Document:

exhibit101notepurchaseag

                                                               Execution Version                              GOLDEN STATE WATER COMPANY                                       $160,000,000                          2.17% Series A Senior Notes due July 8, 2030                                       and                      2.90% Series B Senior Notes due July 8, 2040                                      _____________                            NOTE PURCHASE AGREEMENT                                    _____________                                 Dated as of July 8, 2020             Note Purchase Agreement (Golden State Water) 4849-4417-9624 v21.docx  4306890 

 

                                TABLE OF CONTENTS   SECTION                            HEADING                              PAGE     SECTION 1.        AUTHORIZATION OF NOTES .......................................................................... 1   SECTION 2.        SALE AND PURCHASE OF NOTES ................................................................... 1   SECTION 3.        CLOSING ....................................................................................................... 2   SECTION 4.        CONDITIONS TO CLOSING ............................................................................. 2      Section 4.1.     Representations and Warranties ............................................................ 2      Section 4.2.     Performance; No Default ....................................................................... 2      Section 4.3.     Compliance Certificates ........................................................................ 3      Section 4.4.     Opinions of Counsel .............................................................................. 3      Section 4.5.     Purchase Permitted By Applicable Law, Etc ........................................ 3      Section 4.6.     Sale of Other Notes ............................................................................... 3      Section 4.7.     Payment of Special Counsel Fees .......................................................... 3      Section 4.8.     Private Placement Number .................................................................... 4      Section 4.9.     Changes in Corporate Structure ............................................................. 4      Section 4.10.    Funding Instructions .............................................................................. 4      Section 4.11.    Regulatory Approvals ............................................................................ 4      Section 4.12.    Proceedings and Documents .................................................................. 4   SECTION 5.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................ 4      Section 5.1.     Organization; Power and Authority ....................................................... 4      Section 5.2.     Authorization, Etc .................................................................................. 5      Section 5.3.     Disclosure .............................................................................................. 5      Section 5.4.     Organization and Ownership of Shares of Subsidiaries;                       Affiliates ................................................................................................ 5      Section 5.5.     Financial Statements; Material Liabilities ............................................. 6      Section 5.6.     Compliance with Laws, Other Instruments, Etc .................................... 6      Section 5.7.     Governmental Authorizations, Etc ........................................................ 6      Section 5.8.     Litigation; Observance of Statutes and Orders ...................................... 6      Section 5.9.     Taxes ...................................................................................................... 7      Section 5.10.    Title to property; Leases ........................................................................ 7      Section 5.11.    Licenses, Permits, Etc ............................................................................ 7      Section 5.12.    Compliance with ERISA ....................................................................... 7      Section 5.13.    Private Offering by the Company .......................................................... 8      Section 5.14.    Use of Proceeds; Margin Regulations ................................................... 8      Section 5.15.    Existing Indebtedness ............................................................................ 9      Section 5.16.    Foreign Assets Control Regulations, Etc ............................................... 9      Section 5.17.    Status under Certain Statutes ............................................................... 10                                         -i- 

 

       Section 5.18.    Disposition of the Bear Valley Electric Service Assets ...................... 10   SECTION 6.        REPRESENTATIONS OF THE PURCHASERS .................................................... 10      Section 6.1.     Purchase for Investment ...................................................................... 10      Section 6.2.     Source of Funds ................................................................................... 10   SECTION 7.        INFORMATION AS TO COMPANY .................................................................. 12      Section 7.1.     Financial and Business Information .................................................... 12      Section 7.2.     Officer’s Certificate ............................................................................. 15      Section 7.3.     Visitation ............................................................................................. 15      Section 7.4.     Electronic Delivery .............................................................................. 15   SECTION 8.        PAYMENT AND PREPAYMENT OF THE NOTES ............................................. 16      Section 8.1.     Maturity ............................................................................................... 16      Section 8.2.     Optional Prepayments with Make-Whole Amount ............................. 16      Section 8.3.     Prepayments in Connection with Dispositions of Property ................. 17      Section 8.4.     Allocation of Partial Prepayments ....................................................... 17      Section 8.5.     Maturity; Surrender, Etc ...................................................................... 17      Section 8.6.     Purchase of Notes ................................................................................ 17      Section 8.7.     Make-Whole Amount .......................................................................... 18      Section 8.8.     Payments Due on Non-Business Days ................................................ 19   SECTION 9.        AFFIRMATIVE COVENANTS ......................................................................... 20      Section 9.1.     Compliance with Laws ........................................................................ 20      Section 9.2.     Insurance .............................................................................................. 20      Section 9.3.     Maintenance of Properties ................................................................... 20      Section 9.4.     Payment of Taxes ................................................................................ 20      Section 9.5.     Corporate Existence, Etc ..................................................................... 21      Section 9.6.     Books and Records .............................................................................. 21      Section 9.7.     Priority of Obligations; Subsidiary Guarantors ................................... 21   SECTION 10.       NEGATIVE COVENANTS .............................................................................. 21      Section 10.1.    Disposition of Property ........................................................................ 21      Section 10.2.    Liens on Property; Permitted Encumbrances ...................................... 22      Section 10.3.    Merger, Consolidation, Etc .................................................................. 23      Section 10.4.    Change in Business .............................................................................. 24      Section 10.5.    Transactions with Affiliates ................................................................ 24      Section 10.6.    Restrictions on Sale and Leaseback Transactions ............................... 24      Section 10.7.    Economic Sanctions, Etc ..................................................................... 24      Section 10.8.    Financial Covenants ............................................................................ 24   SECTION 11.       EVENTS OF DEFAULT .................................................................................. 26   SECTION 12.       REMEDIES ON DEFAULT, ETC ..................................................................... 28                                        -ii- 

 

       Section 12.1.    Acceleration ......................................................................................... 28      Section 12.2.    Other Remedies ................................................................................... 29      Section 12.3.    Rescission ............................................................................................ 29      Section 12.4.    No Waivers or Election of Remedies, Expenses, Etc .......................... 30   SECTION 13.       REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES .............................. 30      Section 13.1.    Registration of Notes ........................................................................... 30      Section 13.2.    Transfer and Exchange of Notes ......................................................... 30      Section 13.3.    Replacement of Notes .......................................................................... 31   SECTION 14.       PAYMENTS ON NOTES ................................................................................. 31      Section 14.1.    Place of Payment ................................................................................. 31      Section 14.2.    Home Office Payment ......................................................................... 31      Section 14.3.    FATCA Information ............................................................................ 32      Section 14.4.    Withholding Tax .................................................................................. 32   SECTION 15.       EXPENSES, ETC ........................................................................................... 32      Section 15.1.    Transaction Expenses .......................................................................... 32      Section 15.2.    Survival ................................................................................................ 33      Section 15.3.    Certain Taxes ....................................................................................... 33   SECTION 16.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE                    AGREEMENT ............................................................................................... 33   SECTION 17.       AMENDMENT AND WAIVER ........................................................................ 33      Section 17.1.    Requirements ....................................................................................... 33      Section 17.2.    Solicitation of Holders of Notes .......................................................... 34      Section 17.3.    Binding Effect, Etc .............................................................................. 34      Section 17.4.    Notes Held by Company, Etc .............................................................. 35   SECTION 18.       NOTICES ..................................................................................................... 35   SECTION 19.       REPRODUCTION OF DOCUMENTS ................................................................ 35   SECTION 20.       CONFIDENTIAL INFORMATION .................................................................... 36   SECTION 21.       SUBSTITUTION OF PURCHASER ................................................................... 37   SECTION 22.       MISCELLANEOUS ........................................................................................ 37      Section 22.1.    Successors and Assigns ....................................................................... 37      Section 22.2.    Severability .......................................................................................... 37      Section 22.3.    Construction, Etc ................................................................................. 37      Section 22.4.    Counterparts ........................................................................................ 38      Section 22.5.    Governing Law .................................................................................... 38                                        -iii- 

 

                Section 22.6.    Jurisdiction and Process; Waiver of Jury Trial .................................... 38  Section 22.7.    Accounting Terms ............................................................................... 39                                                    -iv- 

 

   SCHEDULE A        —     Information Relating to Purchasers    SCHEDULE B        —     Defined Terms    SCHEDULE 5.3      —     Disclosure Materials    SCHEDULE 5.4      —     Subsidiaries of Company and Ownership of Shares; Affiliates    SCHEDULE 5.5      —     Financial Statements    SCHEDULE 5.15     —     Existing Indebtedness    SCHEDULE 10.2     —     Existing Liens    EXHIBIT 1 - A     —     Form of 2.17% Series A Senior Note due July 8, 2030    EXHIBIT 1 - B     —     Form of 2.90% Series B Senior Note due July 8, 2040    EXHIBIT 4.4(a)    —     Form of Opinion of Special Counsel for the Company    EXHIBIT 4.4(b)    —     Form of Opinion of Special Counsel for the Purchasers    EXHIBIT 14.4      —     Form of US Tax Compliance Certificate                                           -v- 

 

                        GOLDEN STATE WATER COMPANY                               630 East Foothill Blvd.                             San Dimas, California 91773                   $85,000,000 2.17% Series A Senior Notes due July 8, 2030                                       and                $75,000,000 2.90% Series B Senior Notes due July 8, 2040                                                                                     July 8, 2020      TO EACH OF THE PURCHASERS LISTED IN  SCHEDULE A HERETO:   Ladies and Gentlemen:         Golden  State  Water  Company,  a  California  corporation  (together  with  any  successor  thereto that becomes a party hereto pursuant to Section 10.3, the “Company”), agrees with each  of the Purchasers as follows:   SECTION 1.    AUTHORIZATION OF NOTES.         The  Company  will  authorize  the  issue  and  sale  of  (i) $85,000,000 aggregate  principal  amount  of  its 2.17%  Series  A  Senior  Notes,  due July 8,  2030 (the  “Series A  Notes”)  and  (ii) $75,000,000 aggregate principal amount of its 2.90% Series B Senior Notes due July 8, 2040  (the “Series B Notes”; and together with the Series A Notes, the “Notes” (in each case as amended,  restated or otherwise modified from time to time and including any such notes of the same Series  issued in substitution therefor pursuant to Section 13).  The Series A Notes and Series B Notes  shall be substantially in the form set out in Schedule 1-A and 1-B, respectively.  References to  “Series” of Notes shall refer to the Series A Notes or Series B Notes, or all, as the context may  require.  Certain capitalized and other terms used in this Agreement are defined in Schedule B.   References  to  a  “Schedule”  or  an  “Exhibit”  are,  unless  otherwise  specified,  references  to  a  Schedule or an Exhibit attached to this Agreement.  References to a “Section” are references to a  Section of this Agreement unless otherwise specified.    SECTION 2.    SALE AND PURCHASE OF NOTES         Subject to the terms and conditions of this Agreement, the Company will issue and sell to  each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for  in Section 3, Notes of the Series and in the principal amount specified opposite such Purchaser’s  name  in Schedule  A at  the  purchase  price  of  100%  of  the  principal  amount  thereof.   The    

 

Golden State Water Company                               Note Purchase Agreement    Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have  any liability to any Person for the performance or non-performance of any obligation by any other  Purchaser hereunder.   SECTION 3.    CLOSING.         The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the  offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00  a.m., New York time, at a closing (the “Closing”) on July 8, 2020 (the “Closing Date”).  At the  Closing the Company will deliver to each Purchaser the Notes of the Series to be purchased by  such Purchaser in the form of a single Note (or such greater number of Notes in denominations of  at least $100,000 as such Purchaser may request) dated the date of the Closing and registered in  such Purchaser’s name (or in the name of its nominee), against delivery by such 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, N.A., 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 such Notes to any Purchaser as provided above in this Section 3, or any of the conditions  specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser  shall, at its election, be relieved of all further obligations under this Agreement, without thereby  waiving  any  rights  such  Purchaser  may  have  by  reason  of  any  of  the  conditions  specified  in  Section 4 not having been fulfilled to such Purchaser’s satisfaction or such failure by the Company  to tender such Notes.   SECTION 4.    CONDITIONS TO CLOSING.         Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser  at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing,  of the following conditions:       Section 4.1. Representations and Warranties.  The representations and warranties of  the Company in this Agreement shall be correct when made and as of the Closing Date.       Section 4.2. 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.  Before and after giving effect to the issue and  sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14) no  Default or Event of Default shall have occurred and be continuing.                                         -2- 

 

Golden State Water Company                               Note Purchase Agreement        Section 4.3. Compliance Certificates.        (a)  Officer’s  Certificate.   The  Company  shall  have  delivered  to  such  Purchaser  an  Officer’s  Certificate,  dated  the  Closing  Date,  certifying  that  the  conditions  specified  in  Sections 4.1, 4.2 and 4.9 have been fulfilled.        (b)  Secretary’s  Certificate.   The  Company  shall  have  delivered  to  such  Purchaser  a  certificate of its Secretary or Assistant Secretary, dated the Closing Date, certifying as to (i) the  resolutions  attached  thereto  and  other  corporate  proceedings  relating  to  the  authorization,  execution  and  delivery  of  the  Notes  and  this  Agreement,  (ii)  the  Company’s  organizational  documents as then in effect, (iii) the names and true signatures of the officers of the Company  authorized to sign this Agreement, the Notes and the other Transaction Documents, and (iv) the  good  standing  or  similar  certificate  for  the  Company  from  the  appropriate  Governmental  Authorities of the State of California, dated as of a recent date, and such other evidence of the  status of the Company as such Purchaser may reasonably request.       Section 4.4. Opinions of Counsel.  Such Purchaser shall have received opinions in form  and substance reasonably satisfactory to such Purchaser, dated the date of the Closing (a) from  Winston & Strawn LLP, counsel for the Company, covering the matters set forth in Exhibit 4.4(a)  and covering such other matters incident to the transactions contemplated hereby as such Purchaser  or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver  such opinion to the Purchasers) and (b) from Chapman and Cutler LLP, the Purchasers’ special  counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b)  and covering such other matters incident to such transactions as such Purchaser may reasonably  request.       Section 4.5. Purchase Permitted By Applicable Law, Etc.  On the Closing Date, such  Purchaser’s  purchase  of  Notes  shall  (a) be  permitted  by  the  laws  and  regulations  of each  jurisdiction  to  which  such  Purchaser  is  subject,  without  recourse  to  provisions  (such  as  section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance  companies without restriction as to the character of the particular investment, (b) not violate any  applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of  Governors of the Federal Reserve System) and (c) not subject such 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 such Purchaser, such Purchaser shall have received an  Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify  to enable such Purchaser to determine whether such purchase is so permitted.       Section 4.6. Sale of Other Notes.  Contemporaneously with the Closing the Company  shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased  by it at the Closing as specified in Schedule A.       Section 4.7. Payment  of  Special  Counsel  Fees.   Without  limiting  the  provisions  of  Section 15.1,  the  Company  shall  have  paid  on  or  before  the  Closing  the  fees,  charges  and  disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected                                         -3- 

 

Golden State Water Company                               Note Purchase Agreement    in a statement of such counsel rendered to the Company at least one Business Day prior to the  Closing.       Section 4.8. Private  Placement  Number.   A  Private  Placement  Number  issued by  Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained  for each Series of Notes.       Section 4.9. Changes in Corporate Structure.  The Company shall not have changed its  jurisdiction  of  incorporation  or  organization,  as  applicable,  or  been a  party  to  any  merger  or  consolidation or 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 Schedule 5.5.      Section 4.10. Funding Instructions.  At least five (5) Business Days prior to the Closing  Date, each Purchaser shall have received written instructions signed by a Responsible Officer on  letterhead  of  the  Company  confirming  the  information  specified  in  Section 3  including  (i) the  name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the  account name and number into which the purchase price for the Notes is to be deposited.  Each  Purchaser has the right, but not the obligation, upon written notice (which may be by email) to the  Company, to elect to deliver a micro deposit (less than $51.00) to the account identified in the  written instructions no later than two (2) Business Days prior to Closing.  If a Purchaser delivers  a micro deposit, a Responsible Officer must verbally verify the receipt and amount of the micro  deposit to such Purchaser on a telephone call initiated by such Purchaser prior to Closing.  The  Company shall not be obligated to return the amount of the micro deposit, nor will the amount of  the micro deposit be netted against the Purchaser’s purchase price of the Notes.      Section 4.11. Regulatory Approvals.  The issue and sale of the Notes shall have been duly  authorized by an order of the California Public Utilities Commission and such order shall be in  full force and effect on the date of the Closing and all appeal periods, if any, applicable to such  order shall have expired.         Section 4.12  Proceedings  and  Documents.   All  corporate  and  other  proceedings  in  connection  with  the  transactions  contemplated  by  this  Agreement  and  all  documents  and  instruments incident to such transactions shall be reasonably satisfactory to such Purchaser and its  special counsel, and such Purchaser and its special counsel shall have received all such counterpart  originals or certified or other copies of such documents as such Purchaser or such special counsel  may reasonably request.   SECTION 5.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.         The Company represents and warrants to each Purchaser that:       Section 5.1. Organization; Power and Authority.  The Company is a corporation duly  organized, validly existing and in good standing under the laws of its jurisdiction of incorporation,  and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which  such qualification is required by law, other than those jurisdictions as to which the failure to be so  qualified or in good standing would not, individually or in the aggregate, reasonably be expected                                        -4- 

 

Golden State Water Company                               Note Purchase Agreement    to have a Material Adverse Effect.  The Company has the corporate power and authority to own  or hold under lease the properties it purports to own or hold under lease, to transact the business it  transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to  perform the provisions hereof and thereof.       Section 5.2. Authorization,  Etc.  This  Agreement  and  the  Notes  have  been  duly  authorized  by  all  necessary  corporate  action  on  the  part  of  the  Company,  and  this  Agreement  constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and  binding obligation of the Company enforceable against the Company in accordance with its terms,  except  as  such  enforceability  may  be  limited  by  (i)  applicable  bankruptcy,  insolvency,  reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights  generally  and  (ii)  general  principles  of  equity  (regardless  of  whether  such  enforceability  is  considered in a proceeding in equity or at law).       Section 5.3. Disclosure.  This Agreement and the documents, certificates or other writings  delivered to the Purchasers by or on behalf of the Company in connection with the transactions  contemplated  hereby  and  identified  in Schedule 5.3,  and  the  financial  statements  listed  in  Schedule 5.5 (this Agreement and such documents, certificates or other writings and such financial  statements  delivered  to  each  Purchaser  being  referred  to,  collectively,  as  the “Disclosure  Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to  state any material fact necessary to make the statements therein not misleading in light of the  circumstances under which they were made.  Except as disclosed in the Disclosure Documents,  since December 31, 2019, there has been no change in the financial condition, operations, business  or properties of the Company or any of its Subsidiaries except changes that individually or in the  aggregate would not reasonably be expected to have a Material Adverse Effect.       Section 5.4. Organization  and  Ownership  of  Shares  of  Subsidiaries;  Affiliates.   (a) Schedule 5.4 is  (except  as  noted  therein)  a  complete  and  correct  list  of  (i)  the  Company’s  Subsidiaries,  showing,  as  to  each  Subsidiary,  the  correct  name  thereof,  the  jurisdiction  of  its  organization,  and  the  percentage  of  shares  of  each  class  of  its  capital  stock  or  similar  equity  interests  outstanding  owned  by  the  Company  and  each  other  Subsidiary,  (ii) the  Company’s  Affiliates, other than Subsidiaries, and (iii) the Company’s directors and senior officers.        (b)  All  of  the  outstanding  shares  of  capital  stock  or  similar  equity  interests  of  each  Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been  validly  issued,  are  fully  paid  and  non-assessable  and  are  owned  by  the  Company  or  another  Subsidiary free and clear of any Lien that is prohibited by this Agreement.        (c)  Each Subsidiary is a corporation or other legal entity duly organized, validly existing  and, where applicable, in good standing under the laws of its jurisdiction of organization, and is  duly qualified  as  a  foreign  corporation  or  other  legal  entity  and,  where  applicable,  is  in  good  standing  in  each  jurisdiction  in  which  such  qualification  is  required  by  law,  other  than  those  jurisdictions as to which the failure to be so qualified or in good standing would not, individually  or  in  the  aggregate,  reasonably  be  expected  to  have  a  Material  Adverse  Effect.   Each  such  Subsidiary has the corporate or other power and authority to own or hold under lease the properties                                         -5- 

 

Golden State Water Company                               Note Purchase Agreement    it purports to own or hold under lease and to transact the business it transacts and proposes to  transact.       Section 5.5. Financial Statements; Material Liabilities.  The Company has delivered to  each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on  Schedule 5.5.  All of said financial statements (including in each case the related schedules and  notes) fairly present in all material respects the consolidated financial position of the Company  and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated  results of their operations and cash flows for the respective periods so specified and have been  prepared in accordance with GAAP consistently applied throughout the periods involved except  as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal  year-end adjustments).  The Company and its Subsidiaries do not have any Material liabilities that  are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.       Section 5.6. Compliance with Laws, Other Instruments, Etc.  The execution, delivery  and performance by the Company of this Agreement and the Notes will not (i) contravene, result  in any breach of, or constitute a default under, or result in the creation of any Lien in respect of  any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust,  loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or  any other Material agreement or instrument to which the Company or any Subsidiary is bound or  by which the Company or any Subsidiary or any of their respective properties may be bound or  affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any  order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to  the  Company  or  any  Subsidiary  or  (iii)  violate  any  provision  of  any  statute  or  other  rule  or  regulation of any Governmental Authority applicable to the Company or any Subsidiary including,  without limitation, the Federal Power Act or any regulations of the Federal Energy Regulatory  Commission, or any successor agency thereof (“FERC”).       Section 5.7. Governmental Authorizations, Etc.  No consent, approval or authorization  of,  or  registration,  filing  or  declaration  with,  any  Governmental  Authority,  including  without  limitation, FERC, is required in connection with the execution, delivery or performance by the  Company of this Agreement or the Notes, other than the authorization of the California Public  Utilities Commission which has been obtained and remains in full force and effect (a copy of which  has been provided to the Purchasers) and all appeal periods, if any, applicable to such authorization  shall have expired.        Section 5.8. Litigation; Observance of Statutes and Orders.  (a) There are no actions,  suits,  investigations  or  proceedings  pending  or,  to  the  knowledge  of  the  Company,  threatened  against  or  affecting  the  Company  or  any  Subsidiary  or  any  property  of  the  Company  or  any  Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental  Authority that, individually or in the aggregate, would reasonably be expected to have a Material  Adverse Effect.        (b)  Neither the Company nor any Subsidiary is (i) in violation of any order, judgment,  decree  or  ruling  of  any  court,  arbitrator  or  Governmental  Authority  or  (ii)  in  violation  of  any  applicable law, ordinance, rule or regulation of any Governmental Authority (including without                                        -6- 

 

Golden State Water Company                               Note Purchase Agreement    limitation Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations  that are referred to in Section 5.16), which default or violation, individually or in the aggregate,  would reasonably be expected to have a Material Adverse Effect.       Section 5.9. Taxes.  The Company and its Subsidiaries have filed all tax returns that are  required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable  on such returns and all other taxes and assessments payable by them, to the extent such taxes and  assessments have become due and payable and before they have become delinquent, except for  any taxes and assessments (i) the amount of which is not individually or in the aggregate Material  or (ii) the amount, applicability or validity of which is currently being contested in good faith by  appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may  be, has established adequate reserves in accordance with GAAP.  The U.S. federal income tax  liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of  completed audits or the statute of limitations having run) for all fiscal years up to and including  the fiscal year ended 2015.      Section 5.10. Title to Property; Leases.  The Company and its Subsidiaries have good and  sufficient title to their respective Material properties, including all such properties reflected in the  most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by  the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the  ordinary course of business and the Disposition of the Bear Valley Electric Service Assets and the  stock of Bear Valley Electric Service, Inc. pursuant to the terms of the Spin-off Agreement), in  each case free and clear of Liens prohibited by this Agreement, except for those defects in title and  Liens that, individually or in the aggregate, would not have a Material Adverse Effect.  All Material  leases are valid and subsisting and are in full force and effect in all material respects.      Section 5.11. Licenses, Permits, Etc.  The Company and its Subsidiaries own or possess  all licenses,  permits,  franchises,  authorizations,  patents,  copyrights,  software,  service  marks,  trademarks and trade names, or rights thereto, that individually or in the aggregate are Material,  without  known  conflict  with  the  rights  of  others,  (x)  except  in such  cases  where  the  lack  of  ownership  or  possession  of  such  Material  items  would  not,  individually  or  in  the  aggregate,  reasonably be expected to cause a Material Adverse Effect, and (y) except for those conflicts that,  individually or in the aggregate, would not have a Material Adverse Effect.      Section 5.12. Compliance with ERISA.  The Company and each ERISA Affiliate have  operated  and  administered  each  Plan  in  compliance  with  all  applicable  laws  except for  such  instances of noncompliance as have not resulted in and could not, individually or in the aggregate,  reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any  ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or  excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of  ERISA), and no event, transaction or condition has occurred or exists that would, individually or  in the aggregate, reasonably be expected to result in the incurrence of any such liability by the  Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties  or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA  or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or  federal law or section 4068 of ERISA or by the granting of a security interest in connection with                                        -7- 

 

Golden State Water Company                               Note Purchase Agreement    the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the  aggregate Material.        (b)  The present value of the aggregate benefit liabilities under each of the Plans (other  than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year  on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent  actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan  allocable to such benefit liabilities.  The term “benefit liabilities” has the meaning specified in  section 4001 of ERISA and the terms “current value” and “present value” have the meaning  specified in section 3 of ERISA.        (c)  The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and  are  not  subject  to  contingent  withdrawal  liabilities)  under  section 4201  or  4204  of  ERISA  in  respect of Multiemployer Plans that individually or in the aggregate are Material.        (d)  The expected postretirement benefit obligation (determined as of the last day of the  Company’s most recently ended fiscal year in accordance with Financial Accounting Standards  Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable  to  continuation  coverage  mandated  by  section 4980B  of  the  Code)  of  the  Company  and  its  Subsidiaries is not Material.        (e)  The execution and delivery of this Agreement and the issuance and sale of the Notes  hereunder will not involve any transaction that is subject to the prohibitions of section 406 of  ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A) -  (D) of the Code.  The representation by the Company to each Purchaser in the first sentence of this  Section 5.12(e)  is  made  in  reliance  upon  and subject  to  the  accuracy  of  such  Purchaser’s  representation in Section 6.2 as to the sources of the funds to be used to pay the purchase price of  the Notes to be purchased by such Purchaser.        (f)  The Company does not have any Non U.S. Plans.        Section 5.13. Private Offering by the Company.  Neither the Company nor anyone acting  on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy  any of the same from, or otherwise approached or negotiated in respect thereof with, any Person  other than the Purchasers and not more than ten (10) other Institutional Investors, each of which  has been offered the Notes at a private sale for investment.  Neither the Company nor anyone  acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the  Notes  to  the  registration  requirements  of  section 5  of  the Securities  Act  or  to  the  registration  requirements of any Securities or blue sky laws of any applicable jurisdiction.      Section 5.14. Use  of  Proceeds;  Margin  Regulations.   The  Company  will  apply  the  proceeds of the sale of the Notes hereunder for general corporate purposes to the extent permitted  by Sections 817 and 818 of the California Public Utilities Code.  No part of the proceeds from the  sale  of  the  Notes  hereunder  will  be  used,  directly or  indirectly,  for  the  purpose  of  buying  or  carrying any margin stock within the meaning of Regulation U of the Board of Governors of the  Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any                                        -8- 

 

Golden State Water Company                               Note Purchase Agreement    Securities under such circumstances as to involve the Company in a violation of Regulation X of  said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said  Board  (12  CFR  220).   Margin  stock  does  not  constitute  more  than  5%  of  the  value  of the  consolidated  assets  of  the  Company  and  its  Subsidiaries  and  the  Company  does  not  have  any  present intention that margin stock will constitute more than 5% of the value of such assets.  As  used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have  the meanings assigned to them in said Regulation U.      Section 5.15. Existing Indebtedness.  (a) Except as described therein, Schedule 5.15 sets  forth a complete and correct list of all outstanding Indebtedness of the Company as of March 31,  2020 (including a description of the principal amount outstanding and the issue and the maturity  date), since which date there has been no Material change in the amounts, interest rates, sinking  funds, installment payments or maturities of the Indebtedness of the Company.  The Company’s  sole Subsidiary does not have any outstanding Indebtedness.  None of the Company’s existing  Indebtedness is secured or guaranteed by any Person.  The Company is not in default and no waiver  of default is currently in effect, in the payment of any principal or interest on any Indebtedness of  the Company and no event or condition exists with respect to any Indebtedness of the Company  the outstanding principal amount of which exceeds $4,000,000 that would permit (or that with  notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness  to become due and payable before its stated maturity or before its regularly scheduled dates of  payment.        (b)  The Company is not a party to, or otherwise subject to any provision contained in,  any instrument evidencing Indebtedness of the Company, any agreement relating thereto or any  other agreement (including, but not limited to, its charter or any other organizational document)  which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of  the Company, except as specifically indicated in Schedule 5.15.   Section 5.16. Foreign  Assets  Control  Regulations,  Etc.  (a)   Neither  the  Company  nor  any  Controlled Entity (i) is a Blocked Person, (ii) has been notified that its name appears or may in the  future appear on a State Sanctions List or (iii) is a target of sanctions that have been imposed by  the United Nations or the European Union.        (b)  Neither  the  Company  nor  any  Controlled  Entity  (i) has  violated,  been  found  in  violation of, or been charged or convicted under, any applicable U.S. Economic Sanctions Laws,  Anti-Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s knowledge, is  under investigation by any Governmental Authority for possible violation of any U.S. Economic  Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws.        (c)  No part of the proceeds from the sale of the Notes hereunder:                (i)  constitutes  or  will  constitute  funds  obtained  on  behalf  of  any  Blocked        Person or will otherwise be used by the Company or any Controlled Entity, directly or        indirectly, (A) in connection with any investment in, or any transactions or dealings with,        any Blocked Person, (B) for any purpose that would cause any Purchaser to be in violation                                         -9- 

