminate the Loan and/or declare any or all of the Obligations to be
immediately due and payable without notice upon the occurrence of any one of the
following events (each being an "Event of Default"):
(a) The failure by Debtor to pay any of the Obligations when
due, or such failure by Guarantor of any of the Obligations;
(b) The failure by Debtor or such Guarantor to observe,
perform or comply with any condition or covenant in this Agreement or any of the
other Financing Agreements;
(c) The existence of an event of default under any of the
other Financing Agreements;
(d) If any representation or warranty made by Debtor or
Guarantor in this Agreement or in any of the other Financing Agreements, or any
statement, certificate or other data furnished by Debtor or Guarantor in
connection with any of the Obligations proves to be incorrect or untrue in any
material respect when made;
(e) The entry of a judgment for the payment of money against
Debtor which remains unsatisfied and in effect for any period of thirty (30)
consecutive days without a stay of execution, or appeal;
(f) The insolvency of Debtor or Guarantor (the term
"insolvency" shall mean either a negative tangible net worth or an inability to
pay Debtor's or Guarantor's debts as they mature);
(g) The filing by or against Debtor or Guarantor of any
petition seeking an arrangement, reorganization or the like, the commencement of
any proceedings under any bankruptcy or insolvency law by or against either of
them, the adjudication of any of them as a bankrupt, the appointment of a
receiver for all or any part of their respective assets, or the making of an
assignment for the benefit of creditors, or the calling of a meeting of
creditors, or the appointment of a committee of creditors or liquidating agents,
by, for, or of either of them;
(h) The death, dissolution, liquidation, insolvency, or
termination of legal existence of Debtor or Guarantor, or merger or
consolidation of Debtor or Guarantor with or into any other person or entity;
(i) The failure by Debtor or Guarantor to pay any other
indebtedness or obligations owed to others for borrowed money (including,
without limitation, the Current CDA Debt) or if any such other indebtedness or
obligation shall be accelerated; or
(j) If, at any time, Secured Party believes in good faith that
the prospect of payment or performance of any of the Obligations is impaired, or
there is a change in the condition or affairs (financial, operating or
otherwise) of Debtor or any such guarantor which Secured Party believes, in good
faith, impairs its security or increases its risk,
11. REMEDIES OF SECURED PARTY: NOTICES. When the Obligations, or any of
them, become immediately due and payable, whether by reason of passage of time,
acceleration, or otherwise, Secured Party may, in addition to and not in
limitation of Secured Party's rights set forth in Section 14 of this Agreement,
pursue any legal remedy available to it to collect the Obligations outstanding
at said time, to enforce its rights under the Financing Agreements, and to
enforce any and all other rights or remedies available to it both under the
Uniform Commercial Code of Connecticut (the "Code"), and otherwise, including,
without limitation, the right to take possession of the Collateral and dispose
of the same on Debtor's premises, all without judicial process, Debtor hereby
waiving any right Debtor might otherwise have to require Secured Party to resort
to judicial process and further waiving Debtor's right to notice and hearing
under the Constitution of the United States or any state or under any Federal or
state law, and no such action shall operate as a waiver of any other right or
remedy of Secured Party under the terms of any of the Financing Agreements, or
the law, all rights and remedies of Secured Party being cumulative and not
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alternative. In addition, Secured Party may require Debtor to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties.
The net cash proceeds resulting from the collection, liquidation, sale,
lease or other disposition of the Collateral shall be applied first to the
expenses (including all attorneys' fees) of retaking, holding, storing,
processing and preparing for sale, selling, collecting, liquidating and the
like, and then to the satisfaction of all Obligations, application as to
particular Obligations or against principal or interest to be in Secured Party's
sole discretion. Any notice which Secured Party is required to give Debtor under
the Code shall be deemed to constitute reasonable notice if such notice is
mailed, return receipt requested, at least seven (7) days prior to such action.
