ASSET PURCHASE AGREEMENT

EXHIBIT 10.28

Execution Copy

ASSET PURCHASE AGREEMENT

among

the Town of Barnstable,

Connecticut Water Service, Inc.

the Barnstable Holding Company,

the Barnstable Water Company

and

BARLACO, Inc.

March 10, 2005

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ASSET PURCHASE AGREEMENT

     ASSET PURCHASE AGREEMENT dated as of March 10, 2005 among the Town of Barnstable, Massachusetts (the “ Buyer ”), the Connecticut Water Service, Inc., a Connecticut corporation (“ Parent ”), the Barnstable Holding Company, a Connecticut corporation and wholly owned subsidiary of Parent (“ BHC ”), the Barnstable Water Company, a corporation chartered under Chapter 286 of the Massachusetts Acts of 1911 and wholly owned subsidiary of BHC (the “ Seller ”) and BARLACO, Inc., a Massachusetts corporation and wholly owned subsidiary of BHC (“ BARLACO ”).

SECTION 1 — SALE AND PURCHASE OF ASSETS

     1.1 Sale of Assets . Subject to the provisions of this Agreement, at the Closing (as defined in Section 1.7 hereof), the Seller agrees to sell and the Buyer agrees to purchase all of the properties, assets and business of the Seller used or usable in its business as a water company of every kind and description, tangible and intangible, real, personal or mixed, and wherever located, including without limitation:

               (a) all of the Seller’s land as set forth in Exhibit A to this Agreement, together with the buildings, structures, pipes, fixtures and other improvements located thereon, together with construction in progress;

               (b) all of the Seller’s other interests in real property as set forth in Exhibit B to this Agreement, including easements, rights of way, leaseholds, and all other rights representing less than fee ownership;

               (c) all personal property constituting Seller’s distribution system, including pumping facilities, purification equipment, mains, pipes, fire cisterns, basins, fountains, troughs, meters and hydrants;

               (d) all office, shop, stores, transportation, laboratory and other equipment, including computers, computer programs and related software, but excluding certain essential software that is not owned by or licensed to the Seller but rather is used under a license granted to affiliates of Seller;

               (e) all materials, supplies and equipment;

               (f) to the extent that a sale by contract operates to transfer franchises, water and distribution rights under Massachusetts law, all of the Seller’s rights, franchises, and privileges, including without limitation the water and distribution rights conferred by the Seller’s charter;

               (g) the Seller’s rights and obligations under the contracts and agreements described in Exhibit C to this Agreement (the “ Assigned Agreements ”) that relate to its operation of a water utility;

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               (h) intellectual property rights;

               (i) copyrights;

               (j) all of Seller’s goodwill;

               (k) all information, whether or not proprietary, that relates to the Company’s operation of a water utility, including but not limited to accounts, billing, customer service, meter reading, and other records, computer programs (to the extent permitted by the licenses for such programs), and systems, however described, necessary or useful to the operation of the water utility as a going concern, including any information, documents and data stored in any medium in the possession of any affiliate of or contractor to the Seller;

               (l) all of the Seller’s books and records relating to its business as a water company and all of its engineering and other reports and surveys relating to its water system;

provided , however , that there shall be excluded from such purchase and sale Seller’s tax returns, stock record books, corporate record books containing minutes of meetings of directors and stockholders and such other records as have to do exclusively with Seller’s organization or stock capitalization and other assets listed on Schedule 1.1 (the “ Excluded Assets ”). The Seller shall have access to such other books and records of the Seller at reasonable times for purposes of winding up the Seller, handling tax matters and dealing with liabilities and claims. The assets, property and business of Seller to be sold to and purchased by the Buyer or its designee) under this Agreement are hereinafter sometimes referred to as the “ Purchased Assets .” The parties hereto acknowledge that in accordance with Section 4.8 hereof Seller is entitled to all accounts receivable for services rendered prior to the Closing Date, and Buyer is entitled to all accounts receivable for services rendered on or after the Closing Date.

