EXHIBIT 10.28

Execution Copy

      

 
 

ASSET PURCHASE AGREEMENT

among

the Town of Barnstable,

Connecticut Water Service, Inc.

the Barnstable Holding Company,

the Barnstable Water Company

and

BARLACO, Inc.

--------------------------------------------------------------------------------

March 10, 2005

--------------------------------------------------------------------------------

 
 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

                                      Page SECTION 1   - SALE AND PURCHASE OF
ASSETS     1  
 
    1.1     Sale of Assets     1  

    1.2     Satisfaction of Note     2  

    1.3     Excluded Liabilities     2  

    1.4     Purchase Price and Payment     3  

    1.5     Transfer of Purchased Assets     3  

    1.6     Delivery of Records and Contracts     3  

    1.7     Closing     3   SECTION 2   - REPRESENTATIONS AND WARRANTIES OF THE
SELLER, PARENT, AND BHC     4  

    2.1     Organization and Qualification     4  

    2.2     Authority to Execute and Perform Agreements     4  

    2.3     Capitalization     4  

    2.4     Financial Statements     4  

    2.5     No Material Adverse Change     5  

    2.6     Tax Matters     5  

    2.7     Compliance with Laws     6  

    2.8     Consents; No Breach     7  

    2.9     Actions and Proceedings     7  

    2.10     Contracts and Other Agreements     7  

    2.11     Real Property     8  

    2.12     Tangible Property     8  

    2.13     Title to Assets; Liens     8  

    2.14     Absence of Undisclosed Liabilities     9  

    2.15     Insurance     9  

    2.16     Brokerage     9  

    2.17     Hazardous Materials     9   SECTION 3   - REPRESENTATIONS AND
WARRANTIES OF THE BUYER     10  

    3.1     Authority to Execute and Perform Agreements     10  

    3.2     Brokerage     10  

-i-

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

                                      Page
 
    3.3     Actions and Proceedings     11  

    3.4     No Breach     11   SECTION 4   - COVENANTS AND AGREEMENTS     11  

    4.1     Conduct of Business     11  

    4.2     Continued Effectiveness of Representations and Warranties     12  

    4.3     Taxes     12  

    4.4     Corporate Examinations and Investigations     13  

    4.5     Expenses     13  

    4.6     Authorization from Others     13  

    4.7     Consummation of Agreement     14  

    4.8     Collection of Assets     14  

    4.9     Use of Name     14  

    4.10     Further Assurances     14  

    4.11     Related Agreements     14  

    4.12     Insurance     14   SECTION 5   - CONDITIONS PRECEDENT TO THE
OBLIGATION OF THE BUYER TO CLOSE     15  

    5.1     Representations, Warranties and Covenants     15  

    5.2     Third Party Consents     15  

    5.3     Management Agreement     15  

    5.4     BARLACO Purchase and Sale Agreement     15  

    5.5     Opinion of Counsel to the Seller     15  

    5.6     Litigation     15  

    5.7     Delivery of Instruments of Transfer     16  

    5.8     No Material Change     16  

    5.9     Seller Name Change and Discharge of Liabilities; Insurance     16  

    5.10     Massachusetts Tax Waivers     16  

    5.11     Financing     16  

    5.12     Barnstable Town Council Approval     16  

    5.13     Payment of Discharge Amount     16  

-ii-

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

                                      Page
 
    5.14     DEP Approval     16   SECTION 6   - CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLER TO CLOSE     16  

    6.1     Representations, Warranties and Covenants     17  

    6.2     Litigation     17  

    6.3     Delivery of the Purchase Price     17  

    6.4     Required Approvals     17  

    6.5     Opinion of Counsel to the Buyer     17  

    6.6     DEP Approval     17   SECTION 7   - INDEMNIFICATION     17  

    7.1     Survival     17  

    7.2     Obligation of the Seller, Parent and BHC to Indemnify     19  

    7.3     Obligation of the Buyer to Indemnify     19  

    7.4     Release by Buyer     19  

    7.5     Third-Party Claims     19  

    7.6     Other Claims     20   SECTION 8   - TERMINATION OF AGREEMENT     20
 

    8.1     Termination     20  

    8.2     Effect of Termination     21   SECTION 9   - MISCELLANEOUS     21  

    9.1     Publicity     21  

    9.2     Notices     21  

    9.3     Entire Agreement     22  

    9.4     Waivers and Amendments; Noncontractual Remedies; Preservation of
Remedies     22  

    9.5     Governing Law     22  

    9.6     Enforceability in Jurisdictions; Consent     22  

    9.7     Binding Effect; No Assignment     23  

    9.8     Variations in Pronouns     23  

    9.9     Counterparts     23  

-iii-

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

                                      Page
 
    9.10     Exhibits and Schedules     23  

    9.11     Headings     23  

-iv-

--------------------------------------------------------------------------------

 

          EXHIBITS
 
       
A
  -   Owned Real Property
B
  -   Other Interests in Real Property
C
  -   Assigned Agreements
D
  -   Management Agreement
E
  -   BARLACO Purchase and Sale Agreement
F
  -   Form of Opinion of Seller’s Counsel
G
  -   Form of Opinion of Town Attorney
 
        SCHEDULES
 
       
1.1
      Excluded Assets
2.5
      Material Adverse Change
2.6
      Taxes
2.7
      Compliance with Laws; Permits
2.8
      Consents
2.9
      Actions and Proceedings
2.11
      Real Property; Repairs and Replacements
2.13
      Title to Assets
2.15
      Insurance

 

--------------------------------------------------------------------------------

 

ASSET PURCHASE AGREEMENT

     ASSET PURCHASE AGREEMENT dated as of March 10, 2005 among the Town of
Barnstable, Massachusetts (the “Buyer”), the Connecticut Water Service, Inc., a
Connecticut corporation (“Parent”), the Barnstable Holding Company, a
Connecticut corporation and wholly owned subsidiary of Parent (“BHC”), the
Barnstable Water Company, a corporation chartered under Chapter 286 of the
Massachusetts Acts of 1911 and wholly owned subsidiary of BHC (the “Seller”) and
BARLACO, Inc., a Massachusetts corporation and wholly owned subsidiary of BHC
(“BARLACO”).

SECTION 1 — SALE AND PURCHASE OF ASSETS

     1.1 Sale of Assets. Subject to the provisions of this Agreement, at the
Closing (as defined in Section 1.7 hereof), the Seller agrees to sell and the
Buyer agrees to purchase all of the properties, assets and business of the
Seller used or usable in its business as a water company of every kind and
description, tangible and intangible, real, personal or mixed, and wherever
located, including without limitation:

               (a) all of the Seller’s land as set forth in Exhibit A to this
Agreement, together with the buildings, structures, pipes, fixtures and other
improvements located thereon, together with construction in progress;

               (b) all of the Seller’s other interests in real property as set
forth in Exhibit B to this Agreement, including easements, rights of way,
leaseholds, and all other rights representing less than fee ownership;

               (c) all personal property constituting Seller’s distribution
system, including pumping facilities, purification equipment, mains, pipes, fire
cisterns, basins, fountains, troughs, meters and hydrants;

               (d) all office, shop, stores, transportation, laboratory and
other equipment, including computers, computer programs and related software,
but excluding certain essential software that is not owned by or licensed to the
Seller but rather is used under a license granted to affiliates of Seller;

               (e) all materials, supplies and equipment;

               (f) to the extent that a sale by contract operates to transfer
franchises, water and distribution rights under Massachusetts law, all of the
Seller’s rights, franchises, and privileges, including without limitation the
water and distribution rights conferred by the Seller’s charter;

               (g) the Seller’s rights and obligations under the contracts and
agreements described in Exhibit C to this Agreement (the “Assigned Agreements”)
that relate to its operation of a water utility;

1

--------------------------------------------------------------------------------

 

               (h) intellectual property rights;

               (i) copyrights;

               (j) all of Seller’s goodwill;

               (k) all information, whether or not proprietary, that relates to
the Company’s operation of a water utility, including but not limited to
accounts, billing, customer service, meter reading, and other records, computer
programs (to the extent permitted by the licenses for such programs), and
systems, however described, necessary or useful to the operation of the water
utility as a going concern, including any information, documents and data stored
in any medium in the possession of any affiliate of or contractor to the Seller;

               (l) all of the Seller’s books and records relating to its
business as a water company and all of its engineering and other reports and
surveys relating to its water system;

provided, however, that there shall be excluded from such purchase and sale
Seller’s tax returns, stock record books, corporate record books containing
minutes of meetings of directors and stockholders and such other records as have
to do exclusively with Seller’s organization or stock capitalization and other
assets listed on Schedule 1.1 (the “Excluded Assets”). The Seller shall have
access to such other books and records of the Seller at reasonable times for
purposes of winding up the Seller, handling tax matters and dealing with
liabilities and claims. The assets, property and business of Seller to be sold
to and purchased by the Buyer or its designee) under this Agreement are
hereinafter sometimes referred to as the “Purchased Assets.” The parties hereto
acknowledge that in accordance with Section 4.8 hereof Seller is entitled to all
accounts receivable for services rendered prior to the Closing Date, and Buyer
is entitled to all accounts receivable for services rendered on or after the
Closing Date.