Debtor shall be liable to Secured Party and shall pay to Secured Party on demand
any deficiency which may remain after such sale, lease, disposition, collection
or liquidation of the Collateral. Debtor agrees that the powers granted
hereunder, being coupled with an interest, shall be irrevocable so long as any
of the Obligations remain outstanding.
12. SET-OFF. Debtor hereby grants to Secured Party a lien and right of
set-off for all Obligations upon or against all moneys, deposits, property,
collateral and securities and the proceeds thereof, now or hereafter held or
received by, or in transit to, Secured Party from or for Debtor, whether for
safekeeping, pledge, custody, transmission, collection or otherwise. Secured
Party may at any time apply the same, or any part thereof, to the Obligations,
or any part thereof, whether or not matured or demanded at the time of such
application.
13. RIGHTS OF SECURED PARTY. With respect both to the Obligations and
the Collateral, Debtor hereby consents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of the Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payments thereon
and the settlement, compromising or adjusting of any claims thereof, all in such
manner and at such time or times as Secured Party may deem advisable. Secured
Party shall have no duty as to the collection or protection of the Collateral or
any income thereon, nor as to the preservation of any rights against prior
parties, nor as to the preservation of any rights pertaining thereto beyond the
safe custody thereof. Secured Party may exercise its rights with respect to the
Collateral without resorting or regard to other collateral or sources of
reimbursement for the Obligations. Secured Party shall not be deemed to have
waived any of its rights under the Financing Agreements or upon or under the
Obligations or the Collateral unless such waiver is in writing and signed by
Secured Party. No delay or omission on the part of Secured Party in exercising
any right shall operate as a waiver of such right or any other right. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion. Secured Party may revoke any permission or waiver
previously granted to Debtor, and such revocation shall be effective whether
given orally or in writing. All rights and remedies of Secured Party with
respect to the Obligations or the Collateral, whether evidenced hereby or by any
other document, shall be cumulative and may be exercised singularly or
concurrently.
14. GENERAL PROVISIONS.
(a) Expenses. Debtor shall pay on demand all expenses of
Secured Party arising out of this transaction or in connection with the
negotiation, preparation, administration, collection, defense, protection,
preservation or enforcement of, or realization on, this Agreement, the other
Financing Agreements, the Obligations, or any of the Collateral, or any waiver,
modification or amendment of any provision of any of the foregoing, including,
without limitation, attorneys' fees of outside counsel, and other professionals'
fees, and the allocation costs of in-house legal counsel, and including, without
limitation, any fees or expenses associated with any travel or other costs
relating to any appraisals, examinations, administration of this Agreement, the
other Financing Agreements or any of the Collateral, and the amounts of all such
expenses shall, until paid, be Obligations secured by the Collateral.
(b) Survival. This Agreement and the security interest granted
to Secured Party by Debtor and every representation, warranty, covenant and
other term contained herein shall survive until the Obligations have been paid
in full.
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(c) Notices. Any notice required to be given hereunder shall
be effective when delivered to an overnight mail or messenger service or
deposited in the mails, first class, postage prepaid, registered or certified
mail, return receipt requested, to Debtor or Secured Party, as the case may be,
at its address set forth above. Either of the parties hereto may notify the
other that any such notice shall be given to such other address as such party
may so instruct by written notice similarly given.
(d) Entire Agreement. This Agreement is the entire agreement
between the parties hereto and cannot be amended or modified except by a writing
signed by Debtor and Secured Party.
(e) Governing Law. This Agreement and the other Financing
Agreements shall be construed in accordance with and governed by the laws of the
State of Connecticut. Debtor hereby consents to service of process, and to be
sued, in the State of Connecticut and consents to the jurisdiction of the courts
of the State of Connecticut and the United States District Court for the
District of Connecticut, for the purpose of any suit, action, or other
proceeding arising hereunder, and expressly waives any and all objections it may
have to venue in any such courts.
(f) Headings. Sections and subsection headings have been
inserted herein for convenience only and form no part of this Agreement and
shall not be deemed to affect the meaning or construction of any of the
covenants, agreements, conditions or terms hereof.