 

Golden State Water Company                               Note Purchase Agreement          of any U.S. Economic Sanctions Laws or (C) otherwise in violation of any U.S. Economic        Sanctions Laws;               (ii)  will be used, directly or indirectly, in violation of, or cause any Purchaser        to be in violation of, any applicable Anti-Money Laundering Laws; or               (iii) will be used, directly or indirectly, for the purpose of making any improper        payments, including bribes, to any Governmental Official or commercial counterparty in        order to obtain, retain or direct business or obtain any improper advantage, in each case        which would be in violation of, or cause any Purchaser to be in violation of, any applicable        Anti-Corruption Laws.        (d)  The Company has established procedures and controls which it reasonably believes  are adequate (and otherwise comply with applicable law) to ensure that the Company and each  Controlled  Entity  is  and  will  continue  to  be  in  compliance  with  all  applicable  U.S.  Economic  Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.        Section 5.17. Status under Certain Statutes.  Neither the Company nor any Subsidiary is  subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility  Holding Company Act of 2005, as amended, or the ICC Termination Act of 1995, as amended.        Section 5.18. Disposition of the Bear Valley Electric Service Assets.  The Disposition of  the Bear Valley Electric Service Assets and the stock of Bear Valley Electric Service, Inc. pursuant  to the terms of the Spin-off Agreement has been completed.   SECTION 6.    REPRESENTATIONS OF THE PURCHASERS.       Section 6.1. Purchase  for  Investment.   Each  Purchaser  severally  represents  that it  is  purchasing the Notes for its own account or for one or more separate accounts maintained by such  Purchaser or for the account of one or more pension or trust funds and not with a view to the  distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all  times be within such Purchaser’s or their control.  Each Purchaser understands that the Notes have  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 Notes.  Each Purchaser severally represents as of the  Closing Date that it is an Accredited Investor for its own account or as a fiduciary or agent for  another Accredited Investor.         Section 6.2. Source of Funds.  Each Purchaser severally represents that at least one of the  following statements is an accurate representation as to each source of funds (a “Source”) to be  used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser  hereunder:               (a)   the  Source  is an  “insurance  company  general  account”  (as  the  term  is        defined  in  the  United  States  Department  of  Labor’s  Prohibited  Transaction  Exemption                                        -10- 

 

Golden State Water Company                               Note Purchase Agreement          (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual        statement for life insurance companies approved by the National Association of Insurance        Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held        by or on behalf of any employee benefit plan together with the amount of the reserves and        liabilities for the general account contract(s) held by or on behalf of any other employee        benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-       60) or by the same employee organization in the general account do not exceed 10% of the        total reserves and liabilities of the general account (exclusive of separate account liabilities)        plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of        domicile; or               (b)   the Source is a separate account that is maintained solely in connection with        such  Purchaser’s  fixed  contractual  obligations  under  which  the  amounts  payable,  or        credited, to any employee benefit plan (or its related trust) that has any interest in such        separate  account  (or  to  any participant  or  beneficiary  of  such  plan  (including  any        annuitant)) are not affected in any manner by the investment performance of the separate        account; or               (c)   the  Source  is  either  (i) an  insurance  company  pooled  separate  account,        within  the  meaning  of  PTE  90-1  or  (ii) a  bank  collective  investment  fund,  within  the        meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in        writing pursuant to this clause (c), no employee benefit plan or group of plans maintained        by the same employer or employee organization beneficially owns more than 10% of all        assets allocated to such pooled separate account or collective investment fund; or               (d)   the Source constitutes assets of an “investment fund” (within the meaning        of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional        asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no        employee benefit plan’s assets that are managed by the QPAM in such investment fund,        when  combined  with  the  assets of  all  other  employee  benefit  plans  established  or        maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of        the  QPAM  Exemption)  of  such  employer  or  by  the  same  employee  organization  and        managed by such QPAM, represent more than 20% of the total client assets managed by        such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,        neither  the  QPAM  nor  a  person  controlling  or  controlled  by  the  QPAM  maintains  an        ownership interest in the Company that would cause the QPAM and the Company to be        “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of        such  QPAM  and  (ii) the  names  of  any  employee  benefit  plans  whose  assets  in  the        investment  fund,  when  combined  with  the  assets  of all  other  employee  benefit plans        established or maintained by the same employer or by an affiliate (within the meaning of        Part VI(c)(1)  of  the  QPAM  Exemption)  of  such  employer  or  by  the  same  employee        organization,  represent  10%  or  more  of  the  assets  of  such  investment  fund,  have  been        disclosed to the Company in writing pursuant to this clause (d);or               (e)   the  Source  constitutes  assets  of  a  “plan(s)”  (within  the  meaning  of        Part IV(h)  of  PTE  96-23  (the “INHAM  Exemption”))  managed  by  an  “in-house  asset                                        -11- 

 

Golden State Water Company                               Note Purchase Agreement          manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the        conditions  of  Part I(a),  (g)  and  (h)  of  the  INHAM  Exemption  are  satisfied,  neither  the        INHAM nor a person controlling or controlled by the INHAM (applying the definition of        “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the        Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit        plan(s) whose assets constitute the Source have been disclosed to the Company in writing        pursuant to this clause (e); or                (f)  the Source is a governmental plan; or               (g)   the Source is one or more employee benefit plans, or a separate account or        trust  fund  comprised  of  one  or  more  employee  benefit  plans,  each  of  which  has  been        identified to the Company in writing pursuant to this clause (g); or               (h)   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 6.2,  the  terms “employee  benefit  plan,” “governmental  plan,” and  “separate account” shall have the respective meanings assigned to such terms in section 3 of  ERISA.   SECTION 7.    INFORMATION AS TO COMPANY.,       Section 7.1. Financial and Business Information.  The Company shall deliver to each  holder of a Note that is an Institutional Investor:               (a)   Quarterly Statements — within 60 days (or such shorter period as is the        earlier of (x) 15 days greater than the period applicable to the filing of the Company’s        Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether        the Company is subject to the filing requirements thereof and (y) the date by which such        financial statements are required to be delivered under any Material Credit Facility or the        date on which such corresponding financial statements are delivered under any Material        Credit Facility if such delivery occurs earlier than such required delivery date) 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                                        -12- 

 

Golden State Water Company                               Note Purchase Agreement          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 companies        being  reported  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 Form 10-Q prepared in compliance with the        requirements therefor and filed with the SEC shall be deemed to satisfy the requirements        of this Section 7.1(a);               (b)   Annual  Statements — within  105  days  (or  such  shorter  period  as  is  the        earlier of (x) 15 days greater than the period applicable to the filing of the Company’s        Annual Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the        Company  is  subject  to  the  filing  requirements  thereof  and  (y) the  date  by  which  such        financial statements are required to be delivered under any Material Credit Facility or the        date on which such corresponding financial statements are delivered under any Material        Credit Facility if such delivery occurs earlier than such required delivery date) 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 (without a “going concern” or similar qualification or exception and without any        qualification or exception as to the scope of the audit on which such opinion is based) of        independent 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 companies being reported upon and their results of operations and cash flows and        have  been  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        (together with the Company’s annual report to shareholders, if any, prepared pursuant to        Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor        and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(b);               (c)   SEC and Other Reports — promptly upon their becoming available, one        copy of (i) each financial statement, report, notice or proxy statement sent by the Company        or any Subsidiary to its principal lending banks as a whole (excluding information sent to        such banks in the ordinary course of administration of a bank facility, such as information        relating to pricing and borrowing availability) or to its public Securities holders generally,        and (ii) each regular or periodic report, each registration statement that shall have become        effective (without exhibits except as expressly requested by such Purchaser or holder), and                                        -13- 

 

Golden State Water Company                               Note Purchase Agreement          each final prospectus and all amendments thereto filed by the Company or any Subsidiary        with the SEC;               (d)   Notice of Default or Event of Default — promptly, and in any event within        fifteen days after a Responsible Officer becoming aware that there has been a 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;               (e)   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(c) 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 incurrence              of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of              ERISA or the penalty or excise tax provisions of the Code relating to employee              benefit plans, or 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              or such penalty or excise tax provisions, if such liability or Lien, taken together              with any other such liabilities or Liens then existing, would reasonably be expected              to have a Material Adverse Effect;                 (f)  Resignation or Replacement of Auditors — within ten days following the        date on which the Company’s auditors resign or the Company elects to change auditors, as        the case may be, notification thereof, together with such supporting information as the        Required Holders may request; and               (g)   Requested Information — with reasonable promptness, such other data and        information  relating  to  the  business,  operations,  affairs,  financial  condition,  assets  or        properties  of  the  Company  or  any  of  its  Subsidiaries  or  relating  to  the  ability  of  the        Company to perform its obligations under this Agreement and under the Notes as from        time to time may be reasonably requested by any such holder of a Note, including, but        without  limitation,  (i) actual  copies  of  the  Company’s  Form 10-Q  and  Form 10-K,  and        (ii) in the event that the Company or any Subsidiary has made an election to measure any        financial  liability  using  fair  value  (which election  is  being  disregarded  for  purposes  of                                        -14- 

 

Golden State Water Company                               Note Purchase Agreement          determining compliance with this Agreement pursuant to Section 10.8(d)), a certificate of        Senior Financial Officer as to the period covered by any relevant financial statement, which        sets forth, as to such period, a reconciliation from GAAP with respect to such election.       Section 7.2. Officer’s Certificate.  Each set of financial statements delivered to a holder  of a Note pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a  Senior Financial Officer certifying that such Senior Financial Officer has reviewed the relevant  terms hereof and has made, or caused to be made, under his or her supervision, a review of the  transactions  and  conditions  of  the  Company  and  its  Subsidiaries  from  the  beginning  of  the  quarterly  or  annual  period  covered  by  the  statements  then  being  furnished  to  the  date  of  the  certificate and that such review shall not have disclosed the existence during such period of any  condition or event that constitutes a Default or an Event of Default or, if any such condition or  event existed or exists, specifying the nature and period of existence thereof and what action the  Company shall have taken or proposes to take with respect thereto.       Section 7.3. Visitation.  The Company shall permit the representatives of each holder of  a Note that is an Institutional Investor:               (a)   No Default — if no Default or Event of Default then exists, at the expense        of such holder 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 and its Subsidiaries 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 and each Subsidiary, all at such reasonable times and as often        as may be reasonably requested in writing; and               (b)   Default — if a Default or Event of Default then exists, at the expense of the        Company  to  visit  and  inspect  any  of  the  offices  or  properties  of  the  Company  or  any        Subsidiary, to examine all their respective books of account, records, reports and other        papers,  to  make  copies  and  extracts  therefrom,  and  to  discuss  their  respective  affairs,        finances and accounts with their respective officers and independent public accountants        (and  by  this  provision  the  Company  authorizes  said  accountants  to  discuss  the  affairs,        finances and accounts of the Company and its Subsidiaries), all at such times and as often        as may be requested.        Section 7.4 Electronic Delivery.  Financial statements, opinions of independent certified  public accountants, other information and Officer’s Certificates that are required to be delivered  by the Company pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall be deemed to have  been delivered if the Company satisfies any of the following requirements with respect thereto:               (i) such financial statements satisfying the requirements of Section 7.1(a) or (b)        and related Officer’s Certificate satisfying the requirements of Section 7.2 are delivered to        each holder of a Note by e-mail;               (ii) the  Company  shall  have  timely  filed  such  Form 10-Q or  Form 10-K,        satisfying the requirements of Section 7.1(a) or Section 7.1(b), as the case may be, with the                                        -15- 

 

Golden State Water Company                               Note Purchase Agreement          SEC on  EDGAR  and  shall  have  made  such  form and  the  related Officer’s  Certificate        satisfying the requirements of Section 7.2 available on its home page on the internet, which        is located at http://aswater.com as of the date of this Agreement;               (iii) such  financial statements  satisfying  the  requirements  of Section 7.1(a)  or        Section 7.1(b)  and  related Officer’s  Certificate(s) satisfying  the  requirements  of        Section 7.2 are timely posted by or on behalf of the Company on IntraLinks or on any other        similar website to which each holder of Notes has free access; or               (iv) the Company shall have filed any of the items referred to in Section 7.1(c)        with the SEC on EDGAR and shall have made such items available on its home page on        the internet or on IntraLinks or on any other similar website to which each holder of Notes        has free access;         provided however, that in the case of any of clauses (ii), (iii) or (iv), the Company shall        have  given  each  holder  of a Note  prior written notice,  which  may  be  by e-mail or  in        accordance with Section 18, of such posting or filing in connection with each delivery,        provided further, that upon request of any holder to receive paper copies of such forms,        financial statements and Officer’s Certificates or to receive them by e-mail, the Company        will promptly e-mail them or deliver such paper copies, as the case may be, to such holder.   SECTION 8.    PAYMENT AND PREPAYMENT OF THE NOTES.       Section 8.1. Maturity.  (a)  As provided therein, the entire unpaid principal balance of  each Series A Note shall be due and payable on the Maturity Date thereof.                (b)   As  provided  therein,  the  entire  unpaid  principal  balance  of each  Series B  Note shall be due and payable on the Maturity Date thereof.         Section 8.2. Optional Prepayments with Make-Whole Amount.  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 Notes, in an amount not less than $1,000,000 (and increments of $1,000,000 in excess  thereof) of the aggregate principal amount of the Notes then outstanding in the case of a partial  prepayment or such lesser principal amount of the Notes as shall then be outstanding, at 100% of  the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date  with respect to such principal amount.  The Company will give each holder of Notes written notice  of  each optional  prepayment  under  this  Section 8.2  not  less  than ten days  and  not  more  than  60 days prior to the date fixed for such prepayment unless the Company and the Required Holders  agree to another time period pursuant to Section 17.  Each such notice shall specify such date  (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such  date,  the  principal  amount  of  each  Note  held  by  such  holder  to  be  prepaid  (determined  in  accordance with Section 8.4), and the interest to be paid on the prepayment date with respect to  such  principal  amount  being  prepaid,  and  shall  be  accompanied  by  a  certificate  of  a  Senior  Financial  Officer  as  to  the  estimated  Make-Whole  Amount  due  in  connection  with  such  prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth  the details of such computation.  Two Business Days prior to such prepayment, the Company shall                                        -16- 

 

Golden State Water Company                               Note Purchase Agreement    deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation  of such Make-Whole Amount as of the specified prepayment date.       Section 8.3. Prepayments  in  Connection  with  Dispositions  of  Property.   If  the  Company is required to offer to prepay Notes in accordance with (and in the aggregate amount  calculated pursuant to) Section 10.1(b), the Company will give written notice thereof to the holders  of  all  Notes  then  outstanding,  which  notice  shall  (i) refer  specifically  to  this  Section 8.3  and  describe in reasonable detail the Disposition of Property giving rise to such offer to prepay Notes,  (ii) specify  the  principal  amount  of  each  Note  held  by  such  holder  offered  to  be  prepaid  (determined in accordance with Section 8.4, the “Ratable Amount”), (iii) specify a Business Day  for such prepayment not less than 30 days and not more than 60 days after the date of such notice  (the “Disposition Prepayment Date”) and specify the Disposition Response Date (as defined  below) and (iv) offer to prepay on the Disposition Prepayment Date 100% of the Ratable Amount  of  each  Note  together  with  interest  accrued  thereon  to  the  Disposition  Prepayment  Date  (the  “Prepayment  Amount”).   Each  holder  of  a  Note shall  notify  the  Company  of  such  holder’s  acceptance or rejection of such offer by giving written notice of such acceptance or rejection to  the Company on a date at least five Business Days prior to the Disposition Prepayment Date (such  date  five  Business Days  prior  to  the  Disposition  Prepayment  Date being  the  “Disposition  Response  Date”).   The  Company  shall  prepay  on  the  Disposition  Prepayment  Date  the  Prepayment Amount with respect to each Note held by the holders who have accepted such offer  in accordance with this Section 8.5.  The failure by a holder of any Note to respond to such offer  in writing on or before the Disposition Response Date shall be deemed to be a rejection of such  offer.         Section 8.4 Allocation of Partial Prepayments.  In the case of each partial prepayment  of the Notes pursuant to Section 8.2 and in the case of each offer of partial prepayment of the Notes  pursuant to Section 8.3, the principal amount of the Notes to be prepaid or offered to be prepaid,  as the case may be, shall be allocated among all of the Notes at the time outstanding in proportion,  as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called  for prepayment.        Section 8.5 Maturity;  Surrender,  Etc.   In  the  case  of  each  prepayment  of  Notes  pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become  due and payable on the date fixed for such prepayment (which shall be a Business Day), together  with  interest  on  such  principal  amount  accrued  to  such  date  and  the  applicable  Make-Whole  Amount, if any.  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 Make-Whole Amount, if any, as  aforesaid, interest on such principal amount shall cease to accrue.  Any Note paid or prepaid in  full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall  be issued in lieu of any prepaid principal amount of any Note.       Section 8.6. Purchase of Notes.  The Company will not and will not permit any Affiliate  to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding  Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of  this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an  Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and                                        -17- 

 

Golden State Water Company                               Note Purchase Agreement    conditions.  Any such offer shall provide each holder with sufficient information to enable it to  make  an  informed  decision  with  respect  to  such  offer,  and  shall  remain  open  for  at  least  20 Business Days.  If the holders of more than 50% of the principal amount of the Notes then  outstanding accept such offer, the Company shall promptly notify the remaining holders of such  fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended  by the number of days necessary to give each such remaining holder at least 10 Business Days  from its receipt of such notice to accept such offer.  The Company will promptly cancel all Notes  acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant  to any provision of this Agreement and no Notes may be issued in substitution or exchange for any  such Notes.         Section 8.7. Make-Whole Amount.  “Make-Whole Amount” means, with respect to any  Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled  Payments  with  respect  to  the  Called  Principal  of  such  Note  over  the  amount  of  such  Called  Principal, provided that the Make-Whole Amount may in no event be less than zero.  For the  purposes  of  determining  the  Make-Whole  Amount,  the  following  terms  have  the  following  meanings:               “Called Principal” means, with respect to any Note, the principal of such Note that        is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due        and payable pursuant to Section 12.1, as the context requires.               “Discounted Value” means, with respect to the Called Principal of any Note, the        amount obtained by discounting all Remaining Scheduled Payments with respect to such        Called Principal from their respective scheduled due dates to the Settlement Date with        respect to such Called Principal, in accordance with accepted financial practice and at a        discount factor (applied on the same periodic basis as that on which interest on the Notes        is payable) equal to the Reinvestment Yield with respect to such Called Principal.               “Reinvestment Yield” means, with respect to the Called Principal of any Note,        0.50% over the yield to maturity implied by the yield(s) reported as of 10:00 a.m. (New        York City time) on the second Business Day preceding the Settlement Date with respect to        such Called Principal, on the display designated as “Page PX1” (or such other display as        may  replace  Page  PX1)  on  Bloomberg  Financial  Markets  for  the  most  recently  issued        actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal        to the Remaining Average Life of such Called Principal as of such Settlement Date.  If        there  are  no  such  U.S.  Treasury securities  Reported  having  a  maturity  equal  to  such        Remaining  Average  Life, then  such  implied  yield  to  maturity  will  be  determined  by        (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with        accepted financial practice and (b) interpolating linearly between the yields Reported for        the applicable most recently issued actively traded on-the-run U.S. Treasury securities with        the maturities (1) closest to and greater than such Remaining Average Life and (2) closest        to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded        to the number of decimal places as appears in the interest rate of the applicable Note.                                                   -18- 

 

Golden State Water Company                               Note Purchase Agreement                If  such  yields  are  not  Reported  or  the  yields  Reported  as  of  such  time  are  not        ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with        respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by        the U.S. Treasury constant maturity yields reported, for the latest day for which such yields        have been so reported as of the second Business Day preceding the Settlement Date with        respect  to  such  Called  Principal,  in  Federal  Reserve  Statistical  Release  H.15  (or  any        comparable successor publication) for the U.S. Treasury constant maturity having a term        equal to the Remaining Average Life of such Called Principal as of such Settlement Date.         If there is no such U.S. Treasury constant maturity having a term equal to such Remaining        Average Life, such implied yield to maturity will be determined by interpolating linearly        between (1) the U.S. Treasury constant maturity so reported with the term closest to and        greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so        reported  with  the  term  closest  to  and  less  than  such  Remaining  Average  Life.   The        Reinvestment Yield shall be rounded to the number of decimal places as appears in the        interest rate of the applicable Note                “Remaining  Average  Life” means,  with  respect  to  any  Called  Principal,  the        number  of  years  obtained  by  dividing  (i) such  Called  Principal  into  (ii) the  sum  of  the        products  obtained  by  multiplying  (a) the  principal  component  of  each  Remaining        Scheduled  Payment  with  respect  to  such  Called  Principal  by  (b) the  number  of  years,        computed on the basis of a 360-day year composed of twelve 30-day months and calculated        to two decimal places, that will elapse between the Settlement Date with respect to such        Called Principal and the scheduled due date of such Remaining Scheduled Payment.               “Remaining Scheduled Payments” means, with respect to the Called Principal of        any Note, all payments of such Called Principal and interest thereon that would be due after        the Settlement Date with respect to such Called Principal if no payment of such Called        Principal were made prior to its scheduled due date, provided that if such Settlement Date        is not a date on which interest payments are due to be made under the terms of the Notes,        then the amount of the next succeeding scheduled interest payment will be reduced by the        amount  of  interest  accrued  to  such  Settlement  Date  and  required  to  be  paid  on  such        Settlement Date pursuant to Section 8.5 or Section 12.1.               “Settlement Date” means, with respect to the Called Principal of any Note, the        date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become        or is declared to be immediately due and payable pursuant to Section 12.1, as the context        requires.         Section 8.8. Payments Due on Non-Business Days.  Anything in this Agreement or the  Notes to the contrary notwithstanding, (x) subject to clause (y), any payment of interest on any  Note that is due on a date that is not 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; and (y) any payment of principal of or Make-Whole Amount  on any Note (including principal due on the Maturity Date of such Note) that is due on a date that  is not a Business Day shall be made on the next succeeding Business Day and shall include the                                         -19- 

 

Golden State Water Company                               Note Purchase Agreement    additional days elapsed in the computation of interest payable on such next succeeding Business  Day.   SECTION 9.    AFFIRMATIVE COVENANTS.         The Company covenants that so long as any of the Notes are outstanding:       Section 9.1. Compliance with Laws.  Without limiting Section 10.7, the Company will  and will cause each of its Subsidiaries to comply with all laws, ordinances or governmental rules  or  regulations  to  which  each  of  them  is  subject,  including,  without  limitation, ERISA,  Environmental Laws, the USA PATRIOT Act and the other laws and regulations that are referred  to in  Section 5.16,  and  will  obtain  and  maintain  in  effect  all  licenses,  certificates,  permits,  franchises and other governmental authorizations necessary to the ownership of their respective  properties or to the conduct of their respective businesses, in each case to the extent necessary to  ensure that non-compliance with such laws, ordinances or governmental rules or regulations or  failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other  governmental authorizations would not reasonably be expected, individually or in the aggregate,  to have a Material Adverse Effect.         Section 9.2. Insurance.  The Company will and will cause each of its Subsidiaries to  maintain,  with  responsible  insurers,  insurance  with  respect  to  their  respective  properties  and  businesses against such casualties and contingencies, of such types, on such terms and in such  amounts (including customary deductibles, co-insurance and retentions, which may include self- insurance) as is customary in the case of entities engaged in the same or a similar business and  similarly situated.       Section 9.3. Maintenance of Properties.  The Company will and will cause each of its  Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties  in accordance with customary industry standards, provided that this Section shall not prevent the  Company or any Subsidiary from discontinuing the operation and the maintenance of any of its  properties if such discontinuance is desirable in the conduct of its business and the Company has  concluded that such discontinuance would not, individually or in the aggregate, reasonably be  expected to have a Material Adverse Effect.       Section 9.4. Payment of Taxes.  The Company will and will cause each of its Subsidiaries  to pay and discharge promptly all taxes, assessments, governmental charges, or levies payable by  any of them, to the extent the same have become due and payable and before they have become  delinquent, provided that  neither  the  Company  nor  any  Subsidiary  need  pay  any  such  tax,  assessment, charge or levy if (i) the amount, applicability or validity thereof is contested by the  Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and  the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP  on  the  books  of  the  Company  or  such  Subsidiary  or (ii) the  nonpayment  of  all  such  taxes,  assessments,  charges  and  levies  would  not,  individually  or  in  the aggregate,  reasonably  be  expected to have a Material Adverse Effect.                                         -20- 

 

Golden State Water Company                               Note Purchase Agreement        Section 9.5. Corporate Existence, Etc.  (a) Subject to Section 10.3, the Company will at  all times preserve and keep its corporate existence in full force and effect.         (b)     Subject to Sections 10.1 and 10.3, the Company will at all times preserve and keep  in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the  Company or a Wholly-Owned Subsidiary) and all rights and franchises of the Company and its  Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to  preserve and keep in full force and effect such corporate existence, right or franchise would not,  individually or in the aggregate, have a Material Adverse Effect.       Section 9.6. Books  and  Records.  The  Company  will,  and  will  cause  each  of  its  Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all  applicable requirements of any Governmental Authority having legal or regulatory jurisdiction  over the Company or such Subsidiary, as the case may be.  The Company will, and will cause each  of its Subsidiaries to, keep books, records and accounts which, in reasonable detail, accurately  reflect all transactions and dispositions of assets.  The Company and its Subsidiaries have devised  a  system  of  internal  accounting  controls  sufficient  to  provide  reasonable  assurances  that  their  respective books, records, and accounts accurately reflect all transactions and dispositions of assets  and the Company will, and will cause each of its Subsidiaries to, continue to maintain such system.       Section 9.7   Priority of Obligations; Subsidiary Guarantors.  (a)  The Company will  ensure that its payment obligations under this Agreement, the Notes and the other Transaction  Documents will at all times rank at least pari passu, without preference or priority, with each  Material Credit Facility and all other unsecured and unsubordinated Indebtedness of the Company.       (b)   The Company will cause each of its Subsidiaries that is or becomes a guarantor, co- borrower or other obligor under any Material Credit Facility or other Indebtedness of the Company  to concurrently execute and deliver a guaranty of the Notes and other amounts payable under the  Transaction Documents in favor of the holders of the Notes (a “Subsidiary Guaranty”) and such  other  documentation  reasonably  required  by  the  Required  Holders,  in  each  case,  in  form  and  substance satisfactory to the Required Holders.   SECTION 10.   NEGATIVE COVENANTS.         The Company covenants that so long as any of the Notes are outstanding:      Section 10.1. Disposition of Property.  The Company will not, and will not permit any  Subsidiary to, in any fiscal year, make one or more Dispositions of its respective property with a  book value of more than a Substantial Portion of its property, whether such property is now owned  or hereafter acquired, unless, within one year of the receipt of the Net Proceeds of such Disposition  (or such longer period of time in which the Company may obtain a tax benefit for reinvesting the  proceeds in Public Utility Property), the Company applies the Net Proceeds of such Disposition to  one or more of the following:                                          -21- 

 

Golden State Water Company                               Note Purchase Agreement                (a) the  optional  redemption  of  all  or  a portion  of  the  Notes  as  provided  in        Section 8.2, or the prepayment of all or a portion of the Notes as provided in Section 8.3;        or              (b)  the repayment or other retirement of a portion of Indebtedness incurred or        assumed by the Company which ranks pari passu with the Notes; provided, however, that        if  such  Net  Proceeds (which  are to  be applied  to  repay  or otherwise retire  such        Indebtedness) are (i) in the case of a Disposition that is not pursuant to a Condemnation, in        excess  of $20,000,000 or (ii) in  the  case  of a Disposition  that  is pursuant  to a        Condemnation, in excess of 15% of Total Assets, as the case may be, then prior to any such        repayment or other retirement of such Indebtedness, the Company shall have made an offer        to prepay a pro rata portion of the Notes in accordance with Section 8.3, with such pro        rata portion to be equal to the product of (x) the Net Proceeds being so applied and (y) a        fraction, the numerator of which is the aggregate outstanding principal amount of the Notes        at such time and the denominator of which is the aggregate outstanding principal amount        of Indebtedness (including the Notes) receiving any such repayment or other retirement (or        offer thereof) under this clause (b); or               (c) the purchase of Public Utility Property by the Company or a Subsidiary (other        than  property of  the  Company  or  any  Subsidiary  involved  in  such  Disposition),  as        determined  by  the  board  of  directors  of  the  Company or  such  Subsidiary whose        determination shall be conclusive and evidenced in a resolution of such board of directors.      Section 10.2. Liens on Property; Permitted Encumbrances.  (a) The Company will not,  and will not permit any Subsidiary to, directly or indirectly create, issue, assume, guarantee or  suffer to exist (upon the happening of a contingency or otherwise) any Lien of any nature upon  any of its respective properties, whether now owned or hereafter acquired, unless the Notes (and  any guaranty delivered in connection therewith) are concurrently secured equally and ratably with  any  and  all  other  obligations  secured  by  such  Lien  pursuant  to  documentation  reasonably  satisfactory  to  the  Required  Holders  in  form  and  substance  (including,  without  limitation,  an  intercreditor agreement and opinions of counsel to the Company and/or any such Subsidiary, as  the case may be, from counsel that is reasonably acceptable to the Required Holders) (and for the  avoidance of doubt, the Company or such Subsidiary may also contemporaneously secure any of  its other Indebtedness, so long as the Notes (and any guaranty delivered in connection therewith)  shall also be secured equally ratably with such other Indebtedness in the manner described in the  immediately preceding provisions of this Section 10.2); and (b) excluding, in any event, from the  operation of Section 10.2(a):                (i) Liens existing on the Closing Date and disclosed in Schedule 10.2 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);              (ii) Liens created under the Transaction Documents; and                                         -22- 

 

