UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One) | ||
(X) | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004 OR |
( ) | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM |
TO
Commission File Number 0-8084
Connecticut Water Service, Inc.
Connecticut
(State or other jurisdiction of incorporation or organization) |
06-0739839
(I.R.S. Employer Identification No.) |
|
93 West Main Street, Clinton, CT
(Address of principal executive offices) |
06413-1600
(Zip Code) |
(860) 669-8636
(Registrants telephone number, including area code)
Not Applicable
(Former name, address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes (X) No ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
8,003,328
Number of shares of common stock outstanding, June 30, 2004
(Includes 51,110 common stock equivalent shares awarded under the Performance
Stock Program)
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Financial Report
June 30, 2004 and 2003
TABLE OF CONTENTS
Part I, Item 1: Financial Statements
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EX-4.22: AGREEMENT NO. DWSRF 200103-C PROJECT LOAN AGREEMENT | ||||||||
EX-4.23: COLLATERAL ASSIGNMENT OF WATER SERVICE CHARGES | ||||||||
EX-31.1: CERTIFICATION | ||||||||
EX-31.2: CERTIFICATION | ||||||||
EX-32: CERTIFICATION |
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
Page 4
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
The accompanying notes are an integral part of these financial statements.
Page 5
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
The accompanying notes are an integral part of these financial statements.
Page 6
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
The accompanying notes are an integral part of these financial statements.
Page 7
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Six Months Ended June 30, 2004 and 2003
The accompanying notes are an integral part of these financial statements.
Page 8
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements.
Page 9
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
The consolidated financial statements included herein have been prepared by
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES (the Company), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for interim periods. Certain
information and footnote disclosures have been omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in the Companys latest
annual report or Form 10-K and as updated in the Companys March 31, 2004 Form
10-Q.
The results for interim periods are not necessarily indicative of results
to be expected for the year since the consolidated earnings are subject to
seasonal factors.
2.
The Company has a Stock-Based Compensation Plan with two components: the
Performance Stock Program and the Stock Option Program. Statement of Financial
Accounting Standards (SFAS) No. 123 Accounting for Stock-Based Compensation,
encourages entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant. Alternatively, SFAS No.
123 also allows entities to continue to apply the provisions of APB opinion No.
25 Accounting for Stock Issued to Employees and provide pro forma net income
and pro forma earnings per share disclosures for employee stock grants as if
the fair-value-based method defined in SFAS No. 123 had been applied.
The Company accounts for its Stock Option Program under the recognition
and measurement principles of APB No. 25. As such, no compensation cost
related to the Stock Option Program is reflected in Net Income, as all options
under this program had an exercise price equal to market value of the
underlying common stock on the date of grant. The following table illustrates
the effect on Net Income and Earnings Per Share if the Company had applied the
fair value recognition provisions of SFAS No. 123 to the Stock Option Program.
Page 10
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
3. Pension and Other Postretirement Benefits
Other Postretirement Benefits
Page 11
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Pension Benefits
Other Postretirement Benefits
The Company expects to make a contribution of between $1.3 million and
$3.1 million to its defined benefit pension plan during 2004. As of June 30,
2004 no contribution has been made.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) was signed December 8, 2003 to make additional voluntary benefits
available through Medicare. As permitted by guidance issued by the
Financial Accounting Standards Board, the Company has elected not to recognize the
effects of the Act in these financial statements. The Company will reflect the
implications of the Act during the remaining portion of 2004 and recognize
expected financial effects as prescribed by accounting standards in effect for
subsequent reporting periods.
4.
Earnings per average common share are calculated by dividing net income
applicable to common stock by the average number of shares of common stock
outstanding during the respective periods as detailed below:
Page 12
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
5.
The company operates principally in three business segments: water
activities, real estate transactions, and services and rentals. Financial data
for the segments is as follows in thousands of dollars:
Three Months Ended June 30, 2004
Three Months Ended June 30, 2003
Six Months Ended June 30, 2004
Six Months Ended June 30, 2003
Page 13
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Part I, Item 2: Managements Discussion and Analysis of Financial Condition
and Results of Operations
Regulatory Matters and Inflation
During the quarter ended June 30, 2004, there were no changes to any items
previously disclosed under this subsection by the Company in its Annual Report
on Form 10-K for the period ended December 31, 2003 and as updated on Form 10-Q
for the period ended March 31, 2004.
Critical Accounting Policies and Estimates
The Company maintains its accounting records in accordance with accounting
principles generally accepted in the United States of America and as directed
by the regulatory commissions to which the Companys subsidiaries are subject.
Significant accounting policies employed by the Company, including the use of
estimates, were presented in the Notes to Consolidated Financial Statements of
the Companys Annual Report.
Critical accounting policies are those that are the most important to the
presentation of the Companys financial condition and results of operations.
The application of such accounting policies requires managements most
difficult, subjective, and complex judgments and involves uncertainties and
assumptions. The Companys most critical accounting policies pertain to public
utility regulation related to Financial Accounting Standards No. 71,
Accounting for the Effects of Certain Types of Regulation"(FAS 71), revenue
recognition, and pension plan accounting. Each of these accounting policies and
the application of critical accounting policies and estimates was discussed in
the Companys Annual Report on Form 10-K for the year ended December 31, 2003.
There were no significant changes in the application of critical accounting
policies or estimates during the first two quarters of 2004. Management must
use informed judgments and best estimates to properly apply these critical
accounting policies. Because of the uncertainty in these estimates, actual
results could differ from estimates used in applying the critical accounting
policies. The Company is not aware of any reasonably likely events or
circumstances which would result in different amounts being reported that would
materially affect its financial condition or results of operations.
Liquidity and Capital Resources
The Company is not aware of demands, events, or uncertainties that will
result in a decrease of liquidity or a material change in the mix or relative
cost of capital resources.
Interim Bank Loans Payable at June 30, 2004 was $8,700,000.
We consider the current $15,500,000 lines of credit with four banks
adequate to finance any expected short-term borrowing requirements that may
arise from operations during 2004. The bank lines of credit have expiration
dates ranging from October 2004 through January 2006. Interest expense charged
on interim bank loans will fluctuate based on financial market conditions.
On June 4, 2004, one of the Companys subsidiaries, The Unionville Water
Company, borrowed $1,646,970 from the State of Connecticut Clean Water Fund.
The 19-year loan carries a 3.56% interest rate and requires sinking fund
payments of $4,726 per month for the first 24 months of the loan. The loan
proceeds were used to pay off the short-term borrowings, which financed the
construction of Unionvilles water interconnection with a neighboring water
supply.
The fair value of the interest rate swap, included in the Companys
Consolidated Balance Sheet in Deferred Charges and Other Costs, was
approximately $336,000 at June 30, 2004. Changes in the fair value of this
derivative instrument are recorded in Accumulated Other Comprehensive Income
in Common Stock Equity.
Page 14
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
The Company recently submitted an application to the Connecticut
Department of Public Utility Control (DPUC) for the refunding of $9,550,000 of
Series T and Series U First Mortgage Bonds previously issued by The Connecticut
Water Company. The Company has not yet received a final decision from the DPUC
on the application. Any refunding transaction involving the Series T and
Series U debt will depend upon the receipt of a final decision of the DPUC with
terms acceptable to the Company, which has not yet been issued, and is subject
to the
negotiation and completion of adequate replacement financing.
Off-Balance Sheet Arrangements and Contractual Obligations
During the six months ended June 30, 2004, there were no material changes
under this subheading to any items previously disclosed by the Company in its
Annual Report on Form 10-K for the period ended December 31, 2003.
Results of Operations
The following factors had a significant effect upon the Companys net
income for the three months ended June 30, 2004 as compared with the net income
for the same period last year.
Net income applicable to common stock for the three months ended June 30,
2004 increased from that of June 30, 2003 by $904,000, or $.11 per basic
average common share. This increase is broken down by business segment as
follows:
The increase in the Water Activities segments net income is primarily due
to a $715,000 increase in Utility Operating Income and a $150,000 decrease in
Interest and Debt Expense, partially offset by a $33,000 decrease in Net
Other Income (Deductions).
The increase in Utility Operating Income was primarily due to the
following:
- a $1,118,000 increase in Operating Revenue primarily due to the weather
returning to a more normal pattern than in 2003. In 2003, it was unusually cool
and rainy which caused customer water consumption to decline.
- a $119,000 decrease in Operation and Maintenance Expense primarily due
to fewer main breaks in 2004 as compared to 2003.
- a $494,000 increase in Income Tax Expense primarily due to higher
taxable income.
- a $35,000 increase in Taxes Other Than Income Taxes, primarily property
taxes related to the Companys increased investment in utility plant.
Page 15
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
The reduction in Interest and Debt Expense is primarily due to the October
2003 and March 2004 bond refinancings.
The
reduction in Other Income (Deductions) is partially due to less
interest being capitalized in 2004 due to the Unionville Water interconnection
construction project being completed and placed in service during the second
quarter of 2003.
The 43% increase in the Services and Rentals segments net income is
primarily due to higher revenues from the Companys LinebackerTM Service Line
Maintenance program and antenna site leases.
There was no activity in the Real Estate Transactions segment in either
the three months ended June 30, 2004 or 2003.
The following factors had a significant effect upon the Companys net
income for the six months ended June 30, 2004 as compared with the net income
for the same period last year.
Net income applicable to common stock for the six months ended June 30,
2004 increased from that of June 30, 2003 by $769,000, or $.09 per basic
average common share. This increase is broken down by business segment as
follows:
The increase in the Water Activities segments net income is primarily due
to a $605,000 increase in Utility Operating Income and a $366,000 decrease in
Interest and Debt Expense partially offset by a $60,000 decrease in Net Other
Income (Deductions).
The increase in Utility Operating Income was primarily due to the
following:
- a $1,136,000 increase in Operating Revenue primarily due to the weather
returning to a more normal pattern than we experienced in 2003. In 2003, it was
unusually cool and rainy which caused customer water consumption to decline.
- a $109,000 decrease in Operation and Maintenance Expense primarily due
to fewer water main breaks in 2004 as compared to 2003.
- a $542,000 increase in Income Tax Expense primarily due to higher
taxable income.
- a $68,000 increase in Taxes Other Than Income Taxes, primarily property
taxes related to the Companys increased investment in utility plant.
The reduction in Interest and Debt Expense is primarily due to the October
2003 and March 2004 bond refinancings.
Page 16
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
The reduction in Other Income (Deductions) is primarily due to less
interest being capitalized in 2004 due to the Unionville Water interconnection
construction project being completed and placed in service during the second
quarter of 2003.
The 33% increase in the Services and Rentals segments net income is
primarily due to higher revenues from the Companys LinebackerTM Service Line
Maintenance program and antenna site leases.
The decline in 2004 net income associated with the Real Estate segment was
expected due to the smaller relative size of land donated in the first quarter
of 2004 verses the first quarter of 2003, leading to a lower income tax
deduction in 2004. Both years land donations were to the Town of Killingly,
CT and were part of a three-year (2002-2004) phased plan for land donations in
Connecticut.
Commitments and Contingencies
Land Dispositions
During the quarter ended March 31, 2004, the Company received notice from
the State of Connecticut Department of Environmental Protection (DEP) that its
review of our approximately 7,600 acres of Class I, II, and III land was
complete. The DEP notice indicated that the DEP had identified 240 parcels
representing 6,823 acres of land and land underwater as land that the DEP would
be interested in acquiring as open space, by either fee ownership or a
conservation easement. Any possible land dispositions by the Company to the
State of Connecticut will depend upon the availability of sufficient State
funding for open space land purchases, as well as the successful negotiation by
the parties of the terms and conditions, including price, for such
dispositions. Accordingly, there can be no assurance that any purchases or
other acquisitions of Company owned land will be made by the State of
Connecticut.
In the past, the Company has engaged in a program of land donations to
municipalities in Connecticut which has resulted in net profits (tax benefits)
to the Company of approximately $3.7 million. As previously disclosed, the
land donation program under the Companys agreement with the Town of Killingly,
CT was completed in January 2004 with the donation of the remaining parcel to
the Town. The donation of this final parcel resulted in a net profit (tax
benefit) to the Company of $706,000 during the first quarter of 2004.
The Company and its subsidiaries own additional parcels of land in
Connecticut and Massachusetts which may be suitable in the future for
disposition, either by sale or by donation to municipalities, other local
governments or private charitable entities. These additional parcels would
include certain Class I and II parcels previously identified by the Connecticut
DEP in the DEP notice noted above, as well as certain lands owned by BARLACO in
Barnstable, Massachusetts. The Company is unable to predict if and when any
sales or donations of some or all of these parcels may occur in the future and,
if so, what amount of net profits (tax benefits) may result from any such sales
or donations.
Page 17
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Reverse Privatization
The Town of Barnstable, Massachusetts has advised the Company that it
intends to pursue the acquisition of the Companys wholly-owned subsidiaries,
The Barnstable Water Company and BARLACO. The Town takes the position that it
has the right to acquire The Barnstable Water Company and BARLACO pursuant to
the provisions of Massachusetts legislation passed in 1911. The Company has
previously advised the Town that the Company does not believe the Town has any
statutory right to acquire either The Barnstable Water Company or BARLACO. By
letter dated May 3, 2004, the Town advised the Company that the Towns Manager
has been directed to enter into acquisition negotiations with the Company. The
Company recently entered into negotiations with the Town regarding a possible
sale of The Barnstable Water Company and/or BARLACO. The Towns initial offer
was substantially below what the Company believes to be the fair market value
of the companies. Although negotiations are continuing at an appreciably
higher offering price, there can be no assurances that these negotiations will
result in a sale price and other terms acceptable to both the Company and the
Town. Any transaction would also require the parties successful negotiation
and execution of a definitive transaction agreement, and would be subject to
the receipt of any required regulatory approvals and the satisfaction of
other customary conditions to closing. In the event that negotiations are not
successful, the Company believes that the Town may pursue through the courts
its claim that it is entitled to acquire the companies at a price substantially
below what the Company believes to be the fair market value of the companies.
There were no other material changes under this subheading to any of the
other items previously disclosed by the Company in its Annual Report on Form
10-K for the period ended December 31, 2003 and as updated on Form 10-Q for the
period ended March 31, 2004.
Forward Looking Information
This report, including managements discussion and analysis, contains
certain forward-looking statements regarding the Companys results of
operations and financial position. These forward-looking statements are based
on current information and expectations, and are subject to risks and
uncertainties, which could cause the Companys actual results to differ
materially from expected results.