     1.2 Satisfaction of Note. At the time of the sale and purchase of the
Purchased Assets, the Buyer shall take the steps necessary to enable Seller to
discharge $1.525 million of the Seller’s obligation under the Seller’s long-term
note to Indianapolis Life Insurance Company dated February 15, 1991 (the
“Indianapolis Note”), or such other amount as the Seller may then be obligated
to pay in order to obtain a complete discharge of that note.

     1.3 Excluded Liabilities. Except as otherwise specifically provided in this
Section 1.3, (a) Buyer shall not assume or be liable for any obligation or
liability of Seller, of any kind or nature, known, unknown, contingent or
otherwise (collectively, the “Excluded Liabilities”), including without
limitation:

     (i) any liability of Seller incurred in connection with this Agreement and
the transactions provided for herein, including brokerage, accounting and
counsel fees, transfer and other taxes, and expenses pertaining to its
liquidation or the performance by Seller of its obligations hereunder;

     (ii) any liability or obligation of Seller arising out of any contract or
agreement;

     (iii) any obligations to Seller’s employees, including without limitation,
any obligations arising under any employee program;

2

--------------------------------------------------------------------------------

 

     (iv) any litigation, proceeding, claim by any person or entity or other
obligation of Seller relating to the business or operations of or otherwise
relating to the Purchased Assets prior to the Closing Date, whether or not such
litigation, proceeding, claim or obligation is pending, threatened, or asserted
before, on, or after the Closing Date;

     (v) Taxes (as defined in Section 2.6) whether relating to periods before or
after the Closing Date; and

     (vi) any obligations under any law, including but not limited to antitrust,
civil rights, health, safety, labor, and discrimination laws.

     (b) Seller shall be solely responsible for, and shall discharge, any and
all liabilities and obligations of Seller, including all accounts payable in
connection with purchases made or services received on or prior to the Closing
Date.

     1.4 Purchase Price and Payment. In consideration of the sale of the
Purchased Assets to Buyer, at the Closing, the Buyer shall:

               (a) deliver to the Seller an amount equal to $10 million less the
amount delivered to Seller pursuant to Section 1.4(b) hereof in cash, by
certified or bank check, or by wire transfer of immediately available funds (the
“Purchase Price”); and

               (b) deliver to the Seller in cash, by certified or bank check, or
by wire transfer of immediately available funds an amount sufficient to enable
Seller to discharge the Indianapolis Note (the “Discharge Amount”).

     1.5 Transfer of Purchased Assets. At the Closing, Seller shall deliver or
cause to be delivered to the Buyer good and sufficient instruments of assignment
or transfer transferring to the Buyer title to all the Purchased Assets. Such
instruments of transfer (a) shall be in the form and will contain the
warranties, covenants and other provisions (not inconsistent with the provisions
hereof) which are usual and customary for transferring the type of property
involved under the laws of the jurisdictions applicable to such transfers,
(b) shall be in form and substance satisfactory to the Buyer and its counsel,
and (c) with the exceptions provided for in Section 2.13 of this Agreement,
shall effectively vest in the Buyer good record and marketable title to all the
Purchased Assets free and clear of all liens, restrictions and encumbrances.

     1.6 Delivery of Records and Contracts. At the Closing, Seller shall deliver
or cause to be delivered to the Buyer all written leases, contracts, commitments
and rights evidencing Purchased Assets, with such assignments thereof and
consents to assignments as are necessary to assure the Buyer of the full benefit
of the same. Seller shall also deliver to the Buyer at the Closing all of
Seller’s business records, books and other data relating to its assets, business
and operations (except corporate records and other property of Seller excluded
under Section 1.1) and Seller shall take all requisite steps to put the Buyer
(or its designee) in actual possession and operating control of the assets and
business of Seller.

     1.7 Closing. The closing of the sale and purchase of the transactions
contemplated hereby (the “Closing”), shall take place at the offices of Palmer &
Dodge LLP at 10:00 a.m., local time, on May 15, 2005 or within 45 days after
satisfaction or waiver of the conditions and

3

--------------------------------------------------------------------------------

 

delivery of the items set forth in Sections 5 and 6, whichever is later, or on
such other time and date and at such place as the Buyer and the Seller agree in
writing (the date of such Closing shall herein be referred to as the “Closing
Date”). The parties hereto acknowledge that in no event shall the Closing take
place prior to the expiration of the 30-day referendum period which begins after
the Barnstable Town Council approves this transaction.

SECTION 2 — REPRESENTATIONS AND WARRANTIES OF THE
SELLER, PARENT, AND BHC

     The Seller, Parent, and BHC, jointly and severally, represent and warrant
to the Buyer as follows:

     2.1 Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of Massachusetts
and has full corporate power and lawful authority to own, lease and operate its
assets, properties and business and to carry on its business as now being and as
heretofore conducted. The Seller is not required to be qualified or otherwise
authorized to transact business as a foreign corporation in any jurisdiction (in
the United States and outside of the United States). The Seller does not file
and is not required to file any franchise, income or other Tax Returns (as
defined in Section 2.6) in any jurisdiction (in the United States or outside of
the United States), other than Massachusetts, based upon the ownership or use of
property therein or the derivation of income therefrom. The Seller does not own
or lease property in any jurisdiction (in the United States or outside the
United States) other than Massachusetts.

     2.2 Authority to Execute and Perform Agreements. The Seller, Parent and BHC
have the full legal right and power and all authority and approvals required to
enter into, execute and deliver this Agreement and the Related Agreements (as
defined in Section 4.11) and to perform fully their respective obligations
hereunder and thereunder, and each of this Agreement and the Related Agreements
has been or will be duly executed and delivered and is or will be the valid and
binding obligations of the Seller, Parent and BHC enforceable in accordance with
its terms.

     2.3 Capitalization. BHC is and will be on the Closing Date the only record
and beneficial owner and holder of all of the issued and outstanding shares of
the Seller. There are no agreements relating to the issuance, sale or transfer
of any equity securities or other securities of the Seller.

     2.4 Financial Statements. The unaudited balance sheets of the Seller as at
December 31, 2001, 2002, and 2003 and the related statements of income for the
years then ended, in accordance with the requirements of the Massachusetts
Department of Telecommunications and Energy, and the unaudited balance sheet of
the Seller as of September 30, 2004 which have previously been delivered to the
Buyer, fairly present the financial condition and results of operations of the
Seller as of the respective date and for the periods indicated, in each case.
The foregoing financial statements of the Seller are sometimes herein called the
“Financials,” the balance sheet as of September 30, 2004 is sometimes herein
called the “Balance Sheet” and September 30, 2004 is sometimes herein called the
“Balance Sheet Date.”

