Document:

Exhibit 4.1

 

 

 

GOLDEN STATE WATER
COMPANY

 

 

$40,000,000

 

 

5.87% Senior Note due December 20, 2028

 

 

 

 

NOTE PURCHASE AGREEMENT

 

 

 

Dated
as of October 11, 2005

 

 

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  AUTHORIZATION, SALE AND
  PURCHASE OF NOTE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  CLOSING

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS TO CLOSING

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Representations and
  Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2.

  	
  Performance; No Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3.

  	
  Compliance Certificates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4.

  	
  Opinion of Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5.

  	
  Purchase Permitted by
  Applicable Law, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6.

  	
  Payment of Special Counsel
  Fees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7.

  	
  Changes in Corporate
  Structure

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.8.

  	
  Proceedings and Documents

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND
  WARRANTIES OF THE COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Organization; Power and
  Authority

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2.

  	
  Authorization, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3.

  	
  No Governmental Approvals
  Required

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4.

  	
  Subsidiary

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5.

  	
  Financial Statements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6.

  	
  No Other Liabilities, No
  Material Adverse Changes

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7.

  	
  Intangible Assets

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8.

  	
  Binding Obligations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.9.

  	
  No Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10.

  	
  Regulation U; Investment
  Company Act

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.11.

  	
  Tax Liability

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.12.

  	
  Employee Matters

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.13.

  	
  Fiscal Year

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.14.

  	
  Solvency

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS OF THE
  PURCHASER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Purchase for Investment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2.

  	
  Source of Funds

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  INFORMATION AS TO COMPANY

  	
   

  	
   

  

 

i

 

	
   

  	
  6.1.

  	
  Financial and Business
  Information

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2.

  	
  Inspection

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  PREPAYMENT OF THE NOTE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Optional Prepayments with
  Redemption Premium

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2.

  	
  Maturity; Surrender, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3.

  	
  Redemption Premium

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Insurance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2.

  	
  Payment of Taxes

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3.

  	
  Corporate Existence, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4.

  	
  Acquire Non-voting
  Participation Certificates in Purchaser

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  NEGATIVE COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Disposition of Property

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2.

  	
  Liens on Property; Permitted
  Encumbrances

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3.

  	
  Merger, Consolidation, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4.

  	
  Change in Business

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Transactions with Affiliates

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Restrictions on Sale and
  Leaseback Transactions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  FINANCIAL COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Indebtedness

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2.

  	
  Distributions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3.

  	
  Rounding

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4.

  	
  Accounting Terms; Covenant
  Calculations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5.

  	
  Fiscal Year

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  EVENTS OF DEFAULT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  REMEDIES ON DEFAULT, ETC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1.

  	
  Acceleration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2.

  	
  Other Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3.

  	
  Rescission

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.4.

  	
  No Waivers or Election of
  Remedies, Expenses, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  PAYMENTS ON NOTE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  EXPENSES, ETC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1.

  	
  Transaction Expenses

  	
   

  	
   

  

 

ii

 

	
   

  	
  14.2.

  	
  Survival

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  ENTIRE AGREEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  AMENDMENT AND WAIVER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1.

  	
  Requirements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2.

  	
  Binding Effect, etc

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  NOTICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  REPRODUCTION OF DOCUMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  CONFIDENTIAL INFORMATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.1.

  	
  Successors and
  Assigns

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.2.

  	
  Payments
  Due on Non-Business Days

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.3.

  	
  Severability

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.4.

  	
  Construction

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.5.

  	
  Counterparts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.6.

  	
  Governing Law

  	
   

  	
   

  

 

	
  SCHEDULE A

  	
   

  	
  —

  	
  DEFINED TERMS

  	
   

  
	
  SCHEDULE 4.7

  	
   

  	
  —

  	
  Patents, etc.

  	
   

  
	
  SCHEDULE 9.2

  	
   

  	
  —

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT 1

  	
   

  	
  —

  	
  Form of
  5.87% Senior Note due December 20, 2028

  	
   

  

 

iii

 

GOLDEN
STATE WATER COMPANY

630 East
Foothill Blvd.

San Dimas, California 91773

 

October 11, 2005

 

5.87% Senior Note due December 20, 2028

 

COBANK, ACB

5500 South Quebec Street

Greenwood Village, Colorado 80111

 

Attention: Communications and Energy Banking Group 

 

Ladies and Gentlemen:

 

Golden State Water Company,
a California corporation (the “Company”), agrees
with CoBank, ACB (the “Purchaser”) as
follows:

 

1.                                      AUTHORIZATION, SALE AND
PURCHASE OF NOTE.

 

Subject to the terms and conditions of this
Agreement, the Company will authorize, will issue and sell to the Purchaser, and
the Purchaser will purchase from the Company, at the Closing provided for in Section 2,
$40,000,000 aggregate principal amount of its 5.87% Senior Note due December 20,
2028 (the “Note”). The Note shall be
substantially in the form set out in Exhibit 1, with such changes, if any,
as may be approved by the Purchaser and the Company. Certain capitalized terms
used in this Agreement are defined in Schedule A; references to a “Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.

 

2.                                      CLOSING.

 

The sale and purchase of the Note to be purchased by
the Purchaser shall occur at the offices of Sherman & Howard, LLC, 633
17th Street, Denver, Colorado 80302, at 11:00 p.m., (Mountain time), at a
closing (the “Closing”) on October 11,
2005 or on such other Business Day thereafter on or prior to October 15,
2005 as may be agreed upon by the Company and the Purchaser. At the Closing the
Company will deliver to the Purchaser the Note in a form of a Note dated the
date of the Closing in the Purchaser’s name (or in the name of the Purchaser’s
nominee), against delivery by the Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of the Company to
Wells Fargo Bank, ABA No. 121-000248, Account #4584-706535, Account Name:
Golden State Water Company, Ref: Note Purchase Agreement Proceeds. If at the
Closing the Company shall fail to tender the Note to the Purchaser as provided
above in this Section 2, or any of the conditions specified in Section 3

 

 

shall not have been fulfilled to the Purchaser’s satisfaction, the
Purchaser shall, at the Purchaser’s election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights the
Purchaser may have by reason of such failure or such nonfulfillment.

 

3.                                      CONDITIONS TO CLOSING.

 

The Purchaser’s obligation
to purchase and pay for the Note to be sold to the Purchaser at the Closing is
subject to the fulfillment to the Purchaser’s satisfaction, prior to or at the
Closing, of the following conditions:

 

3.1.                            Representations and
Warranties.

 

The representations and
warranties of the Company in this Agreement shall be correct in all material
respects when made and at the time of the Closing as of the date hereof and the
Closing Date.

 

3.2.                            Performance; No Default.

 

The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing in all material respects and after giving effect to the issue and sale
of the Note, no Default or Event of Default shall have occurred and be
continuing.

 

3.3.                            Compliance Certificates.

 

(a)                                  Officer’s Certificate. The Company shall have delivered to the
Purchaser an Officer’s Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 3.1, 3.2 and 3.7 have been fulfilled.

 

(b)                                 Secretary’s Certificate. The Company shall have delivered to the Purchaser
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Note and the Agreement.

 

3.4.                            Opinion of Counsel.

 

The Purchaser shall have
received an opinion, dated the date of the Closing from O’Melveny &
Myers LLP, counsel for the Company, in form and substance satisfactory to
counsel for Purchaser (and the Company hereby instructs its counsel to deliver
such opinion to the Purchaser).

 

3.5.                            Purchase Permitted by
Applicable Law, etc.

 

On the date of the Closing the Purchaser’s purchase of the Note shall (i) be
permitted by the laws and regulations of each jurisdiction to which the
Purchaser is subject, and (ii) not subject the Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
the Purchaser, the Purchaser shall have received an Officer’s Certificate

 

2

 

certifying as to such matters of fact as the Purchaser may reasonably
specify to enable the Purchaser to determine whether such purchase is so
permitted.

 

3.6.                            Payment of Special Counsel
Fees.

 

Without limiting the provisions of Section 14.1, the Company shall
have paid on or before the Closing the reasonable fees, charges and
disbursements of the Purchaser’s special counsel up to a maximum amount of
$25,000 to the extent reflected in a statement of such counsel rendered to the
Company at least one Business Day prior to the Closing.

 

3.7.                            Changes in Corporate
Structure.

 

The Company shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all
or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in Section 4.5.

 

3.8.                            Proceedings and Documents.

 

All corporate proceedings taken in connection with the transactions
contemplated by this Agreement and all documents and instruments necessary to
the consummation thereof shall be reasonably satisfactory in form and substance
to the Purchaser and the Purchaser’s special counsel, and the Purchaser and the
Purchaser’s special counsel shall have received all such counterpart originals
or certified or other copies of such documents as the Purchaser or they may
reasonably request.

 

4.                                      REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to the Purchaser that:

 

4.1.                            Organization; Power and
Authority.

 

The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, and is duly qualified
as a foreign corporation and is in good standing in each jurisdiction in which
the conduct of its business or the ownership of leasing of its Properties makes
such qualification or registration necessary, other than those jurisdictions as
to which the failure to be so qualified or in good standing could not
reasonably be expected to have a Material Adverse Effect. The Company has all
requisite corporate power and corporate authority to conduct its business, to
own and lease its Properties and to execute and deliver this Agreement and the
Note and to perform the provisions hereof and thereof. The chief executive
offices of the Company are located in San Dimas, California. All outstanding
capital stock of Company is duly authorized, validly issued, fully paid and
non-assessable, and no holder thereof has any enforceable right of rescission
under any applicable state or federal securities or other Laws. The Company is
in compliance with all Laws and other legal requirements applicable to its
business, has obtained all authorizations, consents, approvals, orders,
licenses and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transaction of its business,
except as disclosed in the

 

3

 

Company’s filings with the Securities and Exchange Commission after January 1,
2003 until the date hereof or where the failure so to comply with Laws and
other legal requirements applicable to its business, obtain authorizations,
etc., file, register, qualify or obtain exemptions could not reasonably be
expected to have a Material Adverse Effect.