Golden State Water Company                               Note Purchase Agreement               (iii) Permitted  Encumbrances  (other  than  the  proviso  set  forth  in  clause (k)        thereof).      Section 10.3.  Merger, Consolidation, Etc.  The Company will not consolidate with or  merge with any other Person (except mergers and consolidations of a Subsidiary into the Company,  with the Company as the surviving entity), or convey, transfer or lease all or 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 all or substantially all of the assets        of the 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 each holder of any Notes its assumption of the due and punctual        performance and observance of each covenant and condition of this Agreement, the Notes        and the other applicable Transaction Documents;               (b)   immediately before and immediately after giving effect to such transaction        or each transaction in any such series of transactions, no Default or Event of Default shall        have occurred and be continuing;                (c)   the  Total  Indebtedness  to  Capitalization  Ratio  of  the  Company,  its        Subsidiaries and such other corporation (who shall be included, mutatis mutandis, in the        calculation of such ratio), on a pro forma consolidated basis (or on a pro forma consolidated        and  combined  basis  in  the  case  of  a conveyance,  transfer  or  lease),  is  not  more  than        0.6667:1.00 at the end of the fiscal quarter immediately preceding such transaction, after        giving pro forma effect to such transaction 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);                (d)   the Total Indebtedness to EBITDA Ratio of the Company, its Subsidiaries        and such other corporation (who shall be included, mutatis mutandis, in the calculation of        such  ratio), on  a pro  forma consolidated  basis (or  on  a pro  forma consolidated  and        combined basis in the case of a conveyance, transfer or lease), is not greater than 8.00:1.00        for  the  12-month  period  preceding  the  end  of  the  quarter  immediately  preceding  such        transaction, after giving pro forma effect to such transaction and any changes in Total        Indebtedness since the end of such quarter;               (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; and               (f)   each Subsidiary Guarantor, if any, under any Subsidiary Guaranty that is        outstanding at the time such transaction or each transaction in such a series of transactions        occurs reaffirms its obligations under such Subsidiary Guaranty in writing at such time        pursuant to documentation that is reasonably acceptable to the Required Holders.                                        -23- 

 

Golden State Water Company                               Note Purchase Agreement          No such conveyance, transfer or lease of substantially all of the assets of the Company        shall  have  the  effect  of  releasing  the  Company  or  any  successor  corporation  that  shall        theretofore  have  become  such  in  the  manner prescribed  in  this  Section 10.3 from  its        liability under this Agreement, the Notes or the other applicable Transaction Documents.      Section 10.4. Change in Business.  The Company will not 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.      Section 10.5. Transactions with Affiliates.  The Company will not, and will not permit  any Subsidiary to, enter into directly or indirectly any Material transaction or Material group of  related  transactions  (including  without  limitation  the  purchase,  lease,  sale  or  exchange  of  properties of any kind or the rendering of any service) with any Affiliate (other than the Company  or another Subsidiary), except pursuant to the reasonable requirements of the Company’s or such  Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or  such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person  not an Affiliate or as otherwise may be permitted by applicable law.      Section 10.6. Restrictions on Sale and Leaseback Transactions.  The Company will not,  and will not permit any Subsidiary to, enter into any arrangement with any Person providing for a  Sale and Leaseback, unless (a) the Net Proceeds of such sale are at least equal to the value of such  property that is the subject of such Sale and Leaseback, as determined by the board of directors of  the  Company  or  such  Subsidiary,  as  applicable,  whose  determination  shall  be  conclusive  and  evidenced in a resolution of such board of directors, and (b) the Company or such Subsidiary, as  the case may be, would be entitled, pursuant to Section 10.2, to incur Indebtedness secured by a  Lien  on  such  property  to  be  leased  under  such  Sale  and  Leaseback  without  being  required  to  equally and ratably secure the Notes (and any guaranty delivered in connection therewith) as set  forth in Section 10.2.  In no event may the value of property subject to a Sale and Leaseback, as  determined by the applicable board of directors of the Company or such Subsidiary, as the case  may  be,  as  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.       Section 10.7. Economic Sanctions, Etc.  The Company will not, and will not permit any  Controlled Entity to (a) become (including by virtue of being owned or controlled by a Blocked  Person), own or control a Blocked Person or (b) directly or indirectly have any investment in or  engage in any dealing or transaction (including any investment, dealing or transaction involving  the proceeds of the Notes) with any Person if such investment, dealing or transaction (i) would  cause any holder or any affiliate of such holder to be in violation of, or subject to sanctions under,  any law or regulation applicable to such holder, or (ii) is prohibited by or subject to sanctions under  any U.S. Economic Sanctions Laws.      Section 10.8. Financial Covenants.                 (a)   Indebtedness.  The Company will not, and will not permit any Subsidiary        to, create, incur or assume any Indebtedness, if an Event of Default has occurred and is                                        -24- 

 

Golden State Water Company                               Note Purchase Agreement          continuing or if, after giving pro forma effect thereto, any of the following conditions is        not satisfied:                      (i)   the Total Indebtedness to Capitalization Ratio of the Company and              its Subsidiaries, on a consolidated basis, would be more than 0.6667:1.00 at the end              of  the  fiscal  quarter  immediately  preceding  such  creation,  occurrence  or              assumption; or                      (ii)  the Total Indebtedness to EBITDA Ratio of the Company and its              Subsidiaries,  on  a  consolidated  basis, would  be  greater  than  8.00:1.00  for  the              12-month  period  preceding  the  end  of  the  quarter  immediately  preceding  such              creation, incurrence or assumption; or                      (iii) 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 to be 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.               (b)   Distributions.  The Company will not, and will not permit any Subsidiary        to, declare  or  pay  or  make  any form  of  Distribution,  whether  from  capital,  income  or        otherwise, and whether in Cash or in property (other than Distributions by a Subsidiary to        a  Wholly-Owned  Subsidiary  or  to  the  Company),  if,  at  the  time  of  the  declaration  or        payment of such Distribution:                       (i)   an Event of Default has occurred and is continuing; or                      (ii)  after  giving pro  forma effect  thereto  the  Total  Indebtedness  to              Capitalization Ratio of the Company and its Subsidiaries, on a consolidated basis,              would  be  more  than  0.6667:1.00  at  the end  of  the  fiscal  quarter  immediately              preceding such declaration or payment; or                     (iii) an Event of Default would otherwise occur.               (c)   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                                         -25- 

 

Golden State Water Company                               Note Purchase Agreement          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.               (d)   Accounting Terms;  Covenant  Calculations.  All  accounting  terms  used        herein which are not expressly defined in this Agreement have the meanings respectively        given to them in accordance with GAAP.  Except as otherwise specifically provided herein,        (i) all computations made pursuant to this Agreement shall be made in accordance with        GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP.  For        purposes of determining compliance with this Agreement (including, without limitation,        Section 9, Section 10 and the definition of “Indebtedness”), any election by the Company        to measure any financial liability using fair value (as permitted by Financial Accounting        Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair Value        Option, International Accounting Standard 39 – Financial Instruments: Recognition and        Measurement  or  any  similar  accounting  standard)  shall  be  disregarded and  such        determination shall be made as if such election had not been made.  In the event that GAAP        changes  during  the  term  of  this  Agreement  such  that  the  covenants  contained  in        Sections 10.3, 10.6, 10.8(a) and 10.8(b) would then be calculated in a different manner        with  different  components,  (i) the Company  and the Purchasers 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) the Company        shall be deemed to be in compliance with the covenants contained in the aforesaid Sections        if and to the extent that the Company would have been in compliance therewith under        GAAP as in effect immediately prior to such change.               (e)   Fiscal Year.  The Company will not, and will not permit any Subsidiary to,        cease maintaining a calendar year fiscal year.   SECTION 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  Make-Whole        Amount, if any, on any 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 any 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 7.1(d), 9.5(a), 10.1, 10.2, 10.3, 10.6, 10.7(a) or 10.8; or               (d)   the Company or any Significant Subsidiary Guarantor, if any, defaults in        the performance of or compliance with any term contained herein (other than those referred        to in Sections 11(a), (b) and (c)) or in any Significant Subsidiary Guaranty, if any, and such        default  is  not  remedied within 60 days after  the  earlier  of  (i) a  Responsible  Officer                                        -26- 

 

Golden State Water Company                               Note Purchase Agreement          obtaining actual knowledge of such default and (ii) the Company receiving written notice        of such default from any holder of a Note (any such written notice to be identified as a        “notice of default” and to refer specifically to this Section 11(d)); or               (e)   (i) 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 (ii) any representation or        warranty made in writing by or on behalf of any Significant Subsidiary Guarantor, if any,        or by any officer of such Significant Subsidiary Guarantor in any Significant Subsidiary        Guaranty, if any, or in any writing furnished in connection with such Significant Subsidiary        Guaranty proves to have been false or incorrect in any material respect on the date as of        which made; or                (f)  (i) the Company or any Significant Subsidiary is in default (as principal or        as guarantor or other surety) in the payment of any principal of or premium or make-whole        amount or interest on any Indebtedness that is outstanding in an aggregate principal amount        of more than $4,000,000 beyond any period of grace provided with respect thereto, or        (ii) the  Company  or  any  Significant  Subsidiary  is  in  default  in  the  performance  of  or        compliance with any term of any evidence of any Indebtedness in an aggregate outstanding        principal amount of at least $4,000,000 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 become, or has been declared due and payable before its        stated maturity or before its regularly scheduled dates of payment; or               (g)   the Company or any Significant Subsidiary (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; or               (h)   a court or other Governmental Authority of competent jurisdiction enters an        order appointing, without consent by the Company or any of its Subsidiaries, a custodian,        receiver, trustee or other officer with similar powers with respect to it or with respect to        any substantial part 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 of its Subsidiaries, or any        such petition shall be filed against the Company or any of its Subsidiaries and such petition        shall not be dismissed within 60 days; or                                         -27- 

 

Golden State Water Company                               Note Purchase Agreement                 (i)  a final judgment or judgments for the payment of money aggregating in        excess of $4,000,000 are rendered against one or more of the Company and its Subsidiaries        and 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                (j)  if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA        or the Code for any plan year or part thereof or a waiver of such standards or extension of        any amortization period is sought or granted under section 412 of the Code, (ii) a notice of        intent to terminate any Plan shall have been or is reasonably expected to be filed with the        PBGC  or  the  PBGC  shall  have  instituted  proceedings  under  ERISA  section 4042  to        terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the        Company  or  any  ERISA  Affiliate  that  a  Plan  may  become  a  subject  of  any  such        proceedings,  (iii) the  aggregate  “amount  of  unfunded  benefit  liabilities”  (within  the        meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with        Title IV of ERISA, shall exceed an amount that could reasonably be expected to have a        Material Adverse Effect, (iv) the Company or any ERISA Affiliate shall have incurred or        is  reasonably  expected  to  incur  any  liability  pursuant  to  Title I  or  IV  of  ERISA  or  the        penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the        Company or  any  ERISA  Affiliate  withdraws  from any  Multiemployer  Plan,  or  (vi) the        Company or any Subsidiary establishes or amends any employee welfare benefit plan that        provides post-employment welfare benefits in a manner that would increase the liability of        the Company or any Subsidiary thereunder; and any such event or events described in        clauses (i) through (vi) above, either individually or together with any other such event or        events, would reasonably be expected to have a Material Adverse Effect.  As used in this        Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan”        shall have the respective meanings assigned to such terms in section 3 of ERISA; or                (k)   any Significant Subsidiary Guaranty, if any, shall cease to be in full force        and effect, any Significant Subsidiary Guarantor or any Person acting on behalf of any        Significant Subsidiary Guarantor shall contest in any manner the validity, binding nature        or enforceability of any Significant Subsidiary Guaranty, if any, or the obligations of any        Significant Subsidiary Guarantor under any Significant Subsidiary Guaranty, if any, are        not or cease to be legal, valid, binding and enforceable in accordance with the terms of        such Significant Subsidiary Guaranty.   SECTION 12.   REMEDIES ON DEFAULT, ETC.      Section 12.1. Acceleration.   (a) If  an  Event  of  Default  with  respect  to  the  Company  described  in  Section 11(g)  or  (h)  (other  than  an  Event  of  Default  described  in  clause (i)  of  Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause  encompasses  clause (i)  of  Section 11(g))  has  occurred,  all  the  Notes  then  outstanding  shall  automatically become immediately due and payable.                                         -28- 

 

Golden State Water Company                               Note Purchase Agreement         (b)  If any other Event of Default has occurred and is continuing, the Required Holders  may at any time at its or their option, by notice or notices to the Company, declare all the Notes  then outstanding to be immediately due and payable.        (c)  If  any  Event  of  Default  described  in Section 11(a)  or  (b)  has  occurred  and  is  continuing,  any  holder  or  holders  of  Notes  at  the  time  outstanding  affected  by  such  Event  of  Default may at any time, at its or their option, by notice or notices to the Company, declare all the  Notes held by it or them to be immediately due and payable.         Upon any Notes becoming due and payable under this Section 12.1, whether automatically  or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such  Notes, plus (x) all  accrued  and  unpaid  interest  thereon  (including,  but  not  limited  to,  interest  accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of  such principal amount (to the full extent permitted by applicable law), shall all be immediately due  and payable, in each and every case without presentment, demand, protest or further notice, all of  which are hereby waived.  The Company acknowledges, and the parties hereto agree, that each  holder of a Note has the right to maintain its investment in the Notes free from repayment by the  Company  (except  as  herein  specifically  provided  for)  and  that  the  provision  for  payment  of  a  Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated  as a result of an Event of Default, is intended to provide compensation for the deprivation of such  right under such circumstances.      Section 12.2. Other Remedies.  If any Default or Event of Default has occurred and is  continuing, and irrespective of whether any Notes have become or have been declared immediately  due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed  to  protect  and  enforce  the  rights  of  such  holder  by an  action  at  law,  suit  in  equity  or  other  appropriate proceeding, whether for the specific performance of any agreement contained herein  or in any Note or any other Transaction Documents, 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.      Section 12.3. Rescission.  At any time after any Notes have been declared due and payable  pursuant to Section 12.1(b) or (c), the Required Holders, 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 Notes, all principal of and Make-Whole Amount, if any, on any Notes that  are due and payable and are unpaid other than by reason of such declaration, and all interest on  such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable  law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor  any other Person shall have paid any amounts which have become due solely by reason of such  declaration, (c) 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 17, and (d) no judgment or decree has been entered for the payment of any monies due  pursuant hereto or to the Notes.  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.                                         -29- 

 

Golden State Water Company                               Note Purchase Agreement       Section 12.4. No Waivers or Election of Remedies, Expenses, Etc.  No course of dealing  and no delay on the part of any holder of any Note in exercising any right, power or remedy shall  operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies.  No  right, power or remedy conferred by this Agreement, any Note or any other Transaction Document  upon any holder thereof 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 15, the Company will pay to the holder of each Note  on demand such further amount as shall be sufficient to cover all costs and expenses of such holder  incurred  in  any  enforcement  or  collection  under  this Section 12,  including,  without  limitation,  reasonable attorneys’ fees, expenses and disbursements.   SECTION 13.   REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.      Section 13.1. Registration of Notes.  The Company shall keep at its principal executive  office a register for the registration and registration of transfers of Notes.  The name and address  of each holder of one or more Notes, each transfer thereof and the name and address of each  transferee of one or more Notes shall be registered in such register.  If any holder of one or more  Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes  shall also  be  registered  in  such  register  as  an  owner and  holder  thereof  and  (b) at  any  such  beneficial  owner’s  option,  either  such  beneficial  owner  or  its  nominee  may  execute  any  amendment,  waiver  or  consent  pursuant  to  this  Agreement.  Prior  to  due  presentment  for  registration  of  transfer,  the  Person(s)  in whose  name  any  Note(s)  shall  be  registered  shall  be  deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall  not be affected by any notice or knowledge to the contrary.  The Company shall give to any holder  of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct  copy of the names and addresses of all registered holders of Notes.      Section 13.2. Transfer  and  Exchange  of  Notes.   Upon  surrender  of  any  Note  to  the  Company  at  the  address  and  to  the  attention  of  the  designated  officer  (all  as  specified  in  Section 18(iii)),  for  registration  of  transfer  or  exchange  (and  in  the case  of  a  surrender  for  registration  of  transfer accompanied  by  a  written  instrument  of  transfer  duly  executed  by  the  registered  holder  of  such  Note  or  such  holder’s  attorney  duly  authorized  in  writing  and  accompanied by the relevant name, address and other information for notices of each transferee of  such Note or part thereof), within ten Business Days thereafter, the Company shall execute and  deliver,  at  the  Company’s  expense  (except  as  provided  below),  one  or  more  new  Notes  (as  requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to  the unpaid principal amount of the surrendered Note.  Each such new Note shall be payable to such  Person as such holder may request and shall be substantially in the form of Exhibit 1.  Each such  new Note shall be dated and bear interest from the date to which interest shall have been paid on  the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid  thereon.   The  Company  may  require  payment  of  a sum  sufficient  to  cover  any  stamp  tax  or  governmental  charge  imposed  in  respect  of  any  such  transfer  of  Notes.   Notes  shall  not  be  transferred  in  denominations  of  less  than  $100,000, provided that  if  necessary  to  enable  the  registration  of  transfer  by  a  holder  of  its  entire  holding  of  Notes,  one  Note  may  be  in  a  denomination of less than $100,000.  Any transferee, by its acceptance of a Note registered in its                                         -30- 

 

Golden State Water Company                               Note Purchase Agreement    name (or the name of its nominee), shall be deemed to have made the representation set forth in  Section 6.2.      Section 13.3. Replacement of Notes.  Upon receipt by the Company at the address and to  the attention of the designated officer (all as specified in Section 18(iii)) of evidence reasonably  satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note  (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional  Investor of such ownership and such loss, theft, destruction or mutilation), and               (a)   in the case of loss, theft or destruction, of indemnity reasonably satisfactory        to it (provided that if the holder of such Note is, or is a nominee for, or is an Affiliate of,        or is an account managed by, an original Purchaser or another holder of a Note with an        Investment Grade Rating, such Person’s own unsecured agreement of indemnity shall be        deemed to be satisfactory), or               (b)   in the case of mutilation, upon surrender and cancellation thereof,   within ten Business Days thereafter, the Company at its own expense shall execute and deliver, in  lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been  paid  on  such  lost,  stolen,  destroyed  or  mutilated  Note  or  dated  the  date  of  such  lost,  stolen,  destroyed or mutilated Note if no interest shall have been paid thereon.   SECTION 14.   PAYMENTS ON NOTES.      Section 14.1. Place of Payment.  Subject to Section 14.2, payments of principal, Make- Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New  York,  New  York  at  the  principal  office  of  Bank  of  America,  N.A. in  such  jurisdiction.   The  Company may at any time, by notice to each holder of a Note, change the place of payment of the  Notes so long as such place of payment shall be either the principal office of the Company in such  jurisdiction or the principal office of a bank or trust company in such jurisdiction.      Section 14.2. Home Office Payment.  So long as any Purchaser or its nominee shall be the  holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the  contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole  Amount, if any, interest and all other amounts becoming due hereunder by the method and at the  address specified for such purpose below such Purchaser’s name in Schedule A, or by such other  method or at such other address as such Purchaser shall have from time to time specified to the  Company in writing for such purpose, without the presentation or surrender of such Note or the  making  of  any  notation  thereon,  except  that  upon  written  request  of  the  Company  made  concurrently with or reasonably promptly after payment or prepayment in full of any Note, such  Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request,  to the Company at its principal executive office or at the place of payment most recently designated  by the Company pursuant to Section 14.1.  Prior to any sale or other disposition of any Note held  by  a  Purchaser  or  its  nominee,  such  Purchaser  will,  at  its  election,  either  endorse  thereon  the  amount  of  principal  paid  thereon  and  the  last  date  to  which  interest  has  been  paid  thereon  or  surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2.                                         -31- 

 

Golden State Water Company                               Note Purchase Agreement    The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the  direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that  has  made  the  same  agreement  relating  to  such  Note  as  the  Purchasers  have  made  in  this  Section 14.2.      Section 14.3.  FATCA Information.  By acceptance of any Note, the holder of such Note  agrees  that  such  holder  will  with  reasonable  promptness  duly  complete  and  deliver  to  the  Company, or to such other Person as may be reasonably requested by the Company, from time to  time (a) in the case of any such holder that is a United States Person, such holder’s United States  tax  identification  number  or  other  Forms  reasonably  requested  by  the  Company  necessary  to  establish such holder’s status as a United States Person under FATCA and as may otherwise be  necessary for the Company to comply with its obligations under FATCA and (b) in the case of any  such holder that is not a United States Person, such documentation prescribed by applicable law  (including  as  prescribed  by  section 1471(b)(3)(C)(i)  of  the  Code)  and  such  additional  documentation as may be necessary for the Company to comply with its obligations under FATCA  and to determine that such holder has complied with such holder’s obligations under FATCA or  to determine the amount (if any) to deduct and withhold from any such payment made to such  holder.   Nothing  in  this  Section 14.3  shall  require  any  holder  to  provide  information  that  is  confidential  or  proprietary  to  such  holder  unless  the  Company  is  required  to  obtain  such  information under FATCA and, in such event, the Company shall treat any such information it  receives as confidential.      Section 14.4. Withholding  Tax .  Except  as  otherwise  required  by  applicable  law,  the  Company agrees that it will not withhold from any applicable payment to be made to a holder of  a Note that is not a United States Person any withholding tax so long as such holder shall have  delivered to the Company on or before the date on which such holder becomes a holder under this  Agreement (and from time to time thereafter upon the reasonable request of the Company), two  original executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, as well  as the applicable U.S. Tax Compliance Certificate substantially in the form attached as Exhibit  14.4 in both cases correctly completed and executed and validly claiming a complete exemption  from U.S. federal withholding tax.   SECTION 15.   EXPENSES, ETC.      Section 15.1. Transaction  Expenses.   Whether  or  not  the  transactions  contemplated  hereby  are  consummated,  the  Company  will  pay  all  costs  and  expenses  (including  reasonable  attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or  other  counsel)  incurred  by  the  Purchasers  and  the  Required  Holders  in  connection  with  such  transactions and in connection with any amendments, waivers or consents under or in respect of  this Agreement, the Notes or any other Transaction Document (whether or not such amendment,  waiver or consent becomes effective), including, without limitation: (a) the costs and expenses  incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights  under  this  Agreement,  the  Notes  or  any  other  Transaction  Document  or  in  responding  to  any  subpoena or other legal process or informal investigative demand issued in connection with this  Agreement, the Notes or any other Transaction Document, or by reason of being a holder of any  Note, (b) the costs and expenses, including financial advisors’ fees, incurred in connection with                                        -32- 

 

Golden State Water Company                               Note Purchase Agreement    the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work- out  or  restructuring  of  the  transactions  contemplated  hereby  and  by  the  Notes  and  any  other  Transaction Document and (c) the costs and expenses incurred in connection with the initial filing  of this Agreement and all related documents and financial information with the SVO, provided  that such costs and expenses under this clause (c) shall not exceed $3,500.  The Company will pay,  and will save each Purchaser and each other holder of a Note harmless from, (i) all claims in  respect of any fees, costs or expenses if any, of brokers and finders (other than those, if any,  retained by a Purchaser or other holder in connection with its purchase of the Notes), and (ii) any  and all wire transfer fees that any bank deducts from any payment under such Note to such holder  or otherwise charges to a holder of a Note with respect to a payment under such Note.      Section 15.2. Survival.  The obligations of the Company under this Section 15 will survive  the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of  this  Agreement,  the  Notes  or  any  other  Transaction  Document,  and  the  termination  of  this  Agreement.      Section 15.3. Certain  Taxes.  The  Company  agrees  to  pay  all  stamp,  documentary  or  similar  taxes  or  fees  which  may  be  payable  in  respect  of  the  execution  and  delivery  or  the  enforcement of this Agreement or any Subsidiary Guaranty or the execution and delivery (but not  the transfer) or the enforcement of any of the Notes in the United States or any other jurisdiction  where the Company or any Subsidiary Guarantor has assets or of any amendment of, or waiver or  consent under or with respect to, this Agreement or any Subsidiary Guaranty or of any of the Notes,  and to pay any value added tax due and payable in respect of reimbursement of costs and expenses  by the Company pursuant to this Section 15, and will save each holder of a Note to the extent  permitted by applicable law harmless against any loss or liability resulting from nonpayment or  delay in payment of any such tax or fee required to be paid by the Company hereunder.    SECTION 16.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.         All  representations  and  warranties  contained  herein  shall  survive  the  execution  and  delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note  or portion thereof or interest therein and the payment of any Note, and may be relied upon by any  subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of  such Purchaser or any other holder of a Note.  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,  the  Notes  and  any other  Transaction  Documents  embody  the  entire  agreement and understanding between each Purchaser and the Company and supersede all prior  agreements and understandings relating to the subject matter hereof.   SECTION 17.   AMENDMENT AND WAIVER.      Section 17.1. Requirements.  This Agreement and the Notes may be amended, and the  observance  of  any  term  hereof  or  of  the  Notes  may  be  waived  (either  retroactively  or  prospectively), with (and only with) the written consent of the Company and the Required Holders,  except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21                                        -33- 

 

Golden State Water Company                               Note Purchase Agreement    hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless  consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the  written consent of each Purchaser and the holder of each Note at the time outstanding, (i) subject  to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of  any prepayment or payment of principal of, or reduce the rate or change the time of payment or  method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the  percentage of the principal amount of the Notes the holders of which are required to consent to  any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.      Section 17.2. Solicitation of Holders of Notes.        (a)  Solicitation.  The Company will provide each holder of the Notes (irrespective of the  amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the  date a decision is required, to enable such holder to make an informed and considered decision  with respect to any proposed amendment, waiver or consent in respect of any of the provisions  hereof or of the Notes or any other Transaction Document.  The Company will deliver executed  or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions  of this Section 17 or any other applicable Transaction Document to each holder of outstanding  Notes promptly following the date on which it is executed and delivered by, or receives the consent  or approval of, the requisite holders of Notes.        (b)  Payment.  The Company will not directly or indirectly pay or cause to be paid any  remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant  any security or provide other credit support, to any holder of Notes as consideration for or as an  inducement to the entering into by any holder of Notes or any waiver or amendment of any of the  terms and provisions hereof or of any other Transaction Document unless such remuneration is  concurrently  paid,  or  security is  concurrently  granted  or  other  credit  support  concurrently  provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder  did not consent to such waiver or amendment.        (c)  Consent in Contemplation of Transfer.  Any consent made pursuant to this Section 17  or any other Transaction Document by the holder of any Note that has transferred or has agreed to  transfer  such  Note  to  the  Company,  any  Subsidiary  or  any  Affiliate  of  the  Company  and  has  provided or has agreed to provide such consent as a condition to such transfer shall be void and of  no force or effect except solely as to such holder, and any amendments effected or waivers granted  or to be effected or granted that would not have been or would not be so effected or granted but  for such consent (and the consents of all other holders of Notes that were acquired under the same  or similar conditions) shall be void and of no force or effect except solely as to such transferring  holder.      Section 17.3. Binding Effect, Etc.  Any amendment or waiver consented to as provided in  this Section 17 applies equally to all holders of Notes and is binding upon them and upon each  future holder of any Note and upon the Company without regard to whether such Note has been  marked to indicate such amendment or waiver.  No such 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                                        -34- 

 

Golden State Water Company                               Note Purchase Agreement    the holder of any Note nor any delay in exercising any rights hereunder or under any Note or any  other Transaction Document shall operate as a waiver of any rights of any holder of such Note.      Section 17.4. Notes  Held  by  Company,  Etc.   Solely  for  the  purpose  of  determining  whether the holders of the requisite percentage of the aggregate principal amount of Notes then  outstanding approved or consented to any amendment, waiver or consent to be given under this  Agreement, the Notes or any other Transaction Document, or have directed the taking of any action  provided herein or in the Notes or any other Transaction Document to be taken upon the direction  of  the  holders  of  a  specified  percentage  of  the  aggregate  principal  amount  of  Notes  then  outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be  deemed not to be outstanding.   SECTION 18.   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  any  Purchaser  or  its  nominee,  to  such  Purchaser  or  nominee  at  the        address specified for such communications in Schedule A, or at such other address as such        Purchaser or nominee shall have specified to the Company in writing,               (ii)  if to any other holder of any Note, to such holder at such address as such        other holder shall have specified to the Company in writing, or               (iii) 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 holder of each Note in writing.   Notices under this Section 18 will be deemed given only when actually received.   SECTION 19.   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  by  any  Purchaser  at  the  Closing (except  the  Notes  themselves),  and  (c) financial  statements,  certificates  and  other  information  previously  or  hereafter  furnished  to  any  Purchaser,  may  be  reproduced by such Purchaser by any photographic, photostatic, electronic, digital, or other similar  process and such 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 such  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 19 shall not prohibit                                        -35- 

 

Golden State Water Company                               Note Purchase Agreement    the Company or any other holder of Notes 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.   SECTION 20.   CONFIDENTIAL INFORMATION.         For  the  purposes  of  this  Section 20,  “Confidential  Information”  means  information  delivered to any Purchaser by or on behalf of the Company or any Subsidiary 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  such Purchaser as being confidential information of the Company or such Subsidiary, provided  that such term does not include information that (a) was publicly known or otherwise known to  such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known  through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf,  (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or  any  Subsidiary  or  (d) constitutes  financial  statements  delivered  to  such  Purchaser  under  Section 7.1 that are otherwise publicly available.  Each Purchaser will maintain the confidentiality  of such Confidential Information in accordance with procedures adopted by such Purchaser in  good faith to protect confidential information of third parties delivered to such Purchaser, provided  that such Purchaser may deliver or disclose Confidential Information to (i) its directors, trustees,  officers,  employees,  agents,  attorneys  and  affiliates  (to  the  extent  such  disclosure  reasonably  relates to the administration of the investment represented by its Notes), (ii) its auditors, financial  advisors  and  other  professional  advisors  who  agree  to  hold  confidential  the  Confidential  Information substantially in accordance with the terms of this Section 20, (iii) any other holder of  any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part  thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such  Confidential Information to be bound by the provisions of this Section 20), (v) any Person from  which it offers to purchase any Security of the Company (if such Person has agreed in writing prior  to its receipt of such Confidential Information to be bound by the provisions of this Section 20),  (vi) any  federal  or  state  regulatory  authority  having  jurisdiction  over  such  Purchaser,  (vii) the  NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating  agency  that  requires  access  to information  about  such  Purchaser’s  investment  portfolio,  or  (viii) 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  such  Purchaser,  (x) in  response to any subpoena or other legal process, (y) in connection with any litigation to which  such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent  such  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  such  Purchaser’s Notes, this Agreement or any other Transaction Document.  Each holder of a Note, by  its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the  benefits of this Section 20 as though it were a party to this Agreement.  On reasonable request by  the Company in connection with the delivery to any holder of a Note of information required to be  delivered to such holder under this Agreement or requested by such holder (other than a holder  that is a party to this Agreement or its nominee), such holder will enter into an agreement with the  Company embodying the provisions of this Section 20.                                         -36- 