(g) Severability. If any term or provision of this Agreement
shall be invalid, illegal or unenforceable for any reason whatsoever, such term
or provision shall be severable from the remainder of this Agreement and the
validity, legality and enforceability of the remaining terms and provisions
shall not in any way be affected or impaired thereby.
(h) Binding. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns provided, however, that Debtor may not
assign its rights hereunder without the prior written consent of Secured Party
in its sole discretion, and any such attempted assignment without such consent
shall be null and void. If Debtor consists of more than one person or entity,
they shall be jointly and severally liable for all obligations herein contained.
(i) Interpretation. As used herein, plural or singular include
each other, and pronouns of any gender are to be construed as masculine,
feminine or neuter, as context requires.
16. PREJUDGMENT REMEDY WAIVER; WAIVERS. DEBTOR AND GUARANTOR
ACKNOWLEDGE THAT THE LOAN EVIDENCED AND SECURED BY THIS AGREEMENT IS A
COMMERCIAL TRANSACTION AND DEBTOR AND GUARANTOR HEREBY WAIVE THEIR RIGHTS TO
NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS
OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH SECURED PARTY MAY DESIRE TO USE, and further, Debtor and Guarantor
waive diligence, demand, presentment for payment, notice of nonpayment, protest
and notice of protest, and notice of any renewals or extensions of the Note or
Guarantor's guaranty, and all rights under any statute of limitations.
17. WAIVER OF JURY TRIAL. DEBTOR AND GUARANTOR HEREBY WAIVE TRIAL BY
JURY IN ANY COURT AND IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN
CONNECTION WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH
THIS AGREEMENT IS A PART AND/OR THE ENFORCEMENT OF ANY OF SECURED PARTY'S RIGHTS
AND REMEDIES. DEBTOR AND GUARANTOR ACKNOWLEDGE THAT THEY MAKE THIS WAIVER
KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH THEIR ATTORNEYS. NO PARTY TO THIS AGREEMENT
HAS AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF
THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
BORROWER:
THE CRYSTAL WATER COMPANY OF ▇▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇ ▇▇▇▇▇
Its President
GUARANTOR:
CRYSTAL WATER UTILITIES CORPORATION
By:
▇▇▇▇▇ ▇▇▇▇▇
Its President
NEW LONDON TRUST, F.S.B.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Vice President
11
EXHIBIT A
ATTACH COPY OF MORTGAGE NOTE
12
MORTGAGE NOTE
$2,700,00.00 ▇▇▇▇▇▇▇▇▇, Connecticut
February 9, 1996
FOR VALUE RECEIVED, the undersigned THE CRYSTAL WATER COMPANY OF
▇▇▇▇▇▇▇▇▇, a public service company specially chartered by the General Assembly
of the State of Connecticut ("Maker"), promises to pay to the order of NEW
LONDON TRUST, F.S.B., a federal savings bank organized under the laws of the
United States of America having its principal place of business in ▇▇▇▇▇▇▇▇▇,
Connecticut ("Payee"), or any subsequent holder hereof (Payee or any subsequent
holder hereof sometimes being hereinafter referred to as "Holder"), at the
office of Payee at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other place as Holder may designate from time to time in writing, the principal
sum of TWO MILLION SEVEN HUNDRED THOUSAND DOLLARS ($2,700,000.00), together
with: (i) interest at the rate and in the manner hereinafter provided; (ii) all
amounts which may be or become due under the Mortgage (as hereinafter defined)
or under any other document securing the indebtedness evidenced by this Note;
(iii) all costs and expenses, including reasonable attorneys' and appraisers'
fees, incurred in collecting or attempting to collect the indebtedness evidenced
by this Note, or in foreclosing or otherwise enforcing the Mortgage or
protecting or sustaining the lien of the Mortgage or in any litigation or
controversy arising from or connected with this Note or the Mortgage; and (iv)
all taxes and duties assessed upon the indebtedness evidenced by this Note or by
the Mortgage or upon the Property (as hereinafter defined). Refer to paragraph
17 for defined terms.
