Search

SECTION 5.03. Insurance. Maintain insurance with financially sound and reputable
insurance companies or associations reasonably acceptable to CoBank in such amounts and covering
such risks as are usually carried by companies cngaged in the same business and similarly situated, and
make such increases in the amounts or coverage thereof as CoBank may from time to time require.
Without limiting the foregoing, in the event any property of the Company is located in a flood zone, then
the Company shall obtain such flood insurance as may be required by CoBank. All policies insuring any
collateral shall have lender or mortgagee !oss payable clauses or endorsements in form and content
acceptable to CoBank. At CoBank’s request, the Company agrees to deliver to CoBank such proof of
compliance with this Section as CoBank may require.

SECTION $§.04. Property Maintenance. Maintain all of its properties that are necessary to
or useful in the proper conduct of its business in good repair, working order and condition, ordinary wear
and tear excepted, and make all alterations, improvements and replacements thereto as may from time to
time be necessary in order to ensure that its properties remain in good working order and condition. The
Company agrees that at CoBank’s request, which request may not be made more than once a year, the
Company will furnish to CoBank a report on the condition of the Company’s property prepared by a
professional engineer satisfactory to CoBank.

SECTION $.05. Books and Records. Keep adequate records and books of account in which
complete entries will be made in accordance with GAAP.

SECTION 5.06. Reports and Notices. Furnish to CoBank:

(A) = Annual Financial Statements. As soon as available, but in no event more than
120 days after the end of each fisca! year of the Company occurring during the term hereof, annual
consolidated and consolidating financial statements of the Company and its consolidated subsidiaries, if
any, prepared in accordance with GAAP consistently applied (or the.appropriate standards of the
regulatory agency having jurisdiction over the Company). Such financial statements shail: (a) be audited
by independent certified public accountants selected by the Company and acceptable to CoBank; (b) be
accompanied by a report of such accountants containing an opinion thereon acceptable to CoBank; (c) be
prepared in reasonable detail and in comparative form; and (d) include a balance sheet, a statement of
income, a statement of retained earnings, a statement of cash flows, and all notes and schedules relating
thereto. Notwithstanding the foregoing, the delivery within the time period specified above of the
Guarantor’s Annual Report on Form 10-K for such fiscal year containing consolidating information on
the Company (together with the Guarantor’s annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 of the Exchange Act) prepared in accordance with the requirements therefor and filed with
the Securities and Exchange Commission, together with the accountant’s certificate described above,
shall be decmed to satisfy the requirements of this Section 5.06(A);

(B) Quarterly Financial Statements. As soon as available, but in no event more
than 60 days after the end of each fiscal quarter of the Company occurring during the term hereof (other
than the last fiscal quarter in each fiscal year), such Company preparcd quarterly financial statements as
CoBank may from time to time request.

(C) Annual Officer's Certificate. Together with each set of financial statements
delivered to CoBank pursuant to Subsection (A) of this Section 5.06, a duly completed and executed
certificate of the Chief Financial Officer of the Company in the form attached hereto as Exhibit B.

(D) ~—s Annual Badgets. As soon as available, but in no event more than 90 days after
the beginning of each fiscal year of the Company, an annual budget and forecast of operations and capital
expenditures for the Company for such year, which budget must be in form and content reasonably
acceptable to CoBank.

(E) Notice of Litigation, Material Matters, Ete. Promptly after becoming aware
thereof, notice of: (1) the commencement of any action, suit or proceeding before any court,
governmental instrumentality, arbitrator, mediator or the like which, if adversely decided, could have a
Material Adverse Effect; (2) the commencement of any Enforcement Action; (3) the receipt of any
notice, indictment, pleading, or other communication alleging a condition that may require the Company
to undertake or to contribute to a clean-up or other response under any environmental Law, or which
seeks penalties, damages, injunctive relief, or other relief as a result of an alleged violation of any such
Law, or which claims personal injury or property damage as a result of environmental factors or
conditions; and (4) the occurrence of any other event or matter (including the rendering of any order,
judgment, ruling and the like) which could have a Material Adverse Effect.

(F) Notice of Default. Promptly after becoming aware thereof, notice of the
occurrence of a Default or an Event of Default.