Our water companies are subject to various federal and state regulatory
agencies concerning water quality and environmental standards. Generally, the
water industry is materially dependent on the adequacy of approved rates to
allow for a fair rate of return on the investment in utility plant. The
ability to maintain our operating costs at the lowest possible level, while
providing good quality water service, is beneficial to customers and
stockholders. Profitability is also dependent on the timeliness of rate
relief, when necessary, and numerous factors over which we have little or no
control, such as the quantity of rainfall and temperature, industrial demand,
financing costs, energy rates, tax rates, and stock market trends which may
affect the return earned on pension assets, and compliance with environmental
and water quality regulations. The profitability of our other revenue sources
is subject to the amount of land we have available for sale and/or donation,
the demand for the land, the continuation of the current state tax benefits
relating to the donation of land for open space purposes, regulatory approval
of land dispositions, the demand for telecommunications antenna site leases and
the successful extensions and expansion of our service contract work. We
undertake no obligation to update or revise forward-looking statements, whether
as a result of new information, future events, or otherwise.
Page 18
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Part I, Item 3: Quantitative and Qualitative Disclosure About Market Risk
The primary market risk faced by the Company is interest rate risk. The
Company has exposure to derivative financial instruments through an interest
rate swap agreement. The Company has no other financial instruments with
significant credit risk or off-balance sheet risks and is not subject in any
material respect to any currency or other commodity risk.
The Company is subject to the risk of fluctuating interest rates in the
normal course of business. The Companys exposure to interest fluctuations is
managed at the Company and subsidiary operations levels through the use of a
combination of fixed rate long-term debt (and variable rate borrowings) under
financing arrangements entered into by the Company and its subsidiaries and its
use of the interest rate swap agreement discussed below. The Company has
$15,500,000 current lines of credit with four banks, under which interim bank
loans payable at June 30, 2004 were $8,700,000. Management believes that any
near-term change in interest rates should not materially affect the
consolidated financial position, results of operations or cash flows of the
Company.
During March 2004, The Connecticut Water Company entered into a five-year
interest rate swap transaction in connection with the refunding of its First
Mortgage Bonds (Series V). The swap agreement provides for The Connecticut
Water Companys exchange of floating rate interest payment obligations for
fixed rate interest payment obligations on a notional principal amount of
$12,500,000. The purpose of the interest rate swap is to manage the Companys
exposure to fluctuations in prevailing interest rates. The Company does not
enter into derivative financial contracts for trading or speculative purposes
and does not use leveraged instruments.
Management does not believe that changes in interest rates will have a
material effect on income or cash flow during 2004, although there can be no
assurances that interest rates will not significantly change.
Part I, Item 4: Controls and Procedures
As of June 30, 2004, management, including the Companys Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the design
and operation of the Companys disclosure controls and procedures (as defined
in Rule 13a-14(c) and Rule 13a-15(e)). Based upon, and as of the date of that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures were effective, in all material
respects, to ensure that information required to be disclosed in the reports
the Company files and submits under the Securities Exchange Act of 1934 is
accumulated and communicated to management, including the Companys Chief
Executive Officer and Chief Financial Officer as appropriate to allow timely
decisions regarding disclosure to be made within the time periods specified in
the SECs rules and forms. Further, there were no changes in the Companys
internal controls over financial reporting (as defined in Exchange Act Rules
13a 15(f) and 15d 15(f)) that occurred during the Companys most recent
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.
Part II, Item 1: Legal Proceedings
We are involved in various legal proceedings. Although the results of
legal proceedings cannot be predicted with certainty, there are no pending
legal proceedings to which we or any of our subsidiaries are a party or to
which any of our properties is the subject that presents a reasonable
likelihood of a material adverse impact on the Company.
Page 19
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Part II, Item 6: Exhibits and Reports on Form 8-K
Page 20
(In thousands)
June 30,
2004
Dec. 31,
(Unaudited)
2003
$
322,025
$
319,616
9,973
9,291
(1,274
)
(1,274
)
330,724
327,633
(95,620
)
(92,535
)
235,104
235,098
3,827
3,829
732
1,122
5,165
5,150
4,042
3,779
983
920
891
265
11,813
11,236
6,914
6,204
15,049
15,006
1,221
946
3,608
3,608
1,793
1,619
28,585
27,383
$
279,329
$
277,546
$
85,170
$
83,315
847
847
66,534
64,754
152,551
148,916
312
254
8,700
9,700
1,950
4,791
509
366
11,471
15,111
25,864
24,579
44,494
44,337
23,709
23,073
12,840
12,840
6,555
6,812
1,845
1,878
115,307
113,519
$
279,329
$
277,546
Table of Contents
(In thousands, except share amounts)
June 30,
2004
Dec. 31,
(Unaudited)
2003
$
56,216
$
55,360
(1,594
)
(1,594
)
30,347
29,549
201
85,170
83,315
300
300
472
472
772
772
75
75
847
847
5,000
5,000
4,550
4,550
12,050
9,550
21,600
9,640
9,640
7,695
7,695
8,000
8,000
14,930
14,930
12,500
52,765
40,265
62,315
61,865
114
117
466
469
46
57
1,325
1,425
1,020
1,075
1,560
2,580
1,075
66,846
65,008
(312
)
(254
)
66,534
64,754
$
152,551
$
148,916
Table of Contents
(In thousands, except per share amounts)
2004
2003
(Unaudited)
(Unaudited)
$
11,959
$
10,841
5,483
5,602
1,456
1,463
987
493
1,270
1,235
9,196
8,793
2,763
2,048
240
168
100
116
21
38
361
322
837
983
75
98
76
57
988
1,138
2,136
1,232
10
10
$
2,126
$
1,222
7,992
7,952
8,030
7,992
$
0.26
$
0.15
$
0.26
$
0.15
$
0.2075
$
0.2050
Table of Contents
(In thousands, except per share amounts)
2004
2003
(Unaudited)
(Unaudited)
$
22,878
$
21,742
11,107
11,216
2,967
2,937
1,516
974
2,619
2,551
18,209
17,678
4,669
4,064
706
943
387
292
199
239
58
78
1,350
1,552
1,538
1,956
211
195
150
114
1,899
2,265
4,120
3,351
19
19
$
4,101
$
3,332
7,983
7,948
8,027
7,989
$
0.51
$
0.42
$
0.51
$
0.42
$
0.415
$
0.410
Table of Contents
(In thousands)
2004
2003
(Unaudited)
(Unaudited)
$
2,126
$
1,222
376
$
2,502
$
1,222
(In thousands)
2004
2003
(Unaudited)
(Unaudited)
$
4,101
$
3,332
201
$
4,302
$
3,332
Table of Contents
(In thousands, except per share amounts)
2004
2003
(Unaudited)
(Unaudited)
$
29,870
$
27,396
2,136
1,232
32,006
28,628
3
3
7
7
1,649
1,621
1,659
1,631
$
30,347
$
26,997
2004
2003
(Unaudited)
(Unaudited)
$
29,549
$
26,906
4,120
3,351
33,669
30,257
6
6
13
13
3,303
3,241
3,322
3,260
$
30,347
$
26,997
Table of Contents
(In thousands)
2004
2003
(Unaudited)
(Unaudited)
$
4,120
$
3,351
3,064
3,012
(278
)
717
(689
)
(309
)
(396
)
59
(2,444
)
(4,266
)
603
472
(140
)
(315
)
3,980
3,036
(3,092
)
(3,701
)
8,700
10,050
(9,700
)
(6,950
)
602
366
14,060
(12,222
)
(170
)
(860
)
1,464
1,069
(3,322
)
(3,260
)
(1,278
)
1,105
(390
)
440
1,122
464
$
732
$
904
$
1,685
$
1,600
$
1,304
$
1,580
Table of Contents
Three Months
Ended
June 30
(in thousands, except for per share data)
2004
2003
$
2,126
$
1,222
1
27
(68
)
(96
)
$
2,059
$
1,153
$
0.26
$
0.15
$
0.26
$
0.14
$
0.26
$
0.15
$
0.26
$
0.14
Table of Contents
Six Months
Ended
June 30
(in thousands, except for per share data)
2004
2003
$
4,101
$
3,332
2
54
(137
)
(197
)
$
3,966
$
3,189
$
0.51
$
0.42
$
0.50
$
0.40
$
0.51
$
0.42
$
0.49
$
0.40
Pension Benefits
Components of Net Periodic Cost
Three months ended June 30
2004
2003
$
238
$
211
364
348
(400
)
(386
)
3
3
27
27
24
$
256
$
203
Components of Net Periodic Cost
Connecticut Water
Barnstable Water
Three months ended June 30
2004
2003
2004
2003
$
75
$
67
$
$
79
79
1
1
(43
)
(37
)
31
41
2
2
(5
)
(7
)
(1
)
$
137
$
143
$
3
$
2
Table of Contents
Components of Net Periodic Cost
Six months ended June 30
2004
2003
$
475
$
421
729
695
(786
)
(772
)
6
6
54
54
48
(1
)
$
526
$
403
Components of Net Periodic Cost
Connecticut Water
Barnstable Water
Six months ended June 30
2004
2003
2004
2003
$
150
$
135
$
1
$
1
158
157
3
3
(85
)
(73
)
62
82
3
3
(10
)
(15
)
(1
)
(2
)
$
275
$
286
$
6
$
5
Table of Contents
Pre-tax
Segment
Revenues
Income
Income Tax
Net Income
$
11,959
$
2,862
$
976
$
1,886
$
1,204
$
400
$
160
$
240
$
13,163
$
3,262
$
1,136
$
2,126
Pre-tax
Segment
Revenues
Income
Income Tax
Net Income
$
10,841
$
1,557
$
503
$
1,054
$
870
$
283
$
115
$
168
$
11,711
$
1,840
$
618
$
1,222
Pre-tax
Segment
Revenues
Income
Income Tax
Net Income
$
22,878
$
4,508
$
1,500
$
3,008
$
(29
)
$
(735
)
$
706
$
2,076
$
645
$
258
$
387
$
24,954
$
5,124
$
1,023
$
4,101
Pre-tax
Segment
Revenues
Income
Income Tax
Net Income
$
21,742
$
3,096
$
999
$
2,097
$
(36
)
$
(979
)
$
943
$
1,622
$
486
$
194
$
292
$
23,364
$
3,546
$
214
$
3,332
Table of Contents
Table of Contents
Increase
Increase
(Decrease)
(Decrease)
Business Segment
Net Income
EPS
$
832,000
$
0.10
72,000
.01
$
904,000
$
0.11
Partially offset by
Table of Contents
Partially offset by
Table of Contents
Table of Contents
Table of Contents
Evaluation of Disclosure Controls and Procedures
Table of Contents
(a)
Exhibits Required by Item 601 of Regulation S-K.
Exhibit
Number
Description
Certificate of Incorporation of Connecticut Water Service, Inc. amended
and restated as of April, 1998. (Exhibit 3.1 to Form 10-K for the year
ended 12/31/98).
By-Laws, as amended, of Connecticut Water Service, Inc. as amended and
restated as of August 12, 1999. (Exhibit 3.2 to Form 10-K for the year
ended 12/31/99).
Certification of Incorporation of The Connecticut Water Company effective
April, 1998. (Exhibit 3.3 to Form 10-K for the year ended 12/31/98).
Certificate of Amendment to the Certificate of Incorporation of
Connecticut Water Service, Inc. dated August 6, 2001 (Exhibit 3.4 to Form
10-K for the year ended 12/31/01).
Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of Connecticut Water Service, Inc. dated April 23, 2004.
(Exhibit 3.5 to Form 10-Q for the quarter ended March 31, 2003.)
Agreement No. DWSRF 200103-C Project Loan Agreement Between the State of
Connecticut and Unionville Water Company Under the Drinking Water State
Revolving Fund (DWSRF) Program, dated as of April 19, 2004.
Collateral Assignment of Water Service Charges and Right to Receive
Water Service Expense Assessments and Security Agreement Between
Unionville Water Company and the State of Connecticut, dated as of June 3,
2004.
Rule 13a-14 Certification of Marshall T. Chiaraluce, Chief Executive
Officer.
Rule 13a-14 Certification of David C. Benoit, Chief Financial Officer.
Certification of Marshall T. Chiaraluce, Chief Executive Officer, and
David C. Benoit, Chief Financial Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
*
filed herewith
(b)
Reports on Form 8-K
On April 15, 2004, the Company filed a Form 8-K to report a notice
to Directors and Executive Officers informing them of an eight day
Blackout Period related to changes to the investment options
available to participants in the Savings Plan of the Connecticut
Water Company, a wholly owned subsidiary of Connecticut Water
Service, Inc.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Connecticut Water Service, Inc.
(Registrant) |
||||
Date: August 9, 2004 | By | /s/ David C. Benoit | ||
David C. Benoit | ||||
Vice President - Finance | ||||
Date: August 9, 2004 | By: | /s/ Peter J. Bancroft | ||
Peter J. Bancroft | ||||
Assistant Treasurer |
Page 21
Exhibit 4.22
AGREEMENT NO. DWSRF 200103-C
PROJECT LOAN AGREEMENT
BETWEEN THE STATE OF CONNECTICUT AND
UNIONVILLE WATER COMPANY
UNDER THE DRINKING WATER STATE REVOLVING FUND
(DWSRF) PROGRAM
THIS AGREEMENT, made and concluded at Hartford, Connecticut, this 19th day of April, 2004 by and between the State of Connecticut (the State), acting herein by and through the Commissioner of the Department of Environmental Protection (DEP) and the Commissioner of the Department of Public Health (DPH) and Unionville Water Company (the Recipient), a private corporation duly organized and validly existing under the laws of the State of Connecticut, and constituting an Eligible Public Water System (as defined herein),
WITNESSETH, THAT
WHEREAS , Sections 22a-475 to 483, inclusive of the Connecticut General Statutes, as amended (the Act) provide that the State may make loans to municipalities or Eligible Public Water Systems to finance the planning, design, development, construction, repair, extension, improvement, remodeling, alteration, rehabilitation, reconstruction or acquisition of Public Water Systems (as defined below);
WHEREAS , the Recipient has applied for a Project Loan from the State to finance the design and planning phase and/or the development, construction, repair, extension, improvement, remodeling, alteration, rehabilitation, reconstruction or acquisition of the Public Water System.
NOW THEREFORE, KNOW YE THAT:
THE STATE AND THE RECIPIENT MUTUALLY AGREE:
Section I. Definitions
Section 1.1. For the purposes of this Agreement, the following words and terms shall have the respective meanings set forth as follows:
Account means the account established by the Recipient in the Tax Exempt Bond Fund as required by Section 4.4 hereof.
Advance means each disbursement of Project Loan proceeds as set forth in Section 4.4 hereof.
Audit means an accounting and certification of all Eligible Project Costs incurred in accordance with the approved plans and specifications pursuant to Section 7.6 of this Agreement.
Bonds means any obligation issued by the State, the proceeds of which are used to fund the Project Loan from the State to the Recipient.
Clean Water Fund means the fund created under Section 22a-477 of the Act.
Code means the Internal Revenue Code of 1986, as amended.