1. This Note shall bear interest on the unpaid balance at a rate to be
determined as follows:
(a) Until the first Adjustment Date, the interest rate shall
be eight percent (8%) per annum.
(b) The interest rate during each Adjustment Period shall be a
fixed rate per annum equal to the Index Rate less one quarter
of one percentage point (.25%) as determined on the Adjustment
Date which is the first day of such Adjustment Period;
provided, however, the interest rate for any Adjustment Period
shall not exceed 11.25% per annum for that particular
Adjustment Period.
2. Principal and interest shall be due and payable, with interest
payable in arrears, in monthly installments as follows:
(a) Payments in the amount of $25,802.61 shall be due and
payable on the first (1st) day of the month immediately
following the date of this Note and on the first day of each
and every month thereafter through and including the first
Adjustment Date; provided, however, that if this Note is dated
after the first day of a month, the interest that would accrue
through the end of such month shall be payable in advance on
the date of this Note, and, in that event, the monthly
installments referred to above shall commence on the first day
of the second month following the date of this Note through
and including the first Adjustment Date.
(b) Beginning with the first monthly payment due and payable
after each Adjustment Date, monthly payments hereunder shall
be adjusted to the amount that would fully amortize the
then-outstanding principal balance at the adjusted interest
rate then in effect in equal payments over a period of fifteen
years from the date of the first payment due hereunder.
Payments of such amounts shall be due and payable on the first
day of the month immediately following the first Adjustment
Date and on the first day of each and every month thereafter
until the entire principal balance of the indebtedness
evidenced by this Note and all interest and other amounts from
time to time payable hereunder shall have been paid in full;
(c) Provided, however, that, if not sooner paid, all amounts
owing under this Note shall be due and payable in full on
April 1, 2011.
13
3. Maker may prepay the indebtedness evidenced by this Note, in full,
at any time, subject to the concurrent payment to Holder of an amount equal to
the Prepayment Premium; provided, however, that any prepayment in full of the
then outstanding principal balance of this Note after the Reference Date shall
not be subject to payment of the Prepayment Premium. Amounts so prepaid shall be
applied to interest and other charges accrued under this Note to the date
prepayment shall have been received by Holder and then to principal, in the
inverse order of the installments of principal payable under this Note. If the
maturity of this Note shall be accelerated for any reason, then a tender of
payment by Maker, or by anyone on behalf of Maker, of the amount necessary to
satisfy all sums due hereunder shall constitute an evasion of the payment terms
hereof and shall be deemed to be a voluntary prepayment under this Note, and any
such prepayment, to the extent permitted by law, shall require the concurrent
payment to Holder of the aforesaid Prepayment Premium.
4. All amounts owing under this Note shall be payable in legal tender
of the United States of America. Interest shall be calculated on the daily
unpaid principal balance of the indebtedness evidenced by this Note on the basis
of a three hundred sixty (360) day year, provided that interest shall be due for
the actual number of days elapsed during the period for which interest is being
charged. Each payment hereunder shall be applied first to the payment of late
charges, if any, then to interest and the balance to principal.
5. Any payment under this Note which is stated to be due on a day other
than a "Business Day" (a day on which banks are open for business in
Connecticut) shall be made on the next succeeding Business Day, and any such
extension of time shall be included in the computation of the amount of interest
to be paid; provided, however, that, if any such extension would cause any
payment to be payable in the next following calendar month, such payment shall
be made on the next preceding Business Day.
6. It shall be an Event of Default hereunder if Maker shall fail to
make any payment hereunder when due or if any "Event of Default" (as defined in
the Mortgage) shall occur. If an Event of Default or any other cause for
acceleration of the indebtedness evidenced by this Note shall occur, then, at
the option of Holder, all amounts remaining unpaid under this Note shall
immediately become due and payable. The failure to exercise any such option or
any other rights hereunder or any delay in such exercise, shall not constitute a
waiver of the right to exercise such option or such other right at a later time
so long as such Event of Default shall remain uncured, and shall not constitute
a waiver of the right to exercise such option or other right in the event of any
other Event of Default. The acceptance by Holder of payment of any sum payable
hereunder after the due date of such payment shall not be a waiver of Holder's
right either to require prompt payment when due of all other sums payable
hereunder or to declare a default for failure to make prompt payment in full.