 

4.2.                            Authorization, etc.

 

The execution and delivery by Company of this Agreement and the Note
and payment of the Obligations have been duly authorized by all necessary
corporate action and do not and will not:

 

(a)                                  Require any consent or approval not
heretofore obtained of any shareholder, security holder or creditor of the
Company;

 

(b)                                 Violate or conflict with any provision of the
Company’s articles of incorporation or bylaws;

 

(c)                                  Result in or require the creation or
imposition of any Lien (other than pursuant to the Loan Documents) or
Right of Others upon or with respect to any Property now owned or leased or
hereafter acquired by the Company;

 

(d)                                 Violate any Requirement of Law applicable to
the Company;

 

(e)                                  Result in a breach of or constitute a default
under, or cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Contractual Obligation to
which the Company is a party or by which the Company or any of its Property is
bound or affected;

 

and the Company is not in violation of, or default under, any
Requirement of Law or Contractual Obligation, or any indenture, loan or credit
agreement described in Section 4.2(e), in any respect that could
reasonably be expected to have a Material Adverse Effect.

 

4.3.                            No Governmental Approvals
Required.

 

Except as previously obtained or made, no authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is or will be required to authorize
or permit under applicable Laws the execution and delivery by the Company of
the Agreement and the Note and payment of the Obligations.

 

4.4.                            Subsidiary.

 

The only Subsidiary of the Company is a wholly owned Subsidiary of the
Company, California Cities Water Company, Inc., a California corporation.

 

4

 

4.5.                            Financial Statements.

 

The Company has delivered to the Purchaser (a) the audited
consolidated financial statements of the Company and its Subsidiary for the
Fiscal Year ended December 31, 2004 and (b) the consolidated financial
statements of the Company and its Subsidiary for the Fiscal Quarters ended March 31,
2005 and June 30, 2005. Such financial statements fairly present in all
material respects the financial condition, results of operations and changes in
financial position as of such dates and for such periods in conformity with
GAAP consistently applied.

 

4.6.                            No Other Liabilities, No Material Adverse Changes.

 

As of the Closing Date, the Company does not have any material
liability or material contingent liability required under GAAP to be reflected
or disclosed, and not reflected or disclosed, in the financial statements
described in Section 4.5, other  than liabilities and
contingent liabilities arising in the ordinary course of business since the
date of such financial statements, or that could not be reasonably expected to
have a Material Adverse Effect. As of the Closing Date, no circumstance or
event has occurred that could reasonably be expected to have a Material Adverse
Effect since December 31, 2004.

 

4.7.                            Intangible Assets.

 

The Company owns, or possesses the right to use to the extent necessary
in its business, all material trademarks, trade names, copyrights, patents,
patent rights, computer software, licenses and other Intangible Assets that are
used in the conduct of its business as now operated, and no such Intangible
Asset, to the best knowledge of Company, conflicts with the valid trademark,
trade name, copyright, patent, patent right or Intangible Asset of any other
Person, except, in any such case, to the extent that could not reasonably be
expected to have a Material Adverse Effect. Schedule 4.7 sets forth all patents, patent applications, trademarks,
trade names and trade styles used by Company at any time within the five (5) year
period ending on the Closing Date.

 

4.8.                            Binding Obligations.

 

Each of this Agreement and the Note will, when executed and delivered
by Company, constitute the legal, valid and binding obligation of the Company,
enforceable against Company in accordance with its terms, except as enforcement
may be limited by Debtor Relief Laws or equitable principles relating to the
granting of specific performance and other equitable remedies as a matter of
judicial discretion.

 

4.9.                            No Default.

 

No event has occurred and is continuing that is a Default or Event of
Default.

 

4.10.                     Regulation U; Investment
Company Act.

 

No part of the proceeds of the Note hereunder will be used to purchase
or carry, or to extend credit to others for the purpose of purchasing or
carrying, any Margin Stock in

 

5

 

violation of Regulation U. The Company is not or is not required to be
registered as an “investment company” under the Investment Company Act of 1940.

 

4.11.                     Tax Liability.

 

The Company has filed all tax returns which are required to be filed,
and has paid, or made provision for the payment of, all taxes with respect to
the periods, Property or transactions covered by said returns, or pursuant to
any assessment received by the Company, except (a) such taxes, if any, as
are being contested in good faith by appropriate proceedings and as to which
adequate reserves have been established and maintained and (b) immaterial
taxes so long as no material Property of Company is at impending risk of being
seized, levied upon or forfeited.

 

4.12.                     Employee Matters.

 

There is no strike, work stoppage or labor dispute with any union
or group of employees pending or, to the best knowledge of the Company overtly
threatened involving Company that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.

 

4.13.                     Fiscal Year.

 

The Company operates on a fiscal year ending on December 31.

 

4.14.                     Solvency.

 

After giving effect to this Agreement (including after giving effect to
delivery of the Note under this Agreement as of the Closing Date), the Company
shall be Solvent.

 

5.                                      REPRESENTATIONS OF THE
PURCHASER.

 

5.1.                            Purchase for Investment.

 

The Purchaser represents that the Note represents a loan by the
Purchaser. The Purchaser further represents and warrants to the Company that it
is an “accredited investor” within the meaning of Rule 501 (a) under
the Securities Act of 1933 and is acquiring the Note for investment for its own
account, with no intention of dividing its participation with others or
reselling or otherwise distributing the same in violation of the Securities Act
of 1933 or applicable state securities laws. The Purchaser understands that the
Note has not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Note or to permit the resale of the Note. The
Company may place an appropriate legend on the Note concerning the restrictions
set forth in this Article 5.

 

6

 

5.2.                            Source of Funds.

 

The Purchaser represents, as to each source of funds (a “Source”) to be
used by the Purchaser to pay the purchase price of the Note to be purchased by
the Purchaser hereunder, that the Source does not include assets of any
employee benefit plan, other than a plan exempt from the coverage of ERISA. As
used in this Section 5.2, the term “employee benefit plan” shall have the
meaning assigned to such term in Section 3 of ERISA.

 

6.                                      INFORMATION AS TO COMPANY.

 

6.1.                            Financial and Business
Information.

 

The Company shall deliver to the Purchaser:

 

(a)                                  Quarterly Statements — within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,

 

(i)                                     a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and

 

(ii)                                  consolidated statements of income, changes in
shareholders’ equity and cash flows of the Company and its Subsidiaries, for
such quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the Company and its Subsidiaries on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company’s Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 6.1(a);

 

(b)                                 Annual Statements — within 100 days after the end of each
fiscal year of the Company, duplicate copies of,

 

(i)                                     a consolidated balance sheet of the Company
and its Subsidiaries, as at the end of such year, and

 

(ii)                                  consolidated statements of income, changes in
shareholders’ equity and cash flows of the Company and its Subsidiaries, for
such year,

 

setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants
of recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the Company and its Subsidiaries and their results of operations and cash flows
and have been

 

7

 

prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided
that the delivery within the time period specified above of the Company’s
Annual Report on Form 10-K for such fiscal year prepared in accordance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 6.1(b);

 

(c)                                  Notice of Default or Event of Default — promptly, and in any event within five
days after a Responsible Officer becoming aware of the existence of any Default
or Event of Default, a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take
with respect thereto;

 

(d)                                 ERISA Matters — promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that
the Company or an ERISA Affiliate proposes to take with respect thereto:

 

(i)                                     with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or

 

(ii)                                  the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of, proceedings under section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the PBGC with respect
to such Multiemployer Plan; or

 

(iii)                               any event, transaction or condition that
could result in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA, if such liability or Lien, taken together with any other such Liens then
existing, would reasonably be expected to have a Material Adverse Effect; and

 

(e)                                  Requested Information — with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, annual budget, assets or properties of the Company or relating to
the ability of the Company to perform its obligations hereunder and under the
Note as from time to time may be reasonably requested by the Purchaser.

 

Information
required to be delivered pursuant to this Section 6.1 (to the extent any
such documents are included in materials otherwise filed with the Securities
and Exchange Commission) shall be deemed to have been delivered on the date on
which the Company provides notice to Purchaser that such information has been
posted on the Company’s website at the website address listed on the signature page hereof
or another website identified in such notice and accessible to the Purchaser
without charge; provided that the Company shall provide the Purchaser with
paper copies if requested to do so by Purchaser.

 

8

 

6.2.                            Inspection.

 

The Company shall permit the representatives of the Purchaser:

 

(a)                                  No Default — if no Default or Event of Default then exists, at the expense of the
Purchaser and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company with the Company’s officers, and, with the consent of
the Company (which consent will not be unreasonably withheld) to visit the
other offices and properties of the Company, all at such reasonable times and
as often as may be reasonably requested in writing; provided, however,
that unless the Company otherwise agrees, the Purchaser may only conduct an
on-site inspection of the Company following the Closing twice in any fiscal
year; and

 

(b)                                 Default — if a Default or Event of Default then exists, at the reasonable expense
of the Company and upon reasonable prior notice to the Company, to visit and
inspect any of the offices or properties of the Company, and, to the extent
permitted by applicable Law, to examine all its books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
its affairs, finances and accounts with its officers and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss the affairs, finances and accounts of the Company), all at such times
and as often as may be reasonably requested; provided that the Company
may, if so chooses, be present at or participate in any such discussion.

 

7.                                      PREPAYMENT OF THE NOTE.

 

7.1.                            Optional Prepayments with
Redemption Premium.

 

The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Note, in an amount not
less than $1,000,000 in the case of a partial prepayment, at 100% of the
principal amount so prepaid, plus the Redemption Premium determined for the
prepayment date with respect to such principal amount as provided in Section 7.3.
The Company will give the Purchaser written notice of each optional prepayment
under this Section 7.1 not less than 3 days and not more than 60 days
prior to the date fixed for such prepayment. Each such notice shall specify
such date, the aggregate principal amount of the Note to be prepaid on such
date, and the interest to be paid on the prepayment date with respect to such
principal amount being prepaid. By noon (Mountain time) on the date for such
prepayment, the Purchaser shall notify the Company of its calculation of the
amount of the Redemption Premium due on such date.

 

7.2.                            Maturity; Surrender, etc.

 

In the case of each prepayment of the Note pursuant to this Section 7,
the principal amount of the Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Redemption Premium.
From and after such date, unless the Company shall fail to pay such principal
amount when so due and payable, together with the interest and Redemption
Premium as aforesaid, interest on such principal amount shall cease to accrue.

 

9

 

7.3.                            Redemption Premium.

 

The term “Redemption Premium” means,
with respect to the Note, an amount calculated by Purchaser in good faith and
in a commercially reasonable manner as follows:

 

(A)                              Purchaser will determine the difference between:
(1) the rate provided by Purchaser to the Company on the date the rate on
the Note was fixed as its cost to fund the loan represented by the Note in the
manner set forth in the methodology provided by Purchaser to the Company on
such date; minus (2) the rate estimated by Purchaser on the date of
calculation to be its cost, less dealer concessions and other issuance costs,
to fund a new fixed rate loan in accordance with the methodology used by the
Purchaser for loans to other borrowers on the date the Note is repaid having
the same fixed rate period and repayment characteristics as the balance of the
Note being repaid. If such difference is negative, then for purposes of the
remaining calculations, such difference shall be deemed to be zero.