The Commissioner of DEP means the Commissioner of The Department of Environmental Protection of the State.
The Commissioner of DPH means the Commissioner of the Department of Public Health of the State.
Continuing Disclosure Agreement means a Continuing Disclosure Agreement from the Recipient, entered into in connection with the issuance of the Bonds, relating to the Recipients obligations under the Rule, if required to be delivered by the State pursuant to Section 7.11 hereof, substantially in the form attached hereto as Exhibit I.
Debt Service Reserve Fund means the account held by State Street Bank and Trust Company, as agent of the State, required to be funded by the Recipient in accordance with Section 6.9 hereof.
DWSRF means the Drinking Water Federal Revolving Loan Account created as an account in the Clean Water Fund of the State pursuant to the Act.
DPUC means the Department of Public Utility Control of the State.
Eligible Loan Amount means Eligible Project Costs.
Eligible Project Costs means the total costs of the Project determined by the Commissioner of DEP and the Commissioner of DPH to be necessary and reasonable, minus Funds From Other Sources. The Eligible Project Costs shall include the payment or reimbursement of the costs of all labor, materials, machinery and equipment, lands, property rights and easements, interest on Interim Funding Obligations, Project Loan Obligations and bond anticipation notes, including the costs of issuance thereof, plans and specifications, surveys or estimates of costs and revenues, engineering and legal services, auditing and administrative expenses, and all other expenses approved by the Commissioner of DEP and the Commissioner of DPH, which are incident to all or part of the Project. Eligible Project Costs do not include the payment or reimbursement of the costs of : (1) purchase of lands, property rights and easements to the extent that such purchase(s) are not integral to the Project and are not otherwise consistent with the
Page 2 of 26
objectives of the Federal Act; (2) any labor associated with monitoring, operation and maintenance; and (3) any expense that is not eligible for funding under the Federal Act.
Eligible Public Water System means a water company, as defined in Connecticut General Statutes Section 25-32a, provided such water company serves at least fifteen service connections used by year-round residents or regularly serves at least twenty-five year round residents. An eligible public water system also includes nonprofit noncommunity water systems (as such term is defined under federal law) and to the extent permitted by federal law, recipients of assistance for projects that will result in the creation of a community water system (as such term is defined under federal law).
Event of Default means an event of default specified in Section 9.1 of this Agreement.
Federal Act means the Federal Safe Drinking Water Act, as amended.
Funds From Other Sources means amounts contributed by the Recipient from any source whatsoever other than the DWSRF for the purpose of paying the Recipients share of Total Project Costs. For purposes of this definition, paying shall mean expenditures by the Recipient for the purchase of goods, materials and services utilized in planning, designing and constructing the Project, and specifically excludes any repayments made pursuant to a Project Loan or a Project Loan Obligation.
Interim Funding Obligation means a note or other obligation delivered by the Recipient in anticipation of a Project Loan Obligation in substantially the form as Exhibit II to this Agreement.
Program Income means any investment income accrued on any Advance of the Project Loan during the period it is deposited in the Recipients Account established within the Tax Exempt Bond Fund.
Project means the planning, design, development, construction, repair, extension, improvement, remodeling, alteration, rehabilitation, reconstruction or acquisition of the Public Water System by the Recipient as described in Section 2.1 of this Agreement.
Project Loan means the loan in the amount set forth in Section 2.2 of this Agreement from the DWSRF of the State made to the Recipient pursuant to Section 4.1 of this Agreement to finance a portion of the Eligible Project Costs.
Project Loan Obligation means a note or other obligation issued by the Recipient to evidence the permanent financing of the Project Loan in substantially the form of Exhibit III to this Agreement.
Public Water System means a system for the provision to the public of water for human consumption through pipes or other constructed conveyances, serving at least fifteen service connections or twenty-five or more persons year round and nonprofit noncommunity water systems and otherwise as defined for purposes of the Federal Act, as amended or superseded.
Page 3 of 26
Rule means Rule 15c2-12 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
Scheduled Completion Date means May 15, 2003 or such earlier date should the Project be completed sooner than anticipated or such later date as the Commissioner of DEP and the Commissioner of DPH may otherwise determine, provided however, in no event shall such date be later than the date of completion of the Project.
Security Agreement means a security agreement, if required by and as described in this Agreement, from the Recipient to the State securing the Recipients obligations under this Agreement, the Interim Funding Obligation and the Project Loan Obligation. For the purposes of this Agreement, the term Security Agreement means that certain Collateral Assignment of Water Service Charges and Right to Receive Water Service Expense Assessments and Security Agreement, dated as of the June 3, 2004, between the State and the Recipient.
Tax Exempt Bond Fund means the Tax Exempt Proceeds Fund Inc., created pursuant to Connecticut General Statutes Section 3-24a, as amended, currently managed by Reich & Tang L.P. 600 Fifth Avenue, New York, NY 10020, and administered through the Office of the Treasurer of the State. As set forth in Section 4.4 hereof, each Recipient must have an Account within the Tax Exempt Bond Fund to receive funding from the DWSRF.
Total Project Costs means the total costs paid or incurred by the Recipient for the Project, including but not limited to Eligible Project Costs.
Section II. The Project
Section 2.1. Project Description. The Project, the water main
interconnection with MDC, shall consist of the installation of approximately
7,800 feet of water main, meter pit and appurtenances from the terminus of the
MDC system at Farmington Avenue to Unionville Water Companys water system at
Colton Street, Farmington.
Section 2.2 Costs of Project. The amount of the estimated Total Project
Costs and Eligible Project Costs and sources of payment for such costs are set
forth below:
$
1,850,000.00
$
50,000.00
$
1,800,000.00
$
1,800,000.00
Page 4 of 26
(See attached Project Budget, attached as Exhibit IV hereto, for complete breakdown of estimated Total Project Costs.)
Section III. [RESERVED]
Section IV. The Loan
Section 4.1. The Loan Commitment. Subject to the terms and conditions of this Agreement, the State agrees to lend to the Recipient, and the Recipient agrees to borrow from the State, an amount not to exceed the Project Loan amount as set forth in Section 2.2 hereof. The amount of the Project Loan shall equal the Eligible Project Costs. The Recipients obligation to repay the Project Loan shall be a general obligation of the Recipient issued on a parity basis with any outstanding senior indebtedness of the Recipient, except as otherwise provided in this Agreement. The Recipient shall provide as Exhibit V hereto a list of any outstanding senior indebtedness of the Recipient including outstanding balances, if any, which would take priority over the Recipients obligation to repay the Project Loan to the State. The Recipient shall issue a note or other obligation evidencing its obligation to repay the Project Loan to the State in the form specified in Exhibit II and /or Exhibit III hereto. The States obligation to make the Project Loan shall terminate 30 days from the date of this Agreement, unless the conditions precedent to funding the Project Loan set forth in Section 6.1 of this Agreement are satisfied by that date.
Section 4.2. Increase in Loan Commitment.
(a) Subject to the terms and conditions of this Agreement and the approval of the State Bond Commission and to the extent permitted by federal law, the State shall increase the amount of the Project Loan to the Recipient upon written evidence from the Recipient to the State that the actual amount of Eligible Project Costs exceeds the estimated Eligible Project Costs set forth in Section 2.2 of this Agreement. The revised amount of the Project Loan shall be calculated in the same manner as provided in Sections 2.2 and 4.1 hereof.
(b) Upon the approval of the State to increase the amount of the Project Loan pursuant to this section, Section 2.2 of this Agreement shall be amended in writing signed by the Commissioner of DEP and the Commissioner of DPH and the Recipient to reflect such an increase in the Project Loan.
Section 4.3. The Interim Funding Obligations and Project Loan.
(a) The Recipient will execute and deliver one or more Project Loan Obligations to evidence its obligation to repay the Project Loan, in the form specified in Section 6.1 hereof. In anticipation of the issuance of any Project Loan Obligation, the Recipient will execute and deliver one or more Interim Funding Obligations, in the form specified in Section 6.1 hereof, under which the Recipient may draw up to the amount of the Project Loan as set forth in Section 2.2 of this Agreement. Such draws shall be made in accordance with Section 4.4 of this Agreement. Any increase in the amount of the Project Loan as provided in Sections 4.1 and 4.2(a) of this Agreement shall be evidenced by the execution and delivery by the Recipient of an additional or amended
Page 5 of 26
Interim Funding Obligation or Project Loan Obligation evidencing such increase. Each Interim Funding Obligation shall mature no later than six months following the Scheduled Completion Date, shall bear interest at the rate of 3.56% per annum on the unpaid principal balance of each Project Loan Advance from the date of each such Project Loan Advance, shall be payable as to principal and interest on maturity, shall be dated and shall contain such terms and conditions as are required by law. Any Interim Funding Obligation may be renewed when due by the issuance of an Interim Funding Obligation in an amount sufficient to refund the principal due on the prior Interim Funding Obligation and to provide that the unpaid interest on all prior Project Loan Advances shall continue to accrue from the date of each such prior Project Loan Advance.
(b) Within six months of the Scheduled Completion Date, the Recipient will execute and deliver a Project Loan Obligation which shall be dated no later than the date of such delivery. The amount of the Project Loan Obligation shall not be less than the total of all Project Loan Advances made by the Scheduled Completion Date and accrued interest thereon, minus any amounts repaid to the State. The Project Loan Obligation shall bear interest at the rate of 3.56% per annum on the unpaid principal balance and shall be payable as to principal and interest as provided in Section 4.5(a) hereof. The execution and delivery of the Project Loan Obligation will constitute a refunding of the Interim Funding Obligation and accrued interest thereon and the Project Loan Obligation shall be issued in an amount which does not exceed the Project Loan as set forth in Sections 2.2 and 4.1 hereof. Subsequent to the issuance and delivery of the Project Loan Obligation, the Recipient may issue and refund additional Interim Funding Obligations under which it may draw any undisbursed Project Loan amounts in accordance with Section 4.4 and 7.6 of this Agreement. Any such Interim Funding Obligation may be refunded, and any increase in the Project Loan may be funded, by the issuance and delivery of a subsequent Project Loan Obligation.
(c) Interest on any Interim Funding Obligation and the Project Loan Obligation shall be computed on the basis of a year of 360 days and twelve 30-day months.
Section 4.4. Disbursement of Project Loan Proceeds. Prior to any disbursements, the Recipient must establish an Account with the Tax Exempt Bond Fund. The Account is the sole instrument by which the Recipient will receive its Project Loan proceeds from the State. Proceeds of the Project Loan shall be disbursed as an Advance and wired by the State to the Account upon the written request thereof, in substantially the form as Exhibit VI attached hereto and made a part hereof, from the Recipient to DEP on behalf of the State accompanied by evidence that such amounts have been incurred by or on behalf of the Recipient for the payment of Total Project Costs. Each such request from the Recipient shall indicate (a) the total amount of the costs incurred for the Project which have not been included in any prior Advance request and, if applicable, with evidence that such costs have been paid to the appropriate third parties, (b) the total amount of such costs which are Eligible Project Costs, and (c) the amount of the Project Loan Advance. Provided the Recipient submits such request and evidence on or before noon of the second business day of the month, the State agrees that it shall wire payment of the Project Loan Advance up to the amount determined by the Commissioner of DPH and the Commissioner of DEP to be an Eligible Project Cost, to the Account by the thirteenth business day of such month. Upon receipt of the Project Loan Advance up to the amount determined by the Commissioner of DPH and the Commissioner of DEP to be an Eligible Project Cost, if such costs have not already been paid by the Recipient, the
Page 6 of 26
Recipient shall immediately disburse such Advance to the appropriate third party and shall present the State with evidence of such payment by the end of the next business day. Each time a deposit is made to the Account, the Recipient will receive a deposit notice from the Tax Exempt Bond Fund evidencing the Account and the amount of the deposit. As soon as feasible following the disbursement of each Advance, the State shall send to the Recipient a spreadsheet evidencing as of the date of each Advance, the date and amount of each Project Loan Advance, the date and amount of principal repaid by the Recipient on all Project Loan Advances, the principal balance remaining unpaid by the Recipient on all Project Loan Advances, and the interest accrued on all Project Loan Advances. Such spreadsheet shall be shared with DPH on a regular basis and will constitute the endorsement to Schedule 1 of the Interim Funding Obligation.
Section 4.5. Required Repayment of Obligations.
(a) Except as otherwise provided herein and in the Act with respect to the Interim Funding Obligation, the Recipient shall repay each Project Loan Obligation (i) in monthly installments commencing not later than one month after the Scheduled Completion Date, or (ii) in one single installment representing 1/20 of total principal, not later than one year from the Scheduled Completion Date and monthly installments thereafter, provided, however, the last installment of principal on any Project Loan Obligation shall be payable not later than twenty (20) years from the Scheduled Completion Date. Interest on each Project Loan Obligation shall be paid in arrears on each principal repayment date. Monthly installments of principal may be substantially equal or may be in amounts which substantially equalize the aggregate amount of principal and interest due on each monthly installment due date, except that on the first repayment date all accrued interest shall be paid.
(b) If any Audit required pursuant to Section 7.6 hereof reveals that the actual Eligible Project Costs are less than the amount set forth in Section 2.2, the Recipient shall, as soon as practicable, but not less than 90 days after the State notifies the Recipient in writing of the results of the Audit, repay the difference between the Project Loan received and the Project Loan it would have received if the audited Eligible Project Cost figure had been used to calculate the Project Loan. Any such repayment shall be applied first to reduce the outstanding amount of any Interim Funding Obligations and second to repayment of any Project Loan Obligation in the manner described in Section 4.6 hereof.
Section 4.6. Optional Prepayment of Principal.
(a) The Recipient may, at any time, and from time to time, prepay any Interim Funding Obligation in whole or in part in any amount, together with accrued interest to the date of such prepayment on the principal amount prepaid. Prepayments shall be applied against Project Loan Advances which have been outstanding the longest.
(b) The Recipient may, at any time, and from time to time, prepay any Project Loan Obligation in whole or in part, together with accrued interest to the date of such prepayment on the amount prepaid. Prepayments shall be applied to the principal of the Project Loan Obligation in the
Page 7 of 26
inverse order of maturity of the installments of principal due thereon or in such other order as may be acceptable to the Recipient and the State.
Section 4.7. Method of Payments. All payments of principal and interest on any Interim Funding Obligation or any Project Loan Obligation shall be made by the Recipient by check or draft, or by wire transfer, with Agreement No. DWSRF 200103-C noted thereon payable to the Treasurer, State of Connecticut at: State of Connecticut, Office of the Treasurer, 55 Elm Street, Hartford, Connecticut 06106, Attn: DWSRF Financial Administrator or to such other place as the State shall designate in writing to the Recipient.