     1.2 Satisfaction of Note . At the time of the sale and purchase of the Purchased Assets, the Buyer shall take the steps necessary to enable Seller to discharge $1.525 million of the Seller’s obligation under the Seller’s long-term note to Indianapolis Life Insurance Company dated February 15, 1991 (the “Indianapolis Note”), or such other amount as the Seller may then be obligated to pay in order to obtain a complete discharge of that note.

     1.3 Excluded Liabilities . Except as otherwise specifically provided in this Section 1.3, (a) Buyer shall not assume or be liable for any obligation or liability of Seller, of any kind or nature, known, unknown, contingent or otherwise (collectively, the “ Excluded Liabilities ”), including without limitation:

     (i) any liability of Seller incurred in connection with this Agreement and the transactions provided for herein, including brokerage, accounting and counsel fees, transfer and other taxes, and expenses pertaining to its liquidation or the performance by Seller of its obligations hereunder;

     (ii) any liability or obligation of Seller arising out of any contract or agreement;

     (iii) any obligations to Seller’s employees, including without limitation, any obligations arising under any employee program;

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     (iv) any litigation, proceeding, claim by any person or entity or other obligation of Seller relating to the business or operations of or otherwise relating to the Purchased Assets prior to the Closing Date, whether or not such litigation, proceeding, claim or obligation is pending, threatened, or asserted before, on, or after the Closing Date;

     (v) Taxes (as defined in Section 2.6) whether relating to periods before or after the Closing Date; and

     (vi) any obligations under any law, including but not limited to antitrust, civil rights, health, safety, labor, and discrimination laws.

     (b) Seller shall be solely responsible for, and shall discharge, any and all liabilities and obligations of Seller, including all accounts payable in connection with purchases made or services received on or prior to the Closing Date.

     1.4 Purchase Price and Payment . In consideration of the sale of the Purchased Assets to Buyer, at the Closing, the Buyer shall:

               (a) deliver to the Seller an amount equal to $10 million less the amount delivered to Seller pursuant to Section 1.4(b) hereof in cash, by certified or bank check, or by wire transfer of immediately available funds (the “ Purchase Price ”); and

               (b) deliver to the Seller in cash, by certified or bank check, or by wire transfer of immediately available funds an amount sufficient to enable Seller to discharge the Indianapolis Note (the “Discharge Amount”).

     1.5 Transfer of Purchased Assets . At the Closing, Seller shall deliver or cause to be delivered to the Buyer good and sufficient instruments of assignment or transfer transferring to the Buyer title to all the Purchased Assets. Such instruments of transfer (a) shall be in the form and will contain the warranties, covenants and other provisions (not inconsistent with the provisions hereof) which are usual and customary for transferring the type of property involved under the laws of the jurisdictions applicable to such transfers, (b) shall be in form and substance satisfactory to the Buyer and its counsel, and (c) with the exceptions provided for in Section 2.13 of this Agreement, shall effectively vest in the Buyer good record and marketable title to all the Purchased Assets free and clear of all liens, restrictions and encumbrances.

     1.6 Delivery of Records and Contracts . At the Closing, Seller shall deliver or cause to be delivered to the Buyer all written leases, contracts, commitments and rights evidencing Purchased Assets, with such assignments thereof and consents to assignments as are necessary to assure the Buyer of the full benefit of the same. Seller shall also deliver to the Buyer at the Closing all of Seller’s business records, books and other data relating to its assets, business and operations (except corporate records and other property of Seller excluded under Section 1.1) and Seller shall take all requisite steps to put the Buyer (or its designee) in actual possession and operating control of the assets and business of Seller.

     1.7 Closing . The closing of the sale and purchase of the transactions contemplated hereby (the “ Closing ”), shall take place at the offices of Palmer & Dodge LLP at 10:00 a.m., local time, on May 15, 2005 or within 45 days after satisfaction or waiver of the conditions and

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delivery of the items set forth in Sections 5 and 6, whichever is later, or on such other time and date and at such place as the Buyer and the Seller agree in writing (the date of such Closing shall herein be referred to as the “ Closing Date ”). The parties hereto acknowledge that in no event shall the Closing take place prior to the expiration of the 30-day referendum period which begins after the Barnstable Town Council approves this transaction.