 

(B)                               Add 1⁄2 of 1% to such difference (such that the
minimum result shall at all times be 1⁄2 of l%).

 

(C)                                Divide the result determined in (B) above
by the number of times interest is payable during the year.

 

(D)                               For each interest period (or portion thereof)
during which interest was scheduled to accrue at the fixed rate of the Note,
multiply the amount determined in (C) above by the principal balance
scheduled to have been outstanding during such period (such that there is a calculation
for each interest period during which the amount repaid was scheduled to have
been outstanding at the fixed rate).

 

(E)                                 Determine the present value of each
calculation made under (D) above based upon the scheduled time that
interest on the amount repaid would have been payable and a discount rate equal
to the rate set forth in (A)(2) above.

 

(F)                                 Add all of the calculations made under (E) above.
The result is the Redemption Premium.

 

(G)                                Purchaser’s determination of the Redemption
Premium shall be presumed to be correct in the absence of manifest error.

 

Nothing
contained herein shall prevent CoBank from funding its loans in any manner as
CoBank may, in its sole discretion, elect, and the surcharges provided for
herein shall not be increased or decreased based on the actual methods chosen by
CoBank to fund or hedge the loan being repaid.

 

8.                                      AFFIRMATIVE COVENANTS.

 

The Company covenants that so long as any portion of the Note is
outstanding:

 

10

 

8.1.                            Insurance.

 

The Company will maintain liability, casualty and other insurance
(subject to customary deductibles and retentions and which may include
self-insurance) with responsible insurance companies in such amounts and
against such risks as is carried by responsible companies engaged in similar businesses
and owning similar assets.

 

8.2.                            Payment of Taxes.

 

The Company will pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it, upon its Property or any part
thereof and upon its respective income or profits or any part thereof, except
that Company shall not be required to pay or cause to be paid (a) any tax,
assessment, charge or levy that is not yet past due, or is being contested in
good faith by appropriate proceedings so long as the relevant entity has
established and maintains adequate reserves for the payment of the same or (b) any
immaterial tax, assessment, governmental charge or levy so long as no material
Property of Company is at impending risk of being seized, levied upon or
forfeited.

 

8.3.                            Corporate Existence, etc.

 

(a)                                  The Company will at all times preserve and
maintain its existence in its jurisdiction of organization.

 

(b)                                 The Company will also at all times preserve
and maintain all material authorizations, rights, franchises, privileges,
consents, approvals, orders, licenses, permits or registrations from any
Governmental Agency that are necessary for the transaction of its business and
qualify to transact business in each jurisdiction in which such qualification
is necessary in view of the business or the ownership or leasing of its
Properties, except where the failure to so preserve, maintain or qualify could
not reasonably be expected to have a Material Adverse Effect.

 

8.4.                            Acquire Non-voting
Participation Certificates in Purchaser.

 

Acquire non-voting participation certificates in Purchaser in such
amounts and at such times as the Purchaser may require in accordance with its
bylaws and capital plan (as each may be amended from time to time), except that
the maximum amount of such certificates that the Company may be required to
purchase in connection with the loan made by Purchaser hereunder may not exceed
the maximum amount permitted by the bylaws of the Purchaser at the time the
Note is entered into or is renewed or refinanced by Purchaser. The rights and
obligations of the parties with respect to such certificates and any patronage
or other distributions made by the Purchaser shall be governed by the Purchaser’s
bylaws.

 

9.                                     NEGATIVE COVENANTS.

 

The Company covenants that so long as any portion of the Note is
outstanding, or any other Obligation remains unpaid, that the Company shall
not, unless the Purchaser otherwise consents:

 

11

 

9.1.                            Disposition of Property.

 

In any fiscal year make one or more Dispositions of Property with a
book value of more than a Substantial Portion, whether such Property is now
owned or hereafter acquired, including Dispositions pursuant to any order of
any Governmental Agency in an eminent domain proceeding and any settlement of
any such proceeding unless, within one year of the occurrence of such
Disposition, the Company applies the Net Proceeds of such Disposition to one or
more of the following:

 

(1)                                  the optional redemption of all or a portion
of the Note as provided in Section 7; or

 

(2)                                  the payment or other retirement of a portion
of Indebtedness incurred or assumed by the Company which ranks pari passu with
the Note); or

 

(3)                                  the purchase of Public Utility Property
(other than Property of the Company involved in such Disposition), as
determined by the Board of Directors of the Company whose determination shall
be conclusive and evidenced in a resolution of the Board of Directors.

 

9.2.                            Liens on Property; Permitted
Encumbrances.

 

Create, issue, assume, guarantee or suffer to exist any Indebtedness
secured by any Lien of any nature upon any of its Properties, whether now owned
or hereafter acquired, except:

 

(a)                                  Liens existing on the Closing Date and
disclosed in Schedule 9.2 and
any renewals/extensions, refinancings or amendments thereof, provided that the
obligations secured or benefited thereby are not increased (other than for
premiums or other payments required to be paid in connection therewith and the
expenses incurred in connection therewith);

 

(b)                                 Liens under the Loan Documents; and

 

(c)                                  Permitted Encumbrances,

 

without, in each case, effectively providing that the Note (together
with, if the Company shall so determine, any other Indebtedness of the Company
ranking pari passu with the Note) shall be secured equally and ratably with
such Indebtedness.

 

9.3.                            Merger, Consolidation, etc.

 

The Company shall not consolidate with or merge with any other
corporation, except mergers and consolidations of a Subsidiary into the Company
(with the Company as the surviving entity), or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person unless:

 

(a)                                  the successor formed by such consolidation or
the survivor of such merger or the Person that acquires by conveyance, transfer
or lease substantially all of the assets of the

 

12

 

Company as an entirety, as the case may be, shall be a Solvent
corporation organized and existing under the laws of the United States or any
State thereof (including the District of Columbia), and, if the Company is not
such corporation, such corporation shall have executed and delivered to the
Purchaser its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and the Note; and

 

(b)                                 immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and

 

(c)                                  the Total Indebtedness to Capitalization
Ratio of the Company, its Subsidiaries and of such other corporation, on a
consolidated basis, is not more than .6667 to 1 at the end of the fiscal
quarter immediately preceding the merger after giving effect to the merger, consolidation
or sale and any changes in Total Indebtedness since the end of such quarter (exclusive
of any adjustments to Total Capitalization relating to transaction costs and
accounting adjustments resulting from such transaction); and

 

(d)                                 the Total Indebtedness to EBITDA Ratio of the
Company, its Subsidiaries and of such other corporation, on a consolidated
basis, is not greater than 8:1 for the 12 month period preceding the end of the
quarter preceding such merger, after giving effect to the merger, consolidation
or sale and any changes in Total Indebtedness since the end of such quarter;
and

 

(e)                                  the successor or survivor entity has agreed
to conduct the principal business of the successor or survivor entity as a
regulated water/wastewater public utility under the laws of one or more states
of the United States.

 

9.4.                            Change in Business.

 

Cease to conduct its principal business as a regulated water/wastewater
public utility under the laws of one or more states of the United States of
America.

 

9.5.                            Transactions with
Affiliates.

 

The Company will not enter into or be a party to, any transaction or
arrangement with any Affiliate (including without limitation, the purchase
from, sale to or exchange of Property with, or the rendering of any service by
or for, any Affiliate), except upon fair and reasonable terms no less favorable
in any material respect to the Company than would be obtained in a comparable
arm’s length transaction with a Person other than an Affiliate or as otherwise
may be permitted by applicable Law.

 

9.6                               Restrictions on Sale and
Leaseback Transactions.

 

Enter into any arrangement with any Person providing for a Sale and
Leaseback, unless the Net Proceeds of such sale are at least equal to the value
of such Property, as determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced in a resolution of the Board of
Directors, and the Company would be entitled, pursuant to Section 9.2 to
incur Indebtedness secured by a Lien on the Property to be leased without
equally and ratably securing the Note. In no event may the value of Property
subject to a Sale and Leaseback, as determined by the Board of Directors of the
Company as

 

13

 

provided
herein, together with the amount of Permitted Capital Indebtedness outstanding
on the date of any such Sale and Leaseback exceed a Substantial Portion of the
Property of the Company and its Subsidiaries on a consolidated basis.

 

10.                               FINANCIAL COVENANTS.

 

10.1.                     Indebtedness.

 

The Company covenants and agrees that it will not create, incur or
assume any Indebtedness, if an Event of Default has occurred and is continuing
or if, after giving effect thereto.

 

(a)                                  the Total Indebtedness to Capitalization
Ratio of the Company and its Subsidiaries, on a consolidated basis, would be
more than .6667 to 1 at the end of the fiscal quarter immediately preceding
such creation, occurrence or assumption; or

 

(b)                                 the Total Indebtedness to EBITDA Ratio of the
Company and its Subsidiaries, on a consolidated basis, would be greater than
8:1 for the 12 month period preceding the end of the quarter preceding such
creation, incurrence or assumption; or

 

(c)                                  an Event of Default would otherwise occur.

 

Notwithstanding the foregoing, the Company may incur Indebtedness
solely for the purpose of repaying or refinancing existing Indebtedness so long
as (i) the principal amount of such new Indebtedness does not exceed the
principal amount of the existing Indebtedness refinanced or repaid (plus the
premiums or other payments required to be paid in connection with such
refinancing or repayment and the expenses incurred in connection therewith), (ii) the
maturity of such new Indebtedness is not earlier than that of the existing
Indebtedness to be refinanced or repaid, (iii) such new Indebtedness,
determined as of the date of incurrence, has an Average Life at least equal to
the remaining Average Life of the Indebtedness to be refinanced or repaid, and (iv) the
new Indebtedness is pari passu with or subordinate to the Indebtedness being
refinanced or repaid.

 

10.2.                     Distributions.

 

The Company covenants and agrees that it will not declare or pay or
make any form of Distribution, whether from capital, income or otherwise, and
whether in Cash or in Property, if, at the time of the declaration or payment
of such Distribution,

 

(a)                                  an Event of Default has occurred and is
continuing or,

 

(b)                                 if after giving effect thereto the Total
Indebtedness to Capitalization Ratio of the Company and its Subsidiaries, on a
consolidated basis, would be more than .6667 to 1 or an Event of Default would
otherwise occur.