4

--------------------------------------------------------------------------------

 

     2.5 No Material Adverse Change. Since the Balance Sheet Date, except as
described on Schedule 2.5, there have been no changes in the assets, properties,
business, operations or condition (financial or otherwise) of the Seller which
either individually or in the aggregate materially and adversely affect the
Seller, nor does the Seller, Parent or BHC know of any such change that is
threatened, nor has there been any damage, destruction or loss materially and
adversely affecting the assets, properties, business, operations or condition
(financial or otherwise) of the Seller, whether or not covered by insurance.

     2.6 Tax Matters.

               (a) The Seller has paid or caused to be paid all federal, state,
county, local, foreign and other taxes, including, without limitation, income
taxes, net worth taxes, estimated taxes, alternative minimum taxes, excise
taxes, sales taxes, use taxes, import duties, value-added taxes, gross receipts
taxes, franchise taxes, capital stock taxes, employment, unemployment and
payroll-related taxes, withholding taxes, excise taxes, ad valorem taxes, stamp
taxes, transfer taxes, windfall profit taxes, license taxes, environmental taxes
and property taxes, whether or not measured in whole or in part by net income
and all deficiencies, or other additions to such taxes and interest, fines and
penalties thereon (hereinafter, “Taxes” or, individually, a “Tax”) required to
be paid by the Seller through the date hereof whether disputed or not and
whether shown on a Tax Return (as defined below) or not. Seller shall pay all
accrued and unpaid Taxes owed by or with respect to Seller. No Tax deficiency or
claim for additional Taxes or interest thereon or penalties in connection
therewith, has been asserted or threatened to be asserted against the Seller by
any taxing authority and the Seller does not know of any basis for the assertion
of a tax deficiency against it.

               (b) The Seller has in accordance with applicable law timely filed
all Tax returns, declarations, reports, claims for refund, or information
returns or statements relating to Taxes, including any schedule or amendment
thereto, and including any amendment thereof (as used herein, “Tax Return” or
“Tax Returns”) required to be filed by it through the date hereof. Each of the
Tax Returns filed by the Seller correctly and accurately reflects the amount of
its Tax liability for such period and other required information. There has not
been any audit of any Tax Return filed by the Seller and no audit of any Tax
return of the Seller is in progress and the Seller has not been notified by any
Tax authority that any such audit is contemplated or pending. No claim has ever
been made by an authority in a jurisdiction where Seller does not file Tax
Returns that Seller is or may be subject to taxation by that jurisdiction. No
issue relating to Seller or involving any Tax for which Seller might be liable
has been resolved in favor of any taxing authority in any audit or examination
which, by application of the same principles, could reasonably be expected to
result in a deficiency for Taxes of Seller for any other period. Seller has not
been nor is currently in violation (or, with or without notice or lapse of time
or both, would be in violation) of any applicable law or regulation relating to
payment, collection, or withholding of Taxes, or the remittance thereof, and all
withholding and payroll Tax requirements required to be complied with by Seller.
There are no security interests on any of the assets of Seller that arose in
connection with any failure (or alleged failure) to pay any Taxes. Seller has
never entered into a closing agreement pursuant to Section 7121 of the Code.

               (c) Except as set forth in Schedule 2.6, since January 1, 2001,
Seller has not been a member of an affiliated group filing or required to file a
consolidated, combined, or

5

--------------------------------------------------------------------------------

 

unitary Tax Return. Seller is not a party to or bound by, nor does it have or
has it ever had any obligation under, any Tax sharing agreement, or similar
contract or arrangement. Seller has no liability for the Taxes of any other
person.

               (d) For purposes of this Agreement, all references to Sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.

     2.7 Compliance with Laws.

               (a) Except as set forth on Schedule 2.7(a),

                         (i) the Seller is not in material violation of any
order, judgment, injunction, award or decree binding upon it;

                         (ii) the Seller is not, to the best knowledge of the
Seller, Parent, and BHC, in material violation of any federal, state, local or
foreign law, ordinance, permit or regulation or any other requirement of any
governmental or regulatory body, court or arbitrator applicable to its business
or assets, including, without limitation, laws, ordinances, regulations and
other requirements respecting labor, employment and employment practices, terms
and conditions of employment and wages and hours, or relating to the uses of its
assets, or zoning; and

                         (iii) since January 1, 2001, the Seller has not
received notice of any citation, fine or penalty imposed or asserted against the
Seller for, any such violation or alleged violation, provided however that the
representations in paragraphs 2.7(a)(i) through (iii) apply only to the period
after January 1, 2001 with respect to regulations and requirements of the United
States Environmental Protection Agency (“EPA”) and any state or local
counterparts, the Occupational Safety and Health Administration (“OSHA”), and
laws, ordinances, regulations and other requirements respecting pollution or
protection of the environment, including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.

               (b) Set forth on Schedule 2.7 are all of the licenses, permits,
franchises, orders or approvals of any federal, state, local or foreign
governmental or regulatory body, including, but not limited to, licenses issued
by EPA and OSHA or otherwise relating to employment and environmental matters
that are material to the conduct of Seller’s business and the uses of its assets
(collectively, “Permits”). The Seller holds all Permits necessary to operate its
business as presently conducted and as currently contemplated to be conducted.
Such Permits are in full force and effect and, except as set forth on
Schedule 2.7, such Permits will be transferred to the Buyer as part of the
Purchased Assets to the maximum extent possible under the applicable laws
related to such Permits. Except as set forth on Schedule 2.7, since January 1,
2001, no violations are or have been recorded with any governmental or
regulatory body in respect of any Permit;

6

--------------------------------------------------------------------------------

 

and no proceeding is pending or, to the best knowledge of the Seller, Parent,
BARLACO, and BHC, threatened to revoke or limit any Permit.

     2.8 Consents; No Breach. All consents, permits, authorizations and
approvals from any person pursuant to applicable law or contracts or other
agreements with the Seller, that are required in connection with the performance
of obligations of the Seller, Parent and BHC under this Agreement, or the
assignment of the Purchased Assets are set forth on Schedule 2.8 hereto. The
execution, delivery and performance of this Agreement and the Related Agreements
and the consummation of the transactions contemplated hereby and thereby will
not (i) violate any provision of the Articles of Organization or Bylaws of the
Seller; (ii) except as set forth on Schedule 2.8, violate, conflict with or
result in the breach of any of the terms or conditions of, result in
modification of the effect of, or otherwise give any other contracting party the
right to terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any material instrument, contract or other
agreement to which the Seller, Parent or BHC is a party or to which any of them
or their assets or properties may be bound or subject; (iii) violate any order,
judgment, injunction, award or decree of any court, arbitrator or governmental
or regulatory body against, or binding upon, the Seller, Parent or BHC or upon
the securities, properties, assets or business of the Seller, Parent, or BHC;
(iv) violate any statute, law or regulation of any jurisdiction as such statute,
law or regulation relates to the Seller, Parent, or BHC or to the securities,
properties, assets or business of the Seller, Parent, or BHC; (v) except as set
forth on Schedule 2.8, violate any Permit; (vi) except as set forth in
Schedule 2.8, require the approval or consent of any foreign, federal, state,
local or other governmental or regulatory body or the approval or consent of any
other person; or (vii) result in the creation of any lien or other encumbrance
on the assets or properties of the Seller.

     2.9 Actions and Proceedings. Other than as described in Section 2.7 hereof,
and except as disclosed on Schedule 2.9, there are no outstanding orders,
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving the Seller or any
of its securities, assets, or properties. There are no actions, suits or claims
or legal, administrative or arbitral proceedings or, to the best knowledge of
the Seller, Parent, BARLACO, or BHC, investigations (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) pending or,
to the best knowledge of the Seller, Parent, BARLACO, or BHC, threatened against
or involving the Seller or any of its securities, assets or properties. To the
best knowledge of the Seller, Parent, BARLACO, or BHC, there is no fact, event
or circumstance that may give rise to any suit, action, claim, investigation or
proceeding that individually or in the aggregate could have a material adverse
effect upon the transactions contemplated hereby or upon the assets, properties,
business, operations or condition (financial or otherwise) of the Seller.