Section 4.8. Delivery of Security Agreement. Concurrently with the delivery of each Interim Funding Obligation and the Project Loan Obligation, if required pursuant to Section 6.1 hereof, the Recipient will execute and deliver to the State the Security Agreement in the form specified in Section 6.1 hereof granting to the State a Security Agreement and security interest on the Project and/or other assets of the Recipient, as specified in Section 6.1 hereof. Except as otherwise provided in Section 6.1 hereof, the Security Agreement shall grant to the State a lien and security interest on the property covered thereby on a parity basis with the outstanding senior indebtedness identified on Exhibit V.
Section 4.9. No Defense or Set-Off. The obligations of the Recipient to make payments on the Interim Funding Obligations and the Project Loan Obligation shall be absolute and unconditional without defense or set-off by reason of any default by the State under this Agreement or under any other agreement between the Recipient and the State or for any other reason, including without limitation, destruction of or damage to the Project, condemnation of the Project, commercial frustration of purpose or any other dispute with the State or failure of the State to pay the Recipient amounts which may be due to the Recipient other than under this Agreement. It is the intention of the parties hereto that the payments required hereunder will be paid in full when due without any delay or diminution whatsoever.
Section V. Representations and Warranties
The Recipient hereby makes the following representations and warranties to the State as of the date hereof, which representations and warranties will survive the delivery of the Interim Funding Obligations and the Project Loan Obligation and the making of the Project Loan.
Section 5.1. Existence and Power. The Recipient is, and, except as provided in Section 7.4 hereof, will continue to be, a corporation duly organized and validly existing under the laws of the State of Connecticut and qualified to do business in the State, and has the corporate power and authority to execute and deliver this Agreement and, if applicable, to execute and deliver the Interim Funding Obligation, the Project Loan Obligation, and the Security Agreement and to perform its obligations hereunder and thereunder.
Section 5.2. Authority; Regulatory Approvals. The execution and delivery by the Recipient of this Agreement and, if applicable, the Interim Funding Obligation, the Project Loan Obligation,
Page 8 of 26
and the Security Agreement have been duly authorized by the Recipient in conformity with all applicable laws, its articles of incorporation and bylaws, and all corporate proceedings or authorizations for the execution and delivery of this Agreement and, if applicable, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement remain in full force and effect and have not been modified or otherwise revised which would negate the Recipients ability to conform with this Agreement and to perform any of its obligations under this Agreement, the Interim Funding Obligation, the Project Loan Obligation, and the Security Agreement. The Recipient has received, or will receive prior to any Advance hereunder, all required federal and/or State regulatory approvals and consents necessary for the Recipient to enter into and, deliver and perform this Agreement and, if applicable, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement, including appropriate approvals or pending and/or actual orders from DPH and/or DPUC, if required.
Section 5.3. Validity. This Agreement is, and, if applicable, each of the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement, upon the execution and delivery hereof and thereof and the disbursement of an Advance of the Project Loan, will be, the legal, valid, and binding obligation of the Recipient enforceable against it in accordance with their respective terms.
Section 5.4. Litigation. No litigation of any nature is now pending or, to the best of the Recipients knowledge, threatened which would restrain or enjoin the execution or delivery of this Agreement and, if applicable, the Interim Funding Obligation, the Project Loan Obligation, and the Security Agreement, the payment of interest or principal hereunder or thereunder, the collection of rates and charges or other amounts to pay the same or in any manner questioning the Recipients ability to undertake the Project or its authority for the execution or delivery of, and performance of its obligations under, this Agreement and, if applicable, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement or affecting the validity hereof and thereof.
Section 5.5. Events of Default. No Event of Default specified in Section 9.1 hereof, and no event which with the lapse of time or the giving of notice or both would become an Event of Default, has occurred and is continuing. The execution, delivery and performance by the Recipient of this Agreement, the undertaking by the Recipient of the Project and the execution and delivery by the Recipient of the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement will not result in an event of default, or an event which with the lapse of time or the giving of notice or both would become such an event of default, under any contract, agreement, security agreement or other obligation to which the Recipient is a party or which affects any material properties or assets of the Recipient.
Section 5.6. Expenditure of Project Loan by Recipient. The Recipient reasonably expects to complete the Project on or prior to the Scheduled Completion Date and agrees that all monies received by the Recipient from the Project Loan will be expended to pay the costs of the Project.
Section 5.7. (a) Priority of Security Agreement. If applicable, and except as otherwise provided herein, the lien and security interest granted under the Security Agreement shall be a lien
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on the property subject thereto on a parity basis with the outstanding senior indebtedness identified on Exhibit V.
Section 5.8 The Provisions of Financial Information. Complete and accurate copies of the Recipients most recent financial statements as of the date of this Agreement have been delivered to the State. All financial statements were prepared in all material respects in conformity with generally accepted accounting principles, except as otherwise noted therein, and fairly represent in all material respects the respective consolidated financial position and the consolidated results of operations and cash flows for each of the periods covered thereby of the Recipient at the respective dates thereof. Since the date of the most recent financial statement, both audited and unaudited, there has occurred no event with respect to the Recipient which has resulted, or is reasonably likely to result, in a material adverse effect upon the financial condition, operations or assets of the Recipient. The Recipient agrees to provide financial statements at least in substantially the same form each fiscal year, as described in Section 7.13, until the loans under this Agreement are repaid in full.
Section VI. Conditions Precedent
The obligation of the State to make the Project Loan is subject to the following conditions precedent.
Section 6.1. Conditions Precedent to the Obligations of the State. Prior to making the Project Loan, the Recipient shall deliver to the State, if applicable, the following:
(a) plans and specifications prepared for the Project (if the Project is a construction project), approved by the Commissioner of DPH, and with the concurrence of DPUC, and with approval of the Commissioner of DEP for consistency with financial requirements of the Connecticut General Statues and regulations and resolutions thereto;
(b) written assurance, satisfactory to the Commissioner of DEP and the Commissioner of DPH, that the Recipient will undertake and complete the Project with due diligence;
(c) written assurance satisfactory to the Commissioner of DEP and the Commissioner of DPH that the Recipient will own the Project and will operate and maintain the Project for a period and in a manner satisfactory to DEP and DPH (if the Project is a construction project) after completion of the Project;
(d) all applications and other documents and information required by the Commissioner of DEP, the Commissioner of DPH and DPUC;
(e) evidence that all Recipients are legally required to complete their respective portions of such Project (if the Project is to be owned or maintained by more than one Recipient);
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(f) evidence that the Recipient has established the Account required by Section 4.4 hereof;
(g) evidence that the Recipient has available to it or has made arrangements satisfactory to the Commissioner of DEP and the Commissioner of DPH to obtain any applicable Funds From Other Sources referred to in Section 2.2 hereof to pay that portion of all Total Project Costs for which it is legally obligated and which are not met by the Project Loan;
(h) written assurance to the Commissioner of DEP, the Commissioner of DPH and DPUC that the Recipient has adequate legal, institutional, technical, managerial and financial capability to ensure compliance with the requirements of applicable federal law, except to the extent otherwise permitted by federal law;
(i) written assurance that the Recipient will comply with the Audit requirements of Section 7.6 of this Agreement;
(j) A Security Agreement, in a form satisfactory to the State, covering all water service charges, fees, fines and other assessments levied against the members of the Recipient and such other income, accounts and/or collateral satisfactory to the State which shall be on a parity with the senior obligation identified on Exhibit V.
(k) evidence that the Recipient is in compliance with the requirements of the Act, the Federal Act and all other applicable State and federal laws and regulations pertaining to the Project, including, but not limited to, the outstanding submittals identified in Exhibit VII to this Agreement; and
(l) establishment of the account for the Debt Service Reserve Fund as required by Section 6.9 hereof.
The execution and delivery of this Agreement by the Recipient to the State constitute the written assurances required by clauses (b), (c), (h) and (i) above. The forms of the Interim Funding Obligation and Project Loan Obligation to be delivered by the Recipient shall be as specified in this Agreement and in the forms of such Obligations attached hereto as Exhibits II and III.
Section 6.2. Evidence of Corporate Action. Prior to the making of the Project Loan, the Recipient shall deliver to the State evidence of all corporate action taken by the Recipient to authorize the execution and delivery of this Agreement and, if applicable, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement and the borrowing hereunder, certified by an authorized officer of the Recipient, and such other papers and documents as the Commissioner of DEP and the Commissioner of DPH may reasonably request, including evidence that the Recipient has received all required regulatory approvals.
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Section 6.3. Opinion of Counsel. Prior to the disbursement of the initial Project Loan Advance pursuant to each Interim Funding Obligation and prior to the delivery of any Project Loan Obligation, the Recipient shall deliver to the State a written opinion from counsel for the Recipient, satisfactory to the State, substantially in the form of Exhibit VIII hereto, to the effect that (a) the execution, delivery and performance by the Recipient of this Agreement and, as applicable, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement have been duly authorized by all necessary corporate action, (b) this Agreement and, if applicable, the Security Agreement constitute a legal, valid and binding obligation of the Recipient enforceable against it in accordance with their respective terms, (c) as applicable, the Interim Funding Obligation and the Project Loan Obligation, when executed and delivered and upon disbursement of an Advance of the Project Loan, will constitute a legal, valid and binding obligation of the Recipient enforceable against it in accordance with their respective terms, and (d) the Recipient has received all required regulatory approvals.
Section 6.4. Reserved
Section 6.5. Officers Certificate. Prior to the delivery of each Interim Funding Obligation and Project Loan Obligation, the State shall have received from the Recipient a certificate of a duly authorized officer confirming the representations set forth herein as if made on the date of such certificate, substantially in the form of Exhibit IX to this Agreement and each of such representations shall have been deemed to have been confirmed on the date of each Advance.
Section 6.6. No Event of Default. Prior to the delivery of each Interim Funding Obligation and Project Loan Obligation and the payment of any Advance, no Event of Default and no event which with the lapse of time or the giving of notice or both would become such an Event of Default, shall have occurred and be continuing.
Section 6.7. Insurance. Prior to making the Project Loan, the Recipient shall have provided evidence that it has in force such insurance, including, but not limited to, general liability insurance, property and casualty insurance, flood insurance, key man insurance, disability insurance, and builders risk insurance, if applicable, in sufficient amounts to protect its interests in the Project and otherwise in such amounts and with such coverage as is customary with companies in the same or similar business and as may be reasonably satisfactory to the State. The Recipient shall pay when due the premiums thereon in order to maintain such insurance in full force and effect. The Recipient will provide written evidence that each policy required to be maintained by the Recipient hereunder shall provide thirty (30) days written minimum cancellation notice to the State.
Section 6.8. Compliance with Federal and State Requirements. The Recipient shall at all times comply with all applicable federal and State laws and regulations pertaining to the Project. The Recipient agrees to comply with the regulations adopted pursuant to Section 22a-482 of the Connecticut General Statutes, as amended, and to comply with all provisions thereof except as may be waived by the Commissioner of DEP and the Commissioner of DPH.
Section 6.9 Obligation to Fund Debt Service Reserve Fund. The Recipient shall be obligated to deposit with U.S. Bank National Association, as agent of the State, or with another
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bank or financial institution satisfactory to the State, in an amount of money equal to the maximum annual debt service obligation scheduled to be due with respect to the Project Loan in any year subsequent to the year in which the 1/20 th principal payment of Section 4.5(a) is due and payable. Such amount shall be funded from sources other than proceeds of the Project Loan and shall be held in the Debt Service Reserve Fund for the benefit of the Recipient but pledged to the State to secure the Recipients obligation to pay amounts due with respect to the Project Loan. The Recipient agrees to pay $4,726.35 on each debt service payment date to the Debt Service Reserve Fund, until the Debt Service Reserve Fund contains the maximum annual debt service amount, said amount constituting a 24 month funding schedule. Failure to make the foregoing monthly payment to the Debt Service Reserve Fund shall be an Event of Default. The State shall be entitled to draw amounts from the Debt Service Reserve Fund, any time and from time to time, in the event that an Event of Default under Section 9.1 hereof shall have occurred. Such amounts so drawn shall be applied to pay amounts due and unpaid under the Project Loan from the Recipient (including amounts then due and payable pursuant to exercise of remedies under Section 9.2 hereof). Prior to the occurrence of an Event of Default, amounts on deposit in the Debt Service Reserve Fund may be invested for the benefit of the Recipient in such obligations and securities as shall be determined by the Recipient and agreed to by the State. The Recipient shall be obligated to maintain the amount on deposit in the Debt Service Reserve Fund at the required level and shall be obligated to promptly restore any amount withdrawn by the State or to restore any investment losses accrued to the Debt Service Reserve Fund. Amounts held in the Debt Service Reserve Fund in excess of the amount required hereunder shall, at the direction of the Recipient, (i) be applied to pay amounts then due and payable under the Interim Funding Obligation or the Project Loan Obligation or (ii) not more than once every six months, be disbursed to the Recipient. If at any time the amount on deposit in the Debt Service Reserve Fund is equal to the amount then due and payable with respect to the Project Loan, the Recipient or the State may direct that such amount shall be applied to prepay the Project Loan in full. The Recipient may provide a surety bond or other security instrument in lieu of a cash deposit, from a provider and upon terms satisfactory to the State, in the amount required to be on deposit in the Debt Service Reserve Fund.
Section VII. Agreements of The Recipient
Section 7.1. Construction. The Recipient will undertake and complete the Project in accordance with the final plans and specifications developed and approved by the Commissioner of DEP and the Commissioner of DPH, no later than the Scheduled Completion Date , unless such date is otherwise extended by the Commissioner of DEP and the Commissioner of DPH.
Section 7.2. Inspection of Project By State. The Recipient shall allow the State, the DEP and the DPH and any of their officers, agents or employees to come onto its property from time to time for the purpose of monitoring progress of the Project.
Section 7.3. Maintenance of Project. Subject to section 7.4 hereof, the Recipient will operate and maintain the Project properly after completion of construction, will own such Project and will comply with all existing statutes, rules and regulations applicable to the operation of the Project for the design life of the Project. Notwithstanding Section 10.5 of this Agreement, the
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covenant contained in this Section 7.3 shall survive the making of the Project Loan and payment in full of the Interim Funding Obligation and the Project Loan Obligation for the design life of the Project.
Section 7.4. Maintenance of Corporate Existence. Until payment in full of the Interim Funding Obligation and Project Loan Obligation, the Recipient shall maintain its existence as a corporation validly existing and duly qualified to do business under the laws of the State; provided, however, that the Recipient may dissolve or otherwise dispose of all or substantially all of its assets and may consolidate with or merge into another corporation or entity or permit another corporation or entity to consolidate or merge into it, so long as: (i) the surviving, resulting or transferee corporation or entity, if other than the Recipient, is qualified to do business under the laws of the State and assumes all of the Recipients obligations under this Agreement and, as applicable, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement; (ii) all applicable regulatory approvals of DPH and DPUC, as applicable, have been obtained; (iii) the Commissioner of DEP and the Commissioner of DPH have consented to such transaction; and (iv) the net worth of such surviving corporation or entity is not less than the net worth of the Recipient immediately prior to such transaction.