7. Upon the occurrence of any Event of Default, or upon maturity hereof
(by acceleration or otherwise), the outstanding principal balance of the
indebtedness evidenced by this Note shall, at the option of Holder, bear
interest from the date of occurrence of such Event of Default or such maturity
until collection (including any period of time occurring after judgment), at the
lower of (a) the highest rate allowed by applicable law, or (b) four percent
(4%) in excess of the interest rate that otherwise would have been in effect
under this Note. If Holder shall not receive the full amount of any payment due
under the terms of this Note or the Mortgage within ten (10) days after the due
date of such payment, then Maker shall pay to Holder, upon demand, a late charge
equal to five percent (5%) of the total amount of such payment, to cover the
additional expenses involved in handling such overdue payment. Such charge shall
be in addition to, and not in lieu of, any other remedy Holder may have and
shall be in addition to, and not in lieu of, Maker's obligation to pay any
reasonable fees and charges of any agents or attorneys employed by Holder in the
event of any default hereunder.
8. Maker and each endorser, guarantor and surety of this Note, and each
other person liable or who shall become liable for all or any part of the
indebtedness evidenced by this Note (a) waive demand, presentment, protest,
notice of protest, notice of dishonor, diligence in collection, notice of
nonpayment and all notices of a like nature, and (b) consent to (i) all
renewals, extensions or modifications of this Note or the Mortgage (including
any affecting the time of payment), (ii) all advances under this Note or the
Mortgage, (iii) the release, surrender, exchange or substitution of all or any
part of the security for the
14
indebtedness evidenced by this Note, or the taking of any additional security,
(iv) the release of any or all other persons from liability, whether primary or
contingent, for the indebtedness evidenced by this Note or for any related
obligations, and (v) the granting of any other indulgences to any such person.
Any such renewal, extension, modification, advance, release, surrender,
exchange, substitution, taking or indulgence may take place without notice to
any such person, and, whether or not any such notice is given, shall not affect
the liability of any such person.
9. Maker and each endorser, guarantor and surety of this Note, and each
other person liable or who shall become liable for all or any part of the
indebtedness evidenced by this Note, hereby give Holder a lien and right of
setoff for all of their respective liabilities in respect of such indebtedness
upon and against all of their respective deposits, credits and property (other
than the Property), now or hereafter in the possession or control of Holder or
in transit to it. Holder may at any time apply the same, or any part thereof, to
any liability of Maker or any such other person, whether matured or unmatured.
10. Maker and each endorser, guarantor and surety of this Note, and
each other person liable or who shall become liable for all or any part of the
indebtedness evidenced by this Note, hereby acknowledge that the transaction of
which this Note is a part is a commercial transaction, and to the extent allowed
under Connecticut General Statutes Sections 52-278a to 52-278n, inclusive, or
by other applicable law, hereby waive their right to notice and hearing with
respect to any prejudgment remedy which holder or its successors or assigns may
desire to use.
11. If any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part, or
in any respect, or if any one or more of the provisions of this Note shall
operate, or would prospectively operate, to invalidate this Note, then such
provision or provisions only shall be deemed to be null and void and of no force
or effect and shall not affect any other provision of this Note, and the
remaining provisions of this Note shall remain operative and in full force and
effect, shall be valid, legal and enforceable, and shall in no way be affected,
prejudiced or disturbed thereby.
12. This Note may not be modified or terminated orally, but only by a
written instrument signed by the party against whom enforcement of any such
modification or termination is sought. Time is and shall be of the essence in
the performance of all obligations under this Note. This Note shall be governed
by and construed in accordance with the laws of the State of Connecticut.