     2.10 Contracts and Other Agreements. There have been delivered or made
available to the Buyer true and complete copies of all of the Assigned
Agreements. All of such Assigned Agreements are valid, subsisting, in full force
and effect, binding upon the Seller, and to the best knowledge of the Seller,
Parent, BARLACO, and BHC, binding upon the other parties thereto in accordance
with their terms, and the Seller has paid in full or accrued all amounts now due
thereunder and has satisfied in full or provided for all of its liabilities and
obligations thereunder which are presently required to be satisfied or provided
for, and is not in default under any of them, nor, to the best knowledge of the
Seller, Parent, BARLACO, and BHC, is any other party

7

--------------------------------------------------------------------------------

 

to any Assigned Agreement in default thereunder, nor does any condition exist
that with notice or lapse of time or both would constitute a default thereunder.

     2.11 Real Property. (a) Schedule 2.11 contains a correct legal description,
street address and tax parcel identification number of all tracts, parcels, and
subdivided lots in which Seller has an ownership interest. Schedule 2.11
contains a complete list of all real property that is currently leased, or has
been leased at any time during the last five years, by Seller. The real property
set forth in Schedule 2.11 shall be referred to herein as “Real Property.”

               (b) To the knowledge of the Seller, Parent, BARLACO, and BHC,
there is not (i) any claim of adverse possession or prescriptive rights
involving any of the Real Property, (ii) any structure located on any Real
Property which encroaches on or over the boundaries of neighboring or adjacent
properties, or (iii) any structure of any other party which encroaches on or
over the boundaries of any such Real Property.

               (c) Except as set forth on Schedule 2.11 (i) all of the
buildings, plants, pipes, and structures included, relating to, or connecting to
the Real Property are in condition and repair sufficient to render water utility
service to the public and (ii) Seller has maintained and operated such
buildings, plants, pipes and structures using its water utility engineering and
operating judgment concerning the timing and extent of maintenance, including
the deferral of some maintenance where such deferral would not jeopardize
Seller’s ability to render water utility service to its customers. Buyer
understands that the Purchased Assets are mostly old water utility assets that
require constant attention and maintenance to continue to deliver water utility
service to customers. Attached as Schedule 2.11 is a list of repairs and
replacements performed over the past five years and a plan of future capital
improvements that Seller anticipates will be required over the next five years.

     2.12 Tangible Property. The Seller’s water distribution system, including
pumping facilities, purification equipment, mains, pipes, fire cisterns, basins,
fountains, troughs, meters, and hydrants, office, shop, stores, transportation,
laboratory, and other equipment, machinery, furniture, leasehold improvements,
fixtures, structures, any related capitalized items and other tangible property
material to the business of the Seller included in the Purchased Assets
(“Tangible Property”) are in operating condition as described in Section 2.11 of
this Agreement, and except as otherwise set forth in this Agreement, the Seller
has not received notice that any of its Tangible Property is in violation of any
existing law or any building, zoning, health, safety or other ordinance, code or
regulation.

     2.13 Title to Assets; Liens.

               (a) With respect to the Purchased Assets other than those
identified in Section 1.1(a) and Section 1.1(b), the Seller owns outright and
has good marketable title to all of the Purchased Assets free and clear of any
claim, lien or other encumbrance; provided, however, with respect to Seller’s
rights, franchises, and privileges, including the water and distribution rights
conferred by Seller’s charter included in the Purchased Assets, Seller is
transferring such rights to the maximum extent possible under applicable laws.

8

--------------------------------------------------------------------------------

 

               (b) With respect to the Purchased Assets identified in
Section 1.1(a), Seller has or at Closing will have good marketable title to such
assets free and clear of any liens and encumbrances other than (i) voluntarily
created monetary liens or encumbrances which shall be discharged prior to
Closing or (ii) liens and encumbrances which do not materially and adversely
effect the use of the Purchased Assets in connection with Seller’s business and
the business to be assumed by Buyer.

               (c) The Purchased Assets constitute all of the assets, properties
or rights that are useful or necessary for the conduct of the Seller’s business
as currently conducted on the date hereof and as of the Closing Date, except to
the extent set forth on Schedule 2.13.

               (d) Upon delivery of and payment for the Purchased Assets as
herein provided, the Buyer will acquire all of the Seller’s right, title and
interest thereto, free and clear of any claim, lien or other encumbrance except
as set forth above.

     2.14 Absence of Undisclosed Liabilities. To the best knowledge of Seller,
Parent, BARLACO, and BHC, as at the Balance Sheet Date, the Seller had no
material liabilities, whether accrued, absolute, contingent or otherwise
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others or liabilities for Taxes due or then accrued or
to become due), required to be shown on the Balance Sheet that were not fully
and adequately reflected or reserved against on the Balance Sheet. The Seller
has no such liabilities, other than liabilities (i) fully and adequately
reflected or reserved against on the Balance Sheet, and (ii) incurred since the
Balance Sheet Date in the ordinary course of business.

     2.15 Insurance. Schedule 2.15 sets forth a list of all policies or binders
of fire, liability, product liability, workmen’s compensation, vehicular,
directors and officers and other insurance held by or on behalf of the Seller
(“Insurance”). Such Insurance policies are “claims incurred” policies covering
all claims, occurrences and omissions arising or occurring prior to the Closing
Date. Such Insurance is in full force and effect, all premiums with respect
thereto are currently paid, are reasonably believed to be adequate for the
businesses engaged in by the Seller and are in conformity with the requirements
of all contracts to which the Seller is a party and to the best knowledge of the
Seller, Parent, BARLACO, and BHC, are valid and enforceable in accordance with
their terms. The Seller has not received notice of cancellation or nonrenewal of
any such Insurance.

     2.16 Brokerage. No broker, finder, agent or similar intermediary has acted
on behalf of the Seller, Parent or BHC in connection with this Agreement or the
transactions contemplated hereby, and there are no brokerage commissions,
finders fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with the Seller, Parent, or
BHC, or any action taken by any of them.

     2.17 Hazardous Materials. Since January 1, 2001, except as described in
Schedule 2.7 or as permitted in accordance with applicable laws and regulations
and generally accepted business practices, the Seller has never generated, used
or handled any Hazardous Materials (as defined below), nor has the Seller
treated, stored or disposed of any Hazardous Materials at any site owned or
leased by the Seller or shipped any Hazardous Materials for treatment, storage
or disposal at any other site or facility. Since January 1, 2001, except as
described in Schedule 2.7

9

--------------------------------------------------------------------------------

 

and as permitted in accordance with applicable laws and regulations and
generally accepted business practices, to the best knowledge of Seller, Parent,
BARLACO, and BHC, no other person has ever generated, used, handled, stored or
disposed of any Hazardous Materials at any site owned or premises leased by the
Seller during the period of Seller’s ownership or lease, nor since January 1,
2001, has there been or is there threatened any release of any Hazardous
Materials on or at any such site or premises. Except as described in
Schedule 2.7, the Seller does not presently own, operate, lease or use, nor
since January 1, 2001, has it owned, operated, leased, or used any site on which
underground storage tanks are or, to the best knowledge of Seller, Parent,
BARLACO, and BHC, were located. Since January 1, 2001, no lien has ever been
imposed by any governmental agency on any property, facility, machinery, or
equipment owned, operated, leased or used by Seller in connection with the
presence of any Hazardous Materials. Other than as set forth in Schedule 2.7, no
action, proceeding, revocation proceeding, amendment procedure, writ, injunction
or claim is pending, or to the knowledge of the Seller, Parent, BARLACO, or BHC,
threatened concerning an environmental permit or approval or any Hazardous
Materials, and to the knowledge of the Seller, Parent, BARLACO, or BHC, there is
no fact or circumstance which could reasonably be expected to involve the Seller
in litigation relating to the Hazardous Materials or compliance with
environmental laws. For purposes of this Section 2.17, “Hazardous Materials”
shall mean and include any substance that has been designated by a federal,
state or local authority or law to be hazardous, toxic or otherwise harmful to
health or the environment, including without limitation, PCB, asbestos,
petroleum of any kind, urea formaldehyde, any “hazardous waste” as defined in
either the United States Resource Conservation and Recovery Act or regulations
adopted pursuant to said Act, and also any “hazardous substances” or “hazardous
materials” as defined in the United States Comprehensive Environmental Response,
Compensation and Liability Act, or Massachusetts General Laws Chapter 21E and
its implementing regulations, 310 CMR 40.0001 et seq. The Seller has provided to
Buyer (directly or to Buyer’s consultants) copies of all material documents,
records and information available to Seller concerning any environmental or
health and safety matter relevant to Seller, whether generated by Seller or
others, including, without limitation, environmental audits, environmental risk
assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans, and reports, correspondence, permits,
licenses, approvals, consents and other authorizations related to environmental
or health and safety matters issued by any governmental agency.