 

14

 

10.3.                     Rounding.

 

Any financial ratios required to be maintained by Company pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of
places by which such ratio is expressed in this Agreement and rounding the
result up or down to the nearest number (with a round-up if there is no nearest
number) to the number of places by which such ratio is expressed in this
Agreement.

 

10.4.                     Accounting Terms; Covenant
Calculations.

 

All accounting terms not specifically defined in this Agreement shall
be construed in conformity with GAAP applied on a consistent basis, except as
otherwise specifically prescribed herein. In the event that GAAP changes during
the term of this Agreement such that the covenants contained in Sections 9.3,
9.6, 10.1 or 10.2 would then be calculated in a different manner with different
components, (i) Company and Purchaser agree to amend this Agreement in
such respects as are necessary to conform these covenants to substantially the
same criteria as were effective prior to such change in GAAP, and (ii) Company
shall be deemed to be in compliance with the covenants contained in the
aforesaid Sections if and to the extent that Company would have been in
compliance therewith under GAAP as in effect immediately prior to such change.

 

10.5.                     Fiscal Year.

 

The Company covenants and agrees that it will maintain a calendar year
fiscal year.

 

11.                               EVENTS OF DEFAULT.

 

An “Event of Default” shall exist if any of the following conditions or
events shall occur and be continuing:

 

(a)                                  the Company defaults in the payment of any
principal or Redemption Premium, if any, on the Note when the same becomes due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or

 

(b)                                 the Company defaults in the payment of any
interest on the Note for more than five Business Days after the same becomes
due and payable; or

 

(c)                                  the Company defaults in the performance of or
compliance with any term contained in Sections 8.3(a), 9.1, 9.2, 9.3, 9.6 or
10; or

 

(d)                                 the Company defaults in the performance of or
compliance with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11 and such default
is not remedied within 60 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from the Purchaser (any such written
notice to be identified as a “notice of default” and to refer specifically to
this paragraph (d) of Section 11); or

 

15

 

(e)                                  any representation or warranty made in
writing by or on behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any material
respect on the date as of which made; or

 

(f)                                    the Company is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
interest on any Indebtedness that is outstanding in an aggregate principal
amount of more than $2,500,000 beyond any period of grace provided with respect
thereto for more than sixty (60) days; or (ii) the Company is in default
in the performance of or compliance with any term of any Indebtedness in an
aggregate outstanding principal amount of at least $2,500,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness has
been declared due and payable before its stated maturity or before its regularly
scheduled dates of payment; or

 

(g)                                 the Company (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become due, (ii) files,
or consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy,
for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any Substantial Portion of its
Property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing;

 

(h)                                 a court or governmental authority of
competent jurisdiction enters an order appointing, without consent by the
Company, a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any Substantial Portion of its Property,
or constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company, or any such
petition shall be filed against the Company and such petition shall not be
dismissed within 60 days; or

 

(i)                                     a final judgment or judgments for the payment
of money aggregating in excess of $2,500,000 are rendered against one or more
of the Company and its Subsidiaries, which judgments are not, within 60 days
after entry thereof, bonded, discharged, or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay, or an agreement
has not been entered into for, or an order of a Governmental Agency has not
been entered permitting, the payment of such judgment over a period of more
than 60 days.

 

12.                               REMEDIES ON DEFAULT, ETC.

 

12.1.                     Acceleration.

 

(a)                                  If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Section 11 (other
than an Event of Default described in clause (i) of paragraph (g) or

 

16

 

described in clause (vi) of paragraph (g) by virtue of the
fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, the Note shall automatically become immediately due and payable.

 

(b)                                 If any other Event of Default has occurred
and is continuing, the Purchaser may at any time at its option, by notice to
the Company, declare the Note to be immediately due and payable.

 

Upon the Note becoming due and payable under this Section 12.1,
whether automatically or by declaration, the Note will forthwith mature and the
entire unpaid principal amount of the Note, plus (x) all accrued and unpaid
interest thereon and (y) the Redemption Premium determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, without presentment, demand, protest or further
notice, all of which are hereby waived. The Company acknowledges, and the
parties hereto agree, that the Purchaser has the right to maintain its
investment in the Note free from repayment by the Company (except as herein
specifically provided for) and that the provision for payment of a Redemption
Premium by the Company in the event that the Note is prepaid or is accelerated
as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.

 

12.2.                     Other Remedies.

 

If any Default or Event of Default has occurred and is continuing, and
irrespective of whether the Note has become or has been declared immediately
due and payable under Section 12.1, the Purchaser may proceed to protect
and enforce its rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in the Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

 

12.3.                     Rescission.

 

At any time after the Note has been declared due and payable pursuant
to clause (b) of Section 12.1, the Purchaser by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on the Note, all principal of and
Redemption Premium, if any, on the Note that is due and payable and is unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Redemption Premium, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Note, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 16, and (c) no judgment
or decree has been entered for the payment of any monies due pursuant hereto or
to the Note. No rescission and annulment under this Section 12.3 will
extend to or affect any subsequent Event of Default or Default or impair any
right consequent thereon.

 

17

 

12.4.                     No Waivers or Election of
Remedies, Expenses, etc.

 

No course of dealing and no delay on the part of the Purchaser in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice the Purchaser’s rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by the Note upon the Purchaser shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 16, the
Company will pay to the Purchaser on demand such further amount as shall be
sufficient to cover all reasonable costs and expenses of the Purchaser incurred
in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys’ fees, expenses and disbursements.

 

13.                               PAYMENTS ON NOTE.

 

Payments of principal, Redemption Premium, if any, and interest
becoming due and payable on the Note shall be by wire transfer of immediately
available funds for the account of the Purchaser at CoBank, ACB, ABA No. 3070-8875-4,
Account No. 00036798, Golden State Water Company. The Company may at any
time, by notice to the Purchaser change the place and manner of payment of the
Note so long as such place and manner of payment shall be either to an account
at the principal office of the Purchaser in such jurisdiction or the principal
office of a bank or trust company in such jurisdiction.

 

14.                               EXPENSES, ETC.

 

14.1.                     Transaction Expenses.

 

At the Closing, the Company shall pay an origination fee of $50,000 to
the Purchaser, plus the reasonable legal expenses of Purchaser’s counsel as
provided in Section 3.5. Whether or not the transaction contemplated hereby
is consummated, the Company will pay all reasonable costs and expenses
(including reasonable attorneys’ fees of a special counsel and, if reasonably
required, local or other counsel) incurred by the Purchaser in connection with
such transaction and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Note (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the reasonable costs and expenses incurred in enforcing or defending
(or determining whether or how to enforce or defend) any rights under this
Agreement or the Note or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or
the Note, or by reason of being a holder of the Note, and (b) the
reasonable costs and expenses, including financial advisors’ fees, incurred in
connection with the insolvency or bankruptcy of the Company or in connection
with any work-out or restructuring of the transaction contemplated hereby and
by the Note.

 

14.2.                     Survival.

 

The obligations of the Company under this Section 14 will survive
the payment of the Note, the enforcement, amendment or waiver of any provision
of this Agreement or the Note, and the termination of this Agreement.

 

18

 

15.                               ENTIRE AGREEMENT.

 

All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Note embody the
entire agreement and understanding between the Purchaser and the Company and
supersede all prior agreements and understandings relating to the subject
matter hereof.

 

16.                               AMENDMENT AND WAIVER.

 

16.1.                     Requirements.

 

This Agreement and the Note may be amended, and the observance of any
term hereof or of the Note may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Purchaser.

 

16.2.                     Binding Effect, etc.

 

No amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon. No course of dealing between the
Company and the Purchaser nor any delay in exercising any rights hereunder or
under the Note shall operate as a waiver of any rights of the Purchaser. As
used herein, the term “this Agreement” and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

 

17.                               NOTICES.

 

All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight
delivery service (with charges prepaid). Any such notice must be sent:

 

(i)                                     if to the Purchaser or the Purchaser’s
nominee, to the Purchaser or at the address set forth at the beginning hereof
or such other address as the Purchaser shall have specified to the Company in
writing, or

 

(ii)                                  if to the Company, to the Company at its
address set forth at the beginning hereof to the attention of the Chief
Financial Officer, or at such other address as the Company shall have specified
to the Purchaser in writing.

 

Notices
under this Section 17 will be deemed given only when actually received.

 

18.                               REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received

 

19

 

by
the Purchaser at the Closing (except the Note itself), and (c) financial
statements, certificates and other information previously or hereafter
furnished to the Purchaser, may be reproduced by the Purchaser by any
photographic, photostatic, micro-film, microcard, miniature photographic or
other similar process and the Purchaser may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by
the Purchaser in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 18 shall not prohibit the Company from contesting
any such reproduction to the same extent that it could contest the original, or
from introducing evidence to demonstrate the inaccuracy of any such
reproduction.

 

19.                               CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 19, “Confidential Information” means information delivered to the
Purchaser by or on behalf of the Company in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary in
nature and that was clearly marked or labeled or otherwise adequately
identified when received by the Purchaser as being confidential information of
the Company and its Subsidiaries, provided that such term does not
include information that (a) was publicly known or otherwise known to the
Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by the Purchaser or any person acting
on the Purchaser’s behalf, (c) otherwise becomes known to the Purchaser
other than through disclosure by the Company or any Subsidiary, or (d) constitutes
financial statements delivered to the Purchaser under Section 5.1 that are
otherwise publicly available. The Purchaser will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by the
Purchaser in good faith to protect confidential information of third parties
delivered to the Purchaser, provided that the Purchaser may deliver or
disclose Confidential Information to (i) the Purchaser’s directors,
officers, employees, agents, attorneys and affiliates, (to the extent such
disclosure reasonably relates to the administration of the investment
represented by the Purchaser’s Note), (ii) the Purchaser’s financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this Section 18,
(iii) any federal or state regulatory authority having jurisdiction over
the Purchaser or any nationally recognized rating agency that requires access
to information about the Purchaser’s investment portfolio, or (iv) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to the Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which the Purchaser is a
party, or (z) if an Event of Default has occurred and is continuing, to the
extent the Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under the Note and this Agreement.