13. As used in this Note, words of any gender shall be deemed to apply
equally to any other gender, the plural shall include the singular and the
singular shall include the plural (as the context shall require), and the word
"person" shall refer to individuals, entities, authorities and other natural and
juridical persons of every type.
14. If this Note is now, or hereafter shall be, signed by more than one
person, it shall be the joint and several obligation of all such persons
(including, without limitation, all makers, endorsers, guarantors and sureties,
if any) and shall be binding on all such persons and their respective heirs,
executors, administrators, legal representatives, successors and assigns. This
Note and all covenants, agreements and provisions set forth in this Note shall
inure to the benefit of Holder and its successors and assigns.
15. Each adjustment in the interest rate on this Note pursuant to
paragraph 1 (b) hereof shall take effect automatically on the applicable
Adjustment Date. Holder shall use reasonable efforts to mail to Maker, within
ten (10) days after each Adjustment Date, written notice (the "Adjustment
Notice") specifying the interest rate at which this Note will bear interest from
and after the applicable Adjustment Date and specifying the amount of each
monthly installment that will be payable from and after such Adjustment Date.
Notwithstanding the foregoing, Maker shall not be relieved of any obligations
under the terms of this Note in the event of any failure of Holder to mail an
Adjustment Notice, or any failure of Holder to mail an Adjustment Notice in a
timely or proper manner, or any failure of Maker to receive an Adjustment
Notice, or the presence of any error or errors in an Adjustment Notice.
15
16. The indebtedness evidenced by this Note is secured by, among other
things, a blanket mortgage of even date herewith (the "Mortgage"), delivered to
Holder encumbering certain real estate and properties located in the Towns of
Killingly, Brooklyn, Plainfield and ▇▇▇▇▇▇▇▇, respectively, (collectively, the
"Property"), more particularly described in the Mortgage. The Mortgage is
incorporated herein by reference and shall be deemed a part of this Note as if
set forth in full herein.
17. As used in this Note, the following terms shall have the following
meanings:
(a) "Index Rate" on any Adjustment Date shall mean the prime rate as
published in the "Money Rates" table of the Wall Street Journal. If
more than one prime rate is published in the "Money Rates" table, the
highest of those rates will be the Prime Rate for purposes of this
Note. If the Wall Street Journal ceases to publish a "Money Rates"
table, or if a prime rate is no longer included in the rates published
therein, Holder will designate a comparable index. The selection of a
comparable index shall be made in Holder's sole discretion. If interest
hereunder is computed in relation to the Prime Rate, then as said Prime
Rate changes from time to time, the interest rate hereunder shall
change correspondingly on the date of each Prime Rate change, without
notice or demand of any kind.
(b) "Reference Date" shall mean April 1, 2003.
(c) "Adjustment Date" shall mean the date each year, following the
Reference Date, which is the anniversary of the Reference Date.
(d) "Adjustment Period" shall mean the one-year period commencing on
each Adjustment Date.
(e) "Prepayment Premium" shall mean the payment by Maker of an amount
equal to (1) 5% of the then outstanding balance hereof, if paid during
the first year of the loan evidenced by this Note (the "Loan"), (2) 4%
of the then outstanding balance hereof, if paid during the second year
of the Loan, (3) 3% of the then outstanding balance hereof, if paid
during the third year of the Loan, (4) 2% of the then outstanding
balance hereof, if paid during the fourth year of the Loan, and (5) 1%
of the then outstanding balance hereof, if paid during the fifth year
through and including the seventh year of the Loan.
THE CRYSTAL WATER COMPANY OF ▇▇▇▇▇▇▇▇▇
By:
▇▇▇▇▇ ▇▇▇▇▇
Its President
16
EXHIBIT B
Description of Financing Statements, Liens, Mortgages and other Encumbrances
(See Section 6(c)):
Previously furnished to and disclosed to the Secured Party.
Tradenames (See Sections 6(j) and 8(h)):
None