SECTION 3- REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer represents and warrants to the Seller, Parent and BHC as follows:

     3.1 Authority to Execute and Perform Agreements. The Buyer has the power
and all authority and approvals required to enter into, execute and deliver this
Agreement and the Related Agreements and to perform fully its obligations
hereunder and thereunder, and each of this Agreement and the Related Agreements
has been or will be duly executed and delivered and the valid and binding
obligation of the Buyer enforceable in accordance with its terms.

     3.2 Brokerage. No broker, finder, agent or similar intermediary has acted
on behalf of the Buyer in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders’ fees or
similar fees or commissions payable in

10

--------------------------------------------------------------------------------

 

connection therewith based on any agreement, arrangement or understanding with
the Buyer or any action taken by the Buyer.

     3.3 Actions and Proceedings. There are no actions, suits or claims, legal,
administrative or arbitral proceedings pending or, to the best knowledge of the
Buyer, threatened against or involving the Buyer that individually or in the
aggregate could have a material adverse effect upon the transactions
contemplated hereby. To the best knowledge of the Buyer, there is no fact, event
or circumstance that may give rise to any suit, action, claim, investigation or
proceeding that individually or in the aggregate could have a material adverse
effect upon the transactions contemplated hereby.

     3.4 No Breach. The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not (i) violate, conflict with or result in the breach
of any of the terms or conditions of, result in modification of the effect of,
or otherwise give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both constitute) a default under,
any material instrument, contract or other agreement to which the Buyer is a
party or to which it or any of its assets or properties may be bound or subject;
(ii) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, the
Buyer or upon the securities, properties, assets or business of the Buyer; (iii)
violate any statute, law or regulation of any jurisdiction as such statute, law
or regulation relates to the Buyer or to the properties, assets or municipal
operations of the Buyer; (iv) require the approval or consent of any foreign,
federal, or state governmental or regulatory body; or (vi) result in the
creation of any lien or other encumbrance on the assets or properties of the
Buyer. Except as set forth in Sections 5.11 and 5.12 hereof, no approvals of any
governmental entity are required in order for Buyer to perform its obligations
under this Agreement.

SECTION 4- COVENANTS AND AGREEMENTS

     The parties covenant and agree as follows:

     4.1 Conduct of Business. During the period from the date hereof to the
Closing Date, Seller shall observe the following covenants:

               (a) Affirmative Covenants Pending Closing. The Seller will:

                         (i) Preservation of Personnel. Use reasonable efforts
to preserve intact and keep available the services of Seller’s present
employees;

                         (ii) Insurance. Use reasonable efforts to keep in
effect casualty, public liability, worker’s compensation and other insurance
policies in coverage amounts not less than those in effect on the date of this
Agreement;

                         (iii) Preservation and Advancement of the Business;
Maintenance of Properties, Contracts. Use reasonable efforts to preserve and
advance its business, advertise, promote and market its services in accordance
with past practices over the last twelve months, keep its properties intact,
preserve its goodwill and its business, maintain all Tangible Property, in each
case in accordance with past practices and at a quality that is currently
maintained, and

11

--------------------------------------------------------------------------------

 

perform and comply in all material respects with the terms of the contracts set
forth in Exhibit C hereto; and

                         (iv) Ordinary Course of Business. Operate its business
solely in the ordinary course and in the normal, usual and customary manner.

               (b) Negative Covenants Pending Closing. The Seller will not:

                         (i) Disposition of Assets. Sell, exchange or transfer,
or mortgage, pledge or create or permit to be created any security interest on,
any of its assets, including its equipment, other than in the ordinary course of
business;

                         (ii) Liabilities. Incur any obligation or liability
other than in the ordinary course of Seller’s business or incur any indebtedness
for borrowed money;

                         (iii) Compensation. Increase the rates of direct or
bonus compensation payable or to become payable to any officer, employee, agent
or consultant or prepay any loans to the Seller from any such person;

                         (iv) Charter and Bylaws. Amend the Articles of
Organization or Bylaws of Seller; or

                         (v) Acquisitions. Make any acquisition of property
other than in the ordinary course of Seller’s business.

     4.2 Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, the Seller shall use reasonable efforts to
conduct its business and affairs in such a manner so that the representations
and warranties contained in Section 2 hereof shall continue to be true and
correct in all material respects on and as of the Closing Date as if made on and
as of the Closing Date, and the Buyer shall promptly be given notice of any
event, condition or circumstance occurring from the date hereof through the
Closing Date that would constitute a violation or breach of this Agreement. No
such information shall be deemed to avoid or cure any misrepresentation or
breach of warranty or constitute an amendment of any representation, warranty or
statement in this Agreement for the purpose of (i) determining the accuracy of
any of the representations and warranties made by Seller, Parent or BHC in this
Agreement, or (ii) determining whether any of the conditions set forth in
Section 5 have been satisfied. In the event such violation or breach of this
Agreement shall occur on or prior to the Closing Date, the Seller shall promptly
use its best efforts to remedy the same.

     4.3 Taxes. The Seller shall prepare and timely file, in a manner consistent
with prior years, all Tax reports and returns required to be filed after the
date hereof and on or before the Closing Date, and shall timely pay any Taxes
and estimated Taxes, required to be paid by it (including without limitation
pursuant to Section 6655 of the Code) after the date hereof and on or before the
Closing Date. All transfer, excise or other Taxes payable by the Seller (or by
Buyer or by Seller and Buyer) to any jurisdiction (in the United States and
outside the United States) by reason of the sale and transfer of the Purchased
Assets pursuant to this Agreement shall be paid or provided for by the Seller
after the Closing out of the consideration payable by the Buyer hereunder.
Seller shall not be liable for any municipal property taxes allocable to the
period on

12

--------------------------------------------------------------------------------

 

and after the Closing Date. If the amount of said taxes is not known at the
Closing Date, they shall be apportioned on the basis of the taxes assessed for
the preceding fiscal year, with a reapportionment as soon as the new tax rate
and valuation can be ascertained.

     4.4 Corporate Examinations and Investigations. Prior to the Closing Date,
the Buyer shall be entitled, through its employees and representatives, to have
such access to the assets, properties, business and operations of Seller, as is
reasonably necessary or appropriate in connection with the Buyer’s investigation
of Seller. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances so as to minimize any
disruption to or impairment of the Seller’s business and the Seller shall
cooperate fully therein. No investigation by the Buyer shall diminish or obviate
any of the representations, warranties, covenants or agreements of the Seller
under this Agreement. In order that the Buyer may have full opportunity to make
such review, the Seller shall furnish the representatives of the Buyer during
such period with all such information and copies of such documents concerning
the affairs of the Seller as such representatives may reasonably request and
cause its officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with such representatives in connection with such review and to
make full disclosure to the Buyer of all material facts affecting the assets,
properties, business, operations and financial condition of the Seller. If this
Agreement terminates, the Buyer and its affiliates shall keep confidential and
shall not use in any manner any information or documents obtained from Seller
concerning its assets, properties, business and operations, unless readily
ascertainable from public or published information, or trade sources, or already
known or subsequently developed by the Buyer independently of any investigation
of the Seller, or received from a third party not under an obligation to the
Seller to keep such information confidential, or otherwise required by law. If
this Agreement terminates, any documents obtained from the Seller will be
returned or destroyed, at the Seller’s option.