 

Golden State Water Company                               Note Purchase Agreement          In the event that as a condition to receiving access to information relating to the Company  or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to  this  Agreement,  any Purchaser  or  holder  of  a  Note is  required  to  agree  to  a  confidentiality  undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or  otherwise) which is different from this Section 20, this Section 20 shall not be amended thereby  and, as between such Purchaser or such holder and the Company, this Section 20 shall supersede  any such other confidentiality undertaking.   SECTION 21.   SUBSTITUTION OF PURCHASER.         Each Purchaser shall have the right to substitute any one of its Affiliates as the purchaser  of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which  notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s  agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the  accuracy with respect to it of the representations set forth in Section 6.  Upon receipt of such notice,  any reference to such Purchaser in this Agreement (other than in this Section 21), shall be deemed  to refer to such Affiliate in lieu of such original Purchaser.  In the event that such Affiliate is so  substituted  as  a  Purchaser  hereunder  and  such  Affiliate  thereafter  transfers  to  such  original  Purchaser all of the Notes then held by such Affiliate, upon receipt by the Company of notice of  such transfer, any reference to such Affiliate as a “Purchaser” in this Agreement (other than in this  Section 21), shall no longer be deemed to refer to such Affiliate, but shall refer to such original  Purchaser, and such original Purchaser shall again have all the rights of an original holder of the  Notes under this Agreement.   SECTION 22.   MISCELLANEOUS.      Section 22.1. Successors and Assigns.  All covenants and other agreements contained in  this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their  respective successors and assigns (including, without limitation, any subsequent holder of a Note)  whether so expressed or not.      Section 22.2. 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.      Section 22.3. Construction,  Etc.   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.         Defined  terms  herein  shall  apply  equally  to  the  singular  and  plural  forms  of  the  terms  defined.   Whenever  the  context  may  require,  any  pronoun  shall  include  the  corresponding                                        -37- 

 

Golden State Water Company                               Note Purchase Agreement    masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be  deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to  have the same meaning and effect as the word “shall.”  Unless the context requires otherwise  (a) any definition of or reference to any agreement, instrument or other document herein shall be  construed  as  referring  to  such  agreement,  instrument  or  other  document  as  from  time  to  time  amended, supplemented or otherwise modified (subject to any restrictions on such amendments,  supplements or modifications set forth herein) and, for purposes of the Notes, shall also include  any such notes issued in substitution therefor pursuant to Section 13, (b) subject to Section 22.1,  any reference herein to any Person shall be construed to include such Person’s successors and  assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be  construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all  references  herein  to  Sections  and  Schedules  shall  be  construed  to  refer  to  Sections  of,  and  Schedules to, this Agreement, and (e) any reference to any law or regulation herein shall, unless  otherwise specified, refer to such law or regulation as amended, modified or supplemented from  time to time.      Section 22.4. Counterparts.   This  Agreement  may  be  executed  in  any number  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 all, of the parties hereto.      Section 22.5. Governing  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 New  York excluding choice-of-law principles of the law of such State that would permit the application  of the laws of a jurisdiction other than such State.      Section 22.6. Jurisdiction  and  Process;  Waiver  of  Jury  Trial.  (a) The  Company  irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting  in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising  out of or relating to this Agreement or the Notes.  To the fullest extent permitted by applicable  law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or  otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that  it may now or hereafter have to the laying of the venue of any such suit, action or proceeding  brought in any such court and any claim that any such suit, action or proceeding brought in any  such court has been brought in an inconvenient forum.              (b)  The Company agrees, to the fullest extent permitted by applicable law, that a  final judgment in any suit, action or proceeding of the nature referred to in Section 22.6(a) brought  in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case  may be, and may be enforced in the courts of the United States of America or the State of New  York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject)  by a suit upon such judgment.                (c) The Company consents to process being served by or on behalf of any holder  of Notes in any suit, action or proceeding of the nature referred to in Section 22.6(a) by mailing a  copy thereof by registered, certified priority or express mail (or any substantially similar form of                                        -38- 

 

Golden State Water Company                               Note Purchase Agreement    mail),  postage  prepaid,  return  receipt  or  delivery  confirmation  requested,  to  it at  its  address  specified in Section 18 or at such other address of which such holder shall then have been notified  pursuant to said Section.  The Company agrees that such service upon receipt (i) shall be deemed  in every respect effective service of process upon it in any such suit, action or proceeding and  (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal  service  upon  and  personal  delivery  to  it.   Notices  hereunder  shall  be  conclusively  presumed  received as evidenced by a delivery receipt furnished by the United States Postal Service or any  reputable commercial delivery service.              (d)  Nothing in this Section 22.6 shall affect the right of any holder of a Note to  serve process in any manner permitted by law, or limit any right that the holders of any of the  Notes  may  have  to  bring  proceedings  against  the  Company  in  the  courts  of  any  appropriate  jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other  jurisdiction.               (e) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT  ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN  CONNECTION HEREWITH OR THEREWITH.      Section 22.7. Accounting  Terms.  All  accounting  terms  used  herein  which  are  not  expressly defined in this Agreement have the meanings respectively given to them in accordance  with GAAP.  Except as otherwise specifically provided herein, (i) all computations made pursuant  to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall  be  prepared  in  accordance  with  GAAP.   For  purposes  of  determining  compliance  with  this  Agreement (including Section 9, Section 10 and the definition of “Indebtedness”), any election by  the  Company  to  measure  any  financial  liability  using  fair  value  (as  permitted  by  Financial  Accounting  Standards  Board  Accounting Standards  Codification  Topic  No.  825-10-25 – Fair  Value Option, International Accounting Standard 39 – Financial Instruments: Recognition and  Measurement or any similar accounting standard) shall be disregarded and such determination  shall be made as if such election had not been made.                                                                                                  [Remainder of page intentionally left blank.  Signature pages follow.]                                                                                  -39- 

 

 

Golden State Water Company                               Note Purchase Agreement   This Agreement is hereby accepted and agreed to as of the date hereof.                                       THE NORTHWESTERN MUTUAL LIFE INSURANCE                                       COMPANY                                       By:  Northwestern Mutual Investment                                         Management Company, LLC,                                         Its Investment Adviser                                       By: ______________________________________                                        Name:  Bradley T. Kunath                                       Managing Director                                        THE NORTHWESTERN MUTUAL LIFE INSURANCE                                       COMPANY for its Group Annuity Separate                                        Account                                        By: ______________________________________                                         Name: Bradley T. Kunath                                        Its Authorized Representative 

 

DocuSign Envelope ID: E0235D55-0ADD-4946-AFFC-C03E5CBB74D9            Golden State Water Company                               Note Purchase Agreement                        This Agreement is hereby accepted and agreed to as of the date hereof.                                                                                                STATE FARM LIFE INSURANCE COMPANY                                                                                                                                                By:                                                   ______________________________________                                                  Name: Jeffrey Attwood                                                   Title:   Investment Professional                                                                                                                                                                                                   By: ______________________________________                                                   Name: Rebekah L. Holt                                                   Title:   Investment Professional                                                                                                                                                STATE FARM LIFE AND ACCIDENT ASSURANCE                                                  COMPANY                                                                                                                                                By: ______________________________________                                                   Name: Jeffrey Attwood                                                   Title:   Investment Professional                                                                                                                                                By: ______________________________________                                                   Name: Rebekah L. Holt                                                   Title:   Investment Professional                                                                                                                                                STATE FARM INSURANCE COMPANIES EMPLOYEE                                                  RETIREMENT TRUST                                                                                                                                                By: ______________________________________                                                   Name: Jeffrey Attwood                                                   Title:   Investment Professional                                                                                                                                                By: ______________________________________                                                   Name: Rebekah L. Holt                                                   Title:   Investment Professional                                     

 

 

 

 

Golden State Water Company                               Note Purchase Agreement    This Agreement is hereby accepted and agreed to as of the date hereof.                                                                            MASSACHUSETTS MUTUAL LIFE INSURANCE                                       COMPANY                                                                            By:  Barings LLC as Investment Adviser                                                                                                                  By _______________________________________                                         Name:                                           Title:       

 

 

 

 

                                SCHEDULE A                                                            INFORMATION RELATING TO PURCHASERS                NAME OF AND ADDRESS                 SERIES     PRINCIPAL AMOUNT OF                  OF PURCHASER                   OF NOTES   NOTES TO BE PURCHASED                                                                         THE NORTHWESTERN MUTUAL LIFE INSURANCE            A             $35,000,000  COMPANY                                           B             $11,530,000                                                               Initial Aggregate Amount                                                                   of Notes   I. The Northwestern Mutual Life Insurance Company          $35,000,000 due 2030                                                              $11,530,000 due 2040   II. All payments on account of Notes held by such Purchaser shall be made       by  wire  transfer  of immediately  available  funds,  providing  sufficient      information  to  identify  the  source  of  the  transfer,  the  amount  of  the      dividend  and/or  redemption  (as  applicable)  and  the  identity  of  the      security as to which payment is being made.         Please contact our Treasury & Investment Operations Department to      securely  obtain  wire  transfer  instructions  for The  Northwestern      Mutual Life Insurance Company.         E-mail:  payments@northwesternmutual.com      Phone: (414) 665-1679      III. All notices with respect to confirmation of payments on account of the       Notes shall be delivered or mailed to:         The Northwestern Mutual Life Insurance Company      720 East Wisconsin Avenue      Milwaukee, WI 53202      Attention: Investment Operations      E-mail: payments@northwesternmutual.com      Phone: (414) 665-1679      IV. All other communications including any permitted electronic delivery       of financial and business information (or any notices related thereto)      shall be delivered or mailed to:         The Northwestern Mutual Life Insurance Company      720 East Wisconsin Avenue      Milwaukee, WI 53202      Attention: Securities Department      E-mail: privateinvest@northwesternmutual.com         With copies to:              Email: bradkunath@northwesternmutual.com                                                                    SCHEDULE A                            (to Note Purchase Agreement) 

 

                V. Address for delivery of the Notes and Closing Documents:           The Northwestern Mutual Life Insurance Company     720 East Wisconsin Avenue     Milwaukee, WI 53202     Attention:  Christine L. Rittberg       VI. Tax Identification No.: 39-0509570                                                                                         A-2 

 

                 NAME OF AND ADDRESS                SERIES    PRINCIPAL AMOUNT OF                   OF PURCHASER                   OF NOTES  NOTES TO BE PURCHASED                                                                         THE NORTHWESTERN MUTUAL LIFE INSURANCE             B             $470,000  COMPANY FOR ITS GROUP ANNUITY SEPARATE ACCOUNT                                                                  Initial Aggregate Amount                                                                   of Notes   I. The Northwestern Mutual Life Insurance Company for its Group $470,000  due 2040      Annuity Separate Account          II. All payments on account of Notes held by such Purchaser shall be made       by  wire  transfer  of  immediately  available  funds,  providing  sufficient      information  to  identify  the  source  of  the  transfer,  the  amount  of  the      dividend and/or  redemption  (as  applicable)  and  the  identity  of  the      security as to which payment is being made.            Please contact our Treasury & Investment Operations Department to      securely  obtain  wire  transfer  instructions  for The  Northwestern      Mutual  Life  Insurance  Company  for  its  Group  Annuity  Separate      Account.            E-mail:  payments@northwesternmutual.com      Phone: (414) 665-1679         III. All notices with respect to confirmation of payments on account of the       Notes shall be delivered or mailed to:            The Northwestern Mutual Life Insurance Company      for its Group Annuity Separate Account      720 East Wisconsin Avenue      Milwaukee, WI 53202      Attention: Investment Operations      E-mail: payments@northwesternmutual.com      Phone: (414) 665-1679         IV. All other communications including any permitted electronic delivery       of financial and business information (or any notices related thereto)      shall be delivered or mailed to:            The Northwestern Mutual Life Insurance Company      for its Group Annuity Separate Account      720 East Wisconsin Avenue      Milwaukee, WI 53202      Attention: Securities Department      E-mail: privateinvest@northwesternmutual.com            With copies to:           Email: bradkunath@northwesternmutual.com                                              A-3 

 

                V. Address for delivery of the Notes and Closing Documents:        The Northwestern Mutual Life Insurance Company     720 East Wisconsin Avenue     Milwaukee, WI 53202     Attention:  Christine L. Rittberg       VI.  Tax Identification No.: 39-0509570                                                                                                                   A-4 

 

                                                              PRINCIPAL AMOUNT OF                NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                       STATE FARM LIFE INSURANCE COMPANY                 A            $21,500,000    TAX ID #37-0533090    Participation/Series: $21,500,000/2.17% Senior Notes due July 8, 2030    Wire Transfer Instructions:  All payments on account of Notes held by such Purchaser shall be made by wire transfer of immediately  available funds, providing sufficient information to identify the source of the transfer, including issuer,  CUSIP number, interest rate, maturity date, and whether payment is interest, principal, or premium.     Please contact our Investment Department to securely obtain wire transfer instructions for State Farm  Life Insurance Company.    E-mail: privateplacements@statefarm.com  Phone: (309) 766-2386     Send notices, financial statements, officer’s certificates and other correspondence to:        State Farm Life Insurance Company        Investment Dept. E-8        One State Farm Plaza        Bloomington, IL   61710          If by E-Mail: privateplacements@statefarm.com    Send confirms to:        State Farm Life Insurance Company        Investment Accounting Dept. D-3        One State Farm Plaza        Bloomington, IL   61710    Send the original security (via registered mail) to:        JPMorgan Chase Bank, N.A.        4 Chase Metrotech Center        3rd Floor        Brooklyn, New York 11245-0001        Attention:  Physical Receive Department        Account: G06893    Send an additional copy of the original security plus an original set of closing documents and one  conformed copy of the Note Purchase Agreement to:        State Farm Insurance Companies        One State Farm Plaza        Bloomington, Illinois 61710        Attn:    Corporate Law-Investments, A-3              Christiane M. Stoffer, Associate General Counsel                                                                    A-5 

 

                                                              PRINCIPAL AMOUNT OF                NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                       STATE FARM INSURANCE COMPANIES EMPLOYEE           A             $2,000,000  RETIREMENT TRUST    TAX ID #36-6042145    Participation/Series: $2,000,000/2.17% Senior Notes due July 8, 2030                                   Wire Transfer Instructions:  All payments on account of Notes held by such Purchaser shall be made by wire transfer of immediately  available funds, providing sufficient information to identify the source of the transfer, including issuer,  CUSIP number, interest rate, maturity date, and whether payment is interest, principal, or premium.     Please contact our Investment Department to securely obtain wire transfer instructions for State Farm  Insurance Companies Employee Retirement Trust.    E-mail: privateplacements@statefarm.com  Phone: (309) 766-2386     Send notices, financial statements, officer’s certificates and other correspondence to:        State Farm Insurance Companies Employee Retirement Trust        Investment Dept. E-8        One State Farm Plaza        Bloomington, IL   61710                If by E-Mail: privateplacements@statefarm.com    Send confirms to:        State Farm Insurance Companies Employee Retirement Trust        Investment Accounting Dept. D-3        One State Farm Plaza        Bloomington, IL   61710    Send the original security (via registered mail) to:        JPMorgan Chase Bank, N.A.        4 Chase Metrotech Center        3rd Floor        Brooklyn, New York 11245-0001        Attention:  Physical Receive Department        Account: G07251    Send an additional copy of the original security plus an original set of closing documents and one  conformed copy of the Note Purchase Agreement to:        State Farm Insurance Companies        One State Farm Plaza        Bloomington, Illinois 61710        Attn: Corporate Law-Investments, A-3                 Christiane M. Stoffer, Associate General Counsel                                                                   A-6 

 

                                                              PRINCIPAL AMOUNT OF                NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                       STATE FARM LIFE AND ACCIDENT ASSURANCE COMPANY    A             $1,500,000    TAX ID #37-0805091    Participation/Series:   $1,500,000/2.17% Senior Notes due July 8, 2030                            Wire Transfer Instructions:  All payments on account of Notes held by such Purchaser shall be made by wire transfer of immediately  available funds, providing sufficient information to identify the source of the transfer, including issuer,  CUSIP number, interest rate, maturity date, and whether payment is interest, principal, or premium.     Please contact our Investment Department to securely obtain wire transfer instructions for State Farm  Life and Accident Assurance Company.    E-mail: privateplacements@statefarm.com  Phone: (309) 766-2386                               Send notices, financial statements, officer’s certificates and other correspondence to:        State Farm Life and Accident Assurance Company        Investment Dept. E-8        One State Farm Plaza        Bloomington, IL   61710                If by E-Mail: privateplacements@statefarm.com    Send confirms to:        State Farm Life and Accident Assurance Company        Investment Accounting Dept. D-3        One State Farm Plaza        Bloomington, IL   61710    Send the original security (via registered mail) to:        JPMorgan Chase Bank, N.A.        4 Chase Metrotech Center        3rd Floor        Brooklyn, New York 11245-0001        Attention:  Physical Receive Department        Account: G06895    Send an additional copy of the original security plus an original set of closing documents and one  conformed copy of the Note Purchase Agreement to:        State Farm Insurance Companies        One State Farm Plaza        Bloomington, Illinois 61710        Attn: Corporate Law-Investments, A-3            Christiane M. Stoffer, Associate General Counsel                                                                             A-7 

 

                  NAME OF AND ADDRESS                          SERIES        PRINCIPAL AMOUNT OF                      OF PURCHASER                          OF NOTES       NOTES TO BE PURCHASED                                                                                           JACKSON NATIONAL LIFE INSURANCE COMPANY                       A                $15,000,000                                     PRIVATE PLACEMENTS – 41 ACCT                                                    1. Please wire all payments as follows.  To ensure accurate and timely posting of principal and interest, please include all relevant     information on the wire.     The Bank of New York Mellon     ABA # 021-000-018     Account #: IOC566     Ref: 187241 CUSIP / PPN, Description, and Breakdown (P&I)    2. Original physical notes & certificates should be delivered as follows:          The Depository Trust Company     570 Washington Blvd - 5th floor     Jersey City, NJ  07310     Attn:  BNY Mellon/Branch Deposit Department Ref: 187241 (very important)    3. DTC Settlement Instructions:     DTC Participant # 901     Agent Bank # 26088     Institution # 74323     Interested Party # 26662     Account # 187241       4. Original documents and copies of notes and certificates, notices, waivers, amendments and consents should be sent to:       PPM America, Inc.                                          225 West Wacker Drive, Suite 1200                     Chicago, IL 60606-1228                         Attn:  Private Placements – Elena Unger                               Phone: (312) 634-7853, Fax: (312) 634-0054           Email: elena.unger@ppmamerica.com          Email: PPMAPrivateReporting@ppmamerica.com           5.  Financial information should be sent to:         PPM America, Inc.                                     225 West Wacker Drive, Suite 1200              Chicago, IL 60606-1228                         Attn:  Private Placements – Elena Unger         Phone: (312) 634-7853, Fax: (312) 634-0054          Email: PPMAPrivateReporting@ppmamerica.com    6. Payment notices should be sent to:  PPMAPrivateReporting@ppmamerica.com    7. Legal name to appear on notes:     Jackson National Life Insurance Company    8. Jackson National Life Insurance Company was incorporated in Michigan on June 19, 1961.      EIN:        38-1659835     Its address is: One Corporate Way                 Lansing, MI 48951    9. Name of institution as it should appear in any publicity:  PPM America, Inc.                                                                                  A-8 

 

                  NAME OF AND ADDRESS                          SERIES        PRINCIPAL AMOUNT OF                      OF PURCHASER                          OF NOTES       NOTES TO BE PURCHASED                                                                                           JACKSON NATIONAL LIFE INSURANCE COMPANY                       A                $10,000,000                                    PRIVATE PLACEMENTS – GIC ACCT    1. Please wire all payments as follows.  To ensure accurate and timely posting of principal and interest, please include all relevant     information on the wire.       The Bank of New York Mellon     ABA # 021-000-018     Account #: IOC566     Ref: 187243, CUSIP / PPN, Description, and Breakdown (P&I)    2. Original physical notes & certificates should be delivered as follows:       The Depository Trust Company     570 Washington Blvd - 5th floor     Jersey City, NJ  07310     Attn: BNY Mellon/Branch Deposit Department Ref: 187243 (very important)    3. DTC Settlement Instructions :     DTC Participant # 901     Agent Bank # 26088     Institution # 74323     Interested Party # 26662     Account # 187243    4. Original documents and copies of notes and certificates, notices, waivers, amendments and consents should be sent to:       PPM America, Inc.                                   225 West Wacker Drive, Suite 1200                     Chicago, IL 60606-1228                         Attn: Private Placements – Elena Unger            Phone: (312) 634-7853, Fax: (312) 634-0054            Email: elena.unger@ppmamerica.com          Email: PPMAPrivateReporting@ppmamerica.com    5.   Financial information should be sent to:           PPM America, Inc.                                     225 West Wacker Drive, Suite 1200                     Chicago, IL 60606-1228                         Attn: Private Placements – Elena Unger            Phone: (312) 634-7853, Fax: (312) 634-0054            Email: PPMAPrivateReporting@ppmamerica.com    6.     Payment notices should be sent to:  PPMAPrivateReporting@ppmamerica.com                                                                       7. Legal name to appear on notes:       Jackson National Life Insurance Company    8. Jackson National Life Insurance Company was incorporated in Michigan on June 19, 1961.        EIN:        38-1659835     Its address is:  One Corporate Way                 Lansing, MI 48951    9. Name of institution as it should appear in any publicity: PPM America, Inc.                                                              A-9 

 

                 NAME OF AND ADDRESS                 SERIES     PRINCIPAL AMOUNT OF                  OF PURCHASER                   OF NOTES   NOTES TO BE PURCHASED                                                                         NEW YORK LIFE INSURANCE COMPANY                   B             $13,500,000                                                                                                            See instructions on following page.                                           Also, with respect to any notices delivered electronically under clause 2 in the attached,  please also send a copy to: kimberly_stepancic@nylinvestors.com and  sydney_G_crowe@nylinvestors.com                                                                       A-10 

 

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                                                               PRINCIPAL AMOUNT OF                 NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                        NEW YORK LIFE INSURANCE AND ANNUITY                B           $2,800,000  CORPORATION                                                                   See instructions on following page.                                           Also, with respect to any notices delivered electronically under clause 2 in the attached,  please also send a copy to: kimberly_stepancic@nylinvestors.com and  sydney_G_crowe@nylinvestors.com                                                                   A-13 

 

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                                                               PRINCIPAL AMOUNT OF                 NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                        NEW YORK LIFE INSURANCE AND ANNUITY                B            $300,000  CORPORATION INSTITUTIONALLY OWNED LIFE  INSURANCE SEPARATE ACCOUNT (BOLI 30C)                                                                                                            See instructions on following page.                                           Also, with respect to any notices delivered electronically under clause 2 in the attached,  please also send a copy to: kimberly_stepancic@nylinvestors.com and  sydney_G_crowe@nylinvestors.com                                                                       A-16 

 

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                                                               PRINCIPAL AMOUNT OF                 NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                        NEW YORK LIFE INSURANCE AND ANNUITY                B            $200,000  CORPORATION INSTITUTIONALLY OWNED LIFE  INSURANCE SEPARATE ACCOUNT (BOLI 3-2)                                                                                                            See instructions on following page.                                           Also, with respect to any notices delivered electronically under clause 2 in the attached,  please also send a copy to: kimberly_stepancic@nylinvestors.com and  sydney_G_crowe@nylinvestors.com                                                                     A-19 

 

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                                                               PRINCIPAL AMOUNT OF                 NAME OF PURCHASER                 SERIES    NOTES TO BE PURCHASED                                                                        NEW YORK LIFE INSURANCE AND ANNUITY                B            $200,000  CORPORATION INSTITUTIONALLY OWNED LIFE                                     INSURANCE SEPARATE ACCOUNT (BOLI 3)                                                                                                            See instructions on following page.                                           Also, with respect to any notices delivered electronically under clause 2 in the attached,  please also send a copy to: kimberly_stepancic@nylinvestors.com and  sydney_G_crowe@nylinvestors.com                                                                     A-22 

 

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                   NAME OF AND ADDRESS                     SERIES     PRINCIPAL AMOUNT OF                      OF PURCHASER                       OF NOTES   NOTES TO BE PURCHASED                                                                                 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY                B             $17,000,000  c/o Barings LLC  300 South Tryon Street – Suite 2500  Charlotte, NC  28202    Payments  All payments on account of the Note shall be made by crediting in the form of bank wire transfer of Federal or other  immediately available funds, (identifying each payment as “Golden State Water Company 2.90% Series B Notes  due July 8, 2040 interest and principal”), to:    MassMutual   Citibank  New York, New York  ABA # 021000089  Acct # 30510685  RE:  Description of security, cusip, principal and interest split    With advice of payment to the Treasury Operations Securities Management Department at Massachusetts Mutual  Life Insurance Company at mmincometeam@massmutual.com or (413) 226-4295 (facsimile).    Registration of Securities  All securities should be registered to Massachusetts Mutual Life Insurance Company and sent via overnight mail  to:           Massachusetts Mutual Life Insurance Company         1295 State Street, MIP: E415         Springfield, MA 01111         Attention:  Janelle Tarantino, Treasury Operations Securities Management         Telephone: 413-744-1885         E-mail: Jtarantino@massmutual.com           With a copy to:         Michelle.kearney@barings.com         Diane.murphy@barings.com         Brian.Fitzgerald@barings.com          Owen.Zingraff@barings.com          Meredith.Hunter@barings.com     Notices    Send Communications and Notices (including   Send Notices on Payments to    electronic delivery of financials) to        Massachusetts Mutual Life Insurance Company    Massachusetts Mutual Life Insurance Company  Treasury Operations Securities Management    c/o Barings LLC                              1295 State Street    300 South Tryon Street – Suite 2500          Springfield, MA 01111    Charlotte, NC  28202                         Attn: Janelle Tarantino                                                     With notification to:                       With a copy to:        privateplacements@barings.com            Massachusetts Mutual Life Insurance Company        pdgportfolioadmin@barings.com            c/o Barings LLC        Ben.Jones@barings.com                    300 South Tryon Street – Suite 2500        Nathan.Kapp@barings.com                  Charlotte, NC  28202    Tax Identification No.   04-1590850   DTTP No.:  13/M/63867/DTTP                                                                         A-25 

 

                 NAME OF AND ADDRESS                    SERIES      PRINCIPAL AMOUNT OF                    OF PURCHASER                     OF NOTES     NOTES TO BE PURCHASED                                                                                METLIFE INSURANCE K.K.                                B               $8,400,000   1-3, Kioicho, Chiyoda-ku   Tokyo, 102-8525 JAPAN                                                                             (all portfolio codes)  (Securities to be registered in the name of MetLife Insurance K.K.)    (1)  All scheduled payments of principal and interest by wire transfer of immediately available funds to:                  Beneficiary Bank:   The HongKong and Shanghai Banking Corporation Ltd         Beneficiary Bank BIC: HSBCHKHHGCC         Beneficiary Account No.:  741-243737-201         Beneficiary Name:   MetLife Insurance K.K.         Intermediary Bank:  HSBC BANK USA NA         Intermediary Bank BIC: MRMDUS33         Intermediary Fedwire/CHIPS: Fedwire No.: 021001088 CHIPS No:0108         Ref:  PPN - GOLDEN STATE WATER CO - 2.900% Due 08-JUL-2040       with sufficient information to identify the source and application of such funds, including issuer, PPN#,     interest rate, maturity and whether payment is of principal, interest, make whole amount or otherwise.  For     all payments other than scheduled payments of principal and interest, the Company shall seek instructions     from the holder, and in the absence of instructions to the contrary, will make such payments to the account     and in the manner set forth above.    (2)   All notices and communications:          MetLife Asset Management Corp. (Japan)     Administration Department     Tokyo Garden Terrace Kioicho Kioi Tower 25F     1-3, Kioicho, Chiyoda-ku, Tokyo 102-8525 Japan     Attention:  Administration Dept. Manager     Email:    saura@metlife.co.jp        With a copy to:        MetLife Insurance K.K.   c/o MetLife Investment Management, LLC   Investments, Private Placements   One MetLife Way   Whippany, New Jersey 07981   Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private Placement   Emails: PPUCompliance@metlife.com; fcunha@metlife.com; dhruv.patel@metlife.com;   OpsPvtPlacements@metlife.com       With another copy OTHER than with respect to deliveries of financial statements to:       MetLife Insurance K.K., c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way, Whippany, New Jersey 07981     Attention: Chief Counsel-Investments Law (PRIV)     Email:  sec_invest_law@metlife.com                                                                  A-26 

 

   (3)  Original notes delivered to:     MetLife Insurance K.K., c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way, Whippany, New Jersey 07981     Attention:  Bryan Cho, Assistant General Counsel, Fixed Income & Alternatives    (4)  Taxpayer I.D. Number: 98-1037269 (USA) and 00661996 (Japan)  (5)  Tax Jurisdiction: Japan  (6)  UK Passport Treaty Number (if applicable): 43/M/359828/DTTP     Audit Requests:  Soft copy to AuditConfirms.PvtPlacements@metlife.com or hard copy to:  Metropolitan   Life Insurance Company, Attn:  Private Placements Operations (ATTN: Audit Confirmations), 18210 Crane   Nest Drive – 5th Floor, Tampa, FL 33647                                                                              A-27 