Section 7.5. Use of Proceeds.
(a) The Recipient will use the proceeds of the Project Loan solely to pay, or reimburse itself for paying, Eligible Project Costs. The Recipient shall promptly disburse the proceeds of such Project Loan after it receives notice that such proceeds have been deposited in the Recipients Account.
(b) The amount of any Program Income accumulated in the Account by the Recipient shall be treated as DWSRF money which the Recipient shall pay to the State upon demand and which may be used by the State at its own discretion to fund any DWSRF project.
Section 7.6. Completion of Project; Audit.
(a) Prior to the Scheduled Completion Date and the issuance of a Project Loan Obligation, the Recipient shall engage an independent public accountant to prepare and deliver to the State an Audit and statement of the Project. The Audit shall be undertaken at the expense of the Recipient but may be considered an Eligible Project Cost, shall be performed in accordance with generally accepted auditing standards and shall identify any expenditures made by the Recipient that are not in compliance with terms of this Agreement. The statement shall describe Eligible Project Costs by category which have not yet been paid and an estimate of their amounts and their anticipated date of payment. Such costs shall include any known or anticipated claims, even if the amount cannot be reasonably ascertained, and a description of each claim, the possible amounts of each claim, possible payment dates, and the anticipated means of resolving each claim.
(b) The Audit shall be submitted to the State no later than 90 days after the Scheduled Completion Date. Within 60 days after such submission, the State shall review the Audit and inform the Recipient of the amount of the projected Project Loan Obligation, and any accrued
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interest on any outstanding Interim Funding Obligation. This interest, unless paid by the Recipient from other funds of the Recipient, will be advanced as part of the Project Loan Obligation. No additional amount so advanced shall cause the Project Loan to be exceeded. The Project Loan Obligation may be issued prior to the completion of the Audit in an amount agreed to by the State and the Recipient.
(c) Any Eligible Project Costs (i) which can be reasonably estimated, (ii) which are scheduled for disbursement within one year from the Scheduled Completion Date and (iii) which have not been advanced to pay costs of the Project, but will not cause the amount of the Project Loan to be exceeded, may be included in the Project Loan Obligation, and advanced to the Recipient, upon such conditions as the State shall impose, and held by the Recipient and applied as provided in Sections 4.4 and 7.5 hereof, except that the Recipient shall disburse proceeds from the Account only and promptly after it has completed a request (similar to a request for an Advance as provided in Section 4.4) and received approval of such request from the State.
(d) Any Eligible Project Costs which are not funded by the Project Loan Obligation may be funded by a subsequent Interim Funding Obligation or Project Loan Obligation, provided that no such Interim Funding Obligation or Project Loan Obligation or Advance shall cause the aggregate amount of Project Loan Advances to exceed the Project Loan. The Commissioner of DEP and the Commissioner of DPH shall establish a new Scheduled Completion Date for the portion of the Project related to such Eligible Project Costs. Any other Eligible Project Costs not funded hereunder may be funded under subsection (e) below.
(e) Any Eligible Project Costs which would cause the amount of the Project Loan to be exceeded may be funded through the execution of a new Project Loan Agreement and the delivery of a new Interim Funding Obligation or a new Project Loan Obligation, as the case may be, to the extent permitted by federal law and after approval by the State Bond Commission as provided in Section 4.2, if required. The Commissioner of DEP and the Commissioner of DPH shall establish a new Scheduled Completion Date for the portion of the Project related to such Eligible Project Costs. The State may require that any such subsequent Interim Funding Obligation be permanently funded by the issuance of a new Project Loan Obligation issued no later than six months after the new Scheduled Completion Date.
(f) Notwithstanding any section of this Agreement to the contrary, the term of any Project Loan Obligation issued in accordance with subsections (d) and (e) of Section 7.6 hereof shall not exceed twenty (20) years from the original Scheduled Completion Date contained in the first Project Loan Agreement. Repayment of principal and interest on any such Project Loan Obligation shall commence within one month from the date of issue of the Project Loan Obligation. In any case where any subsequent Project Loan Obligation has been issued pursuant to subsections (d) and (e) of this Section 7.6, the Recipient agrees to cause to be prepared and delivered to the State a supplemental Audit in the same manner as provided in subsections (a) and (b) above on or before the issuance of such subsequent Project Loan Obligations and, except as provided in this subsection, all the provisions of subsections (a), (b), (c), (d), and (e) above shall be followed in connection with the issuance of any such Project Loan Obligation.
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(g) The Recipient further agrees that the auditors of Public Accounts of the State, appointed pursuant to Section 2-89 of the Connecticut General Statutes, shall have access to all records and accounts of the Recipient concerning the Project and that it shall maintain project accounts in accordance with generally accepted accounting principles. To provide such access the Recipient agrees that it shall preserve all of its records and accounts concerning the Project for a period of three (3) years after the Audit required under Section 7.6 of this Agreement is delivered to the State.
Section 7.7. Tax Compliance. The Recipient agrees and covenants that it shall at all times do and perform all acts and things reasonably requested by the State to ensure that interest paid on the Bonds (if issued on a basis which permits the exclusion from gross income of interest thereon for purposes of federal income taxation) shall, for purposes of federal income taxation, be excludable from the gross income of the recipients thereof under the Code. The State and the Recipient acknowledge that the Recipient is a private for profit corporation, which owns and operates the Project and related facilities, and is engaged in the sale of water. It is not the intent of this section to effect the Recipients status, ownership or operations.
Section 7.8. Nondiscrimination. PURSUANT TO PROVISIONS OF CONNECTICUT GENERAL STATUTES SEC. 4a-60 and 4a-60a.
(a) Every contract to which the State or any political subdivision of the State other than a municipality is a party shall contain the following provisions: (1) The contractor agrees and warrants that in the performance of the contract such contractor will not discriminate or permit discrimination against any person or group of persons on the grounds of race, color, religious creed, age, marital status, national origin, ancestry, sex, mental retardation or physical disability, including, but not limited to, blindness, unless it is shown by such contractor that such disability prevents performance of the work involved, in any manner prohibited by the laws of the United States or of the state of Connecticut. The contractor further agrees to take affirmative action to insure that applicants with job-related qualifications are employed and that employees are treated when employed without regard to their race, color, religious creed, age, marital status, national origin, ancestry, sex, mental retardation, or physical disability, including, but not limited to, blindness, unless it is shown by such contractor that such disability prevents performance of the work involved; (2) the contractor agrees, in all solicitations or advertisements for employees placed by or on behalf of the contractor, to state that it is an affirmative action-equal opportunity employer in accordance with regulations adopted by the commission; (3) the contractor agrees to provide each labor union or representative of workers with which such contractor has a collective bargaining agreement or other contract or understanding and each vendor with which such contractor has a contract or understanding, a notice to be provided by the commission, advising the labor union or workers representative of the contractors commitments under this section, and to post copies of the notice in conspicuous places available to employees and applicants for employment; (4) the contractor agrees to comply with each provision of this section and Conn. Gen. Stat. Sections 46a-68e and 46a-68f and with each regulation or relevant order issued by said commission pursuant to Conn. Gen. Stat. Sections 46a-56, as amended by Section 5 of Public Act 89-253, 46a-68e and 46a-68f; (5) the contractor agrees to provide the commission on human rights
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and opportunities with such information requested by the commission, and permit access to pertinent books, records and accounts, concerning the employment practices and procedures of the contractor as relate to the provisions of this section and section 46a-56. If the contract is a public works contract, the contractor agrees and warrants that he will make good faith efforts to employ minority business enterprises as subcontractors and suppliers of materials on such public works project.
(b) For the purposes of this section, minority business enterprise means any small contractor or supplier of materials fifty-one per cent or more of the capital stock, if any, or assets of which is owned by a person or persons: (1) who are active in the daily affairs of the enterprise, (2) who have the power to direct the management and policies of the enterprise and (3) who are members of a minority, as such term is defined in subsection (a) of Conn. Gen. Stat. Section 32-9n; and good faith means that degree of diligence which a reasonable person would exercise in the performance of legal duties and obligations. Good faith efforts shall include, but not be limited to, those reasonable initial efforts necessary to comply with statutory or regulatory requirements and additional or substituted efforts when it is determined that such initial efforts will not be sufficient to comply with such requirements.
For purposes of this Section, Commission means the Commission on Human Rights and Opportunities.
For purposes of this section, Public works contract means any agreement between any individual, firm or corporation and the state or any political subdivision of the state other than a municipality for construction, rehabilitation, conversion, extension, demolition or repair of a public building, highway or other changes or improvements in real property, or which is financed in whole or in part by the state, including, but not limited to, matching expenditures, grants, loans, insurance or guarantees.
(c) Determination of the contractors good faith efforts shall include but shall not be limited to the following factors: The contractors employment and subcontracting policies, patterns and practices; affirmative advertising, recruitment and training; technical assistance activities and such other reasonable activities or efforts as the commission may prescribe that are designed to ensure the participation of minority business enterprises in public works projects.
(d) The contractor shall develop and maintain adequate documentation, in a manner prescribed by the commission, of its good faith efforts.
(e) The contractor shall include the provisions of subsection (a) of this section in every subcontract or purchase order entered into in order to fulfill any obligation of a contract with the State and such provisions shall be binding on a subcontractor, vendor or manufacturer unless exempted by regulations or orders of the Commission. The contractor shall take such action with respect to any such subcontract or purchase order as the Commission may direct as a means of enforcing such provisions including sanctions for noncompliance in accordance with Conn. Gen. Stat. Section 46a-56; provided, if such contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the Commission, the
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contractor may request the state of Connecticut to enter into any such litigation or negotiation prior thereto to protect the interests of the state and the state may so enter.
(f) Every contract to which the State or any political subdivision of the state other than a municipality is a party shall contain the following provisions: (1) The contractor agrees and warrants that in the performance of the contract such contractor will not discriminate or permit discrimination against any person or group of persons on the grounds of sexual orientation, in any manner prohibited by the laws of the United States or of the state of Connecticut, and that employees are treated when employed without regard to their sexual orientation; (2) the contractor agrees to provide each labor union or representative of workers with which such contractor has a collective bargaining agreement or other contract or understanding and each vendor with which such contractor has a contract or understanding, a notice to be provided by the commission on human rights and opportunities advising the labor union or workers representative of the contractors commitments under this section, and to post copies of the notice in conspicuous places available to employees and applicants for employment; (3) the contractor agrees to comply with each provision of this section and with each regulation or relevant order issued by the Commission pursuant to Section 46a-56 of the general statutes; (4) the contractor agrees to provide the commission on human rights and opportunities with such information requested by the commission, and permit access to pertinent books, records and accounts, concerning the employment practices and procedures of the contractor which relate to the provisions of this section and section 46a-56 of the general statutes.
(g) The contractor shall include the provisions of section (f) in every subcontract or purchase order entered into in order to fulfill any obligation of a contract with the state and such provisions shall be binding on a subcontractor, vendor or manufacturer unless exempted by regulations or orders of the commission. The contractor shall take such action with respect to any such subcontract or purchase order as the commission may direct as a means of enforcing such provisions including sanctions for noncompliance in accordance with section 46a-56 of the general statutes; provided, if such contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the commission, the contractor may request the state of Connecticut to enter into any such litigation or negotiation prior thereto to protect the interests of the state and the state may so enter.
The contractor agrees to comply with the regulations referred to in sections 4a-60 and 4a-60a of the Connecticut General Statutes as they exist on the date of this contract and as they may be adopted or amended from time to time during the term of this contract and any amendments thereto.
Section 7.9. Executive Orders of the Governor. This contract is subject to the provisions of Executive Order No. Three of Governor Thomas J. Meskill, promulgated June 16, 1971 and, as such, this contract may be canceled, terminated or suspended by the State Labor Commissioner for violation of or noncompliance with said Executive Order No. Three or any State or federal law concerning nondiscrimination, notwithstanding that the Labor Commissioner is not a party to this contract. The parties of this contract, as part of the consideration hereof, agree that said Executive Order No. Three is incorporated herein by reference and made a part hereof. The parties agree to abide by said Executive Order and agree that the State Labor Commissioner shall have continuing
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jurisdiction in respect to contract performance in regard to nondiscrimination, until the contract is completed or terminated prior to completion. The contractor agrees, as part of the consideration hereof, that this contract is subject to the Guidelines and Rules issued by the State Labor Commissioner to implement Executive Order No. Three, and that it will not discriminate in its employment practices or policies, will file reports as required and will fully cooperate with the State and the State Labor Commissioner. This contract is subject to the provisions of Executive Order No. Seventeen of Governor Thomas J. Meskill promulgated February 15, 1973, and, as such, this contract may be canceled, terminated, or suspended by the contracting agency or the State Labor Commissioner for violation of or noncompliance with said Executive Order No. Seventeen, notwithstanding that the Labor Commissioner is not a party to this contract. The parties to this contract, as part of the consideration hereof, agree that Executive Order No. Seventeen is incorporated herein by reference and made a part hereof. The parties agree to abide by said Executive Order and agree that the contracting agency and the State Labor Commissioner shall have joint and several continuing jurisdiction in respect to contract performance in regard to listing all employment openings with the Connecticut State Employment Service. This contract is subject to the provisions of Executive Order No. Sixteen of Governor John G. Rowland promulgated August 4, 1999, and, as such, this contract may be canceled, terminated or suspended by the State for violation of or noncompliance with said Executive Order No. Sixteen. The parties to this contract, as part of the consideration hereof, agree that Executive Order No. Sixteen is incorporated herein by reference and made a part hereof and agree that a requirement for compliance with Executive Order No. Sixteen shall be included in any subcontracts or other compliance that may result from the contract.
Section 7.10. Indemnification. To the extent permitted by law, the Recipient agrees to indemnify and hold the State, its officials, agents and employees harmless from and against any and all claims, suits, actions, costs, demands and damages resulting from the performance or non-performance by the Recipient or any of its officers, agents, or employees, of the Recipients obligations under this Agreement, as it may be amended or supplemented from time to time. It is further understood that such indemnity shall not be limited by any insurance coverage herein required.
Section 7.11. Continuing Disclosure; Official Statement. The Recipient shall provide or cause to be provided to the State and/or directly to information repositories such annual financial information, operating data regarding the Project, audited financial statements and any other financial information as may be required by the State, in its sole judgment, to comply with the Rule in connection with the issuance of Bonds. The obligation of the Recipient pursuant to this Section 7.11 shall include the execution of a Continuing Disclosure Agreement and/or other certifications related hereto, in each case when requested by the State based on applicable requirements and materiality standards under the Rule.