 

20

 

20.                               MISCELLANEOUS.

 

20.1.                     Successors and Assigns.

 

All covenants and other agreements contained in this Agreement by or on
behalf of the Company bind and inure to the benefit of its successors and
assigns, whether so expressed or not. Purchaser may not assign the Note or its
rights and obligations to any other Person, other than an assignment of the
Note to a nominee of Purchaser. It is understood and agreed that Purchaser’s
agreement not to assign the Note and the Agreement as provided herein is a
material inducement to Company in entering into this Agreement and executing
and delivering the Note. Notwithstanding the foregoing, Purchaser may transfer
or assign the Note in whole, but not in part, to another investor reasonably
acceptable to the Company if the interest rate on the Note is reduced in an
amount sufficient to compensate the Company for the loss of patronage refunds
from Purchaser.

 

20.2.                     Payments Due on Non-Business
Days.

 

Anything in this Agreement or the Note to the contrary notwithstanding,
any payment of principal of or Redemption Premium or interest on the Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation
of the interest payable on such next succeeding Business Day.

 

20.3.                     Severability.

 

Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

20.4.                     Construction.

 

Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.

 

20.5.                     Counterparts.

 

This Agreement may be executed in one or more of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by each of the parties hereto.

 

21

 

20.6.                     Governing Law.

 

Except to the extent governed by applicable federal law, this Agreement
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of California excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.

 

*     *     *     *     *

 

The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in one or more counterparts, each executed counterpart constituting an original
but all together only one agreement.

 

	
   

  	
  GOLDEN
  STATE WATER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Floyd E. Wicks

  
	
   

  	
  Its President and Chief Executive Officer

  

 

Accepted
and agreed to as of the date first above written.

 

	
   

  	
  COBANK,
  ACB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Dave Dornbirer 

  
	
   

  	
  Its Vice President

  
	
   

  	
  Energy & Water Division

  

 

22

 

SCHEDULE A

 

DEFINED
TERMS

 

As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

 

“Advances for Construction” means funds advanced by any Person in
connection with the addition of utility plant which funds are subject to refund
and, in accordance with GAAP as in effect on the date hereof, are reflected as “Other
Credits” in the financial statements of the Company and its Subsidiaries, until
refunded.

 

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person. As used in this definition, “Control”
means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. Unless
the context otherwise clearly requires, any reference to an “Affiliate” is a
reference to an Affiliate of the Company.

 

“Aggregate Effective Amount” means, as of any date of determination and
with respect to all letters of credit for the benefit of the Company then
outstanding, the sum  of (a) the aggregate effective face
amounts of all such letters of credit not then paid by issuing bank plus (b) the
aggregate amounts paid by issuing bank under such letters of credit not then
reimbursed to the issuing bank by the Company.

 

“Average Life” means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment (assuming the exercise by
the obligor of such Indebtedness of all unconditional (other than as to the
giving of notice) extension options of each such scheduled payment date) of
such Indebtedness multiplied by the amount of such principal payment by (ii) the
sum of all principal payments.

 

“Business Day” means any day other than a Saturday, a Sunday
or a day on which the Purchaser or Federal Reserve Banks are required or
authorized to be closed.

 

“Capital Lease” means, as to any Person, a lease of any
Property by that Person as lessee that is, or should be in accordance with GAAP
(including Financial Accounting Standards Board Statement No. 13,
as amended or superseded from time to time), recorded as a “capital lease” on
the balance sheet of that Person prepared in accordance with GAAP.

 

“Capital Lease Obligations” means all monetary obligations of a Person
under any Capital Lease.

 

“Cash” means,
when used in connection with any Person, all monetary and non-monetary items
owned by that Person that are treated as cash in accordance with GAAP.

 

1

 

“Cash Equivalents” means, when used in connection with any
Person, that Person’s Investments in:

 

(a)           Government
Securities due within one year after the date of the making of the Investment;

 

(b)           readily marketable
direct obligations of any State of the United States of America or any
political subdivision of any such State or any public agency or instrumentality
thereof given on the date of such Investment a credit rating of at least Aa by Moody’s
Investor Services (“Moody’s”) or
AA by Standard & Poor’s Ratings Service (“S&P”),
in each case due within one year from the making of the Investment;

 

(c)           certificates of
deposit issued by, bank deposits in, eurodollar deposits through, bankers’
acceptances of, and repurchase agreements covering Government Securities
executed by the Purchaser or any bank incorporated under the Laws of the United
States of America, any State thereof or the District of Columbia and having on
the date of such Investment combined capital, surplus and undivided profits of
at least $250,000,000, or total assets of at least $5,000,000,000, in each case
due within one year after the date of the making of the Investment;

 

(d)           certificates of
deposit issued by, bank deposits in, eurodollar deposits through, bankers’
acceptances of, and repurchase agreements covering Government Securities
executed by Purchaser or any branch or office located in the United States of
America of a bank incorporated under the Laws of any jurisdiction outside the
United States of America having on the date of such Investment combined
capital, surplus and undivided profits of at least $500,000,000, or total
assets of at least $15,000,000,000, in each case due within one year after the
date of the making of the Investment;

 

(e)           repurchase
agreements covering Government Securities executed by a broker or dealer
registered under Section 15(b) of the Securities Exchange Act of
1934, as amended, having on the date of the Investment capital of at least
$50,000,000, due within 90 days after the date of the making of the Investment;
provided that the maker of the Investment receives written confirmation
of the transfer to it of record ownership of the Government Securities on the
books of a “primary dealer” in such Government Securities or on the books of such
registered broker or dealer, as soon as practicable after the making of the
Investment;

 

(f)            readily marketable
commercial paper or other debt Securities issued by corporations doing business
in and incorporated under the Laws of the United States of America or any State
thereof or of any corporation that is the holding company for a bank described
in clause (c) or (d) above given on the date of such
Investment a credit rating of at least P-l by Moody’s or A-l by S&P, in
each case due within one year after the date of the making of the Investment;

 

(g)           “money market
preferred stock” issued by a corporation incorporated under the Laws of the
United States of America or any State thereof (i) given on the date of
such Investment a credit rating of at least Aa by Moody’s and AA by S&P, in
each case having an investment period not exceeding 50 days or (ii) to the
extent that investors therein

 

2

 

have the benefit of a standby letter of credit issued by Purchaser or a
bank described in clauses (c) or (d) above; provided
that (y) the amount of all such Investments issued by the same issuer does not
exceed $5,000,000 and (z) the aggregate amount of all such Investments does not
exceed $10,000,000;

 

(h)           a readily redeemable
“money market mutual fund” sponsored by a bank described in clause (c) or
(d) hereof, or a registered broker or dealer described in clause (e) hereof,
that has and maintains an investment policy limiting its investments primarily
to instruments of the types described in clauses (a) through (g) hereof
and given on the date of such Investment a credit rating of at least Aa by
Moody’s and AA by S&P; and

 

(i)            corporate notes or
bonds having an original term to maturity of not more than one year issued by a
corporation incorporated under the Laws of the United States of America or any
state thereof, or a participation interest therein; provided that (i) commercial
paper issued by such corporation is given on the date of such Investment a
credit rating of at least Aa by Moody’s and AA by S&P, (ii) the amount
of all such Investments issued by the same issuer does not exceed $5,000,000
and (iii) the aggregate amount of all such Investments does not exceed
$10,000,000.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

 

“Closing” is defined in Section 2.

 

“Company” means Golden State Water Company, a California corporation.

 

“Confidential Information” is defined in Section 19.

 

“Contractual Obligation” means, as to any Person, any provision of any
outstanding Security issued by that Person or of any material agreement,
instrument or undertaking to which that Person is a party or by which it or any
of its Property is bound.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws from
time to time in effect affecting the rights of creditors generally.

 

“Default” means an event or condition the occurrence or existence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.

 

“Default Rate” means that rate of interest that is 2% per
annum above the rate of interest stated in clause (a) of the first
paragraph of the Note.

 

“Disposition” means the sale, transfer or other disposition
(each, a “Transfer”) in any single transaction or series of related
transactions of any asset, or group of related assets, of the Company or any
Subsidiary other  than (a) a Transfer of Cash, Cash
Equivalents, Investments (other  than Investments in a
Subsidiary), inventory or other assets sold or otherwise disposed of in the
ordinary course of business of the Company or any Subsidiary, (b) a
Transfer of

 

3

 

equipment
sold or otherwise disposed of where substantially similar equipment in
replacement thereof has theretofore been acquired, or thereafter within 90 days
is acquired, by the Company or any Subsidiary and (c) a Transfer of
obsolete assets no longer useful in the business of the Company or any
Subsidiary and (d) a Transfer to the Company or a wholly-owned Subsidiary
of the Company.

 

“Distribution” means, with respect to any equity Security
issued by a Person, or any warrant or right to acquire any equity Security of a
Person, (a) the retirement, redemption, purchase, or other acquisition for
value by such Person of any such equity Security, (b) declaration or
(without duplication) payment by such Person or any dividend in Cash or in
Property (other than in common stock or other equity Security of such
Person) on or with respect to any such equity Security, (c) any Investment
by such Person in the holder of any such equity Security, and (d) any
other payment by such Person constituting a distribution under applicable Laws
with respect to such equity Security.

 

“EBITDA” means, with respect to any fiscal period, the sum  of (a) Net
Income for that period, plus (b) any extraordinary loss reflected
in such Net Income, minus (c) any extraordinary gain reflected in
such Net Income, plus (d) Interest Expense of the Company and its
Subsidiaries for that period, plus (e) the aggregate amount of
federal and state taxes on or measured by income of the Company and its
Subsidiaries for that period (whether or not payable during that period), plus
(f) depreciation and amortization expense of the Company and its
Subsidiaries for that period, plus (g) all other non-cash,
non-recurring significant expenses of the Company and its Subsidiaries for that
period acceptable to the Purchaser, in each case as determined in accordance
with GAAP, consistently applied and, in the case of items (d), (e),
(f), and (g) only to the extent reflected in the determination
of Net Income for that period. An expense is significant for this purpose if it
equals or exceeds $1,000,000.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

 

“Event of Default” is defined in Section 11.

 

“GAAP” means, as of any date of determination, accounting principles (a) set
forth as generally accepted in then currently effective Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in then currently
effective Statements of the Financial Accounting Standards Board or (c) that
are then approved by such other entity as may be approved by a significant
segment of the accounting profession in the United States of America. The term “consistently
applied,” as used in connection therewith, means that the accounting
principles applied are consistent in all material respects with those applied
at prior dates or for prior periods.

 

“Governmental Agency” means the
government of

 

4

 

(i)            the United States
of America or any State or other political subdivision thereof, or

 

(ii)           any jurisdiction in
which the Company or any Subsidiary conducts all or any part of its business,
or which asserts jurisdiction over any properties of the Company or any
Subsidiary, or

 

(iii)          any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government.