     4.5 Expenses. Each of Buyer, on the one hand, and the Seller, Parent and
BHC, on the other, shall bear their respective expenses incurred in connection
with the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, including, without limitation, all fees and
expenses of agents, representatives, counsel and accountants and no such
expenses of Buyer shall be borne by Seller, Parent, or BHC nor shall such
expenses of Seller, Parent, or BHC be included in the Assumed Liability.

     4.6 Authorization from Others. Prior to the Closing Date, the Buyer, the
Seller, Parent and BHC shall use their best efforts to obtain all
authorizations, consents and permits of others required to permit the
consummation by them of the transactions contemplated by this Agreement,
including but not limited to, all consents set forth on Schedule 2.8, except to
the extent waived by the Buyer in writing. To the extent that the assignment of
any lease, contract, commitment or right which are among the Purchased Assets
shall require the consent of other parties thereto and the Buyer shall have
waived the receipt of such consent at the Closing, this Agreement shall not
constitute an assignment thereof; however, the Seller, Parent and BHC shall use
their best efforts after the Closing to obtain such consents or waivers to
assure the Buyer of the benefits of such leases, contracts, commitments or
rights. Nothing herein shall be deemed a waiver by the Buyer of its right to
receive at the Closing an effective assignment of each of the leases, contracts,
commitments or rights of the Seller which are among the Purchased Assets.

13

--------------------------------------------------------------------------------

 

     4.7 Consummation of Agreement. Each of the Buyer, the Seller, Parent, and
BHC shall use such party’s respective best efforts to perform and fulfill all
conditions and obligations to be performed and fulfilled by them under this
Agreement and further to ensure that to the extent in their collective control
or capable of influence by them, no breach of any of the Seller’s, Parent’s or
BHC’s respective representations, warranties and agreements hereunder or
contemplated hereby occurs or exists on or prior to the Closing Date to the end
that the transactions contemplated by this Agreement shall be fully carried out.

     4.8 Collection of Assets. Subsequent to the Closing, the Seller shall have
the right and authority to collect all accounts receivable for services rendered
before the Closing Date. Seller agrees that it will promptly transfer or deliver
to the Buyer from time to time, any cash or other property that Seller may
receive with respect to any claims, contracts, licenses, leases, commitments,
sales orders, purchase orders, receivables of any character or any other items
which are among the Purchased Assets that relate to services rendered after the
Closing Date. Within five (5) days of the Closing, Seller shall provide Buyer
with a good faith estimate of amounts owed to Seller from customers and water
tower leases as of the Closing Date, and Buyer shall remit to Seller at Closing
the amount of such good faith estimate in cash, by certified or bank check, or
by wire transfer of immediately available funds. Subsequent to the Closing, but
no later than ninety (90) days thereafter, the Buyer and the Seller shall
determine the actual amount owed to Seller as of the Closing Date and Seller
shall remit to Buyer any overpayments made to Seller or Buyer shall remit to
Seller any underpayment.

     4.9 Use of Name. Except as otherwise permitted in writing by Buyer, at and
following the Closing, the Seller, Parent and BHC shall cause any and all
persons in which any of them has an interest (including without limitation,
Seller) to cease and desist from using the name “Barnstable Water Company” or
“Barnstable Water” as all or part of a trade or corporate name other than
required filings identifying Barnstable Water Company, Barnstable Holding
Company, or BARLACO as entities.

     4.10 Further Assurances. Prior to and after the Closing, each of the
parties shall execute such documents, further instruments of transfer and
assignment and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. No later than 30 days prior to Closing, Seller shall
provide to Buyer the following information for all the real estate to be sold to
Buyer pursuant to this Agreement, including the real property set forth in
Exhibits A and B: a legal description, a copy of the deed by which Seller
acquired the said real property, the parcel identified by deed, and recording
information.

     4.11 Related Agreements. At or before the Closing, (i) the Buyer and the
Seller shall enter into a Management Agreement substantially in the form of
Exhibit D hereto and (ii) the Buyer, BARLACO, BHC, and Parent shall enter into
the BARLACO Purchase and Sale Agreement in the form attached hereto as Exhibit E
hereto (collectively, the “Related Agreements”).

     4.12 Insurance. Seller, Parent and BHC shall add Buyer as an additional
“insured” under all existing Insurance policies as defined in Section 2.15.
Following the Closing Date, the Buyer may submit claims under any applicable
Insurance policy under the terms under which

14

--------------------------------------------------------------------------------

 

existing coverage is provided with respect to claims, occurrences or omissions
arising prior to the Closing Date. Seller, Parent and BHC shall provide
commercially reasonable cooperation to the Buyer in submitting any such claims
under such applicable Insurance policy. Seller, Parent or BHC, as the case may
be shall pay the Buyer any insurance proceeds actually received by any of them
in respect of any such claims, as soon as reasonably practicable after receipt
thereof by Seller, Parent or BHC.

SECTION 5 — CONDITIONS PRECEDENT TO
THE OBLIGATION OF THE BUYER TO CLOSE

     The obligation of the Buyer to enter into and complete the Closing is
subject, at the option of the Buyer acting in accordance with the provisions of
this Agreement with respect to termination hereof, to the fulfillment of the
following conditions, any one or more of which may be waived by it:

     5.1 Representations, Warranties and Covenants. The representations and
warranties of the Seller, Parent and BHC contained in this Agreement shall be
true and accurate as of the date hereof and shall be true and accurate as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date. The Seller, Parent and BHC shall have performed and complied with
all covenants and agreements required by this Agreement to be performed or
complied with such parties on or prior to the Closing Date. Seller, Parent, and
BHC shall each have delivered to the Buyer a certificate, dated the Closing Date
and signed by an officer of such party to the foregoing effect and stating that
all conditions to the Buyer’s obligations hereunder have been satisfied.

     5.2 Third Party Consents. The Buyer shall have received evidence of the
receipt of all authorizations, consents and permits of others required to permit
the consummation by the Buyer and the Seller of the transactions contemplated by
this Agreement, including but not limited to, all consents set forth on
Schedule 2.8, except to the extent waived by the Buyer in writing.

     5.3 Management Agreement. Each of the Seller, Parent, BHC and Buyer shall
have executed and delivered the Management Agreement in substantially the form
attached hereto as Exhibit D.

     5.4 BARLACO Purchase and Sale Agreement. Each of the BHC, BARLACO, Parent
and the Buyer shall have executed and delivered the Purchase and Sale Agreement
in substantially the form attached hereto as Exhibit E.

     5.5 Opinion of Counsel to the Seller. The Buyer shall have received the
opinion of Murtha Cullina LLP, counsel to the Seller, dated the Closing Date,
addressed to the Buyer, and substantially in the form of Exhibit F hereto.

     5.6 Litigation. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions, or that has

15

--------------------------------------------------------------------------------

 

or may have, in the reasonable opinion of the Buyer, a materially adverse effect
on the assets, properties, business, operations or condition (financial or
otherwise) of Seller.

     5.7 Delivery of Instruments of Transfer. Seller shall have delivered or
caused to be delivered to the Buyer instruments of transfer in conformity with
Section 1.5 above.

     5.8 No Material Change. There shall have been no material adverse change in
the Seller’s financial condition, business, assets, operations or prospects, nor
shall any event have occurred which so far as can reasonably be foreseen on the
Closing Date appears reasonably likely materially and adversely to affect the
financial condition, business, assets, operations or prospects of the Seller.

     5.9 Seller Name Change and Discharge of Liabilities; Insurance. The Seller
shall have delivered to the Buyer evidence of the Seller’s compliance with
Sections 4.9 and 4.12 above.

     5.10 Massachusetts Tax Waivers. The Seller shall have delivered to the
Buyer (i) a certificate of payment/good standing from the Commission of Revenue
as provided in Massachusetts General Laws Chapter 62C, Section 44(a); and (ii) a
copy of a waiver of tax lien issued by the Commissioner of Revenue pursuant to
Massachusetts General Laws Chapter 62C, Sections 51 and 52 and recorded with the
appropriate register of deeds as provided in Section 51 of the Massachusetts
General Laws Chapter 62C, if required by applicable law.