(G) ‘Notice of Certain Events. At least 60 days prior thereto notice of any change in
the: (1) principal place of business of the Company; or (2) the office where the records concerning the
Company’s accounts are kept.

(H) Other Notices. Such other notices as may be required by any Promissory Note
and Supplement or any other Loan Document.

(Dd Other Information. Such other information regarding the condition or
operations, financial or otherwise, of the Company as CoBank may from time to time reasonably request,
including, but not limited to, budgets, interim financial statements, and copies of all pleadings, notices
and communications referred to in Section 5.06(E) hereof.

SECTION 5.07. Conduct of Business. Engage in an efficient and economical manner in the
business conducted by it on the date hereof.

SECTION 5.08. Capital. Acquire equity in CoBank in such amounts and at such times as
CoBank may from time to time require in accordance with its bylaws and capital plan (as each may be
amended from time to time), except that the maximum amount of equity that the Company may be
required to purchase in connection with a loan may not exceed the maximum amount permitted by
CoBank'’s bylaws at the time the Promissory Note and Supplement relating to such loan is entered into or
such loan is renewed or refinanced by CoBank. The rights and obligations of the parties with respect to
such equity and any patronage or other distributions made by CoBank shall be governed by CoBank's
bylaws and capital plan (as each may be amended from time to time).

SECTION 5.09. Inspection. Permit CoBank or its agents, upon reasonable notice and during
normal business hours or at such other times as the parties may agree, to examine the properties, books
and records of the Company, and to discuss its affairs, finances and accounts with its officers, directors,
and independent certified public accountants.

SECTION 5.10. Water Rights, Title to Property, Etc. (A) Obtain and maintain water cights
in such amounts, priorities and qualities as are necessary at all times to meet the needs of its customers;
(8) obtain and maintain title to, valid leasehold interests in, or other valid interests (including easements,
licenses and servitudes) in, all real property on which all water wells, reservoirs, water and wastewater
treatment plants, and warehouse and storage facilities are located; (C) keep all water rights and discharge
rights free and clear of any interest of any third party; and (D) not suffer or permit any transfer or
encumbrance of any water rights or discharge rights, or abandon any water rights or discharge rights, or
do any act or thing which would impair or cause the loss of any water rights or discharge rights.

ARTICLE 6
NEGATIVE COVENANTS

Unless otherwise agreed to in writing by CoBank, while this Agreement is in effect, the
Company will not:

SECTION 6.01. Liens. Create, incur, assume, or suffer to exist any Lien on any of its
properties, except:

(A) Liens in favor of other lenders; provided, however, that: (1) at the time thereof,
CoBank is granted a Lien on the same assets and such Lien is shared pro rata by CoBank and such other
lenders pursuant to an intercreditor agreement in form and substance reasonably satisfactory to CoBank;
and (2) the instruments and documents granting and/or perfecting such Lien are in form and content
reasonably satisfactory to CoBank.

(B) Liens for taxes or assessments or other governmental charges or levies if not yet
due and payable or, if due and payable: (i) the Company is contesting same in good faith by appropriate
proceedings; (ii) the Company has established and maintains reserves in the amount due and payable
thereon (including interest and penalties); and (iii) foreclosure or other action to enforce the Lien is
stayed,

(C) _—_Liens in favor of mechanics, landlords, material suppliers, warehouses, carriers,
and like Persons that secure obligations that are not past due or if due and payable: (i) the Company is
contesting same in good faith by appropriate proceedings; (ii) the Company has established and
maintains reserves in the amount due and payable thereon (including interest and penalties); and (iti)
foreclosure or other action to enforce the Lien is stayed.

(BD) Deposits and pledges under workers’ compensation, unemployment insurance,
Social Security, or similar legislation (other than ERISA).

(E) Deposits and pledges to secure the performance of bids, tenders, contracts (other
than contracts for the payment of money), public and statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar obligations, in each case arising in the
ordinary course of business.

{£) Judgment and similar Liens arising in connection with court proceeding,
provided the execution or other enforcement of such Liens is effectively stayed, the claims secured
thereby are being actively contested in good faith and by appropriate proceedings, and reserves in the
amount secured thereby (including interest and penalties) are established and maintained by the

Company.