Further, the Recipient agrees to provide to the State such information with respect to the Recipient as may be requested by the State for inclusion in an appendix to the States official statement or other offering documents relating to the offering and sale of Bonds.
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Section 7.12. Financial Covenants. The Recipient agrees to comply with the following financial covenants set forth in Exhibit X, attached hereto and made a part hereof, for the term of the Project Loan, unless otherwise agreed by the State, to the extent that the Recipient is capable of so complying under any applicable regulations or DPUC orders.
Section 7.13. Reports. The Recipient shall deliver to the State:
(a) audited annual financial statements of the Recipient, together with the auditors report thereon, within 120 days after the end of each fiscal year of the Recipient (or within such other period as may be agreed to by the State);
(b) unaudited quarterly financial statements of the Recipient, within 60 days after the end of each fiscal quarter of the Recipient (or within such other period as may be agreed to by the State); and
(c) together with the financial statements required by subsections (a) and (b) of this Section 7.13, an officers certificate evidencing compliance with the Financial Covenants referred to in Section 7.12 hereof and stating to the effect that no Event of Default specified in Section 9.1 hereof, and no event which with the lapse of time or the giving of notice or both would become an Event of Default, has occurred or is then continuing.
(d) copies of any material notice or other material communication received by the Recipient from any third party in connection with any outstanding senior indebtedness of the Recipient, promptly after such notice or other communication is received by the Recipient.
Section VIII. Agreements Of The State
Section 8.1. Audit and Project Loan. Upon receipt of the Audit and statement provided for in Section 7.6, the State will review such Audit and statement and within 60 days notify the Recipient in writing of the following: (a) the amount of Eligible Project Costs expended for the Project, including any adjustments to the amount of Eligible Project Costs, if applicable, the amount of the Project Loan disbursed to the Recipient, and the amount by which the Project Loan disbursed exceeds or is less than the amount of the Project Loan which the Recipient was entitled to receive under this Agreement for Eligible Project Costs; (b) the amount of the projected Project Loan Obligation, as provided in Subsection 7.6(b); and (c) the amount of estimated Eligible Project Costs to be incurred upon payment of all estimated Project costs, including any adjustments to the amount of Eligible Project Costs, if applicable, and the amount by which the Project Loan exceeds or is less than the amount of such estimated Eligible Project Costs. If such Audit demonstrates that the Recipient received disbursements of the Project Loan in excess of what it was entitled to receive pursuant to this Agreement, the Recipient shall repay the State such excess amounts pursuant to Section 4.5 hereof. If the Project Loan received is less than the amount the Recipient was entitled to receive pursuant to this Agreement, the State shall promptly process a request for an Advance of the unpaid portion of the Project Loan but not in excess of the Project Loan. If such Audit and statement demonstrate that the Project Loan is less than the amount of Eligible Project Costs to be
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incurred upon payment of all estimated Project costs, the State shall as soon as practicable increase the Project Loan pursuant to Section 4.2 hereof.
Section IX. Defaults
Section 9.1. Events of Default. An event of default shall be deemed to exist under this Agreement and the Interim Funding Obligation or Project Loan Obligation upon the occurrence of any of the following events or conditions:
(a) Default in the payment of the principal of the Interim Funding Obligation or Project Loan Obligation when the same shall be due and payable; or
(b) Default in the payment of the interest on the Interim Funding Obligation or Project Loan Obligation when the same shall be due and payable; or
(c) Failure to make payments required by Section 6.9 when the same shall be due or payable;
(d) The failure to restore amounts required to be on deposit in the Debt Service Reserve Fund within fifteen (15) days of notice from the bank holding the Debt Service Reserve Fund that the amount on deposit in such fund is less than the amount required pursuant to Section 6.9 of this Agreement, or
(e) The occurrence and continuance of an event of default under the Security Agreement; or
(f) Failure by the Recipient to observe or perform any covenant contained in Section 7.4 or 7.12 of this Agreement; or
(g) Failure by the Recipient to observe or perform any other covenant contained in this Agreement and the continuance thereof for a period of thirty (30) days unless the Recipient notifies the State in writing within such thirty (30) day period that for some reason beyond its control it is unable to observe or perform such covenant, in which case no event of default shall occur if the Recipient is proceeding in good faith and with due diligence to correct such failure, or complete the Audit, as the case may be, but shall occur at the time the Recipient fails to so proceed; or
(h) Any representation or warranty made by the Recipient herein, or any statement, certificate or other data furnished by the Recipient or any of its agents in connection with the Project proves to be incorrect in any material respect as of the making or furnishing thereof and the Recipient fails to correct such failure within thirty (30) days after written notice to the Recipient by the State; or
(i) The Recipient shall (1) apply for or consent to the appointment of a receiver, trustee or liquidator of all or a substantial part of any of its assets; (2) be unable, or admit in writing its inability to pay debts as they mature; (3) file or permit the filing of any petition, arrangement,
Page 21 of 26
reorganization, or the like under any insolvency or bankruptcy law, or the adjudication as a bankrupt, or the making of an assignment for the benefit of creditors or the consenting to any form of arrangement for the satisfaction, settlement or delay of debt or the appointment of a receiver of all or any part of its properties; or (4) any action shall be taken by the Recipient for the purposes of effecting any of the foregoing.
Sections 9.2. Remedies.
If an Event of Default shall occur and be continuing, then the State:
(a) may declare by notice to the Recipient that the principal of and interest accrued on any outstanding Interim Funding Obligation and Project Loan Obligation or its responsibility for repayment of the Project Loan, as evidenced by its Project Loan Obligation is immediately due and payable, whereupon the same shall be due and payable automatically without further notice or demand of any kind;
(b) shall be entitled to exercise any remedy available to it at law or in equity, including, but not limited to, all applicable statutory remedies as may be available under the laws of the State with respect to water companies, such as the ability to order the acquisition of a water company by a suitable public or private entity pursuant to Section 16-262n to 16-262q, inclusive, of the Connecticut General Statutes;
(c) reserved;
(d) shall be entitled to exercise all rights and remedies available under the Security Agreement, including foreclosing the lien of the Security Agreement;
(e) shall have the right to have access to and inspect all books and records of the Recipient;
(f) shall be entitled to such injunctive relief upon the occurrence and continuance of a breach by the Recipient of any agreement contained in Section 7.3 of this Agreement if an Event of Default has occurred and is continuing, the parties recognizing that such breach shall result in irreparable injury to the State which does not have an adequate remedy at law; and
(g) shall be entitled to apply all amounts then on deposit in the Debt Service Reserve Fund toward payment of amounts then due and payable with respect to the Project Loan, including amounts then due and payable as a result of any declaration pursuant to Section 9.2(a) hereof.
No remedy provided in this Agreement or in the Security Agreement is intended to be exclusive of any other remedy or remedies permitted hereby or thereby.
Section X. Miscellaneous
Section 10.1. Waivers.
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(a) The Recipient hereby waives diligence, presentment, demand, protest and notice of dishonor.
(b) The State shall not be deemed to have waived any of its rights under this Agreement or the Interim Funding Obligation or Project Loan Obligation or Security Agreement unless such waiver be in writing and signed by the Commissioner of DEP and the Commissioner of DPH on behalf of the State. No delay or omission on the part of the State in exercising any right under this Agreement or the Interim Funding Obligation or Project Loan Obligation or Security Agreement shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any future default. All rights and remedies of the State under this Agreement or the Interim Funding Obligation or Project Loan Obligation or Security Agreement shall be cumulative and may be exercised singularly or concurrently.
Section 10.2. Notices. Any notice from one party to the other party, in order for such notice to be binding thereon, shall:
(a) be in writing addressed to:
(i) when the State is to receive such notice:
Department of Environmental Protection
79 Elm Street Hartford, Connecticut 06106 Attention: Clean Water Fund Administration |
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and | ||||
Department of Public Health
410 Capitol Avenue Hartford, Connecticut 06106 Attention: Drinking Water Division, Drinking Water State Revolving Fund Administrator. |
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with a copy to: | ||||
Office of the Treasurer
55 Elm Street Hartford, Connecticut 06106 Attention: Clean Water Fund Administrator |
(ii) when the Recipient is to receive such notice:
Unionville Water Company
30 Mill Street Unionville, Connecticut 06085 Attn: David C. Benoit, Vice President/CFO and Treasurer |
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with copies to: | ||||
Bond Counsel, Murtha Cullina LLP
185 Asylum Street, CityPlace I Hartford, Connecticut 06103 Attn: Joseph P. Fasi, Esq. |
(b) be delivered in person, by overnight delivery or be mailed United States Postal Service Certified Mail to the address recited herein as being the address of the party to receive such notice; and
(c) contain complete and accurate information in sufficient detail to properly and adequately identify and describe the subject matter thereof.
The term notice as used herein, shall be construed to include but not be limited to any request, demand, authorization, direction, waiver, and/or consent of the party as well as any document(s) provided, permitted, or required for the making or ratification of any change, revision, addition to or deletion from the document, contract, or agreement in which this notice specification is contained.
Any party hereto may designate alternate persons (by name, title and affiliation) to which such notice(s) is (are) to be addressed; and/or alternate locations to which the delivery of such notice(s) is (are) to be made, provided notice of such designation is given as provided herein.
Section 10.3. Expenses. The Recipient will pay all reasonable expenses of the State arising out of the enforcement of this Agreement, the Interim Funding Obligation, the Project Loan Obligation and the Security Agreement (including without limitation reasonable counsel fees).
Section 10.4. Connecticut Law. This Agreement and the rights and obligations of the parties hereunder and under the Interim Funding Obligation and Project Loan Obligation shall be governed by, and construed in accordance with, the laws of the State of Connecticut.
Section 10.5. Survival of Representations, Warranties and Covenants. Except as otherwise provided herein, all representations, warranties, covenants and agreements contained in this Agreement and the Interim Funding Obligation and Project Loan Obligation and Security Agreement or made in writing in connection with this Agreement shall survive the execution and delivery of this Agreement and the Interim Funding Obligation and Project Loan Obligation and Security Agreement and shall continue in full force and effect until all amounts payable on account of the Interim Funding Obligation and Project Loan Obligation and Security Agreement and this Agreement shall have been paid in full and this Agreement shall have terminated.
Section 10.6. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Recipient, the State and their respective successors or assigns. Except as provided in this Agreement, the rights and obligations of the Recipient shall not be assigned
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without the prior written consent of the State. Except as provided in this Agreement, the rights and obligations of the State shall not be assigned without the prior written consent of the Recipient, however, such rights and obligations of the State, including the loan made pursuant to this Agreement, and such right to receive any payments under this Agreement, any Interim Funding Obligation and any Project Loan Obligation and the Security Agreement may be assigned by the State without the written consent of such Recipient for the purpose of pledging such amounts or the right to receive such amounts to the bondholders of revenue bonds (including the Bonds) to be issued by the State.
Section 10.7. Incorporation of Other Documents. The Recipients application for a Project Loan filed with the Commissioner of DEP and the Commissioner of DPH in connection with the Project are incorporated herein and made a part hereof as if they were fully set forth herein.
Section 10.8. Severability. If any provision of this Agreement is declared invalid by a final judgment of a court with competent jurisdiction, the remaining provisions of this Agreement shall continue to bind the parties.
Section 10.9. Amendment. This Agreement shall not be modified or amended except upon a written instrument executed by both parties hereto.
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AGREEMENT NO. DWSRF 200103-C
PROJECT LOAN AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Project Loan Agreement to be duly executed as of the day and year first above written.
STATE OF CONNECTICUT | ||||||||
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WITNESSES:
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/s/ Jill Kentfield
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By | /s/ | J. Robert Galvin Date: 2/13/04 | |||||
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J. Robert Galvin, M.D., M.P.H. | |||||||
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COMMISSIONER | |||||||
/s/ Nancy Nicolescu
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PUBLIC HEALTH | |||||||
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STATE OF CONNECTICUT | ||||||||
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WITNESSES:
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/s/ Carmen Colon
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By | /s/ | Arthur J. Rocque, Jr. Date: 4/19/04 | |||||
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Arthur J. Rocque, Jr. | |||||||
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COMMISSIONER | |||||||
/s/ Christine Kaiser
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ENVIRONMENTAL
PROTECTION |
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UNIONVILLE WATER | ||||||||
WITNESSES: | COMPANY | |||||||
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/s/ Patricia Rodgers
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By | /s/ | David C. Benoit Date: 1/28/04 | |||||
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David C. Benoit | |||||||
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VICE PRESIDENT, | |||||||
/s/ Juliana Duran
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CHIEF FINANCIAL OFFICER
AND TREASURER |
APPROVED AS TO FORM AND LEGALITY | ||||||
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Associate Attorney General | ||||||
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By:
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/s/ William B. Gundling | Date:5/27/04 | ||||
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Page 26 of 26
Exhibit 4.23
COLLATERAL ASSIGNMENT OF WATER SERVICE CHARGES AND
RIGHT TO RECEIVE WATER SERVICE EXPENSE ASSESSMENTS AND
SECURITY AGREEMENT
THIS AGREEMENT (Security Agreement) is made as of this 3 rd day of June, 2004 by and between Unionville Water Company having an office and place of business at Unionville, Connecticut (Borrower or Debtor) and THE STATE OF CONNECTICUT, acting through the Commissioner of the Department of Public Health and the Commissioner of the Department of Environmental Protection (Lender or Secured Party).
ARTICLE I: DEFINITIONS
For the purposes of this Agreement, the following terms shall have the following definitions:
Section 1.1 - Water Charges. All payments from customers of the Borrower for water services provided to said customers, payable to Borrower under the Corporate By-laws of the Debtor, other agreements or applicable law.
Section 1.2 - Loan Documents.
(a) A certain Interim Funding Obligation of even date herewith made by Borrower and payable to Lender in the maximum principal amount not to exceed One Million Eight Hundred Thousand Dollars ($1,800,000) together with any extensions, renewals and replacements thereof (including any Project Loan Obligation (as defined in the Project Loan Agreement) delivered in accordance with the Project Loan Agreement), a copy of which is attached hereto as Exhibit B, and which covenants, terms and conditions are incorporated into and made a part hereof (referred to herein as the Note)
(b) A certain Project Loan Agreement No. DWSRF 200103-C dated April 19, 2004 (the Project Loan Agreement) made by and between Lender and Borrower, together with any exhibits thereto, are hereby incorporated herein by reference.
(c) Intentionally left blank.
(d) This Agreement secures repayment of the maximum principal amount not to exceed One Million Eight Hundred Thousand Dollars ($1,800,000) together with any extensions, renewals and replacements thereof.
(e) A certain Custodial Agreement, dated February 26, 2004 made by and between Lender and Borrower and accepted by U. S. Bank National Association, as escrow agent, together with any exhibits thereto, are hereby incorporated herein by reference.