 

                 NAME OF AND ADDRESS                   SERIES     PRINCIPAL AMOUNT OF                    OF PURCHASER                     OF NOTES   NOTES TO BE PURCHASED                                                                               METROPOLITAN LIFE INSURANCE COMPANY                  B               $4,300,000   200 Park Avenue   New York, New York    10166                                                                          (General Acct@Chase)  (Securities to be registered in the name of Metropolitan Life Insurance Company)    (1) All scheduled payments of principal and interest by wire transfer of immediately available funds to:              Bank Name:   JPMorgan Chase Bank         ABA Routing #: 021-000-021         Account No.: 002-2-410591         Account Name: Metropolitan Life Insurance Company         Ref:         PPN - GOLDEN STATE WATER CO - 2.900% Due 08-JUL-2040       with sufficient information to identify the source and application of such funds, including issuer, PPN#,     interest rate, maturity and whether payment is of principal, interest, make whole amount or otherwise.     For all payments other than scheduled payments of principal and interest, the Company shall seek     instructions from the holder, and in the absence of instructions to the contrary, will make such payments to     the account and in the manner set forth above.    (2) All notices and communications:          Metropolitan Life Insurance Company     c/o MetLife Investment Management, LLC     Investments, Private Placements     One MetLife Way     Whippany, New Jersey 07981     Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private Placement     Emails: PPUCompliance@metlife.com; fcunha@metlife.com; dhruv.patel@metlife.com;     OpsPvtPlacements@metlife.com       With a copy OTHER than with respect to deliveries of financial statements to:       Metropolitan Life Insurance Company     c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way     Whippany, New Jersey 07981     Attention: Chief Counsel-Investments Law (PRIV)     Email:  sec_invest_law@metlife.com    (3) Original notes delivered to:     Metropolitan Life Insurance Company     c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way     Whippany, New Jersey 07981     Attention:  Bryan Cho, Assistant General Counsel, Fixed Income & Alternatives    (4) Taxpayer I.D. Number: 13-5581829  (5) Tax Jurisdiction: United States/New York  (6) UK Passport Treaty Number (if applicable): 13/M/61303/DTTP                                            A-28 

 

                                 Audit Requests:  Soft copy to AuditConfirms.PvtPlacements@metlife.com or hard copy to:   Metropolitan Life Insurance Company, Attn:  Private Placements Operations (ATTN: Audit  Confirmations), 18210 Crane Nest Drive – 5th Floor, Tampa, FL 33647                                                                                      A-29 

 

                 NAME OF AND ADDRESS                   SERIES     PRINCIPAL AMOUNT OF                    OF PURCHASER                     OF NOTES   NOTES TO BE PURCHASED                                                                               American Fidelity Assurance Company                  B               $2,100,000   9000 Cameron Parkway   Oklahoma City, OK 73114                                                                         (portfolio AFA for USD)  (Securities to be registered in the name of American Fidelity Assurance Company)    (1)    All scheduled payments of principal and interest by wire transfer of immediately available funds to:           Bank Name: First Fidelity Bank          ABA Number:  103002691         Account No.: 2000528686                   Account Name: InvesTrust         FFC: American Fidelity Assurance Co              Ref: PPN - GOLDEN STATE WATER CO - 2.900% Due 08-JUL-2040       with sufficient information to identify the source and application of such funds, including issuer, PPN#,     interest rate, maturity and whether payment is of principal, interest, make whole amount or otherwise.     For all payments other than scheduled payments of principal and interest, the Company shall seek     instructions from the holder, and in the absence of instructions to the contrary, will make such payments to     the account and in the manner set forth above.           (2)    All notices and communications:       American Fidelity Assurance Company     c/o MetLife Investment Management, LLC     Investments, Private Placements     One MetLife Way     Whippany, NJ 07981     Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private     Placement     Emails:  PPUCompliance@metlife.com    and    fcunha@metlife.com; dhruv.patel@metlife.com;       With a copy OTHER than with respect to deliveries of financial statements to:       InvesTrust      Attn:  Debbie Sinard     5100 N. Classen, Suite 620     Oklahoma City, OK 73118    (3) Original notes delivered to:       InvesTrust      Attn:  Debbie Sinard     5100 N. Classen, Suite 620     Oklahoma City, OK 73118       With COPIES OF THE NOTES emailed to bcho@metlife.com    (4)    Taxpayer I.D. Number: 73-0714500  (5)    UK Passport Treaty Number (if applicable): 13/A/351507/DTTP                                                              A-30 

 

                 NAME OF AND ADDRESS                   SERIES     PRINCIPAL AMOUNT OF                    OF PURCHASER                     OF NOTES   NOTES TO BE PURCHASED                                                                               METLIFE INSURANCE CO. OF KOREA, LTD.                 B               $1,300,000   MetLife Tower 16F, 316 Teheran-ro,   Gangnam-gu, Seoul, Korea, 06211                                                                                 (M8K2-PP)  (Securities to be registered in the name of MetLife Insurance Co. of Korea, Ltd.)    (1)  All scheduled payments of principal and interest by wire transfer of immediately available funds to:         Beneficiary Bank: JP Morgan Chase Bank          Beneficiary Bank BIC: CHASUS33         Beneficiary Account No.:  550382516         Beneficiary Name: MetLife Insurance Co. of Korea, Ltd.         Ref:  PPN - GOLDEN STATE WATER CO - 2.900% Due 08-JUL-2040       with sufficient information to identify the source and application of such funds, including issuer, PPN#,     interest rate, maturity and whether payment is of principal, interest, make whole amount or otherwise.  For     all payments other than scheduled payments of principal and interest, the Company shall seek instructions     from the holder, and in the absence of instructions to the contrary, will make such payments to the account     and in the manner set forth above.    (2)   All notices and communications:          MetLife Investment Management, LLC      Investments, Private Placements     One MetLife Way     Whippany, New Jersey 07981     Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private     Placement      Emails: PPUCompliance@metlife.com; fcunha@metlife.com; dhruv.patel@metlife.com;     OpsPvtPlacements@metlife.com     With a copy to: MLK_GA@metlife.com          MetLife Insurance Co. of Korea, Ltd. (Korea)     c/o MetLife Investment Management, LLC     Investments, Private Placements     One MetLife Way     Whippany, New Jersey 07981     Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private     Placement     Emails: PPUCompliance@metlife.com; fcunha@metlife.com; dhruv.patel@metlife.com;     OpsPvtPlacements@metlife.com       With another copy OTHER than with respect to deliveries of financial statements to:       MetLife Insurance Co. of Korea, Ltd.,      c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way     Whippany, New Jersey 07981     Attention: Chief Counsel-Investments Law (PRIV)     Email:  sec_invest_law@metlife.com                                                                  A-31 

 

   (3)  Original notes delivered to:       MetLife Insurance Co. of Korea, Ltd.,     c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way     Whippany, New Jersey 07981     Attention:  Bryan Cho, Assistant General Counsel, Fixed Income & Alternatives    (4)  Taxpayer I.D. Number: 98-1160381 (USA) and 120-81-32969 (Korea)  (5)  Tax Jurisdiction: Korea  (6)  UK Passport Treaty Number (if applicable): N/A     Audit Requests:  Soft copy to AuditConfirms.PvtPlacements@metlife.com or hard copy to:  Metropolitan   Life Insurance Company, Attn:  Private Placements Operations (ATTN: Audit Confirmations), 18210 Crane   Nest Drive – 5th Floor, Tampa, FL 33647                                                                            A-32 

 

                 NAME OF AND ADDRESS                   SERIES     PRINCIPAL AMOUNT OF                    OF PURCHASER                     OF NOTES   NOTES TO BE PURCHASED                                                                               METLIFE INSURANCE CO. OF KOREA, LTD.                 B               $900,000   MetLife Tower 16F, 316 Teheran-ro,   Gangnam-gu, Seoul, Korea, 06211                                                                                 (M8KI-PP)  (Securities to be registered in the name of MetLife Insurance Co. of Korea, Ltd.)    (1)  All scheduled payments of principal and interest by wire transfer of immediately available funds to:                  Beneficiary Bank: JP Morgan Chase Bank          Beneficiary Bank BIC: CHASUS33         Beneficiary Account No.:  192841671         Beneficiary Name: MetLife Insurance Co. of Korea, Ltd.          Ref:  PPN - GOLDEN STATE WATER CO - 2.900% Due 08-JUL-2040       with sufficient information to identify the source and application of such funds, including issuer, PPN#,     interest rate, maturity and whether payment is of principal, interest, make whole amount or otherwise.  For     all payments other than scheduled payments of principal and interest, the Company shall seek instructions     from the holder, and in the absence of instructions to the contrary, will make such payments to the account     and in the manner set forth above.    (2)   All notices and communications:          MetLife Investment Management, LLC      Investments, Private Placements     One MetLife Way     Whippany, New Jersey 07981     Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private     Placement     Emails: PPUCompliance@metlife.com; fcunha@metlife.com; dhruv.patel@metlife.com;     OpsPvtPlacements@metlife.com     With a copy to: MLK_GA@metlife.com          MetLife Insurance Co. of Korea, Ltd. (Korea)     c/o MetLife Investment Management, LLC     Investments, Private Placements     One MetLife Way     Whippany, New Jersey 07981     Attention:  Filipe Cunha, AVP Private Placements, Project Finance/Infra; Dhruv Patel, Analyst, Private Placement     Emails: PPUCompliance@metlife.com; fcunha@metlife.com; dhruv.patel@metlife.com;     OpsPvtPlacements@metlife.com       With another copy OTHER than with respect to deliveries of financial statements to:       MetLife Insurance Co. of Korea, Ltd.,      c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way,      Whippany, New Jersey 07981     Attention: Chief Counsel-Investments Law (PRIV)     Email:  sec_invest_law@metlife.com                                                                  A-33 

 

   (3)  Original notes delivered to:     MetLife Insurance Co. of Korea, Ltd.,      c/o MetLife Investment Management, LLC, Investments Law     One MetLife Way,      Whippany, New Jersey 07981     Attention:  Bryan Cho, Assistant General Counsel, Fixed Income & Alternatives    (4)  Taxpayer I.D. Number: 98-1160381 (USA) and 120-81-32969 (Korea)  (5)  Tax Jurisdiction: Korea  (6)  UK Passport Treaty Number (if applicable): N/A     Audit Requests:  Soft copy to AuditConfirms.PvtPlacements@metlife.com or hard copy to:  Metropolitan   Life Insurance Company, Attn:  Private Placements Operations (ATTN: Audit Confirmations), 18210 Crane   Nest Drive – 5th Floor, Tampa, FL 33647                                                                              A-34 

 

                  NAME OF AND ADDRESS                          SERIES        PRINCIPAL AMOUNT OF                      OF PURCHASER                          OF NOTES       NOTES TO BE PURCHASED                                                                                           MANUFACTURERS LIFE REINSURANCE LIMITED                        B                 $6,000,000   The Goddard Building, Haggatt Hall   St. Michael, BB 11059   Barbados    (1)    PAYMENTS:                                                           All payments to be by bank wire transfer of immediately available funds to:                   USD                                       Bank Name:                      The Bank of New York Mellon, New York (BIC: IRVTUS3N)          ABA:                            021 000 018          Beneficiary Bank BIC:           IRVTUS3NIBK          Beneficiary Bank A/C #:         8901323349          Ultimate Beneficiary A/C #:     8441808400          Ultimate Beneficiary Name:      49AA MLRL US PP COLL          Reference:                      Golden State Water Company, CUSIP/PPN and P&I breakdown,                                          interest rate and maturity date of Notes or other obligations    (2)    NOTICES AND AUDIT REQUESTS:                                                                                                         Notices with    Notices and    Electronic                                                       respect to      communication  notices and                                                       payments,       with respect to all other                                                       prepayments     compliance     Notices                                                       (scheduled and  reporting,                                                       unscheduled,    financial                                                       whether partial or statements and                                                       in full) and    related                                                       maturity        certifications          Manulife Financial          200 Bloor Street East, NT2-D70          Toronto, Ontario, Canada M4W 1E5                   ü                                       Attention: Asia-Canadian Private Placement Team          Email: Asia-Canadian_PP@manulife.com          Manulife General Account Investments (HK)          16/F, Lee Garden One, 33 Hysan Avenue          Causeway Bay, Hong Kong          Attention:   Calvin Yip, Helen Lo, Justin                          ü             ü                       Yeung, Jonathan Luk          Email: corporate_finance_asia@manulife.com          Fax number:  852-2295-1771          John Hancock Financial Services          197 Clarendon Street, C-2          Boston, MA 02116                                                   ü                       Attention:   Bond and Corporate Finance          Team Email:  powerteam@jhancock.com          Asia GA Legal                                                                                           ü          Email: Asia_GA_Legal@manulife.com                                                                                    A-35 

 

     (3)    TAX IDENTIFICATION NUMBER: 1000007310686    (4)    REGISTERED NAME OF SECURITIES: Manufacturers Life Reinsurance Limited    (5)    DOCUMENTATION DELIVERY REQUIREMENTS           (i) Original securities should be sent the day after closing to:                     CIBC Mellon Global Securities Services            1 York Street, Suite 900, Vault Operations            Toronto, Ontario             M5J 0B6            Canada            Attention: Michael Ishisbashi (Tel: 416-643-3240)            Reference: Manufactures Life Reinsurance Limited - Account # 844180 / 49AA                        Also please forward a copy of the note(s) to Asia-Canadian_PP@manulife.com mailbox and            Asia_GA_Legal@manulife.com so we can instruct CIBC to deposit the Note(s).                              (ii) Closing documents (one CD ROM’s and one hardcopy of the executed documents) should be            sent to:                        Manufactures Life Reinsurance Limited             c/o Manulife Asset Management (Asia)            General Accounts Investments            16/F. Lee Garden One, 33 Hysan Avenue            Causeway Bay, Hong Kong            Attention: Jonathan Luk, Helen Lo, Justin Yeung and Calvin Yip                                                                              A-36 

 

                  NAME OF AND ADDRESS                          SERIES        PRINCIPAL AMOUNT OF                      OF PURCHASER                          OF NOTES       NOTES TO BE PURCHASED                                                                                           MANULIFE LIFE INSURANCE COMPANY                               B                 $6,000,000   Marunouchi Trust Tower North 15F   1-8-1 Marunouchi, Chiyoda-ku, Tokyo,   Japan 100-0005    (1)    PAYMENTS:           All payments to be by bank wire transfer of immediately available funds to:                   USD                                       Bank Name:                      The Bank of New York Mellon, New York (BIC: IRVTUS3N)          ABA:                            021-000-018          Beneficiary Bank BIC:           IRVTUS3NIBK          Beneficiary Bank A/C #:         8901323349          Ultimate Beneficiary A/C #:     2491478400          Ultimate Beneficiary Name:      J108 MLJ COLLECTOR AC US PRIVATE          Reference:                      Golden State Water Company, CUSIP/PPN and P&I breakdown,                                          interest rate and maturity date of Notes or other obligations    (2)    NOTICES AND AUDIT REQUESTS:            s                                            Notices with    Notices and    Electronic                                                       respect to      communication  notices and                                                       payments,       with respect to all other                                                       prepayments     compliance     Notices                                                       (scheduled and  reporting,                                                       unscheduled,    financial                                                       whether partial or statements and                                                       in full) and    related                                                       maturity        certifications          Manulife Financial          200 Bloor Street East, NT2-D70          Toronto, Ontario, Canada M4W 1E5                   ü                                       Attention: Asia-Canadian Private Placement Team          Email: Asia-Canadian_PP@manulife.com          Manulife Life Insurance Company          Marunouchi Trust Tower North 15F          1-8-1 Marunouchi, Chiyoda-ku, Tokyo,          Japan 100-0005                                                             ü               ü             ü          Attention:   Head of Investments          Telephone:   81-3-6267-1800          Fax:         81-3-6267-1799          Email: MLJIO_Settlement_Team@manulife.com          Manulife General Account Investments (HK)          16/F, Lee Garden One, 33 Hysan Avenue          Causeway Bay, Hong Kong          Attention:   Calvin Yip, Helen Lo, Justin                          ü             ü                       Yeung, Jonathan Luk          Email: corporate_finance_asia@manulife.com          Fax number:  852-2295-1771          John Hancock Financial Services          197 Clarendon Street, C-2          Boston, MA 02116                                                   ü                       Attention:   Bond and Corporate Finance          Team Email:  powerteam@jhancock.com          Asia GA Legal                                                                                           ü          Email: Asia_GA_Legal@manulife.com                                                 A-37 

 

     (3)    TAX IDENTIFICATION NUMBER: 98-0427213    (4)    REGISTERED NAME OF SECURITIES: Manulife Life Insurance Company    (5)    DOCUMENTATION DELIVERY REQUIREMENTS           (i) Original securities should be sent the day after closing to:                     CIBC Mellon Global Securities Services            1 York Street, Suite 900, Vault Operations            Toronto, Ontario             M5J 0B6            Canada            Attention: Michael Ishisbashi (Tel: 416-643-3240)            Reference:  Manulife Life Insurance Company - Account # 249147 / J108                        Also please forward a copy of the note(s) to Asia-Canadian_PP@manulife.com mailbox and            Asia_GA_Legal@manulife.com so we can instruct CIBC to deposit the Note(s).                     (ii) Closing documents (one CD ROM’s and one hardcopy of the executed documents) should be            sent to:                        Manulife Life Insurance Company            Marunouchi Trust Tower North 15F            1-8-1, Marunouchi, Chiyoda-ku,             Tokyo 100-0005            Japan            Attention: Rikako Shoji and Kensuke Muraki (Investments)                                                                                                  A-38 

 

                                   SCHEDULE B                                        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:         “Accredited Investor” means an accredited investor as defined in Rule 501(a)(1), (2), (3)  or (7) of Regulation D under the Securities Act.          “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 such Person,  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 any of the Company and its Subsidiaries 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 or any Subsidiary, as the case may be.         “Agreement” means this Agreement, including all Exhibits and Schedules attached to this  Agreement, as it may be amended, restated, supplemented or otherwise modified from time to  time.         “Anti-Corruption  Laws” means  any  law  or  regulation  in  a  U.S.  or  any  non-U.S.  jurisdiction regarding bribery or any other corrupt activity, including the U.S. Foreign Corrupt  Practices Act and the U.K. Bribery Act 2010.         “Anti-Money Laundering Laws” means any law or regulation in a U.S. or any non-U.S.  jurisdiction  regarding  money  laundering,  drug  trafficking,  terrorist-related  activities  or  other  money laundering predicate crimes, including the Currency and Foreign Transactions Reporting  Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act.         “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                                    SCHEDULE B                            (to Note Purchase Agreement) 

 

   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.         “Blocked  Person” means  (a) a  Person  whose  name  appears  on  the  list  of  Specially  Designated Nationals and Blocked Persons published by OFAC, (b) a Person, entity, organization,  country  or  regime  that  is  blocked  or  a  target  of  sanctions  that  have  been  imposed  under  U.S.  Economic Sanctions Laws or (c) a Person that is an agent, department or instrumentality of, or is  otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, any  Person, entity, organization, country or regime described in clause (a) or (b).         “Bear Valley Electric Service Assets” means the assets, properties and business of every  kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, held  or used in connection with the distribution of electricity by the Company in several mountain  communities  in  San  Bernardino,  California,  other  than  the  assets  listed  as  excluded  assets  on  Exhibit B to the Spin-off Agreement.          “Business  Day” means  (a) for  the  purposes  of  Section 8.7  only,  any  day  other  than  a  Saturday,  a  Sunday  or  a  day  on  which  commercial  banks  in  New  York  City  are  required  or  authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day  other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, or  Los Angeles, California are required or authorized to be closed.         “Capital Lease” means, as to any Person, a lease of Property by that Person as a lessee  that is, or should be, in accordance with GAAP classified as a finance lease on the balance sheet  of that Person 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.         “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 or AA by 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                                        B-2 

 

                Securities executed by (i) 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 or (ii) CoBank, ACB, in each case due within one  year after the date of the making of the Investment and participation certificates issued by  CoBank, ACB to the Company;         (d)   certificates  of  deposit  issued  by,  bank  deposits  in,  eurodollar  deposits  through,  bankers’  acceptances  of,  and repurchase  agreements  covering  Government  Securities executed by (i) 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 (ii) CoBank, ACB, 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 Exchange Act 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-1 by Moody’s or A-1 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 have  the benefit of a standby letter of credit issued by CoBank, ACB 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                                   B-3 

 

               (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.         “Closing” is defined in Section 3.         “Closing Date” is defined in Section 3.         “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.         “Company” is defined in the introductory paragraph of this Agreement.         “Condemnation” means any order of condemnation of private property of such Person by  any Governmental Authority in an eminent domain proceeding and any settlement of any such  proceeding resulting in the condemnation of such property.          “Confidential Information” is defined in Section 20.         “Controlled Entity” means (i) any of the Subsidiaries of the Company and any of their or  the Company’s respective Controlled Affiliates and (ii) if the Company has a parent company,  such parent company and its Controlled Affiliates.  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.         “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 the greater of (i) 2% per annum above  the rate of interest stated in clause (a) of the first paragraph of the Notes or (ii) 2% over the rate of  interest publicly announced by JPMorgan Chase Bank in New York, New York as its “base” or  “prime” rate.         “Disclosure Documents” is defined in Section 5.3.         “Disposition”  means  the  sale,  transfer  or  other  disposition,  including  pursuant  to  a  Condemnation (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 equipment sold or otherwise disposed of where substantially                                        B-4 

 

   similar  equipment  in  replacement  thereof  has  theretofore  been  acquired,  or  thereafter within  90 days is acquired, by the Company or any Subsidiary, (c) a Transfer of obsolete assets no longer  useful in the business of the Company or any Subsidiary, (d) a Transfer to the Company or to a  Wholly-Owned Subsidiary of the Company, and (e) a Transfer of the Bear Valley Electric Service  Assets and the stock of Bear Valley Electric Service, Inc. pursuant to the terms of the Spin-off  Agreement.           “Disposition Prepayment Date” is defined in Section 8.3.         “Disposition Response Date” is defined in Section 8.3.         “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  deducted  from  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 Required Holders, 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 deducted in the determination of Net Income for that period.  An expense is significant  for this purpose if it equals or exceeds $1,000,000.         “Environmental Laws” means any and all federal, state, local, and foreign statutes, laws,  regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises,  licenses, agreements or governmental restrictions relating to pollution and the protection of the  environment or the release of any materials into the environment, including but not limited to those  related to Hazardous Materials.         “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.                                         B-5 

 

         “Exchange Act” means the Securities Exchange Act of 1934, as amended.          “Form 10-K” is defined in Section 7.1(b).         “Form 10-Q” is defined in Section 7.1(a).         “GAAP” means generally accepted accounting principles as in effect from time to time in  the United States of America.         “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.         “Governmental Authority” means               (a)   the government of                      (i)  the  United  States  of  America  or  any  state  or  other  political              subdivision thereof, or                     (ii)  any  other  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               (b)   any  entity  exercising  executive,  legislative,  judicial,  regulatory  or        administrative functions of, or pertaining to, any such government.         “Governmental Official” means any governmental official or employee, employee of any  government-owned  or  government-controlled entity,  political  party,  any official  of  a  political  party, candidate for political office, official of any public international organization or anyone else  acting in an official capacity.         “Guaranty  Obligation”  means,  as  to  any  Person,  any  (a) guarantee  by  that  Person  of  Indebtedness of, or other obligation performable by, any other Person or (b) assurance given by  that Person to an obligee of any other Person with respect to the performance of any obligation by,  or the financial condition of, such other Person, whether direct, indirect or contingent, including  any purchase or repurchase agreement covering such obligation or any collateral security therefor,  any agreement to provide funds (by means of loans, capital contributions or otherwise) to such  other Person, any agreement to support the solvency or level of any balance sheet item of such  other Person or any “keep well” or other arrangement of whatever nature given for the purpose of  assuring or holding harmless such obligee against loss with respect to any obligation of such other  Person; provided, however, that the term Guaranty Obligation shall not include endorsements of  instruments for deposit or collection or similar arrangements in the ordinary course of business.   The  amount  of  any  Guaranty  Obligation  in  respect  of  Indebtedness  shall  be  deemed  to  be  an                                        B-6 

 

   amount equal to the stated or determinable amount of the related Indebtedness (unless the Guaranty  Obligation is limited by its terms to a lesser amount, in which case to the extent of such amount)  or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof  as determined by the Person in good faith.  The amount of any other Guaranty Obligation shall be  deemed to be zero unless and until the amount thereof has been (or, in accordance with Financial  Accounting Standards Board Accounting Standards Codification Topic No. 450 – Contingencies,  should be) quantified and reflected or disclosed in the consolidated financial statements (or note  thereof) of Company and its Subsidiaries.         “Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or other  substances that might pose a hazard to health and safety, the removal of which may be required or  the  generation,  manufacture,  refining,  production,  processing,  treatment,  storage,  handling,  transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is  or shall be restricted, prohibited or penalized by any applicable law including, but not limited to,  asbestos,  urea  formaldehyde  foam  insulation,  polychlorinated  biphenyls,  petroleum,  petroleum  products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.         “holder” means,  with  respect  to  any  Note,  the  Person  in  whose  name  such  Note  is  registered in the register maintained by the Company pursuant to Section 13.1; provided, however,  that if such Person is a nominee, then for the purposes of Sections 7, 12, 17.2 and 18 and any  related definitions in this Schedule B, “holder” shall mean the beneficial owner of such Note whose  name and address appears in such register.         “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 non-recourse 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 or any of its Subsidiaries 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 or such Subsidiary, as the case may be, 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.  In  addition, for purposes of this Agreement, Indebtedness of any Person shall not include the liability  for “operating leases” that is required to be recorded on the balance sheet of such Person under  ASU 2016-02, Leases (Topic 842).         “INHAM Exemption” is defined in Section 6.2(e).                                        B-7 

 

         “Institutional  Investor” means  (a) any  Purchaser  of  a  Note,  (b) any  holder  of  a  Note  holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount  of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other  financial  institution,  any  pension  plan,  any  investment  company,  any  insurance  company,  any  broker or dealer, or any other similar financial institution or entity, regardless of legal form, and  (d) any Related Fund of any holder of any Note.         “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 Accounting Standards Codification Topic No. 842 – Leases.         “Interest Rate Protection Agreement” means a written agreement between the Company  and/or any Subsidiary, as applicable, 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.         “Investment  Grade  Rating”  means  a  credit rating of  at  least  one  of  the  following:  (a) BBB- or higher by S&P, (b) Baa3 or higher by Moody or (c) the equivalent of such foregoing  ratings by another nationally recognized rating agency, which has been most recently assigned by  such rating agency, as the case may be, to such Person.         “Lien” means,  with  respect  to  any  Person,  any  mortgage,  deed  of  trust,  pledge,  hypothecation, assignment for security, security interest, encumbrance, lien or other charge of any  kind, affecting any Property, including any lease in the nature of a security interest.         “Make-Whole Amount” is defined in Section 8.7.         “Material” means  material  in  relation  to  the  business,  operations,  affairs,  financial  condition, assets or properties of the Company and its Subsidiaries taken as a whole.         “Material Adverse Effect” means a material adverse effect on (a) the business, operations,  affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a                                        B-8 

 

   whole, (b) the ability of the Company to perform its obligations under this Agreement and the  Notes, (c) the ability of any Significant Subsidiary Guarantor, if any, to perform its obligations  under its Significant Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement,  the Notes, any Significant Subsidiary Guaranty or any other Transaction Document.         “Material Credit Facility” means, as to the Company and its Subsidiaries,          (a)   the Prudential NPA; and          (b)   any other agreement(s) creating or evidencing indebtedness for borrowed money  entered into on or after the Closing Date by the Company or any Subsidiary, or in respect of which  the Company or any Subsidiary is an obligor or otherwise provides a guarantee or other credit  support (“Credit Facility”), in a principal amount outstanding or available for borrowing equal to  or greater than $20,000,000 (or the equivalent of such amount in the relevant currency of payment,  determined as of the date of the closing of such facility based on the exchange rate of such other  currency); and if no Credit Facility or Credit Facilities equal or exceed such amounts, then the  largest Credit Facility shall be deemed to be a Material Credit Facility.          “Maturity Date” is defined in each Note.         “Moody’s” means Moody’s Investors Services, Inc. and any successor thereto.         “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is  defined in section 4001(a)(3) of ERISA).         “NAIC” means the National Association of Insurance Commissioners or any successor  thereto.         “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 or a Subsidiary, as the case may be, for such Disposition after (i) provision for  all  income  and  other  taxes  resulting  from  such  Disposition,  (ii) payment  of  all  brokerage  commissions, underwriting, legal, accounting, appraisal and other fees and expenses related to  such Disposition, and (iii) deduction of appropriate amounts to be provided by the Company or  such Subsidiary, as the case may be, 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 or  such Subsidiary, as the case may be, after such Disposition, including, without limitation, any  indemnification obligations associated with the Disposition.         “Non-U.S. Plan” means any plan, fund or other similar program that (a) is established or  maintained outside the United States of America by the Company or any Subsidiary primarily for  the benefit of employees of the Company or one or more Subsidiaries residing outside the United  States of America, which plan, fund or other similar program provides, or results in, retirement                                        B-9 

 

   income,  a  deferral  of  income  in  contemplation  of  retirement  or  payments  to  be  made  upon  termination of employment, and (b) is not subject to ERISA or the Code.           “Notes” is defined in Section 1.         “OFAC means the Office of Foreign Assets Control of the United States Department of  the Treasury.         “OFAC  Sanctions  Program” means  any  economic  or  trade  sanction  that  OFAC  is  responsible for administering and enforcing.  A list of OFAC Sanctions Programs may be found  at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.         “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 have been set aside with respect thereto and, by reason of nonpayment, no property        is subject to an impending risk of loss or forfeiture;                                         B-10 

 