     5.11 Financing. The Barnstable Town Council shall have approved by a
two-thirds affirmative vote the borrowing, issuing of notes in the amount of,
re-authorizing, appropriating and/or transferring, not less than $10,552,385 and
Buyer shall have received such funds on or before the Closing Date.

     5.12 Barnstable Town Council Approval. The Barnstable Town Council shall
have authorized by a majority vote the purchase by the Buyer of the Purchased
Assets in accordance with this Agreement, including the Related Agreements.

     5.13 Payment of Discharge Amount. On the Closing Date, Seller shall have
paid the Indianapolis Note in full.

     5.14 DEP Approval. The Seller shall have received the DEP approval required
by 310 CMR §22.4 for a transfer of a water company of land used for water supply
purposes.

SECTION 6 — CONDITIONS PRECEDENT
TO THE OBLIGATION OF SELLER TO CLOSE

     The obligation of the Seller to enter into and complete the Closing is
subject, at the option of the Seller acting in accordance with the provisions of
this Agreement with respect to

16

--------------------------------------------------------------------------------

 

termination hereof, to the fulfillment of the following conditions, any one or
more of which may be waived:

     6.1 Representations, Warranties and Covenants. The representations and
warranties of the Buyer contained in this Agreement shall be true and accurate
as of the date hereof and shall be true and accurate as of the Closing Date with
the same force and effect as though made on and as of the Closing Date. The
Buyer shall have performed and complied with all covenants and agreements
required by this Agreement to be performed or complied with such parties on or
prior to the Closing Date. The Buyer shall have delivered to the Seller a
certificate, dated the Closing Date and signed by the Buyer, to the foregoing
effect and stating that all conditions to the obligations of the Seller
hereunder have been satisfied.

     6.2 Litigation. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, and such action, suit or
proceeding shall not have been stayed.

     6.3 Delivery of the Purchase Price. Buyer shall have delivered or caused to
be delivered to Seller the Purchase Price in accordance with Section 1.4 hereof.

     6.4 Required Approvals. The transactions contemplated by this Agreement
shall have been approved no later than seven business days from the date this
Agreement is executed by (a) the Board of Directors and the respective holders
of the outstanding capital stock of Seller, BHC, and BARLACO and (b) the Board
of Directors of Parent.

     6.5 Opinion of Counsel to the Buyer. The Seller shall have received the
opinion of the Town Attorney for the Town of Barnstable, dated the Closing Date,
addressed to the Seller, and substantially in the form of Exhibit G hereto.

     6.6 DEP Approval. The Seller shall have received the DEP approval required
by 310 CMR §22.4 for a transfer of a water company of land used for water supply
purposes.

SECTION 7 — INDEMNIFICATION

     7.1 Survival. Notwithstanding any right of any party to fully investigate
the affairs of the other party and notwithstanding any knowledge of facts
determined or determinable by such party pursuant to such investigation or right
of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement or in any Schedule, certificate or financial statement delivered
by any party pursuant hereto. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
hereunder and be indemnified in accordance with this Section 7, and, except as
otherwise specifically provided in this Agreement, shall thereafter:

17

--------------------------------------------------------------------------------

 

               (a) (i) survive forever, with respect to (a) any claim based
upon, arising out of other otherwise in respect of any breach of, any
representation or warranty of the Seller contained in Section 2.2 (Authority to
Execute and Perform Agreements), 2.7 (Compliance with Laws), 2.11 (Real
Property), and 2.13 (Title to Assets) hereof, this clause (i) is referred to as
a “Clause (i) Claim”); (ii) for any Tax Claim (as defined below) survive until
the expiration of the applicable statute of limitations for such claim, taking
into account any extensions or time granted to the taxing authorities, plus
90 days; or (iii) for any Environmental Claim (as defined below) survive until
the second anniversary of the Closing Date; and

               (b) terminate and expire on the second anniversary of the Closing
Date with respect to any General Claim or Seller Claim (as such terms are
hereinafter defined) based upon, arising out of or otherwise in respect of any
fact, circumstance, action or proceeding of which the party asserting such claim
shall have given no notice on or prior to the second anniversary of the Closing
Date to the party against which such General Claim or Seller Claim is asserted;
provided, however, once notice of any such claim has been given hereunder,
additional claims based upon, arising out of or otherwise in respect of such
fact, circumstance, action or proceeding upon which the original claim arose may
be made at any time prior to the final resolution of such claim (by means of a
final, nonappealable judgment of a court of competent jurisdiction, a binding
arbitration decision or a settlement approved by the parties involved) even if
such resolution occurs after the second anniversary of the Closing Date, such
date being deemed to have been extended to the date of such final resolution.

As used in this Section 7, the following terms have the following meanings:

                         (i) “General Claim” means any claim (other than a
Clause (i) Claim, Environmental Claim, or a Tax Claim) based upon, arising out
of or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Seller contained in this
Agreement.

                         (ii) “Tax Claim” means any claim based upon, arising
out of or otherwise in respect of (A) issues raised on audit by Tax authorities
with respect to the Seller’s business on or before the Closing Date, (B) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Seller contained in this Agreement related to Taxes or (C) any
other Tax liabilities of the Seller.

                         (iii) “Environmental Claim” means any claim based upon,
arising out of or otherwise in respect of any breach of Section 2.7 or
Section 2.17 hereof, provided such claim arises from or is a result of Seller’s
negligence, or wrongful or willful misconduct, or intentional act or omission to
act in violation of its duty of care, and further provided that with respect to
an Environmental Claim relating to environmental conditions on or off the Real
Property, Buyer shall bear the burden of establishing that such conditions
resulted from Seller’s actions since January 1, 2001.

                         (iv) “Seller Claim” means any claim based upon, arising
out of or otherwise in respect of any breach of any representation, warranty,
covenant or agreement of the Buyer contained in this Agreement.

18

--------------------------------------------------------------------------------

 

                         (v) “Buyer Claim” means any Clause (i) Claim, Tax
Claim, Environmental Claim, or General Claim.

     7.2 Obligation of the Seller, Parent and BHC to Indemnify. Subject to the
termination provisions set forth in Section 7.1, the Seller, Parent and BHC,
jointly and severally, agree to indemnify, defend and hold harmless the Buyer
(and its directors, officers, employees, affiliates and assigns) from and
against all losses, liabilities, damages, claims, causes of action,
deficiencies, dues, assessments, fines, fees, costs or expenses (including
interest and penalties imposed or assessed by any judicial or administrative
body and reasonable attorneys’ and experts’ fees and expenses), or diminution of
value, whether or not involving a Third-Party Claim (as defined below)
(collectively, a “Loss” or “Losses”) based upon, arising out of or otherwise in
respect of (i) any Buyer Claim; (ii) any Excluded Assets or Excluded
Liabilities; and (iii) the ownership or operation of the Purchased Assets or the
Seller’s business on or before the Closing Date (other than any claim or demand
or assertion of liability based upon, arising out of or otherwise in respect of
the operation of the business by Buyer after the Closing Date).

     7.3 Obligation of the Buyer to Indemnify. Subject to the termination
provisions set forth in Section 7.1, the Buyer agrees to indemnify, defend and
hold harmless the Seller, Parent and BHC (and their directors, officers,
employees, affiliates, and assigns) from and against any Losses based upon,
arising out of or otherwise in respect of any Seller Claim.

     7.4 Release by Buyer. Except for any specific liabilities related to
Compliance with Laws (Section 2.7) or Hazardous Materials (Section 2.17)
pertaining to the period from January 1, 2001 to the Closing Date for which
Seller, Parent, and BHC are responsible pursuant to this Section 7, Buyer
forever releases Seller, Parent, and BHC from any and all Losses arising out of
or relating to any environmental liabilities whatsoever.

     7.5 Third-Party Claims.

               (a) Notice of Claim. If any third party notifies any party hereto
(the “Indemnitee”) with respect to any matter which may give rise to a claim or
the commencement (or threatened commencement) of any action, proceeding or
investigation (a “Third-Party Claim”) that may result in a Loss, the Indemnitee
shall give notice thereof (the “Claims Notice”) to any other party or parties
obligated to provide indemnification pursuant to Sections 7.2 or 7.3 hereof (the
“Indemnifying Party”); provided that the failure of any Indemnitee to give
timely notice of a Third-Party Claim shall not affect the right to
indemnification hereunder except to the extent the Indemnifying Party
demonstrates actual damages caused by such failure. The Claims Notice shall
describe the Third-Party Claim in reasonable detail, and shall indicate the
amount (estimated, if necessary) of the Loss that has been or may be suffered by
the Indemnitee.