SECTION 2 — REPRESENTATIONS AND WARRANTIES OF THE
SELLER, PARENT, AND BHC

     The Seller, Parent, and BHC, jointly and severally, represent and warrant to the Buyer as follows:

     2.1 Organization and Qualification . The Seller is a corporation duly organized, validly existing and in good standing under the laws of Massachusetts and has full corporate power and lawful authority to own, lease and operate its assets, properties and business and to carry on its business as now being and as heretofore conducted. The Seller is not required to be qualified or otherwise authorized to transact business as a foreign corporation in any jurisdiction (in the United States and outside of the United States). The Seller does not file and is not required to file any franchise, income or other Tax Returns (as defined in Section 2.6) in any jurisdiction (in the United States or outside of the United States), other than Massachusetts, based upon the ownership or use of property therein or the derivation of income therefrom. The Seller does not own or lease property in any jurisdiction (in the United States or outside the United States) other than Massachusetts.

     2.2 Authority to Execute and Perform Agreements . The Seller, Parent and BHC have the full legal right and power and all authority and approvals required to enter into, execute and deliver this Agreement and the Related Agreements (as defined in Section 4.11) and to perform fully their respective obligations hereunder and thereunder, and each of this Agreement and the Related Agreements has been or will be duly executed and delivered and is or will be the valid and binding obligations of the Seller, Parent and BHC enforceable in accordance with its terms.

     2.3 Capitalization . BHC is and will be on the Closing Date the only record and beneficial owner and holder of all of the issued and outstanding shares of the Seller. There are no agreements relating to the issuance, sale or transfer of any equity securities or other securities of the Seller.

     2.4 Financial Statements . The unaudited balance sheets of the Seller as at December 31, 2001, 2002, and 2003 and the related statements of income for the years then ended, in accordance with the requirements of the Massachusetts Department of Telecommunications and Energy, and the unaudited balance sheet of the Seller as of September 30, 2004 which have previously been delivered to the Buyer, fairly present the financial condition and results of operations of the Seller as of the respective date and for the periods indicated, in each case. The foregoing financial statements of the Seller are sometimes herein called the “ Financials ,” the balance sheet as of September 30, 2004 is sometimes herein called the “ Balance Sheet ” and September 30, 2004 is sometimes herein called the “ Balance Sheet Date .”

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     2.5 No Material Adverse Change . Since the Balance Sheet Date, except as described on Schedule 2.5 , there have been no changes in the assets, properties, business, operations or condition (financial or otherwise) of the Seller which either individually or in the aggregate materially and adversely affect the Seller, nor does the Seller, Parent or BHC know of any such change that is threatened, nor has there been any damage, destruction or loss materially and adversely affecting the assets, properties, business, operations or condition (financial or otherwise) of the Seller, whether or not covered by insurance.

     2.6 Tax Matters .

               (a) The Seller has paid or caused to be paid all federal, state, county, local, foreign and other taxes, including, without limitation, income taxes, net worth taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use taxes, import duties, value-added taxes, gross receipts taxes, franchise taxes, capital stock taxes, employment, unemployment and payroll-related taxes, withholding taxes, excise taxes, ad valorem taxes, stamp taxes, transfer taxes, windfall profit taxes, license taxes, environmental taxes and property taxes, whether or not measured in whole or in part by net income and all deficiencies, or other additions to such taxes and interest, fines and penalties thereon (hereinafter, “ Taxes ” or, individually, a “ Tax ”) required to be paid by the Seller through the date hereof whether disputed or not and whether shown on a Tax Return (as defined below) or not. Seller shall pay all accrued and unpaid Taxes owed by or with respect to Seller. No Tax deficiency or claim for additional Taxes or interest thereon or penalties in connection therewith, has been asserted or threatened to be asserted against the Seller by any taxing authority and the Seller does not know of any basis for the assertion of a tax deficiency against it.