               (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, 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) incurred in the ordinary course of business;               (g)   Liens  consisting  of  deposits  of  property  to  secure  (or  in  lieu  of)  surety,        appeal or customs bonds incurred in the ordinary course of business;                (h)   Liens which secure indebtedness which was in existence at the time of any        transaction  permitted  by  Section 10.3  and  were  not  created  in  contemplation  of such        transaction;               (i)   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);                (j)   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                (k)   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; provided that such Liens under this        clause (k) shall not secure any Indebtedness under a Material Credit Facility unless the        Company concurrently secures the Notes equally and ratably with such Indebtedness in        accordance with Section 10.2(a).         “Person” means  an individual,  partnership,  corporation,  limited  liability  company,  association, trust, unincorporated organization, business entity or Governmental Authority.                                         B-11 

 

         “Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to  Title I 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.         “Prepayment Amount” is defined in Section 8.3.         “property” or “properties” means, unless otherwise specifically limited, any interest in  any kind of property or asset, whether real, personal or mixed, tangible or intangible, choate or  inchoate.         “Prudential NPA” means the Note Purchase Agreement dated as of December 23, 2014  between the Company and The Prudential Insurance Company of America, and the Company’s  3.45% Senior Notes due December 23, 2029 in an aggregate principal amount of $15,000,000  issued pursuant thereto.           “PTE” is defined in Section 6.2(a).         “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.         “Purchaser”  or  “Purchasers” means  each  of  the  purchasers  that  has  executed  and  delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as  any such assignment complies with Section 13.2), provided, however, that any Purchaser of a Note  that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as  the  result  of  a  transfer  thereof  pursuant  to Section 13.2  shall  cease  to  be  included  within  the  meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer.         “Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer”  within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.         “QPAM Exemption” is defined in Section 6.2(d).         “Ratable Amount” is defined in Section 8.3.         “Related Fund” means, with respect to any holder of any Note, any fund or entity that  (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same  investment advisor as such holder or by an affiliate of such holder or such investment advisor.         “Required Holders” means, at any time, the holders of more than 50% in principal amount  of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its  Affiliates).                                         B-12 

 

         “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.         “S&P”  means  Standard  &  Poor’s  Ratings  Group,  a division  of  The  McGraw-Hill  Companies, and any successor thereto.         “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.          “SEC” means  the  Securities  and  Exchange  Commission  of  the  United  States,  or  any  successor thereto.         “Securities” or “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, or any “security”  as defined in section 2(1) of the Securities Act.          “Securities Act” means the Securities Act of 1933, as amended from time to time, and the  rules and regulations promulgated thereunder from time to time in effect.         “Senior Financial Officer” means the chief financial officer, principal accounting officer,  treasurer or controller of the Company.           “Series A Notes” is defined in Section 1.         “Series B Notes” is defined in Section 1.         “Significant  Subsidiary” means  at  any  time  any  Subsidiary  that  would  at  such  time  constitute a “significant subsidiary” (as such term is defined in Regulation S-X of the SEC as in  effect on the date of the Closing) of the Company.         “Significant Subsidiary Guarantor” means a Significant Subsidiary that is a Subsidiary  Guarantor.         “Significant Subsidiary Guaranty” mean a Subsidiary Guaranty made by a Significant  Guarantor.         “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                                        B-13 

 

   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.  As used in this definition, (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.         “Source” is defined in Section 6.2.         “Spin-off  Agreement” means the  Contribution  and  Spin-off  Agreement  dated  December 13, 2018 among American States Water Company, Bear Valley Electric Service, Inc.  and the Company.         “State Sanctions List” means a list that is adopted by any state Governmental Authority  within  the  United  States  of  America  pertaining  to  Persons  that engage  in  investment  or  other  commercial activities in Iran or any other country that is a target of economic sanctions imposed  under U.S. Economic Sanctions Laws.         “Subsidiary” means, as to any Person, any other Person in which such first Person or one  or more of its Subsidiaries or such first Person and 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  second Person, and any partnership or joint venture if more than a 50% interest in the profits or  capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person  and one or more of its Subsidiaries (unless such partnership or joint venture 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.         “Subsidiary  Guarantor”  means each  Subsidiary  that  has  executed  and  delivered  a  Subsidiary Guaranty.         “Subsidiary Guaranty” is defined in Section 9.7.         “SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.         “Substantial Portion” means, as of any date of determination, the book value of assets of  such Person equal to or exceeding 15% of Total Capitalization as of the last day of the preceding  fiscal year.         “Total Assets” means, as of any date of determination, the consolidated total assets of the  Company and its Subsidiaries as of the last day of the immediately preceding fiscal year, after                                         B-14 

 

   deducting the assets for “operating leases” that are required to be recorded on the balance sheet of  the Company and its Subsidiaries under ASU 2016-02, Leases (Topic 842).          “Total  Capitalization”  means,  at  any  time,  the  sum  of  Total  Indebtedness plus the  difference  between  the  consolidated  total  assets  of  the  Company  and  its  Subsidiaries  less  consolidated total liabilities of the Company and its Subsidiaries (each determined in accordance  with GAAP), provided that contributions in aid of construction, Advances for Construction of the  Company  or  any  of  its  Subsidiaries, 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, without limitation, subordinated indebtedness, debt Securities issued by the Company  and any of its Subsidiaries, the aggregate principal Indebtedness outstanding under the Notes and  the Aggregate Effective Amount of all outstanding letters of credit in favor of the Company and  each Subsidiary) 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 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 the applicable fiscal quarter of such fiscal  year.         “Total  Indebtedness  to  EBIDTA  Ratio”  means  the  ratio  of  Total  Indebtedness  to  EBITDA, determined on the last day of the applicable fiscal period.         “Transaction Documents” means this Agreement, the Notes, each Subsidiary Guaranty,  if any, and any other agreements of any type or nature presently or hereafter executed and delivered  by  the  Company  or  any  Subsidiary  Guarantor  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.           “U.S.  Economic  Sanctions  Laws” means  those  laws,  executive  orders,  enabling  legislation  or  regulations  administered  and  enforced  by  the  United  States  pursuant  to which  economic sanctions have been imposed on any Person, entity, organization, country or regime,  including the Trading with the Enemy Act, the International Emergency Economic Powers Act,  the  Iran  Sanctions  Act,  the  Sudan  Accountability  and  Divestment  Act  and  any  other  OFAC  Sanctions Program.         “USA  PATRIOT  Act”   means  United  States  Public  Law  107-56,  Uniting  and  Strengthening  America  by  Providing  Appropriate  Tools  Required  to  Intercept  and  Obstruct  Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and  regulations promulgated thereunder from time to time in effect.                                         B-15 

 

         “Wholly-Owned Subsidiary” means, at any time, any Subsidiary all of the equity interests  (except directors’ qualifying shares) and voting interests of which are owned by any one or more  of the Company and the Company’s other Wholly-Owned Subsidiaries at such time.                                         B-16 

 

                                   SCHEDULE 5.3                             DISCLOSURE MATERIALS    Form 10-K for the year ended December 31, 2019    Form 8-Ks filed on January 31, 2020 and March 13, 2020    Form 10-Qs for the quarter ended March 31, 2020                                                                  SCHEDULE 5.3                            (to Note Purchase Agreement) 

 

                                   SCHEDULE 5.4                       SUBSIDIARIES OF THE COMPANY AND                       OWNERSHIP OF SHARES; AFFILIATES                                            Subsidiaries:  California Cities Water Company, Inc., a California corporation; 100% of shares.                  Affiliates: American States Water Company              Bear Valley Electric Service, Inc.              American States Utility Services, Inc.              Fort Bliss Water Services Company              Old Dominion Utility Services, Inc.              Terrapin Utility Services, Inc.              Palmetto State Utility Services, Inc.              Old North Utility Services, Inc.              Emerald Coast Utility Services, Inc.              Fort Riley Utility Services, Inc.    Directors:  James L. Anderson              Sarah J. Anderson              Diana Bontá              John R. Fielder              Anne M. Holloway              Mary Ann Hopkins              C, James Levin              Robert J. Sprowls              Janice F. Wilkins    Officers:   Robert J. Sprowls              Denise L. Kruger              Eva G. Tang              Gladys M. Farrow              Sunil K. Pillai              Paul J. Rowley                        Bryan K. Switzer                                       SCHEDULE 5.4                            (to Note Purchase Agreement) 

 

                                   SCHEDULE 5.5                             FINANCIAL STATEMENTS                                            Financial Statements in Form 10-K for the year ended December 31, 2017  Financial Statements in Form 10-K for the year ended December 31, 2018  Financial Statements in Form 10-K for the year ended December 31, 2019  Financial Statements in Form 10-Q for the quarter ended March 31, 2020                                     SCHEDULE 5.5                            (to Note Purchase Agreement) 

 

                                              SCHEDULE 5.15                         EXISTING INDEBTEDNESS - As of March 31, 2020                                  Debt      Coupon                   Maturity        Description       Amount      Rate      Issue Date      Date             Remark  6.81% Note due 2028      15,000,000  6.810%     03/23/1998   03/23/2028 Public Debt  6.59% Note due 2029      40,000,000  6.590%     01/25/1999   01/25/2029 Public Debt  7.875% Note due 2030     20,000,000  7.875%     01/26/2001   12/01/2030 Public Debt  7.23% Note due 2031      50,000,000  7.230%     12/11/2001   12/15/2031 Public Debt  6.00% Note due 2041      62,000,000  6.000%     04/14/2011   04/15/2041 Public Debt  9.56% Notes due 2031 (*)    28,000,000  9.560%  05/15/1991   05/15/2031 Private Placement   5.87% Note due 2028 (*)    40,000,000  5.870%   10/11/2005   12/20/2028 Private Placement   3.45% Note due 2029 (*)    15,000,000  3.450%   12/23/2014   12/23/2029 Private Placement   5.50% Tax Exempt Note       7,730,000  5.500%   12/01/1996   12/01/2026 Public Debt -Tax Exempt  State Water Project        3,563,129  Various   06/01/1994   09/30/2035 Tax Exempt  American Recovery and      3,313,763  2.5017%      Various   03/01/2033 Funding under the Safe  Reinvestment Act                                                       Drinking Water State  Obligation                                                             Revolving Fund Law of 1997                                                                         and the American Recovery                                                                         and Reinvestment Act of 2007                        $284,606,892                                                  * The debt agreement on these private placement debts contains covenants, which restrict incurrence of debt.            ** $940,000 of letters of credit have been issued by the Company and were outstanding at March 31, 2020 under the      Amended and Restated Credit Agreement of American States Water Company.  The Company is able to obtain      letters of credit under this credit agreement.                                                SCHEDULE 5.15                                    (to Note Purchase Agreement) 

 

                                  SCHEDULE 10.2                                 EXISTING LIENS                                             None.                                   SCHEDULE 10.2                            (to Note Purchase Agreement) 

 

                                    EXHIBIT 1-A                            [FORM OF SERIES A NOTE]   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS  AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT  BE  SOLD  OR  OTHERWISE  DISPOSED  OF  EXCEPT  PURSUANT  TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE  ACT  AND  ANY  APPLICABLE  STATE  SECURITIES LAWS OR PURSUANT TO A VALID EXEMPTION THEREFROM.                        GOLDEN STATE WATER COMPANY                  2.17% SERIES A SENIOR NOTE DUE JULY 8, 2030    No. R-[__]                                                              [Date]  $[_______]                                                   PPN: 38121@ AC6         FOR VALUE RECEIVED, the undersigned, GOLDEN STATE WATER COMPANY  (herein called the “Company”), a corporation organized and existing under the laws of the State  of California, hereby promises to pay to [____________], or registered assigns, the principal sum  of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on  July 8, 2030 (the “Maturity Date”), with interest (computed on the basis of a 360-day year of  twelve 30-day months) (a) on the unpaid balance hereof at the rate of 2.17% per annum from the  date hereof, payable semiannually, on the 8th day of January and July in each year, commencing  with the January 8 or July 8 next succeeding the date hereof, and on the Maturity Date, until the  principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any  overdue payment of interest and, during the continuance of an Event of Default, on such unpaid  balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time  to time equal to the greater of (i) 4.17% and (ii) 2% over the rate of interest publicly announced  by JPMorgan Chase Bank from time to time in New York, New York as its “base” or “prime” rate,  payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).         Payments of principal of, interest on and any Make-Whole Amount with respect to this  Note are to be made in lawful money of the United States of America at the principal office of  Bank of America, N.A. in New York, New York or at such other place as the Company shall have  designated by written notice to the holder of this Note as provided in the Note Purchase Agreement  referred to below.         This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to  the Note Purchase Agreement, dated as of July 8, 2020 (as from time to time amended, the “Note  Purchase Agreement”), between the Company and the respective Purchasers named therein and  is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance  hereof,  to  have  (i) agreed  to  the  confidentiality  provisions  set  forth  in  Section 20  of  the  Note  Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase  Agreement.   Unless  otherwise  indicated,  capitalized  terms  used  in  this  Note  shall  have  the  respective meanings ascribed to such terms in the Note Purchase Agreement.                                     EXHIBIT 1A                            (to Note Purchase Agreement) 

 

         This Note is a registered Note and, as provided in the Note Purchase Agreement, upon  surrender of this Note for registration of transfer, accompanied by a written instrument of transfer  duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing,  a  new  Note  for  a  like  principal  amount  will  be  issued  to,  and  registered  in  the  name  of,  the  transferee.  Prior to due presentment for registration of transfer, the Company may treat the person  in whose name this Note is registered as the owner hereof for the purpose of receiving payment  and for all other purposes, and the Company will not be affected by any notice to the contrary.         The Company will make required prepayments of principal on the dates and in the amounts  specified in the Note Purchase Agreement.  This Note is also 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 occurs and is continuing, the principal of this Note may be declared  or otherwise become due and payable in the manner, at the price (including any applicable Make- Whole Amount) and with the effect provided in the Note Purchase Agreement.         This  Note  shall  be  construed  and  enforced  in  accordance  with,  and  the  rights  of  the  Company and the holder of this Note shall be governed by, the law of the State of New York  excluding choice-of-law principles of the law of such State that would permit the application of  the laws of a jurisdiction other than such State.                                                                                  GOLDEN STATE WATER COMPANY,                                           a California corporation                                                                                                                           By ___________________________________                                             Name:                                            Title:                                       EXHIBIT 1A-2 

 

                                    EXHIBIT 1B                            [FORM OF SERIES B NOTE]   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS  AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT  BE  SOLD  OR  OTHERWISE  DISPOSED  OF  EXCEPT  PURSUANT  TO  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE       ACT  AND  ANY  APPLICABLE  STATE  SECURITIES LAWS OR PURSUANT TO A VALID EXEMPTION THEREFROM.                        GOLDEN STATE WATER COMPANY                  2.90% SERIES B SENIOR NOTE DUE JULY 8, 2040    No. R-[__]                                                              [Date]  $[_______]                                                   PPN: 38121@ AD4         FOR VALUE RECEIVED, the undersigned, GOLDEN STATE WATER COMPANY  (herein called the “Company”), a corporation organized and existing under the laws of the State  of California, hereby promises to pay to [____________], or registered assigns, the principal sum  of [_____________________] DOLLARS (or so much thereof as shall not have been prepaid) on  July 8, 2040 (the “Maturity Date”), with interest (computed on the basis of a 360-day year of  twelve 30-day months) (a) on the unpaid balance hereof at the rate of 2.90% per annum from the  date hereof, payable semiannually, on the 8th day of January and July in each year, commencing  with the January 8 or July 8 next succeeding the date hereof, and on the Maturity Date, until the  principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any  overdue payment of interest and, during the continuance of an Event of Default, on such unpaid  balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time  to time equal to the greater of (i) 4.90% and (ii) 2% over the rate of interest publicly announced  by JPMorgan Chase Bank from time to time in New York, New York as its “base” or “prime” rate,  payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).         Payments of principal of, interest on and any Make-Whole Amount with respect to this  Note are to be made in lawful money of the United States of America at the principal office of  Bank of America, N.A. in New York, New York or at such other place as the Company shall have  designated by written notice to the holder of this Note as provided in the Note Purchase Agreement  referred to below.         This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to  the Note Purchase Agreement, dated as of July 8, 2020 (as from time to time amended, the “Note  Purchase Agreement”), between the Company and the respective Purchasers named therein and  is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance  hereof,  to  have  (i) agreed  to  the  confidentiality  provisions  set  forth  in  Section 20  of  the  Note  Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase  Agreement.   Unless  otherwise  indicated,  capitalized  terms  used  in  this  Note  shall  have the  respective meanings ascribed to such terms in the Note Purchase Agreement.                                     EXHIBIT 1B                            (to Note Purchase Agreement) 

 

         This Note is a registered Note and, as provided in the Note Purchase Agreement, upon  surrender of this Note for registration of transfer, accompanied by a written instrument of transfer  duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing,  a  new  Note  for  a  like  principal  amount  will  be  issued  to,  and  registered  in  the  name  of,  the  transferee.  Prior to due presentment for registration of transfer, the Company may treat the person  in whose name this Note is registered as the owner hereof for the purpose of receiving payment  and for all other purposes, and the Company will not be affected by any notice to the contrary.         The Company will make required prepayments of principal on the dates and in the amounts  specified in the Note Purchase Agreement.  This Note is also 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 occurs and is continuing, the principal of this Note may be declared  or otherwise become due and payable in the manner, at the price (including any applicable Make- Whole Amount) and with the effect provided in the Note Purchase Agreement.         This  Note  shall  be  construed  and  enforced  in  accordance  with,  and  the  rights  of  the  Company and the holder of this Note shall be governed by, the law of the State of New York  excluding choice-of-law principles of the law of such State that would permit the application of  the laws of a jurisdiction other than such State.                                                                                  GOLDEN STATE WATER COMPANY,                                           a California corporation                                                                                                                           By ___________________________________                                             Name:                                            Title:                                                                              EXHIBIT 1B-2 

 

                                      EXHIBIT 4.4(a)                         FORM OF OPINION OF SPECIAL COUNSEL             TO THE COMPANY                                          [Attached]                                                   EXHIBIT 4.4(a)          (to Note Purchase Agreement) 

 

                                                                               July 8, 2020   To Each of the Purchasers Listed on   Schedule A to the Note Purchase  Agreement (as defined below)                Re: Golden State Water Company    Ladies and Gentlemen:               We have acted as special counsel to Golden State Water Company, a California  corporation (the “Company”), in connection with that certain Note Purchase Agreement, dated as  of July  8, 2020 (the “Note  Purchase  Agreement”), between  the Company and you, as the  Purchasers under  the Note  Purchase  Agreement (the “Purchasers”), and with  respect  to  the  Company’s issuance of $85,000,000 principal amount of its 2.17% Series A Senior Notes due July  8, 2030 and $75,000,000 principal amount of its 2.90% Series B Senior Notes due July 8, 2040  (collectively, the “Notes”) pursuant  to  the  Note  Purchase  Agreement. Capitalized  terms  used  herein, but not otherwise defined herein, shall have the respective meanings ascribed to such terms  in the Note Purchase Agreement.  This opinion letter is delivered to you at our client’s request  pursuant to Section 4.4(a) of the Note Purchase Agreement.               In rendering the opinions set forth herein, we have examined:                (i)   the Company’s articles of incorporation and bylaws, as amended through  the date hereof;               (ii)  the  resolutions  of  the  board  of  directors  of  the  Company (the  “Board”)  regarding the offer and sale of the Notes;               (iii) the resolutions of the Issuance Committee of the Board authorizing the Note  Purchase Agreement, the Notes, and the transactions contemplated thereby;               (iv)  the good standing certificate of the Company attached hereto as Schedule I  (the “Good Standing Certificate”);               (v)   Decision 20-05-010 issued by the California Public Utilities Commission  (“CPUC”) on May 7, 2020 (the “Financing Decision”);                (vi)  the Note Purchase Agreement;                (vii) the Notes;               (viii) the letter from BofA Securities, Inc., dated July 8, 2020, concerning the  Notes (the “Representation Letter”); and                                      4.4(a)-2 

 

               (ix)  such  other agreements,  instruments and  documents  as  we  have  deemed  necessary or appropriate to enable us to render the opinions expressed below.                Additionally, we have examined originals or copies, certified to our satisfaction, of  such certificates of public officials and officers and of representatives of the Company and we  have made such inquiries of officers and representatives of the Company, in each case, as we have  deemed relevant or necessary to establish the basis for the opinions set forth herein.  The items  identified  in clause (i)  above  are  collectively  hereinafter  referred  to  as  the  “Organizational  Documents,” the items identified in clauses (vi) and (vii) above are collectively hereinafter referred  to as the “Transaction Documents,” and the items identified in clauses (i) through (ix) above are  collectively hereinafter referred to as the “Documents.”               In rendering the opinions expressed below, we have, with your consent, assumed  the legal capacity of all natural persons executing documents, that the signatures of persons signing  all  documents  in  connection  with  which  this  opinion  letter  is  rendered  are  genuine,  that  all  documents submitted to us as originals or duplicate originals are authentic and that all documents  submitted  to  us  as  copies,  whether  certified  or  not,  conform  to  authentic  original  documents.  Additionally, we have, with your consent, assumed and relied upon the following: (a) the accuracy  and completeness of all certificates and other statements, documents, records, financial statements  and papers reviewed by us, and the accuracy and completeness of all representations, warranties,  schedules and exhibits contained in the Documents, with respect to the factual matters set forth  therein and compliance by the Company with its covenants under the Documents; and (b) except  to the extent expressly set forth in paragraphs 1 and 2 below with respect to the Company, all  parties to the documents reviewed by us are duly organized, validly existing and in good standing  (to  the  extent  applicable)  under  the  laws  of  their  respective  jurisdictions  of  incorporation  or  formation  and  qualified  under  the  laws  of  all  jurisdictions  where  they  are  conducting  their  businesses or otherwise required to be so qualified, and have full power and authority to execute,  deliver and perform under such documents and all such documents have been duly authorized,  executed and delivered by such parties.               Whenever our opinion with respect to the existence or absence of facts is indicated  to be based on our knowledge or awareness, we are referring to the actual present knowledge of  the particular Winston & Strawn LLP attorneys who have represented the Company during the  course  of  our  limited  representation  of  the  Company  in  connection  with  the  Transaction  Documents.   Except  as  expressly  set  forth  herein,  we  have  not  undertaken  any  independent  investigation, examination or inquiry to determine the existence or absence of any facts (and have  not caused the review of any court file or indices) and no inference as to our knowledge concerning  any facts should be drawn as a result of the limited representation undertaken by us.               Based upon the foregoing and subject to the assumptions, qualifications, limitations  and comments stated herein, we are of the opinion that:               1.    The  Company  is  validly  existing  and  in  good  standing  as  a  corporation  under the laws of the State of California.  The Company has the corporate power and authority to  conduct  its  business  as  presently  conducted  and  to  execute  and  deliver,  and to perform  its  obligations under, each of the Transaction Documents.                                       4.4(a)-3 

 

               2.    The  execution,  delivery  and  performance  of  each  of  the  Transaction  Documents  have been  duly  authorized  by  all  necessary  corporate  action  on  the  part  of  the  Company,  each  of  the  Transaction  Documents  has  been  duly  executed  and  delivered  by  the  Company and each  of  the  Transaction  Documents  constitutes  the legal, valid  and  binding  obligation of the Company, enforceable against the Company in accordance with its terms.               3.    Neither  the  execution  and  delivery  by the  Company of  the  Transaction  Documents, nor the performance by the Company of its obligations thereunder:                      (a) violates (i) any provision of the Company’s Organizational Documents              or  (ii)  any  law  or  regulation  of  the  State  of California or  the  United  States of              America (including  any  applicable  order,  judgment or  decree  of  any  court  or              governmental  instrumentality  known  to  us)  applicable  to the Company which  a              California lawyer exercising customary professional diligence would reasonably be              expected to recognize as being applicable to transactions of the type contemplated              by the Transaction Documents (except we express no opinion as to any law that              might be violated by any misrepresentation or omission or a fraudulent act);                     (b) requires the consent or approval of, or any filing or registration with,              any governmental body, agency or authority of the State of California or the United              States of America other than the authorization of the California Public Utilities              Commission, obtained in the Financing Decision, and which, to our knowledge,              remains in full force and effect and is not the subject of any pending or threatened              application for rehearing or petition for modification; or                      (c)  results  in  the  breach  of,  or  constitutes  a  default  under,  any  of  the              agreements listed or described on Schedule II attached hereto, except we express              no opinion as to (i) violations resulting from cross default provisions applicable as              a result of a breach or default under an agreement that is not listed or described on              Schedule  II attached  hereto or  (ii) violations  of  financial  covenants  or  similar              provisions to the extent they require financial calculations to ascertain compliance;              or                     (d) to our knowledge, results in the creation or imposition of any lien upon              any  of  the  property  of  the  Company  under  any  indenture,  mortgage  or  other              agreement described in the preceding clause (c) above.               4.    To our knowledge, there are no actions, suits, arbitrations, investigations or  proceedings pending or overtly threatened in writing by potential claimants who manifest a present  intention to sue, against the Company or any of its assets and properties, that question or may  affect  the  validity  of  any  action  to  be  taken  by  the  Company  pursuant  to  the  Transaction  Documents, or that seek to restrain the Company from carrying out the transactions contemplated  therein or the obligations of the Company thereunder.                5.    Assuming  (i)  the  accuracy  of  the  representations  and  warranties  of  the  Company in Section 5.13 of the Note Purchase Agreement and compliance by the Company with  the covenants contained therein, (ii) the accuracy of the representations and warranties of each                                       4.4(a)-4 

 

   Purchaser in Section 6 of the Note Purchase Agreement, (iii) the compliance by the Company with  the offering and transfer procedures and restrictions described in the Note Purchase Agreement  and (iv) receipt by each Purchaser of a copy of the Private Placement Memorandum dated June  2020, entitled: “Golden State Water Company $150,000,000 Senior Unsecured Notes Due 2030  & 2040” (the “Placement Memorandum”) prior to such sale, it is not necessary in connection with  the  offer,  sale  and  delivery  of the  Notes  in  the  manner  contemplated  by  the  Note  Purchase  Agreement to qualify an indenture with respect to the Notes under the Trust Indenture Act of 1939,  as amended, or to register the Notes issued pursuant to the Note Purchase Agreement under the  Securities Act of 1933, as amended, it being understood that no opinion is expressed as to any  resale of any Notes.               6.    The issuance  and  sale  of  the  Notes as  provided  in  the Note  Purchase  Agreement will comply with the provisions of Regulation U or X of the Federal Reserve Board.   For purposes of this opinion, we have assumed that none of the Purchasers is a “creditor” as defined  in Regulation T.               The  opinions  expressed  herein  are  subject  to  the  following  qualifications,  limitations and comments:               (i)   the enforceability of the Transaction Documents and the obligations of the        Company thereunder and the availability of certain rights and remedial provisions provided        for in the Transaction Documents are subject to: (i) the effect of bankruptcy, fraudulent        conveyance or transfer, insolvency, reorganization, receivership, arrangement, liquidation,        conservatorship and moratorium laws; (ii) limitations imposed by other laws and judicial        decisions (including foreign governmental actions and foreign laws) relating to or affecting        the rights of creditors or secured creditors generally; and (iii) general principles of equity        (regardless of whether enforcement is considered in proceedings at law or in equity), upon        the  availability  of  injunctive  relief  or  other  equitable  remedies,  including,  without        limitation, where (1) the breach of covenants or provisions imposes restrictions or burdens        upon  a  party  and  it  cannot  be  demonstrated  that  the  enforcement  of  such  remedies,        restrictions or burdens is reasonably necessary for the protection of another party to the        agreement, (2) a party’s enforcement of such remedies, covenants or provisions under the        circumstances,  or  the  manner  of  such  enforcement,  would  violate  such  party’s  implied        covenant of good faith and fair dealing, or would be commercially unreasonable, (3) a court        having  jurisdiction  finds  that  such  remedies,  covenants  or  provisions  were,  at  the  time        made, or are in application, unconscionable as a matter of law or contrary to public policy        or  (4)  self-help  or  automatic  or  summary  remedies  are  exercised  without  notice  or        opportunity for hearing or correction or disclaiming liability or responsibility in connection        with the exercise of remedies;               (ii)  we express no opinion as to the enforceability of cumulative remedies to the        extent such cumulative remedies purport to or would have the effect of compensating the        party entitled to the benefits thereof in amounts in excess of the actual loss suffered by such        party;               (iii) provisions in the Transaction Documents deemed to impose the payment of        interest on interest may be unenforceable, void or voidable under applicable law;                                      4.4(a)-5 

 

                      (iv)  requirements  in  the  Transaction  Documents  specifying  that  provisions  thereof may only be waived in writing may not be valid, binding or enforceable to the  extent  that  an  oral  agreement  or  an  implied  agreement  by  trade  practice  or  course  of  conduct has been created modifying any provision of such documents;         (v)   as to our opinion set forth in paragraph 2 hereof, we express no opinion as  to the effect of the laws of any jurisdiction other than the State of New York where any  Purchaser may be located or where enforcement of the Notes may be sought that limit the  rates of interest legally chargeable or collectible;         (vi)  we express no opinion as to the severability of any provision of any of the  Transaction Documents;         (vii) we  express  no  opinion  with  respect  to  the  validity,  binding  effect  or  enforceability of any provision of the Transaction Documents: (i) consenting to venue or  jurisdiction of any particular court or other governmental authority (either as to personal  jurisdiction or subject matter jurisdiction); or (ii) waiving service of process or demand or  notice or constitutional rights (including a jury trial);         (viii) our opinions expressed in paragraph 1 hereof as to the existence and good  standing of the Company are given solely on the basis of the Good Standing Certificate  applicable to the Company and such opinions speak only as of the dates of such certificate  and not as of the date hereof;         (ix)  we express no opinion with respect to the applicability or effect of (i) federal  or state anti-trust, unfair competition, tax, employee benefit, environmental or commodities  laws, and (ii) except as expressly set forth in paragraphs 5 and 6 above, securities or “blue  sky” laws or Federal Reserve Board margin regulations, in each case, on the transactions  contemplated by the Transaction Documents;         (x)   we  express  no  opinion  as  to  the  effect  of  any  federal  law  related  to  copyrights, patents, trademarks, service marks or other intellectual property on the opinions  expressed herein;         (xi)  we express no opinion with respect to the USA PATRIOT Act of 2001 or  any laws relating to foreign asset control or any rules, regulations or orders relating to any  of the foregoing;          (xii) we  express  no  opinion  as to  whether  a  failure  to  exercise  or  delay  in  exercising rights or remedies will operate as a waiver of any such right or remedy or with  respect to the enforceability of “time is of the essence” or other provisions relating to a  delay or failure to exercise any right, remedy or option; and         (xiii) other than as to the Company as expressly set forth herein, we express no  opinion as to the effect of the legal or regulatory status or the nature of the business of any  party to any Transaction Document.         The opinions expressed herein are based upon and are limited to (i) the laws of the                                4.4(a)-6 