(f) Financing Statement (UCC-1).
Section 1.3 - Corporate By-laws. Corporate By-laws of the Borrower, dated October 31, 2002, and all exhibits and schedules thereto, as the same may be amended or supplemented from time to time.
Section 1.4 - Collateral. The following property rights of Borrower, whether presently existing or hereafter created, arising or acquired:
(a) All Water Charges, including fees, fines and other assessments levied against the customers of Borrower provided water services by Borrower (Water Service Charges),
(b) To the extent permitted by law, Borrowers rights and authority to levy Water Service Charges (including to pay all obligations under the Note and other Loan Documents), to enforce the payment of the same and to collect the same,
(c) All liens, both statutory and by covenant, which secure unpaid Water Service Charges,
(d) All other cash, credits, income, accounts receivable, rents and profits received by or on behalf of Borrower, including, but not limited to, Unionville Water Company Escrow Account at U. S. Bank National Association, including replacements and substitutions therefor,
(e) Secured Party shall have a continuing lien in, on and to all of the Collateral, the products and proceeds thereof, additions and accessions thereto, and replacements and substitutions therefor.
Section 1.5 - Parity Obligations. Are preexisting obligations of the Borrower to the Farmington Savings Bank which the Lenders indebtedness is secured on a parity basis (pari passu) with respect to the Collateral. The Farmington Savings Bank obligations secured on a parity to the Borrowers obligation to the State consists of the Borrowers obligation pursuant to a Revolving and Term Loan and Security Agreement dated as of April 11, 1991, as amended, by and between the Borrower and Farmington Savings Bank, a bank corporation then organized under the laws of the State of Connecticut.
ARTICLE II: AGREEMENTS OF BORROWER
Section 2.1 - Representation by Borrower. Borrower represents and warrants that:
(a) Borrower is, and at all times hereafter shall be, a stock corporation duly organized, existing and in good standing under the laws of the State of Connecticut.
(b) The undersigned officer of the Borrower has all requisite power and authority to execute and deliver the Loan Documents and this Agreement. Borrower has the right and power and is duly authorized and empowered to enter into, execute, deliver and perform the Loan Documents and this Agreement.
(c) Borrower has not executed any prior assignment or pledge of the Collateral, nor are its rights encumbered with respect to the Collateral, except for the Parity Obligations.
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(d) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances except those of Lender and the Parity Obligations.
(e) The execution, delivery or performance by Borrower of the Loan Documents and this Agreement shall not, by the lapse of time, by giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in the Corporate By-laws or any agreement, instrument or document to which Borrower is now or hereafter becomes a party by which it is or may become bound.
(f) Borrowers right to collect the Collateral is valid and enforceable and unmodified except as limited by the Corporate By-laws and to the best of Borrowers knowledge determined after reasonable due diligence, no customer has any defenses to any claim by Borrower for Water Service Charges.
(g) The Corporate By-laws are valid and enforceable.
(h) Borrower has not done anything inconsistent with the terms of this Security Agreement which might prevent Lender from or limit Lender in exercising its rights herein granted.
(i) Secured party has and will continue to have a first priority perfected security interest in the Collateral subject to no other liens or encumbrances, except the Parity Obligations
Section 2.2 - Nondiscrimination. THIS CONTRACT IS SUBJECT TO THE PROVISIONS OF EXECUTIVE ORDER NO. THREE OF GOVERNOR
(a) Thomas J. Meskill promulgated June 16, 1971 and as such, this contract may be canceled, terminated or suspended by the State Labor Commissioner for violation of or noncompliance with said Executive Order No. Three or any state or federal law concerning nondiscrimination, notwithstanding that the State Labor Commissioner is not a party to this contract. The parties to this contract, as part of the consideration hereof, agree that said Executive Order No. Three is incorporated herein by reference and made a part hereof. The parties agree to abide by said Executive Order and agree that the State Labor Commissioner shall have continuing jurisdiction in respect to contract performance in regard to nondiscrimination, until the contract is completed or terminated prior to completion. The contractor agrees, as part consideration hereof, that this contract is subject to the Guidelines and Rules issued by the State Labor Commissioner to implement Executive Order No. Three, and that it will not discriminate in its employment practices or policies, will file all reports as required, and will fully cooperate with the State of Connecticut and the State Labor Commissioner.
(b) This contract is subject to the provisions of Executive Order No. Seventeen of Governor Thomas J. Meskill promulgated February 15, 1973 and as such, this contract may be canceled, terminated or suspended by the contracting agency or the State Labor Commissioner for violation or noncompliance with said Executive Order No. Seventeen, notwithstanding that the State Labor Commissioner may not be a party to this contract. The parties to this contract as
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part of consideration hereof, agree that the Executive Order Seventeen is incorporated herein by reference and made a part hereof. The parties agree to abide by said Executive Order and agree that the contracting agency and the State Labor Commissioner shall have joint and several continuing jurisdiction in respect to contract performance in regard to listing all employment openings with the Connecticut State Employment Service.
(c) This contact is subject to the provisions of Executive Order No. Sixteen of Governor John G. Rowland promulgated August 4, 1999, and as such, this contract may be canceled, terminated or suspended by the state for violation of or noncompliance with said Executive Order No. Sixteen. The parties to this contract, as part of consideration hereof, agree that Executive Order No. Sixteen is incorporated herein by reference and made a part hereof and agree that a requirement for compliance with Executive Order No. Sixteen shall be included in any subcontracts or other compliance that may result from the contract.
ARTICLE III: SECURITY INSTRUMENT
Section 3.1 - Grant of Security Interest. In order to secure the prompt payment to Lender of the sums due under the Loan Documents and the prompt, full and faithful performance of Borrowers obligations under said Loan Documents and this Agreement, Borrower hereby grants, transfers, and assigns to Lender, its successors and assigns, a present first priority and continuing security interest in the Collateral for the purpose of securing payment of all sums now or at any time hereafter due Lender as evidenced by the Loan Documents and the performance and discharge of each and every obligation, covenant and agreement contained in the Loan Documents and in this Agreement within the meaning of the Uniform Commercial Code.
Section 3.2 - Execution and Filing. At the request of the Lender, Borrower will join with Lender in executing one or more financial statements, continuation statements, or other appropriate filings pursuant to the Uniform Commercial Code applicable to the Collateral in form reasonably satisfactory to the Lender and will pay all costs and expenses incurred by Lender in connection with the preparation and filing in all public offices wherever and whenever filing or recording is reasonably deemed by the Lender to be necessary or desirable, whether or not Borrower has executed such statements.
Borrower will take all action requested by Lender which may be reasonable and necessary to better perfect, continue, evidence, preserve, protect and validate the security interest of Lender or to enable Lender as Secured Party to exercise and enforce its rights hereunder, including but not limited to (i) executing one or more documents or instruments, and (ii) delivering to Lender, endorsed or with appropriate assignment, any and all Collateral paper or documents.
Section 3.3 - Use of Copies of Financing Statement or Security Agreement. Borrower hereby authorizes Lender to file a carbon, photographic or other reproduction of this Agreement or a financing statement in all places where necessary to perfect Lenders security interest in the Collateral to the extent permitted by law. Such filing shall be effective for all purposes as if the document filed were an original.
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ARTICLE IV: BORROWERS COVENANTS
Section 4.1 - Corporation Duties. Borrower shall not do or omit to do any thing or act which would result in any customer serviced by Borrower having any defense, counterclaim, or set-off, to Borrowers right to collect the Collateral.
Section 4.2 - Budget for Repayment. Borrower will, in establishing budgets for the corporation, include a separate item in each budget established for the repayment of sums due under the Loan Documents and any other payments due to Lender under this Agreement in an amount which shall be no less than the amount of such payments that will become due to Lender during the period for which such budget is established. Borrower will not propose, maintain, or establish any budget in an amount less than the reasonable costs of discharging all of Borrowers obligations plus all payments due under the Project Loan Agreement and this Agreement.
Section 4.3 - No Assignment or Security Interest. Except for the Parity Obligations, Borrower shall not make any other assignment of the Collateral or grant any other security interest in the Collateral whether such assignment or security interest is senior or junior to the rights created by this Agreement. Except for Parity Obligations, Borrower shall not create, assume or suffer to exist any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority, or other security agreement or preferential arrangement, charge, or encumbrance of any kind or nature whatsoever on the Collateral including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing or recording of any financing statement or other instrument under the Uniform Commercial Code or comparable law of any jurisdiction to evidence or give notice of any of the foregoing. Borrower shall at its cost and expense take all necessary measures to defend the rights of Lender in and to the Collateral.
Section 4.4 - Additional Debt. Borrower will not in any manner whatsoever incur or assume any indebtedness, other than trade debt, without first obtaining the permission of Lender in writing.
Section 4.5 - Collection of Water Service Assessment and other Collateral. Borrower will not require payment of Water Service Charges or any other Collateral more than thirty (30) days in advance of the time when they are due and payable, except in the case of any acceleration of water service assessments under the Corporate By-laws or applicable law made by Borrower in the course of collecting Water Service Charges.
Section 4.6 - Amendments to the Corporate By-laws. Borrower will not amend or permit to be amended any portion of the Corporate By-laws pertaining to the following without first obtaining the approval of the Department of Public Utility Control (DPUC) if such approval is otherwise required by law:
(a) Assessments, assessment liens, or subordination of assessment liens.
(b) Voting rights.
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(c) Reserves for maintenance, repair and replacement of water distribution system.
(d) The responsibility for maintenance and repair.
(e) Reallocation of interests in the water distribution system except for reallocation of Water Charges by agreement of the majority of the members.
(f) Expansion or contraction of the area served by the corporation.
(g) Insurance or fidelity bonds.
(h) Leasing of all or any portion of the water distribution system.
(i) Restoration or repair of any portion of the water distribution system after hazard damage or partial condemnation in a manner other than that specified in the Corporate By-laws.
(j) Dissolution or merger of the Borrower.
(k) Any provision that expressly benefits mortgage holders, insurers, or guarantors.
Section 4.7 - Actions. Intentionally left blank.
Section 4.8 - Maintenance of Accounts. Intentionally left blank.
Section 4.9 - Financial Statements. Borrower shall furnish, without expense to Lender, within ninety (90) days following the end of Borrowers fiscal year, statements prepared in accordance with generally accepted accounting principles consistently applied by a Certified Public Accountant, satisfactory to Lender and in such detail as Lender may reasonably require, including a balance sheet and income and expenses statement. Such financial statements shall be prepared, consistent at least with the standards for a review as that term is used in the reporting standards of the AICPA. Borrower shall also furnish to Lender quarterly accounts receivable reports certified to be true, accurate and complete by the then acting President or Treasurer of the Borrower and any other financial reports or statements which it is required to furnish or in fact furnishes to owners or mortgagees of homes or which Lender may reasonably request. Borrower shall also furnish such other financial information as Lender shall require from time to time. The acceptance of Lender of such other forms of audit or financial statements or waiver of any or all of the requirements, shall not constitute a waiver, release or discharge or these requirements nor does this requirement impose any liability on Lender to require the Borrowers compliance or for failure to impose compliance herewith.
Section 4.10 - Insurance. Borrower, at its sole cost and expense, shall maintain insurance on all real property which is owned by the Borrower and on all personal property of Borrower, including but not limited to any tangible items of Collateral against loss by fire and other casualty with such coverages in such amounts as are acceptable to Lender. Borrower shall cause Lender to be named as a loss payee under such policies. Borrower shall provide Lender
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with a certificate evidencing such insurance and shall claim no cancellation or material change without thirty (30) days advance written notice to Lender. In case of loss payments to Lender under any insurance policy, the amount of insurance money received shall be applied either on the indebtedness secured hereby (in which event failure to repair or rebuild shall not be an event of default), or in rebuilding and restoring the damaged property, including the replacement or repair of all tangible Collateral. Borrower shall also maintain liability insurance on the corporate property.
Section 4.11 - Inspection. Borrower will at all times keep at its principle office accurate and complete records of income (both received and receivable) and of its application of income received. Lender (by any of its officers, employees, or agents), shall have the right, at any time or times during business hours, to inspect the books and records of Borrower to verify the amount and condition or any other matter relating to the Collateral, and to discuss the affairs, business, finances, and accounts of Borrower with its officers, employees, or manager.
Section 4.12 - Maintenance of Accounts. Borrower will at all times be the sole owner of each and every item of Collateral and defend the Collateral against the claims and demands of others, except as otherwise provided herein.
Section 4.13 - Notices. In accordance with Section 7.7 of this Agreement, Borrower will give Lender notice of (i) any change in (A) its name, identity or business structure, (B) the location of its principle executive office or any other place of business, or (C) the location of its books and records concerning any of its accounts or the Collateral, and (ii) any substantial loss or depreciation in the value of any of the Collateral, and (iii) such other information as to the Collateral Lender may request.
Section 4.14 - Further Assurances. Borrower will, from time to time, at its expense, execute, deliver, file and record any statement, assignment, instrument, document, agreement or other paper and take any other action (including any filings of financial or continuation statements under the Uniform Commercial Code applicable to the Collateral) that from time to time may be necessary or reasonably deemed appropriate by Lender, in order to create, preserve, perfect, confirm or validate the security interest of Lender created hereby or to enable Lender to obtain the full benefits of this Agreement, or to enable Lender to exercise and enforce any of its rights, powers, and remedies hereunder with respect to any of the Collateral.
ARTICLE V: DEFAULT AND LENDERS REMEDIES
Section 5.1 - Default. Upon the happening of any one or more of the following events of default, Lender shall have all of the rights and remedies contained in this Article in addition to any rights and remedies contained in the Loan Documents, this Security Agreement or available under applicable law:
(a) Default in the payment of any installment of principle or interest or both as set forth in the Note.
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(b) Failure and neglect of Borrower to perform, keep or observe any term, provision, condition, covenant, warranty or representation contained in this Agreement or in any Loan Document which is required to be performed, kept or observed by Borrower.
(c) If Borrower becomes insolvent, or unable to meet its debts as they mature, or is generally not paying its debts, or involved as a debtor pursuant to the United States bankruptcy laws or if Borrower is adjudged to be bankrupt or insolvent, or is subject to an action or proceeding to any other law relating to relief of debtors, readjustment, composition, arrangement, reorganization or extension of indebtedness, or should a judgment lien, execution or similar process be levied against Borrower or any property of Borrower and any of the aforesaid not be released or otherwise vacated within a period of sixty (60) days.
(d) If any material statements, report or certificate made or delivered by Borrower or any of its officers, employees, or agents to Lender is not true and correct.
(e) If Borrower defaults under the terms of any note or other agreement between Borrower and Lender whether or not related to the transaction documented in this Agreement.