 

“Government Securities” means readily marketable (a) direct full
faith and credit obligations of the United States of America or obligations
guaranteed by the full faith and credit of the United States of America and (b) obligations
of an agency or instrumentality of, or corporation owned, controlled or
sponsored by, the United States of America that are generally considered in the
securities industry to be implicit obligations of the United States of America.

 

“Indebtedness” means, as to any Person (without
duplication), (a) indebtedness of such Person for borrowed money or for
the deferred purchase price of Property (excluding trade and other
accounts payable in the ordinary course of business in accordance with ordinary
trade terms), (b) indebtedness of such Person of the nature described in
clause (a) that is nonrecourse to the credit of such Person but is
secured by assets of such Person, to the extent of the fair market value of
such assets as determined in good faith by such Person, (c) Capital Lease
Obligations of such Person, (d) indebtedness of such Person arising under
bankers’ acceptance facilities or under facilities for the discount of accounts
receivable of such Person, (e) any direct or contingent obligations of
such Person under letters of credit issued for the account of such Person and (f) any
net obligations of such Person under Interest Rate Protection Agreements. For
the avoidance of doubt, Advances for Construction of the Company in the
ordinary course of business, to the extent that such obligation is recorded as
a liability offset by a receivable in the same amount on the financial
statements of Company, will not constitute Indebtedness hereunder. All
indebtedness guaranteed as to payment of principal in any manner by such Person
or in effect guaranteed by such Person through a contingent agreement to
purchase such indebtedness, and all indebtedness secured by a Lien upon
property owned by such Person, even though such Person has not assumed or
become liable for the payment of such indebtedness, shall for all purposes hereof
be deemed to be “Indebtedness” of such Person.

 

“Interest Expense” means, with respect to any Person and as of
the last day of any fiscal period, the sum of (a) all interest,
fees, charges and related expenses (in each case as such expenses are calculated
according to GAAP) paid or payable (without duplication) for that fiscal period
by that Person to a lender in connection with borrowed money (including
any obligations for fees, charges and related expenses payable to the issuer of
any letter of credit) or the deferred purchase price of assets that are
considered “interest expense” under GAAP plus (b) the portion of
rent paid or payable (without duplication) for that fiscal period by that
Person under Capital Lease Obligations that should be treated as interest in
accordance with Financial Accounting Standards Board Statement No. 13.

 

5

 

“Interest Rate Protection Agreement” means a written agreement between the Company
and one or more financial institutions providing for “swap”, “cap”, “collar” or
other interest rate protection with respect to any Indebtedness.

 

“Investment” means, when used in connection with any Person, any investment by or of
that Person, whether by means of purchase or other acquisition of stock or
other Securities of any other Person or by means of a loan, advance creating a
debt, capital contribution, guaranty or other debt or equity participation or
interest in any other Person, including any partnership, limited
liability company and joint venture interests of such Person. The amount of any
Investment shall be the amount actually invested (minus any return of
capital with respect to such Investment which has actually been received in
Cash or has been converted into Cash), without adjustment for subsequent
increases or decreases in the value of such Investment.

 

“Laws” means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, regulations, ordinances, codes, and
administrative or judicial precedents.

 

“Lien” any
mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, lien or charge of any kind, affecting any
Property, including any lease in the nature of a security interest.

 

“Loan Documents” means, collectively, this Agreement, the
Note, and any other agreements of any type or nature hereafter executed and
delivered by the Company in any way relating to or in furtherance of this
Agreement, in each case either as originally executed or as the same may from
time to time be supplemented, modified, amended, restated, extended or
supplanted.

 

“Margin Stock” means “margin stock” as such term is defined
in Regulation U.

 

“Material Adverse Effect” means any set of circumstances or events
which (a) has had or would reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of any Loan
Document, (b) has been or would reasonably be expected to be material and
adverse to the business, condition (financial or otherwise), prospects or
operations of the Company and its Subsidiaries, taken as a whole, or (c) has
materially impaired or would reasonably be expected to materially impair the
ability of the Company to perform its Obligations under the Loan Documents.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan”
(as such term is defined in section 4001(a)(3) of ERISA).

 

“Net Income” means, with respect to any fiscal period, the consolidated net income
of the Company and its Subsidiaries for that period, determined in accordance
with GAAP, consistently applied.

 

“Net Proceeds” means, with respect to any Disposition, the
cash consideration received by the Company for such Disposition after (i) provision
for all income and other taxes resulting from such Disposition, (ii) payment
of all brokerage commissions, underwriting, legal,

 

6

 

accounting, appraisal and other fees and expenses related to such
Disposition, (iii) deduction of appropriate amounts to be provided by the
Company as a reserve, in accordance with GAAP, against any liabilities
associated with the assets sold or disposed of in such Disposition and retained
by the Company after such Disposition, including, without limitation, any
indemnification obligations associated with the Disposition.

 

“Note” is
defined in Section 1.

 

“Obligations” means all present and future obligations of
every kind or nature of the Company at any time and from time to time owed to
the Purchaser, under any one or more of the Loan Documents, whether due or to
become due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well as
obligations of payment, and including interest that accrues after the
commencement of any proceeding under any Indebtedness or Debtor Relief Law by
or against the Company.

 

“Officer’s Certificate” means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined
in ERISA or any successor thereto

 

“Permitted Capital Asset Indebtedness” means Indebtedness of Company and its
Subsidiaries consisting of Capital Lease Obligations, or otherwise incurred to
finance the purchase or construction of capital assets (which shall be deemed
to exist if the Indebtedness is incurred at or within 90 days before or after
the purchase or construction of the capital assets), or to refinance any such
Indebtedness.

 

“Permitted Encumbrances” means:

 

(a)           Inchoate Liens
incident to construction on or maintenance of Property; or Liens incident to
construction on or maintenance of Property now or hereafter filed of record for
which adequate reserves have been set aside (or deposits made pursuant to applicable
Law) and which are being contested in good faith by appropriate proceedings and
have not proceeded to judgment, provided that, by reason of nonpayment
of the obligations secured by such Liens, no such Property is subject to an
impending risk of loss or forfeiture;

 

(b)           Liens for taxes and
assessments on Property which are not yet past due; or Liens for taxes and
assessments on Property for which adequate reserves have been set aside and are
being contested in good faith by appropriate proceedings and have not proceeded
to judgment, provided that, by reason of nonpayment of the obligations
secured by such Liens, no such Property is subject to an impending risk of loss
or forfeiture;

 

(c)           statutory Liens,
other than those described in clauses (a) or (b) above,
arising in the ordinary course of business with respect to obligations which
are not delinquent or are being contested in good faith, provided that,
if delinquent, adequate reserves

 

7

 

have been set aside with respect thereto and, by reason of nonpayment,
no Property is subject to an impending risk of loss or forfeiture;

 

(d)           Liens consisting of
pledges or deposits to secure obligations under workers’ compensation laws or
similar legislation, including Liens of judgments thereunder which are not
currently dischargeable;

 

(e)           Liens consisting of
pledges or deposits of Property to secure performance in connection with
operating leases made in the ordinary course of business, provided the
aggregate value of all such pledges and deposits (excluding the property
subject to such lease) in connection with any such lease does not at any time
exceed 10% of the annual fixed rentals payable under such lease;

 

(f)            Liens consisting of
deposits of Property to secure bids made with respect to, or performance of,
contracts (other  than contracts creating or evidencing an
extension of credit to the depositor);

 

(g)           Liens consisting of
deposits of Property to secure statutory obligations of the Company;

 

(h)           Liens consisting of
deposits of Property to secure (or in lieu of) surety, appeal or customs bonds;

 

(i)            Liens which secure
indebtedness which was in existence at the time of any transaction permitted by
Section 9.3 and were not created in contemplation of such transaction;

 

(j)            Liens securing
Permitted Capital Asset Indebtedness on and limited to the capital assets
acquired, constructed or financed with the proceeds of such Permitted Capital
Asset Indebtedness or with the proceeds of any Indebtedness directly or
indirectly financed by such Indebtedness; provided that the aggregate
principal amount of such Indebtedness secured by such Liens and incurred by the
Company and/or its Subsidiaries after the Closing Date and the value of the
Property subject to a Sale and Leaseback shall not exceed a Substantial Portion
of the Property of the Company and its Subsidiaries, on a consolidated basis,
at any time outstanding (as determined in accordance with GAAP consistently applied;

 

(k)           Liens consisting of
deposits of Cash and/or Cash Equivalents to secure the obligation of the
Company to reimburse a lender under a letter of credit incurred in the ordinary
course of business which will terminate after the maturity of the credit or
reimbursement agreement related to such letter of credit; and

 

(1)           Liens on Property of
the Company and its Subsidiaries that are immaterial in amount or type or on
Property that is immaterial in value or to the conduct of the business of the
Company and its Subsidiaries taken as a whole.

 

8

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

 

“Plan” means an “employee benefit plan” (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any
liability.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

 

“Public Utility Property” means Property which is used in the
provision, treatment or distribution of water or wastewater or in the
generation, transmission and distribution of electric energy and which is
included in the rate base of a regulated public utility.

 

“Requirement of Law” means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any Law, or judgment, award, decree, writ or
determination of a Governmental Agency, in each case applicable to or binding
upon such Person or any of its Property or to which such Person or any of its
Property is subject.

 

“Responsible Officer” means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

 

“Right of Others” means, as to any Property in which a Person
has an interest, any legal or equitable right, title or other interest (other
than a Lien) held by any other Person in that Property, and any option or right
held by any other Person to acquire any such right, title or other interest in
that Property, including any option or right to acquire a Lien; provided,
however, that (a) no covenant restricting the use or disposition of
Property of such Person contained in any Contractual Obligation of such Person
and (b) no provision contained in a contract creating a right of payment
or performance in favor of a Person that conditions, limits, restricts, diminishes,
transfers or terminates such right shall be deemed to constitute a Right of
Others.

 

“Sale and Leaseback” means, with respect to any Person, the sale
of Property owned by that Person (the “Seller”) to another Person (the “Buyer”),
together with the substantially concurrent leasing of such Property by the
Buyer to the Seller; provided that such term shall not include any sale
under threat of condemnation which involves a concurrent leasing of such
Property or any sale followed by a temporary lease for a term, including
renewal thereof, of not more than three years.