 

   States of California and New York, and (ii) the laws of the United States of America, and we  express no opinion with respect to the laws of any other state, jurisdiction or political subdivision.   The opinions expressed herein that are based on the laws of the States of California and New York  and the United States of America are limited to the laws which a New York or California lawyer  exercising customary professional diligence would reasonably be expected to recognize as being  applicable to transactions of the type contemplated by the Transaction Documents.               Our opinions set forth in this letter are based upon the facts in existence and laws  in effect on the date hereof and we expressly disclaim any obligation to update our opinions herein,  regardless of whether changes in such facts or laws come to our attention after the delivery hereof.   No attorney-client relationship exists or has existed by reason of our preparation, execution and  delivery of this opinion letter.  In permitting reliance hereon by you, we are not acting as your  counsel and have not assumed any responsibility to advise you with respect to the adequacy of this  opinion letter for your purposes.               This opinion letter is solely for your benefit in connection with the offer and sale  of Notes in accordance with the Note Purchase Agreement and not for the benefit of any other  person. This opinion letter may not be relied upon in any manner by any other person and may not  be disclosed, quoted, filed with a governmental agency or otherwise referred to without our prior  written consent except that you may furnish copies of this opinion letter: (i) to your accountants  and counsel; (ii) to bank or other regulatory examiners (including, without limitation, the National  Association  of  Insurance Commissioners);  (iii) to your  successors  and  permitted  assigns  and  prospective  successors  and  assignees,  in  each  case, which  are  subject  to  the  confidentiality  provisions  set  forth  in  the  Note  Purchase  Agreement  that  are  applicable  to  the  Purchasers or  substantially the same confidentiality provisions in a separate writing; and (iv) pursuant to judicial  process or government order or requirement of applicable law or regulation.  Notwithstanding the  foregoing, this opinion letter may be relied upon by subsequent holders of the Notes who are  qualified institutional buyers (as defined in Rule 144A promulgated under the Securities Act of  1933, as amended) and who have acquired the Notes in accordance with the terms of the Note  Purchase Agreement as if this opinion were addressed and delivered to such holder on the date  hereof; provided, however, that by permitting reliance by subsequent holders of the Notes, we are  not undertaking any of the duties that an attorney owes to a client with respect to this matter or the  legal advice we have provided to you in the course of our representation of the Purchasers in this  matter.                                                                                         Very truly yours,                                                                                                             4.4(a)-7 

 

                      SCHEDULE I                 Good Standing Certificate                       See attached.           4.4(a)-8 

 

                                   SCHEDULE II                               Existing Debt Instruments     1. Indenture dated September 1, 1993 between Golden State Water Company and The Bank of New     York Mellon Trust Company, N.A., as successor trustee, as supplemented       2. Note Purchase Agreement dated as of October 11, 2005 between Golden State Water Company and     Co-Bank, ACB    3. Note Agreement dated as of May 15, 1991 between Golden State Water Company and Transamerica     Occidental Life Insurance Company           4. Loan Agreement dated as of December 1, 1996 between Golden State Water Company and California     Pollution Control Financing Authority           5. Funding Agreement effective as of October 22, 2009 between Golden State Water Company and the     State of California Department of Public Health           6. Water Supply Agreement dated as of June 1, 1994 between Golden State Water Company and Central     Coast Water Authority          7. Note Purchase Agreement dated as of December 23, 2014 between Golden State Water Company     and The Prudential Insurance Company of America                                                                                                                                                  4.4(a)-9 

 

                              EXHIBIT 4.4(b)                         FORM OF OPINION OF SPECIAL COUNSEL            TO THE PURCHASERS                                                [Attached]                                          EXHIBIT 4.4(b)          (to Note Purchase Agreement) 

 

                                     [FORM OF]                         U.S. TAX COMPLIANCE CERTIFICATE         Reference is hereby made to the Note Purchase Agreement dated as of July 8, 2020 (as  amended,  supplemented  or  otherwise  modified  from  time  to  time,  the “Note  Purchase  Agreement”), among Golden State Water Company, a California corporation and the holders of  Notes that are signatories thereto.          Unless otherwise defined herein, capitalized terms defined in the Note Purchase Agreement  and used herein have the meanings given to them in the Note Purchase Agreement.         Pursuant  to  the  provisions  of  Section 14.4  of  the  Note  Purchase  Agreement,  the  undersigned hereby certifies that:         (i)   it is the sole record and beneficial owner of the Notes in respect of which it is              providing this certificate;         (ii)  it is not a bank within the meaning of Section 881(c)(3)(A) of the Code;         (iii) it  is  not  a  ten  percent  shareholder  of  the  Company  within  the  meaning  of              Section 871(h)(3)(B) of the Code; and          (iv)  it is not a controlled foreign corporation related to the Company as described in              Section 881(c)(3)(C) of the Code.         The undersigned has furnished the Company with a certificate of its non-U.S. Person status  on IRS W-8BEN-E.      [•]      By: ___________________________________      Name:     Title:   Date: ________ __, [•]                                            EXHIBIT 14.4                            (to Note Purchase Agreement)Exhibit 10.8

 

JAMF HOLDING CORP.

 

OMNIBUS INCENTIVE PLAN

 

ARTICLE I
 PURPOSE; EFFECTIVE DATE; TERM

 

1.1                               Purpose. The purpose of this Jamf Holding Corp. Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its Stockholders by enabling the Company to offer Eligible Individuals stock- and cash-based incentives in order to attract, retain, and reward such individuals and strengthen the mutuality of interests between such individuals and the Stockholders.

 

1.2                               Effective Date. The Plan became effective on [          ] (the “Effective Date”), which is the date of its adoption by the Board, subject to the approval of the Plan by the Stockholders in accordance with Applicable Law.

 

1.3                               Term. No Award may be granted on or after the 10th anniversary of the earlier of the Effective Date or the date of Stockholder approval of the Plan, but Awards granted before such 10th anniversary may extend beyond that date.

 

ARTICLE II
 DEFINITIONS

 

For purposes of the Plan, the following terms will have the following meanings:

 

2.1                               “Affiliate” means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade, or business that is directly or indirectly controlled 50% or more (whether by ownership of stock, assets, or an equivalent ownership interest or voting interest) by the Company or any Affiliate; (d) any trade or business that directly or indirectly controls 50% or more (whether by ownership of stock, assets, or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any Affiliate has a material equity interest and that is designated as an “Affiliate” by resolution of the Committee.

 

2.2                               “Applicable Law” means the requirements related to or implicated by the administration or operation of the Plan under United States federal and state laws (including corporate, securities, tax, and employment laws, and the Code), any stock exchange or quotation system on which the Shares are listed or quoted, and the laws of any foreign country or jurisdiction where Awards are granted.

 

2.3                               “Award” means any award granted under the Plan of any Stock Option, Stock Appreciation Right, Restricted Shares, Performance Award, Other Share-Based Award, or Other Cash-Based Award. All Awards will be granted by, confirmed by, and subject to the

 

 

terms and conditions of, a written Award Agreement executed by the Company and the Participant.

 

2.4                               “Award Agreement” means the written or electronic agreement setting forth the terms and conditions applicable to an Award.

 

2.5                               “Board” means the Board of Directors of the Company.

 

2.6                               “Business Combination” has the meaning set forth in Section 11.2(c).

 

2.7                               “Cause” means, as determined by the Company, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to an Eligible Employee’s or Consultant’s Separation from Service, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import)), a Participant’s insubordination, dishonesty, fraud, incompetence, moral turpitude, willful misconduct, refusal to perform the Participant’s duties or responsibilities (for any reason other than illness or incapacity), repeated or material violation of any employment policy, violation or breach of any confidentiality agreement, work product agreement, or other agreement between the Participant and the Company, or materially unsatisfactory performance of the Participant’s duties to the Company or an Affiliate; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement. Notwithstanding any foregoing term or condition of this definition of Cause, with respect to a Non-Employee Director, “Cause” means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.

 

2.8                               “Change in Control” has the meaning set forth in Section 11.2.

 

2.9                               “Change in Control Price” has the meaning set forth in Section 11.1.

 

2.10                        “Code” means the Internal Revenue Code of 1986.

 

2.11                        “Committee” means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, “Committee” will be deemed to refer to the Board for all purposes under the Plan.

 

2.12                        “Common Stock” means the shares of common stock, $0.001 par value per share, of the Company. Unless otherwise determined by the Committee, the Common Stock subject to any Award must constitute “service recipient stock” under Section 409A (or otherwise not subject the Award to Section 409A).

 

2.13                        “Company” means Jamf Holding Corp., a Delaware corporation, and its successors by operation of law.

 

2

 

2.14                        “Consultant” means an advisor or consultant to the Company or an Affiliate.

 

2.15                        “Detrimental Conduct” means, as determined by the Company, the Participant’s serious misconduct or unethical behavior, including any of the following: (a) any violation by the Participant of a restrictive covenant agreement that the Participant has entered into with the Company or an Affiliate (covering, for example, confidentiality, non-competition, non-solicitation, non-disparagement, etc.); (b) any conduct by the Participant that could result in the Participant’s Separation from Service for Cause; (c) the commission of a criminal act by the Participant, whether or not performed in the workplace, that subjects, or if generally known would subject, the Company or an Affiliate to public ridicule or embarrassment, or other improper or intentional conduct by the Participant causing reputational harm to the Company, an Affiliate, or a client or former client of the Company or an Affiliate; (d) the Participant’s breach of a fiduciary duty owed to the Company or an Affiliate or a client or former client of the Company or an Affiliate; (e) the Participant’s intentional violation, or grossly negligent disregard, of the Company’s or an Affiliate’s policies, rules, or procedures; or (f) the Participant taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to the Company or an Affiliate.

 

2.16                        “Disability” means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Separation from Service, a permanent and total disability as defined in Code Section 22(e)(3). A Disability will only be deemed to occur at the time of the determination by the Committee of the Disability; provided, however, that, for Awards that are subject to Section 409A, Disability means that a Participant is disabled under Section 409A.

 

2.17                        “Effective Date” has the meaning set forth in Section 1.2.

 

2.18                        “Eligible Employee” means each employee of the Company or an Affiliate.

 

2.19                        “Eligible Individual” means each Eligible Employee, Non-Employee Director, or Consultant who is designated by the Committee as eligible to receive an Award.

 

2.20                        “Exchange Act” means the Securities Exchange Act of 1934.

 

2.21                        “Fair Market Value” means, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date as reported on the principal stock exchange in the United States on which the Common Stock is then listed, or if the Common Stock is not listed, or otherwise reported or quoted, the Committee will determine the Fair Market Value taking into account the requirements of Section 409A. For purposes of the grant of any Award, the applicable date will be the trading day immediately before the date on which the Award is granted. For purposes of any Award granted in connection with the Registration Date, the Fair Market Value will be the public offering price in the initial public offering as set forth on the cover of the final prospectus. For purposes of the purchase of any Award, the applicable date will be the date a notice of purchase is received by the Company or, if not a day on which the applicable market is open, the next day that it is open. Notwithstanding the foregoing, the Committee may use any alternative definition

 

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of Fair Market Value that it determines should be used in connection with the grant, exercise, vesting, settlement, or payment of any Award. Such alternative definition may include a price that is based on the opening, actual, high, low, or average selling prices of the Common Stock on the applicable stock exchange on the given date, the trading day preceding the given date, the trading day next succeeding the given date, or an average of trading days.

 

2.22                        “Family Member” of a Participant means the Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests.

 

2.23                        “GAAP” means generally accepted accounting principles.

 

2.24                        “Incentive Stock Option” or “ISO” means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries, or any Parent intended to be, qualifying, and designated as an “incentive stock option” within the meaning of Code Section 422.

 

2.25                        “Incumbent Directors” has the meaning set forth in Section 11.2(b).

 

2.26                        “Lead Underwriter” has the meaning set forth in Section 13.21.

 

2.27                        “Lock-Up Period” has the meaning set forth in Section 13.21.

 

2.28                        “Non-Employee Director” means a member of the Board or the board of directors of an Affiliate who is not an active employee of the Company or an Affiliate.

 

2.29                        “Nonstatutory Stock Option” means any Stock Option that is not an ISO.

 

2.30                        “Other Cash-Based Award” means an award granted to an Eligible Individual under Section 10.3 that is payable in cash at the time or times and subject to the terms and conditions determined by the Committee.

 

2.31                        “Other Share-Based Award” means an award granted to an Eligible Individual under Article X that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including an award valued by reference to an Affiliate.

 

2.32                        “Parent” means any parent corporation of the Company within the meaning of Code Section 424(e).

 

2.33                        “Participant” means an Eligible Individual who has been granted, and holds, an Award.

 

2.34                        “Performance Award” means an award granted to an Eligible Individual under Article IX contingent upon achieving specified Performance Goals.

 

4

 

2.35                        “Performance Goals” means goals established by the Committee as contingencies for Awards to vest or become exercisable or distributable based on one or more of the performance criteria set forth in Exhibit A.

 

2.36                        “Performance Period” means the designated period during which Performance Goals must be satisfied with respect to a Performance Award.

 

2.37                        “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a government or any branch, department, agency, political subdivision, or official thereof.

 

2.38                        “Plan” means this Jamf Holding Corp. Omnibus Incentive Plan.

 

2.39                        “Proceeding” has the meaning set forth in Section 13.10.

 

2.40                        “Registration Date” means the date on which the Company consummates the sale of its Common Stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act.

 

2.41                        “Restricted Shares” means restricted Shares granted to an Eligible Individual under Article VIII.

 

2.42                        “Restriction Period” has the meaning set forth in Section 8.3(a).

 

2.43                        “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act.

 

2.44                        “Section 409A” means Code Section 409A.

 

2.45                        “Securities Act” means the Securities Act of 1933.

 

2.46                        “Separation from Service” means, unless otherwise determined by the Committee or the Company, the termination of the applicable Participant’s employment with, and performance of services for, the Company and all Affiliates, including by reason of the fact that the Participant’s employer or other service recipient ceases to be an Affiliate of the Company. Unless otherwise determined by the Company, if a Participant’s employment or service with the Company or an Affiliate terminates but the Participant continues to provide services to the Company or an Affiliate in a Non-Employee Director capacity or as an Eligible Employee or Consultant, as applicable, such change in status will not be considered a Separation from Service. Approved temporary absences from employment because of illness, vacation, or leave of absence and transfers among the Company and its Affiliates will not be considered Separations from Service. Notwithstanding the foregoing definition of Separation from Service, with respect to any Award that constitutes nonqualified deferred compensation under Section 409A, “Separation from Service” means a “separation from service” as defined under Section 409A.

 

2.47                        “Share” means a share of Common Stock.

 

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2.48                        “Share Reserve” has the meaning set forth in Section 4.1.

 

2.49                        “Stock Appreciation Right” means a right granted to an Eligible Individual under Article VII to receive an amount in cash or Shares equal to the difference between (a) the Fair Market Value of a Share on the date such right is exercised and (b) the per Share exercise price of such right.

 

2.50                        “Stock Option” means an option to purchase Shares granted to an Eligible Individual under Article VI.

 

2.51                        “Stockholder” means a stockholder of the Company.

 

2.52                        “Subsidiary” means any subsidiary corporation of the Company within the meaning of Code Section 424(f).

 

2.53                        “Substitute Award” has the meaning set forth in Section 4.1.

 

2.54                        “Ten Percent Stockholder” means a Person owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, its Subsidiaries, or any Parent.

 

2.55                        “Transfer” means (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance, or other disposition, whether for value or no value and whether voluntary or involuntary, and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate, or otherwise dispose of, whether for value or for no value and whether voluntarily or involuntarily. “Transferred” and “Transferable” have a correlative meaning under the Plan.

 

ARTICLE III
 ADMINISTRATION

 

3.1                               Committee. The Plan will be administered and interpreted by the Committee; provided, that the Board will retain the right to exercise the authority of the Committee to the extent consistent with Applicable Law. To the extent required by Applicable Law, it is intended that each member of the Committee will qualify as (a) a “non-employee director” under Rule 16b-3 and (b) an “independent director” under the rules of the principal stock exchange in the United States on which the Common Stock is then listed, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee before such determination will be valid despite such failure to qualify.

 

3.2                               Grants of Awards. The Committee will have full authority to grant, under the terms and conditions of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Shares, (iv) Performance Awards, (v) Other Share-Based Awards, and (vi) Other Cash-Based Awards. In particular, the Committee will have the authority:

 

(a)                                 to select the Eligible Individuals to whom Awards may be granted;

 

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(b)                                 to determine whether and to what extent Awards, or any combination thereof, are to be granted to one or more Eligible Individuals;

 

(c)                                  to determine the number of Shares to be covered by each Award;

 

(d)                                 to determine the terms and conditions, not inconsistent with the terms and conditions of the Plan, of all Awards;

 

(e)                                  to determine the amount of cash to be covered by each Award;

 

(f)                                   to determine whether, to what extent, and under what circumstances grants of Stock Options and other Awards are to operate on a tandem basis or in conjunction with or apart from other awards made by the Company outside of the Plan;

 

(g)                                  to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock, or Restricted Shares under Section 6.4(d);

 

(h)                                 to determine whether a Stock Option is an ISO or Nonstatutory Stock Option;

 

(i)                                     to impose a “blackout” period during which Stock Options may not be exercised;

 

(j)                                    to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of Shares acquired upon the exercise of an Award for a period of time as determined by the Committee after the date of the acquisition of such Award;

 

(k)                                 to modify, extend, or renew an Award, subject to Section 6.4(l) and Article XII; and

 

(l)                                     solely to the extent permitted by Applicable Law, to determine whether, to what extent, and under what circumstances to provide loans (which may be on a recourse basis and bear interest at the rate the Committee may determine) to Participants in order to exercise Stock Options.

 

3.3                               Guidelines. Subject to Article XII, the Committee will have the authority to adopt, alter, and repeal such administrative rules, guidelines, and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by Applicable Law), as it may deem advisable; to construe and interpret the Plan, all Awards, and all Award Agreements (and in each case any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it deems necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special terms and conditions for Persons who are residing in, or employed in, or subject to the taxes of, any domestic or foreign jurisdictions to comply with Applicable Law. Notwithstanding the foregoing terms and conditions of this Section 3.3, no action of the Committee under this Section 3.3 may materially impair the rights of any Participant without the Participant’s consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule

 

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16b-3, and the Plan will be limited, construed, and interpreted in a manner so as to comply therewith.

 

3.4                               Sole Discretion; Decisions Final. Any decision, interpretation, or other action made or taken by or at the direction of the Company, the Board, or the Committee (or any of their members) arising out of or in connection with the Plan will be within the sole and absolute discretion of all and each of them, as the case may be, and will be final, binding, and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors, and assigns and all other Persons having an interest in the Plan.

 

3.5                               Designation of Consultants/Liability.

 

(a)                                 The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and may grant authority to officers to grant Awards and execute agreements and other documents on behalf of the Committee, in each case to the extent permitted by Applicable Law. In the event of any designation of authority hereunder, subject to Applicable Law and any terms and conditions imposed by the Committee in connection with such designation, such designee or designees will have the power and authority to take such actions, exercise such powers, and make such determinations that are otherwise specifically designated to the Committee hereunder.

 

(b)                                 The Committee may employ such legal counsel, consultants, and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant, or agent will be paid by the Company. The Committee, its members, and any Person designated under Section 3.5(a) will not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by Applicable Law, no officer of the Company or member or former member of the Committee or of the Board will be liable for any action or determination made in good faith with respect to the Plan or any Award.

 

3.6                               Indemnification. To the maximum extent permitted by Applicable Law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such Person, each officer and employee of the Company and each Affiliate and member or former member of the Committee and the Board will be indemnified and held harmless by the Company against all costs and expenses and liabilities, and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officer’s, employee’s, member’s, or former member’s own fraud or bad faith. Such indemnification will be in addition to any right of indemnification the employees, officers, directors, or members or former officers, directors, or members may have under Applicable Law or under the Certificate of Incorporation or By-Laws of the Company or an Affiliate. Notwithstanding

 

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any other term or condition of the Plan, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to himself or herself.

 

ARTICLE IV
 SHARE LIMITATION

 

4.1                               Shares.

 

(a)                                 Share Limits and Counting. The maximum number of Shares available for issuance under the Plan may not exceed 14,800,000 Shares (subject to any increase or decrease under this Section 4.1 or Section 4.2) (the “Share Reserve”). The Share Reserve may consist of authorized and unissued Shares and Shares held in or acquired for the treasury of the Company. The Share Reserve will automatically increase on each January 1 that occurs after the Effective Date, for 10 years, by an amount equal to 4% of the total number of Shares outstanding on December 31 of the preceding calendar year, or a lesser number as may be determined by the Board. The maximum number of Shares with respect to which ISOs may be granted is 14,800,000 Shares. With respect to Stock Appreciation Rights settled in Shares, upon settlement, only the number of Shares delivered to a Participant will count against the Share Reserve. If any Stock Option, Stock Appreciation Right, or Other Share-Based Award expires, terminates, or is canceled for any reason without having been exercised in full, the number of Shares underlying such Award will be added back to the Share Reserve. If any Restricted Shares, Performance Awards, or Other Share-Based Awards denominated in Shares are forfeited for any reason, the number of Shares underlying such Award will be added back to the Share Reserve. Any Award settled in cash will not count against the Share Reserve. If Shares issuable upon exercise, vesting, or settlement of an Award, or Shares owned by a Participant (that are not subject to any pledge or other security interest), are surrendered or tendered to the Company in payment of the purchase or exercise price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance with the terms of the Plan, such surrendered or tendered Shares will be added back to the Share Reserve. Awards may be granted in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (“Substitute Awards”). Substitute Awards will not count against the Share Reserve; provided, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding Stock Options intended to qualify as ISOs will count against the ISO limit above. Subject to applicable stock exchange requirements, available shares under a shareholder-approved plan of an entity acquired by the Company or with which the Company combines (as appropriately adjusted to reflect such acquisition or transaction) may be used for Awards and will not count against the Share Reserve.

 

(b)                                 Annual Non-Employee Director Award Limitation. The maximum value of Awards granted during any calendar year to any Non-Employee Director, taken together with any cash fees paid to that Non-Employee Director during the calendar year

 

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and the value of awards granted to the Non-Employee Director under any other compensation plan of the Company or any Affiliate during the calendar year, may not exceed $750,000 in total value (based on the Fair Market Value of the Shares underlying the Award as of the grant date for Restricted Shares and Other Share-Based Awards, and based on the grant date fair value for accounting purposes for Stock Options and Stock Appreciation Rights).

 

4.2                               Changes.

 

(a)                                 The existence of the Plan and any Awards will not affect in any way the right or power of the Board, the Committee, or the Stockholders to make or authorize (i) any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, or preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate, or (vi) any other corporate act or proceeding.

 

(b)                                 Subject to Section 11.1:

 

(i)                                     In the event of any change in the outstanding Common Stock or in the capital structure of the Company by reason of any stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, combination, division, exchange, spin off, extraordinary cash or stock dividend, or other relevant change in capitalization, Awards will be equitably adjusted or substituted to the extent necessary to preserve the economic intent of such Awards.

 

(ii)                                  Fractional Shares resulting from any adjustment in Awards under this Section 4.2(b) will be aggregated until, and eliminated at, the time of exercise or payment by rounding down to the nearest whole number. No cash settlements will be required with respect to fractional Shares eliminated by rounding. Notice of any adjustment will be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) will be effective and binding for all purposes of the Plan.

 

4.3                               Minimum Purchase Price. Notwithstanding any other term or condition of the Plan, if authorized but previously unissued Shares are issued under the Plan, such Shares may not be issued for a consideration that is less than as permitted under Applicable Law.

 

ARTICLE V
 ELIGIBILITY

 

5.1                               General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan will be determined by the Committee.

 

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5.2                               ISOs. Notwithstanding Section 5.1, only Eligible Employees of the Company, its Subsidiaries, and any Parent are eligible to be granted ISOs.

 

5.3                               General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual must be conditioned upon such individual actually becoming an Eligible Employee, Consultant, or Non-Employee Director, respectively.

 

ARTICLE VI
 STOCK OPTIONS

 

6.1                               Stock Options. Stock Options may be granted alone or in addition to other Awards. Each Stock Option will be either (a) an ISO or (b) a Nonstatutory Stock Option.

 

6.2                               Grants. The Committee will have the authority to grant to any Eligible Employee one or more ISOs, Nonstatutory Stock Options, or both types of Stock Options. The Committee will have the authority to grant any Consultant or Non-Employee Director one or more Nonstatutory Stock Options. To the extent that any Stock Option does not qualify as an ISO, such Stock Option or the portion thereof that does not so qualify will constitute a separate Nonstatutory Stock Option.

 

6.3                               ISOs. Notwithstanding any other term or condition of the Plan, no term or condition of the Plan relating to ISOs will be interpreted, amended, or altered, nor will any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Code Section 422, or, without the consent of the Participants affected, to disqualify any ISO under Code Section 422.

 

6.4                               Terms and Conditions of Stock Options. Stock Options will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following:

 

(a)                                 Exercise Price. The exercise price per Share subject to a Stock Option will be determined by the Committee at the time of grant; provided, that the per Share exercise price of a Stock Option may not be less than 100% (or, in the case of an ISO granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the grant date.

 

(b)                                 Stock Option Term. The term of each Stock Option will be fixed by the Committee; provided, that no Stock Option may be exercisable more than 10 years after the date the Stock Option is granted; and provided, further, that the term of an ISO granted to a Ten Percent Stockholder may not exceed 5 years.

 

(c)                                  Exercisability. Unless otherwise determined by the Committee in accordance with this Section 6.4, Stock Options will be exercisable at the time or times and subject to the terms and conditions determined by the Committee at the time of grant. If the Committee provides that any Stock Option is exercisable subject to certain terms and conditions, the Committee may waive those terms and conditions on the exercisability at any time at or after the time of grant in whole or in part.

 

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(d)                                 Method of Exercise. Subject to whatever installment exercise and waiting period terms and conditions that may apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Stock Option term by giving written notice of exercise to the Company specifying the number of Shares to be purchased. Such notice must be accompanied by payment in full of the exercise price as follows: (i) in cash or by check, bank draft, or money order payable to the order of the Company; (ii) solely to the extent permitted by Applicable Law, if the Common Stock is listed on a national stock exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the exercise price; (iii) to the extent the Committee authorizes, having the Company withhold Shares issuable upon exercise of the Stock Option, or by payment in full or in part in the form of Shares owned by the Participant, based on the Fair Market Value of the Shares on the payment date; or (iv) on such other terms and conditions that may be acceptable to the Committee. No Shares will be issued under the Plan until payment for those Shares has been made or provided for in accordance with the Plan.

 

(e)                                  Non-Transferability of Stock Options. No Stock Option will be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options will be exercisable, during the Participant’s lifetime, only by the Participant, except that the Committee may determine at the time of grant or thereafter that a Nonstatutory Stock Option that is otherwise not Transferable under this Section 6.4(e) is Transferable to a Family Member in whole or in part on terms and conditions that are specified by the Committee. A Nonstatutory Stock Option that is Transferred to a Family Member under the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution and (ii) remains subject to the Plan and the applicable Award Agreement. Any Shares acquired upon the exercise of a Nonstatutory Stock Option by a permissible transferee of a Nonstatutory Stock Option or a permissible transferee under a Transfer after the exercise of the Nonstatutory Stock Option will be subject to the Plan and the applicable Award Agreement.

 

(f)                                   Separation from Service by Death or Disability. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Separation from Service may be exercised by the Participant (or in the case of the Participant’s death, by the legal representative of the Participant’s estate) at any time within a period of 1 year from the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, in the event of a Participant’s Separation from Service by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant will thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of 1 year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options.

 

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(g)                                  Involuntary Separation from Service without Cause. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service is initiated by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Separation from Service may be exercised by the Participant at any time within a period of 90 days after the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options.

 

(h)                                 Voluntary Resignation. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service is voluntary (other than a voluntary Separation from Service described in Section 6.4(i)(y)), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Separation from Service may be exercised by the Participant at any time within a period of 90 days after the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options.

 

(i)                                     Separation from Service for Cause. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service (x) is for Cause or (y) is a voluntary Separation from Service (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Separation from Service for Cause, all Stock Options, whether vested or not vested, that are held by such Participant will terminate and expire as of the date of such Separation from Service.

 

(j)                                    Unvested Stock Options. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participant’s Separation from Service for any reason will terminate and expire as of the date of such Separation from Service.

 

(k)                                 ISO Terms and Conditions. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which ISOs are exercisable for the first time by an Eligible Employee during any calendar year under the Plan or any other stock option plan of the Company, any Subsidiary, or any Parent exceeds $100,000, such Stock Options will be treated as Nonstatutory Stock Options. In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary, or any Parent at all times from the time an ISO is granted until 3 months before the date of exercise thereof (or such other period as required by Applicable Law), such Stock Option will be treated as a Nonstatutory Stock Option. Should any term or condition of the Plan not be necessary in order for the Stock Options to qualify as ISOs, or should any additional terms and conditions be required, the Committee may amend the Plan accordingly.