(G) Easements, rights-of-way, restrictions, and other similar encumbrances which, in
the aggregate, do not materially interfere with the occupation, use, and enjoyment by the Company of the
property or assets encumbered thereby in the normal course of its business or materially impair the value
of the property subject thereto.

(H) — Purchase money Liens on trucks and other rolling stock and the proceeds thereof
to secure debt permitted under Section 6.02(E) hereof.

SECTION 6.02. Debt. Create, incur, assume, or suffer to exist, any indebtedness or
liability for borrowed money or for the deferred purchase price of property or services or for letters of
credit, except that, as long as the Company is and remains in compliance with Article 7 hereof, for: (A)
debt of the Company to CoBank; (B) debt to the New Hampshire State Revolving Fund incurred to
finance the expansion of the Company's water utility facilitics; (C) debt to the Guarantor; provided,
however, that such debt is subordinate to all obligations of the Company to CoBank on terms and
conditions satisfactory to CoBank; (D) accounts payable to trade creditors incurred in the ordinary course
of business; (E) purchase money indebtedness and capital leases in an aggregate principal amount not to
exceed, at any one time outstanding, $200,000; and (F) obligations of the Company with respect to tax
exempt debt obligations issued by the State of New Hampshire or any agency or department thereof in
order to finance the expansion of the Company's water utility facilities.

SECTION 6.03. Sale, Transfer or Lease of Assets. Sell, transfer, lease or otherwise dispose
of any of its assets except for: (A) the sale of water and wastewater services in the ordinary course of
business; and (B) the sale, lease or other disposition of equipment which is: (t) obsolete, worn-out or no
longer necessary for, or useful in, the provision of water and wastewater services to customers in its
service territories; and (2) not occasioned by the discontinuance of service to any portion of its service
territory.

SECTION 6.04. Distributions. Declare or pay, directly or indirectly, any Distribution unless
after giving effect thereto: (A) no Default or Event of Default will exist (including as a result of a breach
of any financial covenant set forth in Article 7 hereof); and (B) the Company will have a Total Debt to
Total Capitalization Ratio of less than 65%.

SECTION 6.05. Contingent Liabilities. Assume, guarantee, endorse, or otherwise be or
become directly or contingently responsible or liable for the obligations of any Person (including by
means of an agreement to: (A) purchase any obligation, stock, assets, or services; (B) supply or advance
any funds, assets, or services; or (C) cause any Person to maintain a minimum working capital or net
worth or other financial test), except by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.

SECTION 6.06. Mergers, Ete. Merge or consolidate with any other Person or acquire all or
a material part of the assets of any other Person, or change the jurisdiction of its formation, except for
mergets or acquisitions where: (A) the Company is the surviving entity; and (B) the Person merged into
the Company or whose asscts were acquired was a regulated water system or a water system owned by
the Guarantor. ,

SECTION 6.07. Change in Business, Etc.. Engage in any business activities or operations

substantially different from or unrelated to its present business activities or operations or make any
change in the Company's name, structure, jurisdiction of formation, or organizational number (if any).

10

SECTION 6.08. Prepayment. While any Default or Event of Default shall have occurred
and be continuing, prepay, directly or indirectly, any debt (other than debt to CoBank).

SECTION 6.09. Investments. Make any loan or advance to, or deposit any funds of the
Company in, or purchase or otherwise acquire any capital stock, obligations, or other securities of, or
make any capital contribution to, or otherwise invest in or acquire any interest in, any Person (including a
Subsidiary), or participate as a partner or joint venturer with any other Person (collectively,
“Investments”), except: (A) securities or deposits issued, guaranteed or fully insured as to payment by the
United States of America or any agency thereof, (B) commercial paper of a domestic issuer rated at least
"A-|" by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.; and (C)
intercompany loans made in accordance with the Money Pool Agrecment; and (D) Investments in
CoBank.

SECTION 6.10. Certain Agreements. Amend, alter, waive any provision of, breach or
terminate any agrecment (or accept any termination by the other party) if such action could reasonably be
expected to have a Material Adverse Effect.