               (b) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, and control the defense of, at its own expense and by
counsel reasonably satisfactory to the Indemnitee, any Third Party Claim,
provided that the Indemnitee shall have no liability under any compromise or
settlement agreed to by the Indemnifying Party to which it has not consented in
writing, which consent shall not be unreasonably withheld. If the Indemnifying
Party elects to compromise or defend such Third-Party Claim, it shall within
30 days (or sooner, if the nature of the Third-Party Claim so requires) notify
the Indemnitee of its intent to do so, and

19

--------------------------------------------------------------------------------

 

the Indemnitee shall cooperate upon the request and at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Third-Party
Claim. If the Indemnifying Party elects not to compromise or defend the
Third-Party Claim, or fails to notify the Indemnitee of its election as herein
provided, or fails to diligently defend or seek to compromise such Third-Party
Claim after electing to assume such defense or compromise, the Indemnitee may
pay, compromise or defend such Third-Party Claim and receive full
indemnification for its Losses. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the defense of such
Third-Party Claim by the Indemnifying Party or the Indemnitee, respectively. If
the named parties of any Third-Party Claim include both the Indemnifying Party
and the Indemnitee and representation of both parties by the same counsel would
be inappropriate under applicable standards of professional conduct, the expense
of separate counsel for the Indemnitee shall be paid by the Indemnifying Party.
If the Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are reasonably requested for such defense and shall otherwise
cooperate with the Indemnifying Party, in which event the Indemnitee shall be
reimbursed for its out-of-pocket expense. All amounts required to be paid in
connection with any such Third-Party Claim pursuant to the determination of any
court, governmental or regulatory body or arbitrator, and all amounts required
to be paid in connection with any such compromise or settlement reached in
accordance with this Section 7.4, shall be borne and paid by the Indemnifying
Party. The parties agree to cooperate fully with one another in the defense,
compromise or settlement of any such Third-Party Claim.

     7.6 Other Claims. Any claim for indemnification for any matter not
involving a Third-Party Claim may be asserted by notice to the party from whom
indemnification is sought and shall be paid promptly after such notice.

SECTION 8 — TERMINATION OF AGREEMENT

     8.1 Termination. This Agreement may be terminated on or prior to the
Closing as follows:

                         (i) at the election of the Seller, Parent or BHC upon
written notice to the Buyer from Seller if, on or after May 15, 2005, any one or
more of the conditions to the obligation of the Seller to close has not been
fulfilled;

                         (ii) at the election of the Buyer upon written notice
to the Seller, Parent or BHC if, on or after May 15, 2005, any one or more of
the conditions to the obligation of the Buyer to close has not been fulfilled;

                         (iii) at the election of the Seller, Parent or BHC upon
written notice to the Buyer from any of them, if the Buyer has breached any
representation, warranty, covenant or agreement contained in this Agreement and
has not, within 15 business days of receipt by the Buyer of written notice from
the Seller, Parent or BHC of such breach of representation, warranty, covenant
or agreement, cured such breach;

                         (iv) at the election of the Buyer upon written notice
to the Seller, Parent or BHC if the Seller, Parent or BHC has breached any
representation, warranty, covenant

20

--------------------------------------------------------------------------------

 

or agreement contained in this Agreement and has not, within 15 business days of
receipt by the Seller, Parent or BHC of written notice from the Buyer of such
breach of representation, warranty, covenant or agreement, cured such breach; or

                         (v) by mutual written agreement of the Seller, Parent,
BHC and the Buyer.

     8.2 Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are not consummated as provided above, each and
every representation and warranty contained in this Agreement or any Schedule
hereto, or any certificate, document or other instrument delivered by the
parties in connection herewith (other than the provisions of this Section 8.2,
Section 4.5 (Expenses), Section 9.5 (Governing Law), Section 9.6 (Enforceability
in Jurisdiction; Consent), shall expire and none of the parties hereto shall be
under any liability whatsoever with respect to any such representation or
warranty; provided, however, that notwithstanding the foregoing, each party
shall be and remain liable to the other in the event that the failure so to
close hereunder shall occur as a consequence of the failure of a party to fully
perform its covenants and agreements hereunder or the material breach by a party
of its representations or warranties contained herein.

SECTION 9 — MISCELLANEOUS

     9.1 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without advance
approval thereof by the Seller and the Buyer.

     9.2 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, two days after the date of deposit in the United States mails, as
follows:

                  (i)   if to the Buyer, to:
 
           

          The Town of Barnstable
 
                    with a copy to:
 
           

          Jeffrey Swope, Esq.

          Palmer & Dodge LLP

          111 Huntington Avenue

          Boston, Massachusetts 02199
 
                (ii)   if to the Seller:
 
           

          The Barnstable Water Company

          c/o Connecticut Water Service, Inc.

21

--------------------------------------------------------------------------------

 

             

          93 West Main Street

          Clinton, Connecticut 06413

          Attention: Marshall T. Chiaraluce
 
                    with a copy to:
 
           

          Paul R. McCary, Esq.

          Murtha Cullina LLP

          Cityplace 1

          185 Asylum Street

          Hartford, Connecticut 06103-3469

Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.

     9.3 Entire Agreement. This Agreement (including the Schedules), the Related
Agreements and all other documents executed in connection with the consummation
of the transactions contemplated herein contain the entire agreement among the
parties with respect to the purchase of the Purchased Assets and related
transactions, and supersedes all prior agreements, written or oral, with respect
thereto.

     9.4 Waivers and Amendments; Noncontractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty, covenant
or agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement between the parties) as to which there is
not inaccuracy or breach.

     9.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of The Commonwealth of Massachusetts.

     9.6 Enforceability in Jurisdictions; Consent. The parties hereto intend to
and hereby confer jurisdiction to enforce the provisions of this Agreement,
expressly including without limitation, the provisions of Section 7 hereof, upon
the courts of Massachusetts. The parties hereto hereby acknowledge and agree
that any breach of their respective obligations under this Agreement or any
other agreement executed in connection herewith shall be deemed to have

22

--------------------------------------------------------------------------------

 

occurred in Boston, Massachusetts and that such party has purposely established
minimum contact in Boston, Massachusetts within the meaning of all applicable
law. Each of the parties hereto consents to the jurisdiction of said court or
courts in Massachusetts and to service of process by certified mail, return
receipt requested, or by any other manner provided by law. In the case of any
claim involving the parties hereto, any legal action, suit or proceeding arising
out of or relating to such claim may be instituted against such parties in any
state or federal court located in Boston, Massachusetts and each such party
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum, that the venue of the action, suit or proceeding is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court.

     9.7 Binding Effect; No Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and legal
representatives. This Agreement is not assignable except by operation of law.

     9.8 Variations in Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.

     9.9 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.

     9.10 Exhibits and Schedules. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.

     9.11 Headings. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.

23

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first above written.

              BUYER
 
            TOWN OF BARNSTABLE
 
       

  By:    

     

--------------------------------------------------------------------------------

  Name:    

  Title:    
 
            SELLER
 
            BARNSTABLE WATER COMPANY
 
       

  By:    

     

--------------------------------------------------------------------------------

  Name:    

  Title:    
 
            BARLACO
 
            BARLACO, INC.
 
       

  By:    

     

--------------------------------------------------------------------------------

  Name:    

  Title:    
 
            BHC
 
            BARNSTABLE HOLDING COMPANY
 
       

  By:    

     

--------------------------------------------------------------------------------

  Name:    

  Title:    

24

--------------------------------------------------------------------------------

 

              PARENT
 
            CONNECTICUT WATER SERVICE, INC.
 
       

  By:    

     

--------------------------------------------------------------------------------

  Name:    

  Title:    

25