Exhibit 10.53
Loan No. RX0848T2
PROMISSORY NOTE AND SUPPLEMENT
(Single Advance Term Loan)
THIS PROMISSORY NOTE AND SUPPLEMENT (this “Promissory Note and Supplement”) is
entered into as of February 9, 2010, between PENNICHUCK EAST UTILITY, INC., a
New Hampshire corporation (the “Company”) and CoBANK, ACB, a federally chartered
instrumentality of the United States (“CoBank”), and supplements the Master Loan
Agreement dated as of February 9, 2010 (as amended or restated from time to
time, the “MLA”).
SECTION 1. The Commitment. On the terms and subject to the conditions set forth
in the MLA and this Promissory Note and Supplement, CoBank agrees to make a loan
(the “Loan”) to the Company in an amount up to $4,500,000 (the “Commitment”).
CoBank’s obligation to make the Loan shall expire at 12:00 Noon, Mountain Time,
on March 2, 2010, or such later date as CoBank may, in its sole discretion,
authorize in writing. Under the Commitment, amounts borrowed and later repaid
may not be re-borrowed.
SECTION 2. Purpose. The purpose of the Commitment is to refinance the unpaid
principal balance of, together with all accrued interest owing on, the loans
made by the Guarantor to the Company to refinance the Company’s debt to Bank of
America.
SECTION 3. Availability. Notwithstanding Section 2.02 of the MLA, the Loan will
be made available: (A) on a date to be agreed upon by the parties (the “Closing
Date”); and (B) in a single advance.
SECTION 4.
(A) Rate Options. The Company agrees to pay interest on the unpaid balance of
the Loans in accordance with one of more of the following interest rate options,
as selected by the Company:
(1) Weekly Variable Rate Option. At a rate per annum equal to the rate of
interest established by CoBank on the first Business Day of each week (the
“Variable Rate Option”). The rate established by CoBank shall be effective until
the first Business Day of the next week and each change in the rate shall be
applicable to all balances subject to this option. Information about the then
current rate shall be made available upon telephonic request.
(2) Quoted Rate Option. At a fixed rate per annum to be quoted by CoBank in its
sole discretion in each instance (the “Quoted Fixed Rate Option”). Under this
option, rates may be fixed on such balances and for such periods (each, a
“Quoted Fixed Rate Period”), as may be agreeable to CoBank in its sole
discretion in each instance, provided that: (1) rates may not be fixed for
Quoted Fixed Rate Periods of less than 180 days; (2) rates may only be fixed on
balances of $100,000.00 or in multiples thereof; and (3) the maximum number of
balances that may be subject to this option at any one time shall be five (5).

 

 

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(3) LIBOR Option. At a fixed rate per annum equal to “LIBOR” (as hereinafter
defined) plus 1.75% per annum (the “LIBOR Option”). Under this option rates may
be fixed: (A) for “Interest Periods” (as hereinafter defined) of 1,2, 3, 6, and
9 months, as selected by the Company; provided, however, that: in no event may
rates be fixed for Interest Periods expiring after the Maturity Date; (B) on
balances of $500,000 or in increments of $500,000; (C) on a “Banking Day” (as
hereinafter defined) on 3 Banking Days’ prior notice; and (D) on not more than
five (5) separate balances at any one time. For purposes hereof: (a) “LIBOR”
shall mean the rate (rounded upward to the nearest sixteenth of a percentage
point and adjusted for reserves required on “Eurocurrency Liabilities” (as
hereinafter defined) for banks subject to “FRB Regulation D” (as hereinafter
defined) or required by any other federal law or regulation) quoted by the
British Bankers Association (“BBA”) at 11:00 a.m. London time 2 Banking Days
before the commencement of the Interest Period for the offering of U.S. dollar
deposits in the London interbank market for the Interest Period designated by
the Company, as published by Bloomberg or another major information vendor
listed on BBA’s official website; (b) “Banking Day” shall mean a day on which
CoBank is open for business, dealings in U.S. dollar deposits are being carried
out in the London interbank market, and banks are open for business in New York
City and London, England; and (c) “Interest Period” shall mean a period
commencing on the date this option is to take effect and ending on the
numerically corresponding day in the next calendar month or the month that is 2,
3, 6, or 9 months thereafter, as the case may be; provided, however, that:
(i) in the event such ending day is not a Banking Day, such period shall be
extended to the next Banking Day unless such next Banking Day falls in the next
calendar month, in which case it shall end on the preceding Banking Day; and
(ii) if there is no numerically corresponding day in the month, then such period
shall end on the last Banking Day in the relevant month; (d) “Eurocurrency
Liabilities” shall have meaning as set forth in FRB Regulation D; and (e) “FRB
Regulation D” shall mean Regulation D as promulgated by the Board of Governors
of the Federal Reserve System, 12 CFR Part 204, as amended.
(B) Elections. Subject to the limitations set forth above, the Company:
(1) shall select the applicable rate option(s) at the time it requests a Loan;
(2) may, on any Business Day, elect to convert balances bearing interest at the
Variable Rate Option to the Quoted Fixed Rate Option; (3) may, on the last day
of any Quoted Fixed Rate Period, elect to refix the rate under the Quoted Fixed
Rate Option or convert the balance to the Variable Rate Option; (4) may, on the
last day of any Interest Period, elect to convert balances bearing interest at
the LIBOR Option to the Variable Rate Option or Quoted Fixed Rate Option; and
(5) may, on three Banking Days’ prior notice, elect to convert balances bearing
interest at the Variable Rate Option or the Quoted Fixed Rate Option to the
LIBOR Option or refix a rate under the LIBOR Option; provided, however, that
balances bearing interest at the Quoted Fixed Rate Option or the LIBOR Option
may not be converted or continued until the last day of the Quoted Fixed Rate
Period or Interest Period applicable thereto. In the absence of an election
provided for herein, the Company shall be deemed to have elected the Variable
Rate Option. All elections provided for herein may be made telephonically, in
writing, or, if agreed to in a separate agreement, electronically, and must be
received by 12:00 noon Company’s local time on the applicable Business Day. Any
election made telephonically, shall be promptly confirmed in writing if so
requested by CoBank.
(C) Calculation and Payment. Interest shall be calculated on the actual number
of days each Loan is outstanding on the basis of a year consisting of 360 days.
In calculating interest, the date each Loan is made shall be included and the
date each Loan is repaid shall, if received before 3:00 P.M. Mountain time, be
excluded. Interest shall be calculated and shall be due and payable quarterly in
arrears on the first day of each March, June, September and December.
Notwithstanding the foregoing, at CoBank’s option, interest on balances bearing
interest at the LIBOR Option shall be payable on the last day of the Interest
Period or, in the case of Interest Periods of longer than three months, at three
month intervals.