SECTION 6.11. Transactions with Affiliates. Enter into any transaction with an Affiliate
except in the ordinary course of and pursuant to the reasonable requirements of its business and upon fair
and reasonable terms no less favorable to the Company than would obtain in a comparable arm’s-length
transaction with a Person not an Affiliate.

ARTICLE 7
FINANCIAL COVENANTS

Unless otherwise agreed to in writing by CoBank, while this Agreement is in effect:

SECTION 7.01. Debt Service Coverage Ratio. The Company shall have for each fiscal year
of the Company, a Debt Service Coverage Ratio of not less than 1.25 to 1.00.

SECTION 7,02. Total Debt to Total Capitalization Ratio. The Company shall have at the
end of each fiscal year of the Company, a Total Debt to Total Capitalization Ratio of not more than .65 to
1.00.

SECTION 7.03. Fiscal Year. The Company will not change its fiscal year.

ARTICLE 8
EVENTS OF DEFAULT

Each of the following shall constitute an “Event of Default” hereunder:

SECTION 8.01. Payment Default. The Company should fail to make when duc any payment
to CoBank hereunder, under any Promissory Note and Supplement, or under any other Loan Document.

SECTION 8.02. Representations and Warranties, Etc. Any opinion, certificate or like
document furnished to CoBank by or on behalf of the Company, or any representation or warranty made
or deemed made by the Company herein or in any other Loan Document, shall prove to have been false
or misleading in any material respect on or as of the date furnished, made or deemed made,

SECTION 8.03. Covenants. The Company should fail to perform or comply with any
covenant set forth in Article 5 hereof (other than Sections 5.01, 5.06(F) and 5.10) and such failure
continues for 30 days after written notice thereof shall have been delivered to the Company by CoBank.

SECTION 8.04. Other Covenants and Agreements, The Company should fail to perform or
comply with Sections 5.01, 5.06(F) or 5.10, or any other covenant or agreement contained herein or in
any Promissory Note and Supplement, or shall use the proceeds of any loan for any unauthorized
purpose.

SECTION 8.05. Cross Default. The Company should, after any applicable grace period,
breach or be in default under the terms of any other Loan Document, any other agreement with CoBank,
or any agreement with any affiliate of CoBank, including the Farm Credit Leasing Services Corporation.

SECTION 8.06. Other Indebtedness. The Company should fail to pay when due any
indebtedness to any other person or entity for borrowed money or any long-term obligation for the
deferred purchase price of property (including any capitalized lease), or any other event occurs which,
under any agreement or instrument relating to such indebtedness or obligation, has the effect of
accelerating or permitting the acceleration of such indebtedness or obligation, whether or not such
indebtedness or obligation is actually accelerated or the right to accelerate is conditioned on the giving of
notice, the passage of time, or otherwise,

SECTION 8.07. Judgments. A judgment, decree, or order for the payment of money shall
have been rendered against the Company and either: (A) enforcement proceedings shall have been
commenced; (B) a Lien having priority over any Lien of CoBank shall have been obtained; or (C) such
judgment, decree, or order shall continue unsatisfied and in effect for a period of 30 consecutive days
without being vacated, bonded, discharged, satisfied, or stayed pending appeal.

SECTION 8.08. Insolvency, Etc. The Company shall: (A) become insolvent or shall
generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become
due; or (B) suspend its business operations or a material part thereof; or (C) apply for, consent to, or
acquiesce in the appointment of a trustee, receiver, or other custodian for it or any of its property; or (D)
have commenced against it any action or proceeding for the appointment of a trustee, receiver, or other
custodian, or a trustee, receiver, or other custodian is appointed for all or any part of its property; (E)
have commenced against it any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law of any jurisdiction; or (F) make an assignment for
the benefit of creditors or commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law of any jurisdiction.

SECTION 8.09. Casualty or Condemnation. All or a material portion of the assets of the
Company: (A) are destroyed in a casualty or like event (regardless of the cause); or (B) are actually taken
in a condemnation action or proceeding ot in a like proceeding or are sold or otherwise transferred in lieu
thereof or pursuant to any right of any governmental authority to direct the sale of transfer thereof.