 

“Security”
means any capital stock, share, voting trust certificate, bond, debenture, note
or other evidence of Indebtedness, limited partnership interest, member
interest, or any warrant, option or other right to purchase or acquire any of
the foregoing

 

9

 

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

 

“Solvent”
means, as of any date of determination, and as to any Person, that on such
date: (a) the fair valuation of the assets of such Person is greater than
the fair valuation of such Person’s probable liability in respect of existing
debts; (b) such Person does not intend to, and does not believe that it
will, incur debts beyond such Person’s ability to pay as such debts mature; (c) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, which would leave such Person with assets
remaining which would constitute unreasonably small capital after giving effect
to the nature of the particular business or transaction (including, in
the case of the Company, the transactions occurring on the Closing Date); and (d) such
Person is generally paying its debts as they become due. For purposes of the
foregoing (1) the “fair valuation” of any assets means the amount
realizable within a reasonable time, either through collection or sale, of such
assets at their regular market value, which is the amount obtainable by a
capable and diligent businessman from an interested buyer willing to purchase
such assets within a reasonable time under ordinary circumstances; and (2) the
term “debts” includes any legal liability whether matured or unmatured,
liquidated or unliquidated, absolute, fixed, or contingent.

 

“Subsidiary” means, as to any Person, any
corporation, association or other business entity in which such Person or one
or more of its Subsidiaries owns sufficient equity or voting interests to
enable it or them (as a group) ordinarily, in the absence of contingencies, to
elect a majority of the directors (or Persons performing similar functions) of
such entity, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries (unless such
partnership can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a “Subsidiary” is a
reference to a Subsidiary of the Company.

 

“Substantial Portion” means, as to any assets sold during a fiscal
year, the book value of assets equal to or exceeding 15% of Total
Capitalization as of the last day of the preceding fiscal year.

 

“Total Capitalization” means, at any time the sum of Total
Indebtedness plus the difference between the total assets of the Company less
total liabilities of the Company (each determined in accordance with GAAP; provided
that contributions in aid of construction, Advances for Construction,
customer deposits and similar items reducing rate base calculation shall be
excluded.

 

“Total Indebtedness” means, as of any date of determination,
without duplication, the sum  of (a) all principal
Indebtedness of the Company and its Subsidiaries for borrowed money (including
subordinated indebtedness, debt Securities issued by the Company and any of its
Subsidiaries, the aggregate principal Indebtedness outstanding under the Note
and the Aggregate Effective Amount of all outstanding Letters of Credit in
favor of the Company) on that date plus (b) the aggregate amount of
the principal portion of all Capital Lease Obligations of the Company and its
Subsidiaries plus (c) any Guaranty Obligations of the Company and
its

 

10

 

Subsidiaries with respect to the Indebtedness of others of the types
referred to in (a) and (b) above.

 

“Total Indebtedness to Capitalization Ratio” means the ratio of Total Indebtedness to
Total Capitalization, determined as of the last day of each quarter of the
fiscal year.

 

“Total Indebtedness to EBIDTA Ratio” means the ratio of Total Indebtedness to
EBITDA, determined on the last day of each fiscal year.

 

“UCC” means
the Uniform Commercial Code as the same may from time to time be enacted and in
effect in the State of California; provided that, in the event by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of the Purchaser’s Lien on any collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other  than
the State of California, the term “UCC” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.

 

11

 

EXHIBIT 1

 

[FORM OF NOTE]

 

GOLDEN STATE WATER COMPANY

 

5.87% SENIOR NOTE DUE DECEMBER 20, 2028

 

October 11, 2005

 

$40,000,000

 

FOR VALUE RECEIVED, the undersigned, GOLDEN STATE WATER COMPANY (the “Company”),
a corporation organized and existing under the laws of the State of California,
hereby promises to pay to COBANK, ACB (the “Purchaser”), the principal sum of
FORTY MILLION DOLLARS on December 20, 2031 with interest (computed on the
basis of a 365/6-day year) (a) on the unpaid balance thereof at the rate
of 5.87% per annum from the date hereof, payable semiannually, on the first day
of March and September in each year, commencing with March 1,
2006, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Redemption Premium (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid a rate per annum from
time to time equal to the Default Rate (as defined in the Note Purchase
Agreement).

 

Payments of principal of, interest on and any Redemption Premium with
respect to this Note are to be made in lawful money of the United States of
America at CoBank ACB, ABA No. 3070-8875-4, Account No. 00036798,
Golden State Water Company or at such other place as the Company shall have
designated by written notice to the Purchaser as provided in the Note Purchase
Agreement referred to below.

 

This Note is issued pursuant to the Note Purchase Agreement, dated as
of October 11, 2005 (as from time to time amended, the “Note Purchase
Agreement”), between the Company and the Purchaser and is entitled to the
benefits thereof.

 

This Note may not be assigned by Purchaser to any other Person, other
than a nominee of Purchaser.

 

This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise. If an Event of Default, as defined in the Note
Purchase Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price and
with the effect provided in the Note Purchase Agreement.

 

Except to the extent governed by applicable federal law, this Note
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the

 

1

 

20.6.                     Governing Law.

 

Except to the extent governed by applicable federal law, this Agreement
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of California excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.

 

*     *     *     *     *

 

The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in one or more counterparts, each executed counterpart constituting an original
but all together only one agreement.

 

	
   

  	
  GOLDEN
  STATE WATER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Floyd E. Wicks

  
	
   

  	
  Floyd E. Wicks

  
	
   

  	
  Its President and Chief Executive Officer

  

 

 

Accepted
and agreed to as of the date first above written.

 

 

	
   

  	
  COBANK,
  ACB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Dave Dornbirer 

  
	
   

  	
  Its Vice President

  
	
   

  	
  Energy & Water Division

  

 

22

 

SCHEDULE 4.7

PATENTS, ETC.

 

Bear
Valley Electric

Arden-Cordova
Water Company

California
Cities Water Company

Southern
California Water Company

 

1

 

SCHEDULE 9.2

LIENS

 

Liens
relating to the $6,296,000 Certificates of Participation executed and delivered
by the Three Valleys Municipal Water District in favor of the holders of the
Certificates of Participation and providers of credit support in connection
therewith

 

Equipment Leasing UCC Filings filed by Newport Communications Finance
Corporation, CIT Technologies Corporation DBA CIT, Compaq Financial Services
Corporation, Toshiba America Information Systems, Marlin Leasing Corp. and Bank
One Arizona

 

1Exhibit 10.29

 

July 28,
2005

 

United Natural
Foods, Inc.

260 Lake Road

Dayville, CT
06241

 

Stow Mills,
Inc.

71 Stow Drive

Chesterfield,
NH  03443

 

United Natural
Foods Pennsylvania, Inc.

71 Stow Drive

Chesterfield,
NH  03443

 

Albert’s
Organics, Inc.

3268 East
Vernon Avenue

Vernon,
CA  90058

 

Attention:  Rick Puckett, Chief Financial Officer

 

RE:  Fifth Amendment to Term Loan Agreement

 

Dear Rick:

 

Reference
is made to that certain Term Loan Agreement dated as of April 28, 2003 as
amended (the “Loan Agreement”) among United Natural Foods, Inc. (“UNFI”), Stow
Mills, Inc. (“SMI”), United Natural Foods Pennsylvania, Inc. (“UNFPA”) and Albert’s
Organics, Inc. (“Albert’s” and together with UNFI, SMI and UNFPA, the “Borrowers”)
and Fleet Capital Corporation (the “Lender”). 
Capitalized terms not defined herein shall have the meanings ascribed
thereto in the Loan Agreement.  This Fifth
Amendment to Term Loan Agreement shall be referred to as the “Fifth Amendment”.

 

The
Borrowers have requested that the Lender agree to increase the principal amount
of the Term Loan made pursuant to the Loan Agreement to $75,000,000 and the
Lender has agreed to such increase, subject to the terms and conditions of this
Fifth Amendment to Term Loan Agreement  (“Fifth
Amendment”).

 

1.                                       Amendments to the Loan Agreement.  Subject to the terms and conditions of this Fifth
Amendment, Borrowers and Lender agree that the Loan Agreement shall be amended
as follows:

 

a.                                       The First Recital of
the Loan Agreement is deleted and replaced with the following:

 

 

“WHEREAS, the
Borrowers have requested that the Lender extend credit to the Borrowers in the
principal amount of up to SEVENTY-FIVE MILLION DOLLARS ($75,000,000); and”

 

b.                                      Section 1.1.1 of the Loan
Agreement is hereby deleted and replaced with the following:

 

“1.1.1  Term Loan.  The Lender agrees to make a Term Loan to
Borrowers in the principal amount of $75,000,000 of which (a) $65,000,000 will
be advanced on the Fifth Amendment Closing Date, and (b) $10,000,000 (the “Greenwood
Advance”) will be advanced when the Greenwood Conditions (as set forth below) are
satisfied. The Term Loan shall be repayable in accordance with the term of the
Term Note and shall be secured by all the Collateral. Notwithstanding any
provision hereof to the contrary, the making of the Greenwood Advance shall be
subject to the satisfaction of the following conditions in a manner
satisfactory to Lender (the “Greenwood Conditions”), which conditions shall be
satisfied on or before January 31, 2006 or the Lender’s commitment to make the
Greenwood Advance shall, upon written notice by Lender to Borrowers, terminate:

 

(a)     Borrowers
shall have delivered to Lender the following, each in form and substance
satisfactory to Lender:

 

	
  (i)

  	
  A Mortgage (the “Greenwood
  Mortgage”), covering the Borrowers’ Greenwood, Indiana Real Property (as more
  particularly described on Exhibit A attached (the “Greenwood, Indiana Real
  Property”);

  
	
   

  	
   

  
	
  (ii)

  	
  An Assignment of Leases
  and Rents covering the Greenwood, Indiana Real Property;

  
	
   

  	
   

  
	
  (iii)

  	
  An ALTA Lender’s Title
  Insurance Policy insuring the Greenwood Mortgage in the allocated amount of
  $11,000,000, together with endorsements required by Lender;

  
	
   

  	
   

  
	
  (iv)

  	
  An ALTA Survey and a
  Surveyor’s Certificate for the Greenwood, Indiana Real Property;

  
	
   

  	
   

  
	
  (v)

  	
  A Phase I Environmental
  Report with respect to the Greenwood, Indiana Real Property and, if required
  by Lender after its review of the Phase I Report, a Phase II Environmental
  Report;

  

 

2

 

	
  (vi)

  	
  A zoning letter from
  municipality of Greenwood, Indiana with respect to the Greenwood, Indiana
  Real Property, if available;

  
	
   

  	
   

  
	
  (vii)

  	
  UCC-1 Financing Statements
  covering the personal property and fixtures described in the Greenwood
  Mortgage;

  
	
   

  	
   

  
	
  (viii)

  	
  A local counsel’s
  enforceability opinion covering the Greenwood Mortgage and Assignment of
  Leases and Rents;

  
	
   

  	
   

  
	
  (ix)

  	
  A Certificate of Occupancy
  or, if a Certificate of Occupancy is not available, such other evidence of
  completion of the improvements on the improvements to the Greenwood, Indiana
  Real Property in accordance with all legal requirements;

  
	
   

  	
   

  
	
  (x)

  	
  An updated appraisal of
  the value of the Greenwood, Indiana Real Property (reflecting completion of
  the pending construction project); and

  
	
   

  	
   

  
	
  (xi)

  	
  A Certificate from a
  senior executive officer of the Borrowers certifying that all representations
  and warranties set forth in Loan Agreement are and remain true and correct on
  the date of the making of the Greenwood Advance and that no Default or Event
  of Default has occurred and is continuing.