 

(l)                                     Form, Modification, Extension and Renewal of Stock Options. Subject to the terms and conditions of the Plan, Stock Options will be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may

 

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(i) modify, extend, or renew outstanding Stock Options (provided, that the rights of a Participant are not reduced without such Participant’s consent; and provided, further, that such action does not subject the Stock Options to Section 409A without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding any other term or condition of the Plan, except in connection with a corporate transaction involving the Company in accordance with Section 4.2, the repricing of Options (and Stock Appreciation Rights) is prohibited without prior approval of the Stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (y) any action that is treated as a “repricing” under GAAP and (z) repurchasing for cash or canceling an Option or a Stock Appreciation Right at a time when its exercise price is greater than the Fair Market Value of the underlying Shares in exchange for another Award. A cancellation and exchange under clause (z) would be considered a “repricing” regardless of whether it is treated as a “repricing” under GAAP and regardless of whether it is voluntary on the part of the Participant.

 

(m)                             Early Exercise. The Committee may provide that a Stock Option include a term or condition whereby the Participant may elect at any time before the Participant’s Separation from Service to exercise the Stock Option as to any part or all of the Shares subject to the Stock Option before the full vesting of the Stock Option and such Shares will be subject to the terms and conditions of Article VIII and be treated as Restricted Shares. Unvested Shares so exercised may be subject to a repurchase option in favor of the Company or to any other restriction the Committee may determine.

 

(n)                                 Automatic Exercise. The Committee may include a term or condition in an Award Agreement providing for the automatic exercise of a Nonstatutory Stock Option on a cashless basis on the last day of the term of such Stock Option if the Participant has failed to exercise the Nonstatutory Stock Option as of such date, with respect to which the Fair Market Value of the Shares underlying the Nonstatutory Stock Option exceeds the exercise price of such Nonstatutory Stock Option on the date of expiration of such Stock Option, subject to Section 13.5.

 

ARTICLE VII
 STOCK APPRECIATION RIGHTS

 

7.1                               Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following:

 

(a)                                 Exercise Price. The exercise price per Share subject to a Stock Appreciation Right will be determined by the Committee at the time of grant; provided, that the per Share exercise price of a Stock Appreciation Right will not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.

 

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(b)                                 Term. The term of each Stock Appreciation Right will be fixed by the Committee, but may not be greater than 10 years after the date the right is granted.

 

(c)                                  Exercisability. Unless otherwise determined by the Committee in accordance with this Section 7.1, Stock Appreciation Rights will be exercisable at the time or times and subject to the terms and conditions determined by the Committee at the time of grant. If the Committee provides that any such right is exercisable subject to certain terms and conditions, the Committee may waive those terms and conditions on the exercisability at any time at or after grant in whole or in part.

 

(d)                                 Method of Exercise. Subject to whatever installment exercise and waiting period terms and conditions apply under Section 7.1(c), Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award Agreement, by giving written notice of exercise to the Company specifying the number of Stock Appreciation Rights to be exercised.

 

(e)                                  Payment. Upon the exercise of a Stock Appreciation Right, a Participant will be entitled to receive, for each right exercised, up to, but no more than, an amount in cash or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market Value of 1 Share on the date that the right is exercised over the Fair Market Value of 1 Share on the date that the right was awarded to the Participant.

 

(f)                                   Separation from Service. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable Award Agreement and the Plan, upon a Participant’s Separation from Service for any reason, Stock Appreciation Rights will remain exercisable after a Participant’s Separation from Service on the same basis as Stock Options would be exercisable after a Participant’s Separation from Service in accordance with Sections 6.4(f) through 6.4(j).

 

(g)                                  Non-Transferability. No Stock Appreciation Rights will be Transferable by the Participant other than by will or by the laws of descent and distribution, and all such rights will be exercisable, during the Participant’s lifetime, only by the Participant.

 

7.2                               Automatic Exercise. The Committee may include a term or condition in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of the term of the Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the Shares underlying the Stock Appreciation Right exceeds the exercise price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 13.5.

 

ARTICLE VIII
 RESTRICTED SHARES

 

8.1                               Restricted Shares. Restricted Shares may be issued either alone or in addition to other Awards. The Committee will determine the Eligible Individuals to whom, and the time or

 

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times at which, grants of Restricted Shares will be made, the number of Restricted Shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards will be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.

 

8.2                               Awards and Certificates. Participants selected to receive Restricted Shares will not have any right with respect to the Award, unless and until the Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent required by the Committee, and has otherwise complied with the applicable terms and conditions of the Award. Further, such Award will be subject to the following:

 

(a)                                 Purchase Price. The purchase price of Restricted Shares will be fixed by the Committee. Subject to Section 4.3, the purchase price for Restricted Shares may be zero to the extent permitted by Applicable Law, and, to the extent required by Applicable Law, such purchase price may not be less than par value.

 

(b)                                 Acceptance. Awards of Restricted Shares must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the grant date, by executing an Award Agreement and by paying whatever price (if any) the Committee has designated thereunder.

 

(c)                                  Legend. Each Participant receiving Restricted Shares will be issued a stock certificate in respect of the Restricted Shares, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of Restricted Shares. Such certificate will be registered in the name of the Participant, and will, in addition to any legends required by Applicable Law, bear an appropriate legend referring to the terms and conditions applicable to the Award, substantially in the following form:

 

“The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance, or charge of the restricted shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Jamf Holding Corp. (the “Company”) Omnibus Incentive Plan (the “Plan”) and an award agreement entered into between the registered owner and the Company dated            (the “Agreement”). Copies of such Plan and Agreement are on file at the principal office of the Company.”

 

(d)                                 Custody. If stock certificates are issued in respect of Restricted Shares, the Committee may require that any stock certificates evidencing such Shares be held in custody by the Company until the restrictions thereon have lapsed, and that, as a condition of any grant of Restricted Shares, the Participant must deliver a duly signed stock power or other instruments of assignment, each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the Restricted Shares in the event that such Award is forfeited in whole or part.

 

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8.3                               Terms and Conditions. Restricted Shares will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following:

 

(a)                                 Restriction Period. The Participant is not permitted to Transfer Restricted Shares during the period or periods set by the Committee (the “Restriction Period”) commencing on the date of such Award, as set forth in the applicable Award Agreement, and such agreement will set forth a vesting schedule and any event that would accelerate vesting of the Restricted Shares. Within these limits, based on service, attainment of Performance Goals, or such other factors or criteria as the Committee may determine, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Shares and waive the deferral terms and conditions for all or any part of any Restricted Shares.

 

(b)                                 Rights as a Stockholder. Except as provided in Section 8.3(a) and this Section 8.3(b) or as otherwise determined by the Committee, the Participant will have, with respect to Restricted Shares, all of the rights of a Stockholder, including the right to receive dividends, the right to vote such Restricted Shares, and, subject to and conditioned upon the full vesting of Restricted Shares, the right to tender those Shares. The Committee may determine at the time of grant that the payment of dividends will be deferred until, and conditioned upon, the expiration of the applicable Restriction Period.

 

(c)                                  Separation from Service. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable Award Agreement and the Plan, upon a Participant’s Separation from Service for any reason during the relevant Restriction Period, all Restricted Shares will be forfeited.

 

(d)                                 Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Shares, the certificates for such Shares will be delivered to the Participant. All legends will be removed from said certificates at the time of delivery to the Participant, except as otherwise required by Applicable Law or other terms and conditions imposed by the Committee.

 

ARTICLE IX
 PERFORMANCE AWARDS

 

9.1                               Performance Awards. The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. If the Performance Award is payable in Restricted Shares, such Shares will be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in Restricted Shares (based on the then current Fair Market Value of such Shares). Each Performance Award will be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may

 

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approve. The Committee will condition the right to payment of any Performance Award upon the attainment of Performance Goals established under Section 9.2(c).

 

9.2                               Terms and Conditions. Performance Awards will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following:

 

(a)                                 Earning of Performance Award. At the expiration of the applicable Performance Period, the Committee will determine the extent to which the Performance Goals established under Section 9.2(c) are achieved and the percentage of each Performance Award that has been earned.

 

(b)                                 Non-Transferability. Subject to the applicable Award Agreement and the Plan, Performance Awards may not be Transferred.

 

(c)                                  Performance Goals, Formulae or Standards. The Committee will establish the Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants. Such Performance Goals may incorporate terms and conditions for disregarding (or adjusting for) changes in accounting methods, corporate transactions, and other similar type events or circumstances.

 

(d)                                 Dividends. Unless otherwise determined by the Committee at the time of grant, amounts equal to dividends declared during the Performance Period with respect to the number of Shares covered by a Performance Award will not be paid to the Participant.

 

(e)                                  Payment. After the Committee’s determination in accordance with Section 9.2(a), the Company will settle Performance Awards, in such form as determined by the Committee, in an amount equal to such Participant’s earned Performance Awards. Notwithstanding the foregoing sentence, the Committee may award an amount less than the earned Performance Awards and subject the payment of all or part of any Performance Award to additional vesting, forfeiture, and deferral terms and conditions.

 

(f)                                   Separation from Service. Subject to the applicable Award Agreement and the Plan, upon a Participant’s Separation from Service for any reason during the Performance Period for a Performance Award, the Performance Award will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.

 

(g)                                  Accelerated Vesting. Based on service, performance, and any other factors or criteria the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award.

 

ARTICLE X
 OTHER SHARE-BASED AND CASH-BASED AWARDS

 

10.1                        Other Share-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Share-Based Awards that are payable in, valued in whole or in part by reference to,

 

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or otherwise based on or related to Shares, including Shares awarded purely as a bonus and not subject to terms or conditions, Shares in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock units (RSUs), and Awards valued by reference to book value of Shares. Other Share-Based Awards may be granted either alone or in addition to or in tandem with other Awards. Subject to the terms and conditions of the Plan, the Committee has the authority to determine the Eligible Individuals to whom, and the time or times at which, Other Share-Based Awards will be granted, the number of Shares to be granted under such Awards, and all other terms and conditions of the Awards.

 

10.2                        Terms and Conditions. Other Share-Based Awards will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following:

 

(a)                                 Non-Transferability. Subject to the applicable Award Agreement and the Plan, Shares subject to Other Share-Based Awards may not be Transferred before the date on which the Shares are issued, or, if later, the date on which any applicable restriction, performance, or deferral period lapses.

 

(b)                                 Dividends. Unless otherwise determined by the Committee at the time of grant, subject to the applicable Award Agreement and the Plan, the recipient of an Other Share-Based Award will not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents in respect of the number of Shares covered by the Award.

 

(c)                                  Vesting. All Other Share-Based Awards and any Shares covered by those awards will vest or be forfeited to the extent so provided in the Award Agreement.

 

(d)                                 Price. Common Stock issued on a bonus basis under this Article X may be issued for no cash consideration. Common Stock purchased under a purchase right awarded under this Article X will be priced as determined by the Committee.

 

10.3                        Other Cash-Based Awards. The Committee may grant Other Cash-Based Awards to Eligible Individuals in amounts, on terms and conditions, and for consideration, including no consideration or such minimum consideration as may be required by Applicable Law. Other Cash-Based Awards may be granted subject to the satisfaction of vesting terms and conditions or may be awarded purely as a bonus and not subject to terms and conditions, and if subject to vesting, the Committee may accelerate such vesting at any time.

 

ARTICLE XI
 CHANGE IN CONTROL

 

11.1                        Benefits. In the event of a Change in Control (as defined below), and except as otherwise determined by the Committee in an Award Agreement, a Participant’s unvested Awards will not vest automatically and will be treated in accordance with one or more of the following methods as determined by the Committee:

 

(a)                                 Awards, whether or not then vested, will be continued, assumed, or have new rights substituted therefor, and restrictions to which Restricted Shares or any other Award

 

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granted before the Change in Control are subject will not lapse upon the Change in Control and the Restricted Shares or other Awards will receive the same distribution as other Common Stock on terms and conditions determined by the Committee; provided, that the Committee may decide to award additional Restricted Shares or other Awards in lieu of any cash distribution. Notwithstanding any other term or condition of the Plan, for purposes of ISOs, any assumed or substituted Stock Option will comply with the requirements of Treasury Regulation Section 1.424-1.

 

(b)                                 The Committee may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess (if any) of the Change in Control Price (as defined below) of the Shares covered by such Awards, over the aggregate purchase or exercise price of such Awards. For purposes of the Plan, “Change in Control Price” means the highest price per Share paid in any transaction related to a Change in Control.

 

(c)                                  The Committee may terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, and other Other Share-Based Awards that provide for a Participant-elected exercise, effective as of the Change in Control, by delivering notice of termination to each Participant at least 20 days before the date of consummation of the Change in Control, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Change in Control, each affected Participant will have the right to exercise in full all of the Participant’s Awards that are then outstanding (without regard to any terms and conditions on exercisability otherwise contained in the Award Agreements), but any such exercise will be contingent on the occurrence of the Change in Control; provided, that if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto will be null and void.

 

(d)                                 The Committee may make any other determination as to the treatment of Awards in connection with a Change in Control. The treatment of Awards need not be the same for all Participants. Any escrow, holdback, earnout, or similar terms and conditions in the definitive agreements relating to the Change in Control may apply to any payment to the holders of Awards to the same extent and in the same manner as such terms and conditions apply to the holders of Shares.

 

11.2                        Change in Control. Unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement with a Participant approved by the Committee, a “Change in Control” means:

 

(a)                                 any “person,” as that term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the Stockholders in substantially the same proportions as their ownership of Common Stock), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company

 

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representing 50% or more of the combined voting power of the Company’s then outstanding securities;

 

(b)                                 during any period of 24 consecutive calendar months, individuals who were directors serving on the Board on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director after the first day of such period whose election, or nomination for election, by the Stockholders was approved by a vote of at least 2/3 of the Incumbent Directors will be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as used in Section 13(d) of the Exchange Act), in each case other than the Board;

 

(c)                                  consummation of a reorganization, merger, consolidation, or other business combination (any of the foregoing, a “Business Combination”) of the Company or any direct or indirect subsidiary of the Company with any other corporation, in any case with respect to which the Company voting securities outstanding immediately before such Business Combination do not, immediately after such Business Combination, continue to represent (either by remaining outstanding or being converted into voting securities of the Company or any ultimate parent thereof) more than 50% of the then outstanding voting securities entitled to vote generally in the election of directors of the Company (or its successor) or any ultimate parent thereof after the Business Combination; or

 

(d)                                 a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

 

Notwithstanding the foregoing terms and conditions of this definition, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A, an event will not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a “change in control event” within the meaning of Section 409A.

 

11.3                        Initial Public Offering not a Change in Control. Notwithstanding the foregoing terms and conditions of the definition of Change in Control, the occurrence of the Registration Date or any change in the composition of the Board within 1 year after the Registration Date will not be considered a Change in Control.

 

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ARTICLE XII
 AMENDMENT AND TERMINATION

 

12.1                        Amendment and Termination of Plan. Subject to Section 12.3, the Board may amend or terminate the Plan at any time; provided, however, that no amendment will be effective unless approved by the Stockholders to the extent Stockholder approval is necessary to satisfy any Applicable Laws.

 

12.2                        Amendment of Awards. Subject to Section 12.3, the Committee may amend any Award at any time; provided, however, that no amendment will be effective unless approved by the Stockholders to the extent Stockholder approval is necessary to satisfy any Applicable Laws.

 

12.3                        No Material Impairment of Rights. Rights under any Award granted before amendment or termination of the Plan or amendment of an Award may not be materially impaired by any such amendment or termination unless the Participant consents thereto.

 

ARTICLE XIII
 GENERAL TERMS AND CONDITIONS

 

13.1                        Legend. The Committee may require each person receiving Shares under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for Shares issued under the Plan may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for Shares delivered under the Plan will be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under Applicable Law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

13.2                        Book Entry. Notwithstanding any other term or condition of the Plan, the Company may elect to satisfy any requirement under the Plan for the delivery of Share certificates through the use of another system, such as book entry.

 

13.3                        Other Plans. Nothing contained in the Plan prevents the Board from adopting other or additional compensation arrangements, subject to Stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

 

13.4                        No Right to Employment/Consultancy/Directorship. Neither the Plan nor the grant of any Award gives any Person any right with respect to continuance of employment, consultancy, or directorship by the Company or any Affiliate, nor does the Plan or the grant of any Award cause any limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy, or directorship at any time.

 

13.5                        Withholding for Taxes. The Company or an Affiliate, as the case may be, has the right to deduct from payments of any kind otherwise due to a Participant any federal, state, or local

 

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taxes of any kind required by Applicable Law to be withheld (a) with respect to the vesting of or other lapse of restrictions applicable to an Award, (b) upon the issuance of any Shares upon the exercise of an Option or Stock Appreciation Right, or (c) otherwise due in connection with an Award. At the time the tax obligation becomes due, the Participant must pay to the Company or the Affiliate, as the case may be, any amount that the Company or Affiliate determines to be necessary to satisfy the tax obligation. The Company or the Affiliate, as the case may be, may require or permit the Participant to satisfy the tax obligation, in whole or in part, (i) by causing the Company or Affiliate to withhold up to the maximum required number of Shares otherwise issuable to the Participant as may be necessary to satisfy such tax obligation or (ii) by delivering to the Company or Affiliate Shares already owned by the Participant. The Shares so delivered or withheld must have an aggregate Fair Market Value equal to the tax obligation. The Fair Market Value of the Shares used to satisfy the tax obligation will be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined. To the extent applicable, a Participant may satisfy his or her tax obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. Any fraction of a Share required to satisfy tax obligations will be disregarded and the amount due must be paid instead in cash by the Participant.

 

13.6                        No Assignment of Benefits. No Award or other benefit payable under the Plan may, except as otherwise specifically provided by Applicable Law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit will be void, and any such benefit will not in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any Person who will be entitled to such benefit, nor will it be subject to attachment or legal process for or against such Person.

 

13.7                        Listing and Other Terms and Conditions.

 

(a)                                 Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national stock exchange or system sponsored by a national securities association, the issuance of Shares under an Award will be conditioned upon such Shares being listed on such exchange or system. The Company will have no obligation to issue such Shares unless and until such Shares are so listed, and the right to exercise any Stock Option or other Award with respect to such Shares will be suspended until such listing has been effected.

 

(b)                                 If at any time counsel to the Company is of the opinion that any sale or delivery of Shares under an Award is or may be unlawful or result in the imposition of excise taxes on the Company, the Company will have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to Shares or Awards, and the right to exercise any Stock Option or other Award will be suspended until, in the opinion of said counsel, such sale or delivery would be lawful or would not result in the imposition of excise taxes on the Company.

 

(c)                                  Upon termination of any period of suspension under this Section 13.7, any Award affected by such suspension that has not expired or terminated will be reinstated as

 

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to all Shares available before such suspension and as to Shares that would otherwise have become available during the period of such suspension, but no such suspension will extend the term of any Award.

 

(d)                                 A Participant will be required to supply the Company with certificates, representations, and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent, and approval the Company determines necessary or appropriate.

 

13.8                        Stockholders Agreement and Other Requirements. Notwithstanding any other term or condition of the Plan, as a condition to the receipt of Shares under an Award, to the extent required by the Committee, the Participant must execute and deliver a Stockholder’s agreement and such other documentation that sets forth certain restrictions on transferability of the Shares acquired upon exercise or purchase, and such other terms and conditions as the Committee may establish. The Company may require, as a condition of exercise, the Participant to become a party to any other existing Stockholders agreement (or other agreement). Any payment of cash or issuance or transfer of Shares or other property to the Participant or the Participant’s legal representative under the Plan will, to the extent thereof, be in full satisfaction of all claims of such Persons under the plan, and the Company may require the Participant or the Participant’s legal representative, as a condition to such payment or issuance or transfer, to execute a general release of all claims in favor of the Company and each Affiliate in such form as the Company may determine.

 

13.9                        Governing Law. The Plan and actions taken in connection with the Plan will be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

 

13.10                 Jurisdiction; Waiver of Jury Trial. Any suit, action, or proceeding with respect to the Plan or any Award or Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of the Plan or any Award or Award Agreement, will be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the Company and each Participant irrevocably and unconditionally (a) submits in any proceeding relating to the Plan or any Award or Award Agreement, or for the recognition and enforcement of any judgment in respect of the Plan or any Award or Award Agreement (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts, and agrees that all claims in respect of any Proceeding will be heard and determined in such state court or, to the extent permitted by Applicable Law, in such federal court, (b) consents that any Proceeding may and will be brought in such courts and waives any objection that the Company or the Participant may have at any time after the Effective Date to the venue or jurisdiction of any Proceeding in any such court or that the Proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort, or otherwise) arising out of or relating to the Plan or any Award or Award

 

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Agreement, (d) agrees that service of process in any Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agrees that nothing in the Plan will affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware.

 

13.11                 Other Benefits. No Award will be considered compensation for purposes of computing benefits under any retirement plan of the Company or any Affiliate or affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.

 

13.12                 Costs. The Company will bear all expenses associated with administering the Plan, including expenses of issuing Common Stock under Awards.

 

13.13                 No Right to Same Benefits. The terms and conditions of Awards need not be the same with respect to each Participant, and Awards to individual Participants need not be the same in subsequent years (if granted at all).

 

13.14                 Death/Disability. The Committee may require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require the agreement of the transferee to be bound by the Plan.

 

13.15                 Section 16(b) of the Exchange Act. All elections and transactions under the Plan by Persons subject to Section 16 of the Exchange Act involving Shares are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.

 

13.16                 Section 409A. The Plan is intended to comply Section 409A and will be limited, construed, and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A, it will be paid in a manner that complies with Section 409A. Notwithstanding any other provision of the Plan, any Plan provision that is inconsistent with Section 409A will be deemed to be amended to comply with Section 409A and to the extent such provision cannot be amended to comply, such provision will be null and void. The Company will have no liability to a Participant, or any other party, if an Award that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant, or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A, responsibility for payment of such penalties will rest solely with the affected Participants and not with the Company. Notwithstanding any other provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A) that are otherwise required to be made under the Plan to a “specified

 

25

 

employee” (as defined under Section 409A) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A) will be delayed for the first 6 months after such separation from service and will instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period (or, if earlier, the date of death of the specified employee). All installment payments under the Plan will be deemed separate payments for purposes of Section 409A.

 

13.17                 California Participants. The Plan is intended to comply with Section 25102(o) of the California Corporations Code, to the extent applicable. Any Plan term that is inconsistent with Section 25102(o) will, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o).

 

13.18                 Successor and Assigns. The Plan will be binding on all successors and permitted assigns of a Participant, including the estate of such Participant and the executor, administrator, or trustee of such estate.

 

13.19                 Severability of Terms and Conditions. If any term or condition of the Plan is held invalid or unenforceable, such invalidity or unenforceability will not affect any other term or condition of the Plan, and the Plan will be construed and enforced as if such term or condition had not been included.

 

13.20                 Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent Person, or other Person incapable of receipt thereof will be considered paid when paid to such Person’s guardian or to the party providing or reasonably appearing to provide for the care of such Person, and such payment will fully discharge the Committee, the Board, the Company, all Affiliates, and their employees, agents, and representatives with respect thereto.

 

13.21                 Lock-Up Agreement. As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of Common Stock (the “Lead Underwriter”), a Participant must irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time after the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter may specify (the “Lock-Up Period”). Each Participant must sign such documents as may be requested by the Lead Underwriter to effect the foregoing. The Company may impose stop-transfer instructions with respect to Common Stock acquired under an Award until the end of such Lock-Up Period.

 

13.22                 Separation from Service for Cause; Clawbacks; Detrimental Conduct.

 

(a)                                 Separation from Service for Cause. The Company may annul an Award if the Participant incurs a Separation from Service for Cause.

 

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(b)                                 Clawbacks. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with any Company clawback or similar policy or any Applicable Law related to such actions. A Participant’s acceptance of an Award will constitute the Participant’s acknowledgement of and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to the Participant, whether adopted before or after the Effective Date, and any Applicable Law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Company may take any actions that may be necessary to effectuate any such policy or Applicable Law, without further consideration or action.

 

(c)                                  Detrimental Conduct. Except as otherwise determined by the Committee, notwithstanding any other term or condition of the Plan, if a Participant engages in Detrimental Conduct, whether during the Participant’s service or after the Participant’s Separation from Service, in addition to any other penalties or restrictions that may apply under the Plan, Applicable Law, or otherwise, the Participant must forfeit or pay to the Company the following:

 

(i)            any and all outstanding Awards granted to the Participant, including Awards that have become vested or exercisable;

 

(ii)           any cash or Shares received by the Participant in connection with the Plan within the 36-month period immediately before the date the Company determines the Participant has engaged in Detrimental Conduct; and

 

(iii)          the profit realized by the Participant from the sale, or other disposition for consideration, of any Shares received by the Participant under the Plan within the 36-month period immediately before the date the Company determines the Participant has engaged in Detrimental Conduct.

 

13.23                 Data Protection. A Participant’s acceptance of an Award will be deemed to constitute the Participant’s acknowledgement of and consent to the collection and processing of personal data relating to the Participant so that the Company and the Affiliates can fulfill their obligations and exercise their rights under the Plan and generally administer and manage the Plan. This data will include data about participation in the Plan and Shares offered or received, purchased, or sold under the Plan and other appropriate financial and other data (such as the date on which the Awards were granted) about the Participant and the Participant’s participation in the Plan.

 

13.24                 Unfunded Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but that is not yet made to a Participant by the Company, nothing in the Plan gives any Participant any right that is greater than the rights of a general unsecured creditor of the Company. The grant of an Award will not require a segregation of any of

 

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the Company’s assets for satisfaction of the Company’s payment obligation under any Award.

 

13.25                 Plan Construction. In the Plan, unless otherwise stated, the following uses apply:

 

(a)                                 references to Applicable Law refer to the Applicable Law and any amendments and supplements thereto and any successor Applicable Law, and to all valid and binding rules and regulations promulgated thereunder, court decisions, and other regulatory and judicial authority issued or rendered thereunder, as amended or supplemented, or their successors, as in effect at the relevant time;

 

(b)                                 in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until,” and “ending on” (and the like) mean “to and including”;

 

(c)                                  indications of time of day will be based upon the time applicable to the location of the principal headquarters of the Company;

 

(d)                                 the words “include,” “includes,” and “including” (and the like) mean “include, without limitation,” “includes, without limitation,” and “including, without limitation” (and the like), respectively;

 

(e)                                  all references to articles, sections, and exhibits are to articles, sections, and exhibits in or to the Plan;

 

(f)                                   all words used will be construed to be of such gender or number as the circumstances and context require;

 

(g)                                  the captions and headings of articles, sections, and exhibits have been inserted solely for convenience of reference and will not be considered a part of the Plan, nor will any of them affect the meaning or interpretation of the Plan;

 

(h)                                 any reference to an agreement, plan, policy, form, document, or set of documents, and the rights and obligations of the parties under any such agreement, plan, policy, form, document, or set of documents, will mean the agreement, plan, policy, form, document, or set of documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions, or replacements thereof; and

 

(i)                                     all accounting terms not specifically defined will be construed in accordance with GAAP.

 

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Exhibit A

 

PERFORMANCE GOALS

 

Performance Goals established for purposes of Performance Awards will be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following performance criteria:

 

·                                          earnings per share;

·                                          operating income;

·                                          gross income;

·                                          net income (before or after taxes);

·                                          cash flow;

·                                          gross profit;

·                                          gross profit return on investment;

·                                          gross margin return on investment;

·                                          gross margin;

·                                          operating margin;

·                                          working capital;

·                                          earnings before interest and taxes;

·                                          earnings before interest, tax, depreciation, and amortization;

·                                          adjusted earnings before interest, tax, depreciation, and amortization;

·                                          return on equity;

·                                          return on assets;

·                                          return on capital;

·                                          return on invested capital;

·                                          net revenues;

·                                          gross revenues;

·                                          net recurring revenues;

·                                          revenue growth;

·                                          annual recurring revenues;

·                                          recurring revenues;

·                                          license revenues;

·                                          sales or market share;

·                                          total shareholder return;

·                                          economic value added;

·                                          specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and other offsets and adjustments as may be established by the Committee;

·                                          the fair market value of a Share;

·                                          the growth in the value of an investment in the Common Stock assuming the reinvestment of dividends;

·                                          expense targets;

 

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·                                          reduction in operating expenses;

·                                          cost control measures;

·                                          cash earnings per share;

·                                          adjusted net income;

·                                          adjusted net income per share;

·                                          volume/volume growth;

·                                          in year volume;

·                                          productivity;

·                                          merchant account production;

·                                          distribution partner account production;

·                                          new merchant locations;

·                                          new merchant locations using a particular product;

·                                          calculated attrition;

·                                          product revenue;

·                                          goals based on product performance;

·                                          customer metrics (including customer satisfaction, customer retention, and customer profitability);

·                                          strategic initiatives;

·                                          recruitment or retention of personnel or employee satisfaction;

·                                          objectives related to financing or capital raising transactions, strategic acquisitions or divestitures, joint ventures, partnerships, collaborations, or other transactions;

·                                          corporate governance goals;

·                                          attainment of regulatory approvals;

·                                          annual cash adjusted earnings per share growth;

·                                          annual stock price growth;

·                                          diluted earnings per share;

·                                          total shareholder return positioning within a comparator group; or

·                                          adjusted cash net income per share.

 

The Committee may exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be excluded or adjusted, including:

 

(a)                                 restructurings, discontinued operations, extraordinary items and events, and other unusual and non-recurring charges;

 

(b)                                 an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; or

 

(c)                                  a change in tax law or accounting standards.

 

Performance Goals may also be based upon individual Participant Performance Goals, as determined by the Committee.

 

In addition, Performance Goals may be based upon the attainment of specified levels of Company (or Affiliate, division, other operational unit, administrative department, or product

 

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category) performance under one or more of the measures described above relative to the performance of other corporations. The Committee may also:

 

(a)                                 designate additional business criteria on which the Performance Goals may be based; and

 

(b)                                 adjust, modify, or amend the aforementioned business criteria.

 

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