SECTION 8.10. Material Adverse Change. Any material adverse change occurs, as
reasonably determined by CoBank, in the condition, financial or otherwise, operations, business or
properties of the Company or in its ability to perform its obligations hereunder, under any security
instrument or document, or under any other Loan Document.

12

SECTION 8.11. Changes in Ownership. The Company shall cease to be owned 100% by
the Guarantor or 50% or more of the voting stock in the Guarantor should be acquired by a Person or a
Person and one or more Affiliates of that Person.

SECTION 8.12. Guaraaty, Etc. The Guaranty shall, at any time, ceasc to be in full
force and effect, or shall be revoked or declared null and void, or the validity or enforceability thereof
shall be contested by the Guarantor, or the Guarantor shall deny any further liability or obligation
thereunder, or shall fail to perform its obligations thercunder, or any representation or warranty sct forth
therein shall be breached, or the Guarantor shall breach or be in default under the terms of any other
agreement with CoBank (including any loan agreement or security agreement), or an Event of Default of
the type set forth in Sections 8.06 through 8.10 hereof shall occur with respect to the Guarantor.

SECTION 8.13. PWW, The Consent and Agreement shall, at any time, cease to be in full
force and effect, or shall be revoked or declared null and void, or the validity or enforceability thereof
shall be contested by PWW, or PWW shall deny any further liability or obligation thereunder, or shall
fail to perform its obligations thereunder, or an Event of Default of the type set forth in Sections 8.06,
8.07, 8.08, 8.09(A), or 8.10 hereof shall occur with respect to PWW, or an Event of Default of the type
referred to in Sections 8,09(B) or 8.11 shall occur with respect to PWW and, in CoBank’s sole discretion,
such event could have a material adverse effect on the condition, financial or otherwise, operations,
business or properties of the Company or in its ability to conduct is business or perform its obligations
hereunder, under any security instrument or document, or under any other Loan Document.

ARTICLE 9
REMEDIES UPON DEFAULT

SECTION 9.01. Remedies. Upon the occurrence and during the continuance of a Default or
Event of Default, CoBank shall have no obligation to make any loan to the Company and may
discontinue doing so at any time without prior notice. In addition, upon the occurrence and during the
continuance of an Event of Default, CoBank may, upon notice to the Company:

(A) Termination and Acceleration. Terminate any commitment and declare the
unpaid principal balance of the loans, all accrued interest thereon, and all other amounts payable under
this Agreement, the Promissory Notes and Supplements, and all other Loan Documents to be
immediately due and payable; provided, however, that upon the occurrence of an Event of Default under
Section 8.08(F), any commitments shall automatically be terminated and all such amounts shall
automatically become due and payable. Upon such a declaration (or automatically, as provided above),
the unpaid principal balance of the loans and all such other amounts shall become immediately due and
-payable, without protest, presentment, demand, or further notice of any kind, all of which are hereby
expressly waived by the Company.

(B) Eaforcement. Proceed to protect, exercise, and enforce such rights and
remedies as may be provided by this Agreement, any other Loan Document, or under Law. Each and
every one of such rights and remedies shall be cumulative and may be exercised from time to time, and
no failure on the part of CoBank to exercise, and no delay in exercising, any right or remedy shall operate
as a waiver thereof, and no single or partial exercise of any right or remedy shall preclude any future or
other exercisc thereof, or the exercise of any other right. Without limiting the foregoing, CoBank may
hold and/or sct off and apply against the Company's obligations to CoBank the proceeds of any equity in
CoBank and any balances held in any account maintained at CoBank {whether or not such balances are
then due).

{C) Application of Funds. Apply all payments received by it to the Company’s
obligations to CoBank in such order and manner as CoBank may elect in its sole discretion.

In addition to the rights and remedies set forth above and notwithstanding the terms of any Promissory
Note and Supplement, upon the occurrence and during the continuance of an Event of Default, the unpaid
principal balance of the loans and, to the extent permitted by Law, overdue interest, fees and other
charges, shall, at CoBank's option in each instance (and automatically following an acceleration), accrue
interest at the Default Rate.