  

 

(b)                               All requisite corporation action
and proceedings in connection with the Greenwood Advance and all documents and
certificates required by Lender and/or its counsel in connection therewith
shall be in form and substance satisfactory to Lender and its counsel;

 

(c)                                No Default or Event of Default
shall have occurred and shall be continuing under the Agreement; and

 

(d)                               Such other agreements, documents
and instruments as Lender may reasonably required in connection with the
Greenwood Advance.

 

c.                                       Appendix A to the Loan
Agreement is amended to add the following defined terms following the
definition of “FCC”:

 

“Fifth Amendment - the Fifth Amendment to Term Loan Agreement
dated as of July 28, 2005.”

 

3

 

“Fifth Amendment Closing Date - the date on which all the
conditions precedent in Section 4 of the Fifth Amendment are satisfied.

 

d.                                      Appendix A to the Loan
Agreement is amended to delete the defined term “Maturity Date” and the
definition thereof and to substitute the following in place thereof:

 

“Maturity Date – July 28, 2012.”

 

e.                                       Appendix A to the Loan
Agreement is amended to delete the defined term “Term Note” and the definition
thereof and to substitute the following in place thereof:

 

“Term Note - the Second Amended and Restated Term Promissory
Note executed by Borrower on the Fifth Amendment Closing Date in favor of
Lender to evidence the Term Loan, which shall be in the form of Exhibit A to
the Fifth Amendment.”

 

f.                                         Appendix A to the Loan
Agreement is amended to delete the defined term “Total Credit Facility” and the
definition thereof and to substitute the following in place thereof:

 

“Total Credit Facility - $75,000,000”

 

g.                                      Exhibit L to the Loan
Agreement is hereby deleted and replaced with Exhibit L attached hereto.

 

2.                                       Amendment Fees.  The Borrowers agree to pay to Lender the fees
set forth in the fee letter dated the date hereof.

 

3.                                       Evidence of Proper Completion
of Rocklin, CA Site.  Upon
completion of the improvements currently under construction at the Rocklin,
California property owned by UNFI, Borrowers shall deliver to Lender evidence
of the completion of such improvements in compliance with law, which evidence
must be acceptable to Lender in its sole discretion.

 

4.                                       Representations and Warranties.  The Borrowers hereby represent and warrant as
follows:

 

a.                                       Power, Authority, Etc.  The Borrowers have the power and authority
for the making and performing of this Fifth Amendment.  This Fifth Amendment has been duly executed
and delivered by or on behalf of the Borrowers pursuant to authority legally
adequate therefor, and this Fifth Amendment to is in full force and effect and
is a legal, valid and binding obligation of the Borrowers enforceable in
accordance with its terms subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws and equitable principles affecting the
enforcement of creditors’ rights generally.

 

b.                                      Incorporation of
Representations and Warranties.  The
representations and warranties of the Borrowers contained in the Loan
Agreement, except for any changes resulting only from the passage of time and
which do not otherwise constitute a Default or Event of Default hereunder, are
true and correct on and as of the date hereof as though made on and as of 

 

4

 

the date hereof and such representations and
warranties are hereto incorporated in this Fifth Amendment to as though fully
set forth herein.

 

5.                                       Conditions Precedent.  Notwithstanding any of the provisions of the
Loan Agreement or any of the other Loan Documents, and without affecting in any
manner the rights of Lender under any other sections of the Loan Agreement or
this Fifth Amendment, Lender shall not be required to make the Term Loan under
this Fifth Amendment unless and until each of the following conditions has been
and continues to be satisfied (the date when such conditions are satisfied
shall be the “Fifth Amendment Closing Date”).

 

a.                                       Documentation.  Lender shall have received, in form and
substance satisfactory to Lender, a duly executed copy of this Fifth Amendment,
the Second Amended and Restated Term Promissory Note in substantially the form
of Exhibit A hereto, Mortgages with respect to Real Property not previously
subject to Mortgages, amendments to Mortgages, Collateral Assignments with
respect to Real Property not previously subject to Mortgages, amendments of collateral
assignments and such additional documents, instructions and certificates as
Lender shall require in connection therewith, all in form and substance
satisfactory to Lender and its counsel.

 

b.                                      No Default.  No Default or Event of Default shall exist.

 

c.                                       Corporate Documents.  All requisite corporate action and
proceedings of the Borrowers in connection with this Fifth Amendment and all
documentation and certificates required by Lender and/or its counsel in
connection therewith shall be satisfactory in form and substance to Lender and
its counsel;

 

d.                                      Opinions of Counsel.  The receipt by Lender of an opinion, dated
the Fifth Amendment Closing Date, of (i) Cameron & Mittleman LLP, counsel
to Borrowers and Guarantors covering such matters as the Lender may reasonably
request, and (ii) local counsel of Borrowers in the jurisdictions where the
Real Property is located, covering such matters as the Lender may reasonably
request;

 

e.                                       Payment of Fees.  The payment by Borrowers of such fees as Borrowers
have agreed to pay or deliver to Lender including, without limitation under the
fee letter, the reasonable fees and expenses of Brown Rudnick Berlack Israels
LLP and of other counsel to Lender and all fees and expenses of title insurance
companies;

 

f.                                         Title Insurance.  Borrowers shall have obtained and delivered
to Lender title insurance policies for each new Mortgage of Real Property
entered into by Borrowers and endorsements to the title insurance policies
previously delivered to Lender, insuring the Mortgages as increased by the Term
Loan provided for herein and as may be requested by Lender for any changes or
modifications in the Real Property, all in form and substance satisfactory to
Lender;

 

5

 

g.                                      Participant Consent.  Lender shall have received the written
consent of its participants to the increase to the Term Loan pursuant to this Fifth
Amendment and to the participants’ participation therein in form and substance
satisfactory to Lender; and

 

h.                                      Other Documents.  Such other agreements, instruments, and
documents as Lender may reasonably require in connection with this Fifth Amendment.

 

6.                                       Miscellaneous.

 

a.                                       Counterparts.  This Fifth Amendment to Loan Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this Fifth Amendment
to Loan Agreement by signing any such counterpart.

 

b.                                      Force and Effect.  The Loan Agreement and each other Loan
Document, as amended by this Fifth Amendment, are hereby ratified, confirmed
and approved, and shall continue in full force or effect.

 

c.                                       Loan Document.  This Fifth Amendment to Loan Agreement and
all other documents executed in connection herewith are “Loan Documents” as
such term is defined in the Loan Agreement. 
This Fifth Amendment shall be governed by the laws of the State of
Connecticut.  This Fifth Amendment to
Loan Agreement and the other documents executed and delivered in connection
herewith set forth the entire agreement of the parties with respect to the
subject matter thereof and supersede any prior agreement and contemporaneous
oral agreements of the parties concerning their subject matter.

 

[remainder of page
intentionally left blank]

 

6

 

Signature
Page to Fifth Amendment to Loan Agreement

 

IN WITNESS WHEREOF, the parties have executed
this Fifth Amendment to Loan Agreement as of the date first above written.

 

	
  BORROWERS:

  	
   

  	
  UNITED NATURAL FOODS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STOW MILLS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNITED NATURAL FOODS

  PENNSYLVANIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ALBERT’S ORGANICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
  LENDER:

  	
   

  	
  FLEET CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Kim B. Bushey

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Kim B. Bushey

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
											

 

 

RATIFICATION OF GUARANTY AGREEMENT

 

The undersigned Guarantors acknowledge receipt of
the foregoing Fifth Amendment to Term Loan Agreement (“Fifth Amendment”) and
hereby (a) accept and agree to the terms and provisions of the Fifth Amendment including,
without limitation, to the increase in the Term Loan to $                    
and (b) ratify, confirm, and approve all of the terms and conditions of each of
the Guaranty Agreements.

 

IN WITNESS WHEREOF, the parties have executed the
Ratification of Guaranty Agreement on this 28th day of July, 2005.

 

 

	
   

  	
   

  	
  NATURAL RETAIL GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNITED NATURAL TRADING CO.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNITED NATURAL FOODS WEST, INC.

  (formerly known as Mountain People’s Warehouse

  Incorporated)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NUTRASOURCE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RAINBOW NATURAL FOODS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNITED NORTHEAST, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Rick D. Puckett

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Rick D. Puckett

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
									

 

 

EXHIBIT A

 

Description of
Greenwood, Indiana Real Property

 

The land and improvements thereon known as:

 

Block 10 in Precedent South Business Center Section
Three recorded in Plat Book D, Page 305, C & C in the Office of the
Recorder of Johnson County, Indiana

 

Containing 26.57 acres, more or less.

 

9

 

EXHIBIT L

 

United Natural
Foods, Inc.

and
Subsidiaries

Real Property

 

	
  Property Address

  
	
   

  
	
  12745 Earhart Avenue,
  Auburn, CA

  
	
   

  
	
  12600 Locksley Lane,
  Auburn, CA

  
	
   

  
	
  1101 Sunset Boulevard,
  Rocklin, CA

  
	
   

  
	
  Block No. 41, Part of Lot
  No. 1.01, Logan Township, Gloucester County, NJ

  
	
   

  
	
  71 Stow Drive,
  Chesterfield, NH

  
	
   

  
	
  260 Lake Road, Dayville,
  CT

  
	
   

  
	
  100 Lincoln Street, New
  Oxford, PA 

  
	
   

  
	
  2340 Heinz Road, Iowa
  City, Iowa 52240

  
	
   

  
	
  100 Lakeview Court,
  Atlanta, GA

  
	
   

  

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]