 

 

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(D) Additional Provisions Regarding LIBOR Option. Notwithstanding any other
provision hereof, CoBank shall have the right to temporarily suspend or
permanently terminate the Company’s ability to fix rates under the LIBOR Option
or for one or more Interest Periods if, for any reason whatsoever (including a
change in Law): (1) LIBOR is no longer being quoted in the London interbank
market or is no longer being quoted for an Interest Period; (2) CoBank is
prohibited from offering rates based on LIBOR; or (3) CoBank’s cost to fund
balances bearing interest at the LIBOR Option (as determined by CoBank in its
sole discretion) increases beyond any corresponding increase in LIBOR or
decreases less than any corresponding decrease in LIBOR. In addition, if as a
result of a change in Law or otherwise, CoBank is required to allocate
additional capital to, or otherwise bear increase costs as a result of
maintaining balances under, the LIBOR Option, the Company agrees to indemnify
CoBank upon demand against all such costs.
(E) SWAP Agreement. Notwithstanding any other provision hereof, in the event the
Company and CoBank enter into a swap agreement (a “SWAP Agreement”) under which
the Company agrees to pay a fixed rate of interest and to receive LIBOR for a
given Interest Period as the floating rate, then for the duration of the SWAP
agreement, the Company shall elect LIBOR for the Interest Period contemplated in
the SWAP agreement, and interest payments shall be due and payable on the same
date and at the same time as payments are due under the SWAP Agreement.
SECTION 5. Fees. [Waived By CoBank]
SECTION 6. Promissory Note. The Company promises to pay to CoBank or order the
principal amount of the Loan in 80 consecutive quarterly installments, each due
on the first day of each March, June, September, and December  , with the first
installment due on June 1, 2010, and the last installment due on March 1, 2030.
The amount of each installment shall be the same principal amount that would be
due and payable if the Loan was scheduled to be repaid in level installments of
principal and interest and such schedule was calculated utilizing the “CoBank
Base Rate” (as hereinafter defined) on the date hereof as the rate of interest
accruing on the Loan; provided, however, that in the event the Company fixes the
rate of interest on the Loan at a single fixed rate to the final maturity
thereof, then the rate utilized to calculate the schedule shall be the rate of
interest accruing on the Loan. In addition to the above, the Company promises to
pay to CoBank or order interest on the unpaid principal balance of the Loan at
the times and in accordance with the provisions set forth above. If any date on
which principal or interest is due is not a Business Day (or, in the event a
SWAP Agreement is entered into, a Banking Date), then such payment shall be due
and payable on the next Business Day (or, in the case of a SWAP Agreement, on
the next Banking Date) and, in the case of principal, interest shall continue to
accrue on the amount thereof.
SECTION 7. Prepayment. Subject to Section 10.01 of the MLA, the Company may
prepay all or any portion of the Loan. Unless otherwise agreed, all prepayments
will be applied to principal installments in the inverse order of their maturity
and to such balances, fixed or variable, as CoBank shall be directly by CoBank.
SECTION 8. Security; Guaranties. The Company’s obligations hereunder and, to the
extent related hereto, the MLA shall be secured as provided in Section 2.04 of
the MLA. In addition, the Company’s obligations hereunder and, to the extent
related hereto, the MLA, are guaranteed by Pennichuck Corporation (as provided
in the MLA).

 

 

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SECTION 9. Additional Conditions Precedent. In addition to the conditions
precedent set forth in the MLA, CoBank’s obligation to make the Loan is subject
to the receipt by CoBank of each of the following instruments and documents
(each of which must be in form and content acceptable to CoBank): (A) a duly
completed and executed request for the Loan; and (B) one or more lien searches
conducted in all places required by Law in order to identify all Liens filed
against any real or personal property of the Company, which lien searches must
show that the Company’s property is free and clear of all Liens.
IN WITNESS WHEREOF, the parties have caused this Promissory Note and Supplement
to be executed by their duly authorized officers as of the date shown above.

                      CoBANK, ACB       PENNICHUCK EAST UTILITY, INC.    
 
                   
By:
  /s/ Irene Matlin       By:   /s/ Donald L. Ware    
 
                   
 
  Title: Assistant Corporate Secretary           Title: President Regulated
Utilities    
 
  Irene Matlin