ARTICLE 10
MISCELLANEOUS

SECTION 10.01. Broken Funding Surcharge. Notwithstanding the terms of any Promissory
Note and Supplement, the Company agrees to: (A) give CoBank not less than three (3) Business Days’
prior notice in the event it desires to repay any loan balance bearing interest at a fixed rate prior to the
last day of the fixed rate period; and (B) pay to CoBank a broken funding surcharge in the amount set
forth below in the event the Company: (1) repays any fixed rate balance prior to the last day of its fixed
rate period (whether such payment is made voluntarily, as a result of an acceleration, or otherwise);
(2) converts any fixed rate balance to another fixed rate or to a variable rate prior to the last day of the
fixed rate period applicable to such balance; or (3) fails to borrow any fixed rate balance on the date
scheduled therefor. The surcharge shall be in an amount equal to the greater of (i) the sum of the present
value of: (a) any funding losses imputed by CoBank to have been incurred as a result of such payment,
conversion or failure; plus (b) a per annum yield of 4 of 1% of the amount repaid, converted or not
borrowed for the period such amount was scheduled to have been outstanding at such fixed rate, or (ii)
$300.00. Such surcharge shall be determined and calculated in accordance with methodology established
by CoBank, a copy of which wil! be made available upon request. Notwithstanding the foregoing, in the
event of a conflict between the provisions of this subsection and of the broken funding charge section of
a forward fix agreement between CoBank and the Company, the provisions of the forward fix agreement
shall control.

SECTION 10.02. Complete Agreement, Amendments, Etc. The Loan Documents are
intended by the parties to be a complete and final expression of their agreement. NO AMENDMENT,
MODIFICATION, OR WAIVER OF ANY PROVISION OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS, AND NO CONSENT TO ANY DEPARTURE BY THE COMPANY
HEREFROM OR THEREFROM, SHALL BE EFFECTIVE UNLESS APPROVED BY COBANK AND
CONTAINED IN A WRITING SIGNED BY OR ON BEHALF OF COBANK, AND THEN SUCH
WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR
THE SPECIFIC PURPOSE FOR WHICH GIVEN. In the event this Agreement is amended or restated,
each such amendment or restatement shall be applicable to ail Promissory Notes and Supplements hereto.
Each Promissory Note and Supplement shall be deemed to incorporate all of the terms and conditions of
this Agreement as if fully set forth therein. Without limiting the foregoing, any capitalized term utilized
in any Promissory Note and Supplement (or in any amendment to this Agreement or Promissory Note and
Supplement) and not otherwise defined in the Promissory Note and Supplement (or amendment) shall
have the meaning set forth herein.

SECTION 10.03. Applicable Law, Jurisdiction. Except to the extent governed by applicable
federat Law, the Laws of the State of Colorado, without reference to choice of law doctrine, shall govern:
(A) this Agreement and each Promissory Note and Supplement; (B) all disputes and matters between the
parties to this Agreement; and (C) the rights obligations of the parties to this Agreement. The parties

14

agree to submit to the non-exclusive jurisdiction of any federal or state court sitting in Colorado for any
action or proceeding arising out of or relating to this Agreement or any other Loan Document. The
Company hereby waives any objection that it may have to any such action or proceeding on the basis of
forum non-conveniens.

SECTION 10.04. Notices. All notices hereunder shall be in writing and shall be deemed to
have been duly given upon delivery if personally delivered or sent by overnight mail or by facsimile or
similar transmission, or three (3) days after mailing if sent by express, certified or registered mail, to the
parties at the following addresses (or such other address as either party may specify by like notice):

If to CoBank, as foilows: If to the Company, as follows:
CoBank, ACB Pennichuck East Utility, Inc.

5500 South Quebec Street 25 Manchester Street

Greenwood Village, Colorado 80111 Merrimack, New Hampshire 03054
Facsimile: (303) 740-4002 Facsimile: (603} 913-2305
Attention: Energy & Water Group Attention: President

SECTION 10.05. Costs, Expenses, and Taxes. To the extent allowed by Law, the Company
agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel
retained by CoBank) incurred by CoBank in connection with the origination, administration,
interpretation, collection, and enforcement of this Agreement and the other Loan Documents, including,
without limitation, all costs and expenses incurred in perfecting, maintaining, determining the priority of,
and releasing any security for the Company's obligations to CoBank, all title insurance premiums and
other charges, and any stamp, intangible, transfer or like tax incurred in connection with this Agreement
or any other Loan Document or the recording hereof or thereof.