(f) Upon the assignment, conveyance, transfer, lease or encumbrance of the assets of Borrower, or the assignment, conveyance, transfer, merger or consolidation of Borrower, or liens attaching to the Collateral (other than liens for taxes not yet due and payable).
(g) Upon the failure of or dissolution of Borrower as a stock corporation.
(h) Upon Borrowers (i) abandoning or terminating the Project, (ii) creating any material amendment to the Corporate By-laws or regulations of Borrower without consent of DPUC in accordance with Section 5.6 hereof.
(i) Upon Borrower, directly or indirectly, creating, incurring, assuming, guaranteeing or otherwise becoming or remaining directly or indirectly liable with respect to any indebtedness, other than trade debt, without first obtaining the permission of Lender in writing.
Section 5.2 - Right to Collect Water Service Charges and Other Items of Collateral. Upon the happening of any event of default under the Loan Documents, Lender may, at its option, without notice and without regard to the adequacy of any security for the indebtedness hereby secured, in person or by agent, with or without bringing any action, suit, or proceeding, collect the Water Service Charges and other items of Collateral, withholding from the Water Service Charges and other items of Collateral actually collected such sums as may then be due to Lender under the terms of the Note and this Agreement including sums past due and unpaid costs and expenses of operation and collection, including reasonable attorneys fees, fees of agents and, if Lender exercises the powers contained in this Section with its own employees, an amount equal to the customary fees charged for similar services by unaffiliated managers in the area where the Borrower is located, and remitting the balance, if any, to Borrower. Lender may also exercise all rights that Borrower may have to collect Water Service Charges and other items of Collateral, including, but not limited to bringing actions against serviced home owners and others, and imposing and foreclosing liens on serviced homes all in its own name, in the name of Borrower or otherwise. Lender may also, to the extent necessary to
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cause the Water Service Charges and other items of Collateral to be sufficient to pay all sums due under the Loan Documents and this Agreement, exercise all powers granted to Borrower under the Corporate By-laws and applicable law to establish budgets for Borrower, assess Water Service Charges and other items of Collateral and impose special assessments. Lender shall not be accountable for more monies than it actually receives as Water Service Charges and other items of Collateral nor shall it be liable for failure to collect Water Service Charges and other items of Collateral for any reason whatsoever.
All such sums collected and other amounts collected in respect of Collateral shall apply first, to the payment of all costs, expenses and attorney fees incurred by Lender in connection therewith or in connection with any other remedial action; second, to the payment of interest due on said Note; third, to the payment of principle on said Note; and fourth, to the payment to Borrower or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds.
The provisions of this section shall be subject to the terms and conditions of the Parity Obligations.
Section 5.3 - Assistance in Collection. From and after any event of default, Borrower shall facilitate, in all reasonable ways, any action taken by Lender under this Article and Borrower shall, upon demand by Lender, execute a written notice to each home owner and mortgagee directing that Water Service Charges and other items of Collateral be paid to Lender to its designee.
Borrower shall, upon request of Lender, assemble the Collateral and maintain or disburse it into possession of Lender at such place or places Lender may designate.
In addition to, and not by way of limitation of, any other power which Borrower has vested in Lender or any designee of Lender as set forth in this Agreement, from and after the happening of any event of default, Borrower hereby constitutes and appoints Lender or any representative who Lender may designate as Borrowers agent to endorse the name of Borrower on any notes, acceptances, checks, drafts, money orders or other evidence of payment that constitutes Water Service Charges and other Collateral.
All acts by Lender or its designee performed pursuant to the power granted in this Article are hereby ratified and approved and neither Lender nor its designee shall be liable for any acts of commission or omission, except gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until all sums due under the Loan Documents are paid in full.
Section 5.4 - Costs, Expenses and Attorneys Fees. Borrower will reimburse Lender for all reasonable expenses incurred by Lender arising out of this transaction, including, without limitation, any attorneys fees, costs, filing or recording fees, court costs, and other related costs reasonably necessary to the following:
(a) Documenting, negotiating, and perfecting this transaction or protecting Lender and the interest and lien created in favor of Lender under the Loan Documents or this Agreement.
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(b) Enforcing and exercising any of the rights contained in the Loan Documents or this Agreement or at law or in equity, before or after default, against Borrower or third parties. Performing due diligence inquiry and providing, if any, amendments, modifications, waivers and consents in connection with the Loan Documents or this Agreement.
(c) Any claim and the prosecution of defense thereof arising out of or in any way connected with the Note, Loan Documents and this Agreement.
Section 5.5 - Specific Performance. In addition to, and not in limitation of, any other rights which Lender may have under this Agreement, Lender may, after default and until all sums due under the Loan Documents are paid in full, apply to any court of competent jurisdiction for specific performance or other equitable relief, it being understood with respect to equitable remedies sought that there may be no adequate remedy at law.
Section 5.6 - Self-Help. In the event of any default in the performance of any of Borrowers covenants or agreements herein, Lender, may at its option, perform the same, and the cost thereof with interest at the rate set forth in the Note, shall immediately be due from Borrower to Lender and secured by this Agreement.
Section 5.7 - Limitation on Duty of Lender in Respect of Collateral. Lender shall have no fiduciary or other responsibility or duty to Borrower with respect to the holding, maintenance or transmittal of the Collateral delivered to or otherwise in the possession of Lender, or any third party permitted hereby or the Project Loan Agreement, except for the duty of reasonable care required by Section 9-207(1) of the Connecticut Uniform Commercial Code; it being understood that reasonable care shall be deemed to be such care that Lender exercises in the transmittal, care, holding, preservation and custody of its own property of a similar nature. Notwithstanding the foregoing, Lender shall have (1) no responsibility with respect to the risk of accidental loss or damage to Collateral in its possession provided that Lender has exercised reasonable care in the custody thereof, (2) no obligation to provide insurance for or in respect of the Collateral, and (3) no responsibility for Collateral not in its possession or a bailee on its behalf.
ARTICLE VI: LIMITATIONS
Section 6.1 - Borrowers Right to Collect Water Service Charges. So long as there is no event of default under this Agreement, Borrower shall have the right to collect Water Service Charges, but shall not require payment of Water Service Charges more then thirty (30) days prior to accrual unless accelerated by Borrower under the terms of the Corporate By-laws or applicable law.
Section 6.2 - Release on Payment. Upon the payment in full of all indebtedness evidenced by the Loan Documents or secured by this Agreement, Lender shall furnish to Borrower, in proper form, a release of this Agreement and any financing statements furnished under this Agreement and this Agreement shall become and be void and of no effect.
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ARTICLE VII: MISCELLANEOUS PROVISIONS
Section 7.1 - No Waiver. Lender may take or release other security, may release any party primarily or secondarily liable for any indebtedness secured hereby, may grant extensions, renewals, or indulgences with respect to such indebtedness and may apply any other security thereof held by it for the satisfaction of such indebtedness without prejudice to any of its rights hereunder. Nothing herein contained and no act done or omitted by Lender pursuant to the powers and rights granted it herein, shall be deemed to be a waiver by Lender of its rights and remedies hereunder or under the Note, and this Agreement is made and accepted without prejudice to any of the rights and remedies possessed by Lender under the terms thereof.
The right of Lender to collect said indebtedness and to enforce any other security therefor held by it may be exercised by Lender either prior to, simultaneously with, or subsequent to any action taken by it hereunder. Any failure by Lender to insist upon the strict performance by Borrower of any of the terms and provisions hereof shall not be deemed a waiver of any of the terms and provisions hereof, and Lender may thereafter insist upon strict performance.
Section 7.2 - No Obligation on Lender. Lender shall not be obligated to perform or discharge any obligation of Borrower under the Corporate By-laws or applicable law or under or by reason of this Agreement and Borrower hereby agrees to indemnify Lender against, and hold it harmless from, any and all liability, loss or damage which it may or might incur under the Corporate By-laws or applicable law or under, or by reason of this Agreement and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligation or undertaking on its part to perform or discharge any of the obligations of Borrower under the Corporate By-laws or applicable law or under, or by reason of this Agreement. Should Lender incur any such liability, loss, or damage under the Corporate By-laws or applicable law or under or by reason of this Agreement, or in defense against any such claims or demands, the amount thereof, including costs, expenses, attorneys fees, together with interest thereon at the rate set forth in the Note, shall be secured hereby and Borrower shall reimburse Lender therefor immediately upon demand.
Section 7.3 - Participations. Intentionally left blank.
Section 7.4 - Successors and Assigns. This Agreement shall be binding on Borrower and its successors and assigns and shall inure to the benefit of Lender and its successors and assigns.
Section 7.5 - Modification in Writing. This Agreement may not be changed, waived, discharged or terminated orally, but only by an agreement in writing signed by the party or parties against whom enforcement of any change, waiver, discharge or termination is sought.
Section 7.6 - Remedies Cumulative. Upon default, Lender may, at its option, exercise its rights under this Agreement for any portion of the debt or any other sums secured thereby which are then due and payable, subject to the continuing lien of this Agreement for the balance not then due, but nothing in this Section shall impair or affect any right or remedy which
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Lender might now or hereafter have, were it not for
this Section, but the right herein given shall be in addition to others which
Lender may have hereunder.
Section 7.7 - Notices. Any notice, demand or written instrument required
or permitted to be given, made or sent under this Agreement shall be in
writing, signed by or on behalf of the party giving the same and shall be
addressed to the address set forth below and delivered by hand, by United
States certified or registered mail, return receipt requested, or by overnight
express delivery.
To Lender:
Department of Public Health
410 Capitol Avenue
Hartford, CT 06106
Attention: Water Supply Section,
Drinking Water State
Revolving Fund Administrator
and
Department of Environmental Protection
79 Elm Street
Hartford, CT 06106
Attention:Clean Water Fund
Administration
with copy to:
Office of the Treasurer
55 Elm Street
Hartford, CT 06106
Attention:Clean Water Fund
Administrator
To Borrower:
Unionville Water Company
30 Mill Street
Unionville, Connecticut 06085
Attn: David C. Benoit, Vice President/CFO and Treasurer
with copies to:
Bond Counsel, Murtha Cullina LLP
185 Asylum Street, CityPlace I
Hartford, Connecticut 06103
Attn: Joseph P. Fasi, Esq.
Either may change its address set forth in this Section by giving notice to the other party in accordance with this Section. Each such notice shall be effective (i) if hand delivered (including by overnight express mail or similar delivery service), upon the physical delivery thereof or (ii) if given by registered or certified mail, return receipt requested, upon execution of the return receipt or the refusal to acknowledge such receipt.
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Section 7.8 - Partial Invalidity. The invalidity of one or more of the phrases, sentences, clauses or sections of this Agreement shall not affect the validity of the remaining portions of this Agreement.
Section 7.9 - Governing Law. This Agreement and all rights and obligations hereunder, including matters of construction, validity and performance shall be governed by the laws of the State of Connecticut.
Section 7.10 - Commercial Transaction. BORROWER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS SECURITY AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH LENDER MAY DESIRE TO USE. FURTHER, THE BORROWER HEREBY WAIVES TO THE EXTENT PERMITTED BY LAW, THE BENEFITS OF ALL VALUATION, APPRAISEMENT, HOMESTEAD, EXEMPTION, STAY, REDEMPTION, AND MORATORIUM LAWS, NOW IN FORCE OR WHICH MAY HEREAFTER BECOME LAW.
Section 7.11 - Gender. In this Agreement, the use of any gender shall include the other genders and either the singular or the plural shall include the other.
Section 7.12 - Captions. The captions contained in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any of the provisions hereof.
Section 7.13 - Construction. Each provision of this Agreement and of the Loan Documents has been mutually negotiated, prepared, and drafted and, in connection with the construction of any provision thereof or deletion therefrom, no consideration shall be given to the issue of which party actually prepared, drafted, requested, or negotiated same.
Section 7.14 - Counterparts. This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
Section 7.15 - Entire Agreement. This Agreement and the Loan Documents and instruments executed and/or delivered in connection therewith, as applicable, constitute the entire agreement between the parties hereto, and supersedes all prior or contemporaneous agreements, communications and understandings, both written or oral, with respect to the subject matter of this Agreement.
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COLLATERAL ASSIGNMENT OF WATER SERVICE CHARGES AND
RIGHT TO RECEIVE WATER SERVICE EXPENSE ASSESSMENTS AND
SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be signed, sealed and dated as of the first day mentioned above.
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STATE OF CONNECTICUT | |||||
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WITNESSES:
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/s/ Jill Kentfield
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By | /s/ J. Robert Galvin Date: 2/13/04 | ||||
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J. Robert Galvin, M.D., M.P.H. | |||||
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COMMISSIONER | |||||
/s/ Nancy Nicolescu
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PUBLIC HEALTH | |||||
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STATE OF CONNECTICUT | |||||
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WITNESSES:
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/s/ Carmen Colon
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By | /s/ Arthur J. Rocque, Jr. Date: 4/19/04 | ||||
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Arthur J. Rocque, Jr. | |||||
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COMMISSIONER | |||||
/s/ Christine Kaiser
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ENVIRONMENTAL
PROTECTION |
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BORROWER: | |||||
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UNIONVILLE WATER | |||||
WITNESSES:
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COMPANY | |||||
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/s/ Patricia E. Rodgers
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By | /s/ David C. Benoit Date: 1/28/04 | ||||
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David C. Benoit | |||||
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VICE PRESIDENT, | |||||
/s/ Juliana Duran
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CHIEF FINANCIAL OFFICER
AND TREASURER |
Exhibit 31.1
Certification of Chief Executive Officer
I, Marshall T. Chiaraluce, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Connecticut Water
Service, Inc. (the registrant).
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Intentionally omitted.
(c) Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and
5. The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Marshall T. Chiaraluce
Exhibit 31.2
Certification of Chief Financial Officer
I, David C. Benoit, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Connecticut Water
Service, Inc. (the registrant).
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Intentionally omitted.
(c) Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and
5. The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
David C. Benoit
Exhibit 32
CERTIFICATION PURSUANT TO
In connection with the Quarterly Report of The Connecticut Water Service,
Inc. (the Company) on Form 10-Q for the period ending June 30, 2004 as filed
with the Securities and Exchange Commission on the date hereof (the Report),
the undersigned, Marshall T. Chiaraluce, Chief Executive Officer of the
Company, and David C. Benoit, the Chief Financial Officer of the Company, do
each hereby certify, to the best of his knowledge, pursuant to 18 U.S.C. §1350,
as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
These certifications accompany the Report, are not deemed filed by the Company
for purposes of Section 18 of the Securities Exchange Act of 1934 (Exchange
Act) and are not to be incorporated by reference into any filing of
Connecticut Water Service, Inc. under the Securities Act of 1933 or the
Exchange Act (whether made before or after the date of filing of the Report),
irrespective of any general incorporation language contained in any such
filing.
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
Marshall T. Chiaraluce
David C. Benoit