SECTION 10.06. Effectiveness and Severability. This Agreement shall continue in effect
until: (A) all indebtedness and obligations of the Company under this Agreement and the other Loan
Documents shall have been paid or satisfied; (B) CoBank has no commitment to extend credit to or for
the account of the Company under any Promissory Note and Supplement; (C) all Promissory Notes and
Supplements shall have been terminated; and (D) either party sends written notice to the other party
terminating this Agreement. Any provision of this Agreement or any other Loan Document which is
prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or thereof.

SECTION 10.07. Other Types of Credit. From time to time, CoBank may issue letters of
credit or extend other types of credit to or for the account of the Company. In the event the parties desire
to do so under the terms of this Agreement, then the agreement of the parties with respect thereto may be
set forth in a Promissory Note and Supplement to this Agreement and this Agreement shall be applicable
thereto as if such letters of credit or other types of credit were loans.

SECTION 10.08. Indemnification. The Company agrecs to indemnify, defend and hold
harmless CoBank, its participants, and its and their respective officers, directors, shareholders,
employees, and agents (collectively, the “Indemnitees”) from and against any and all claims, obligations,
liabilities, losses, damages, injuries (to persons or property), penalties, actions, suits, judgments, costs
and expenses (including reasonable attorney's fees) of whatever kind or nature, whether or not well
founded, meritorious or unmeritorious, which are demanded, asserted or claimed against any such
Indemnitee in any way relating to, or arising out of, or in connection with this Agreement or the other
Loan Documents, including: (A) al! claims arising in connection with the release, presence, removal, and

15

disposal of all Hazardous Materials located on any property of the Company, (B) any claims, suits, or
liabilities against the Company; and (C) the failure to pay any taxes as and when due. The foregoing
indemnities shall not apply with respect to an Indemnitee to the extent arising as a result of the gross
negligence or willful misconduct of such Indemnitee. The indemnification provided for hereunder shall
survive the termination of this Agreement.

SECTION 10.09. [Intentionally Omitted]

SECTION 10.10. Patriot Act Notice. CoBank hereby notifies the Company that pursuant to
the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001)
(the “Patriot Act”). it and its affiliates are required to obtain, verify and rccord information that identifics
the Company, which information includes the name, address, tax identification number and other
information regarding the Company that will allow CoBank to identify the Company in accordance with
the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is
effective for CoBank and its affiliates.

SECTION 10.11. Counterparts; Electronic Delivery. Counterparts. This Agreement
may be executed in any number of counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement. In addition, if agreeable to CoBank, signature
pages may be delivered by facsimile.

SECTION 10.12. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the Company and CoBank and their
respective successors and assigns, except that the Company may not assign or transfer its rights or
obligations under this Agreement or the other Loan Documents without the prior written consent of
CoBank. CoBank may sell or assign its rights and obligations hereunder and under the other Loan
Documents or may sell participations in its rights and obligations hereunder and under the Loan
Documents to any Person, and, in connection therewith, disclose financial and other information on the
Company and its Affiliates. Patronage distributions in the event of a sale shal! be governed by CoBank's
bylaws and capital plan (as each may be amended from time to time). A sale of a participation interest
may includc certain voting rights of the participants regarding the loans hereunder (including without
limitation the administration, servicing and enforcement thereof). CoBank agrees to give written
notification to the Company of any sale hereunder.

SECTION 10.13. Headings. Captions and headings used in this Agreement are for reference
and convenience of the parties only, and shall not constitute a part of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers as of the date shown above.

CoBANK, ACB.
cs “
By: C “ (A 7 By:

goigtant Corporgks Sacrsety :
™ ene Matin —— Title: __Wresidus~ Result Ubi des
re

C- —P PENNICHUCK EAST UTILITY, INC.