               (b) The Seller has in accordance with applicable law timely filed all Tax returns, declarations, reports, claims for refund, or information returns or statements relating to Taxes, including any schedule or amendment thereto, and including any amendment thereof (as used herein, “ Tax Return ” or “ Tax Returns ”) required to be filed by it through the date hereof. Each of the Tax Returns filed by the Seller correctly and accurately reflects the amount of its Tax liability for such period and other required information. There has not been any audit of any Tax Return filed by the Seller and no audit of any Tax return of the Seller is in progress and the Seller has not been notified by any Tax authority that any such audit is contemplated or pending. No claim has ever been made by an authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to taxation by that jurisdiction. No issue relating to Seller or involving any Tax for which Seller might be liable has been resolved in favor of any taxing authority in any audit or examination which, by application of the same principles, could reasonably be expected to result in a deficiency for Taxes of Seller for any other period. Seller has not been nor is currently in violation (or, with or without notice or lapse of time or both, would be in violation) of any applicable law or regulation relating to payment, collection, or withholding of Taxes, or the remittance thereof, and all withholding and payroll Tax requirements required to be complied with by Seller. There are no security interests on any of the assets of Seller that arose in connection with any failure (or alleged failure) to pay any Taxes. Seller has never entered into a closing agreement pursuant to Section 7121 of the Code.

               (c) Except as set forth in Schedule 2.6 , since January 1, 2001, Seller has not been a member of an affiliated group filing or required to file a consolidated, combined, or

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unitary Tax Return. Seller is not a party to or bound by, nor does it have or has it ever had any obligation under, any Tax sharing agreement, or similar contract or arrangement. Seller has no liability for the Taxes of any other person.

               (d) For purposes of this Agreement, all references to Sections of the Code shall include any predecessor provisions to such Sections and any similar provisions of federal, state, local or foreign law.

     2.7 Compliance with Laws .

               (a) Except as set forth on Schedule 2.7(a),

                         (i) the Seller is not in material violation of any order, judgment, injunction, award or decree binding upon it;

                         (ii) the Seller is not, to the best knowledge of the Seller, Parent, and BHC, in material violation of any federal, state, local or foreign law, ordinance, permit or regulation or any other requirement of any governmental or regulatory body, court or arbitrator applicable to its business or assets, including, without limitation, laws, ordinances, regulations and other requirements respecting labor, employment and employment practices, terms and conditions of employment and wages and hours, or relating to the uses of its assets, or zoning; and

                         (iii) since January 1, 2001, the Seller has not received notice of any citation, fine or penalty imposed or asserted against the Seller for, any such violation or alleged violation, provided however that the representations in paragraphs 2.7(a)(i) through (iii) apply only to the period after January 1, 2001 with respect to regulations and requirements of the United States Environmental Protection Agency (“EPA”) and any state or local counterparts, the Occupational Safety and Health Administration (“OSHA”), and laws, ordinances, regulations and other requirements respecting pollution or protection of the environment, including, without limitation, laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, surface water, ground water or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes.

               (b) Set forth on Schedule 2.7 are all of the licenses, permits, franchises, orders or approvals of any federal, state, local or foreign governmental or regulatory body, including, but not limited to, licenses issued by EPA and OSHA or otherwise relating to employment and environmental matters that are material to the conduct of Seller’s business and the uses of its assets (collectively, “Permits”). The Seller holds all Permits necessary to operate its business as presently conducted and as currently contemplated to be conducted. Such Permits are in full force and effect and, except as set forth on Schedule 2.7 , such Permits will be transferred to the Buyer as part of the Purchased Assets to the maximum extent possible under the applicable laws related to such Permits. Except as set forth on Schedule 2.7 , since January 1, 2001, no violations are or have been recorded with any governmental or regulatory body in respect of any Permit;

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and no proceeding is pending or, to the best knowledge of the Seller, Parent, BARLACO, and BHC, threatened to revoke or limit any Permit.

     2.8 Consents; No Breach . All consents, permits, authorizations and approvals from any person pursuant to applicable law or contracts or other agreements with the Seller, that are required in connection with the performance of obligations of the Seller, Parent and BHC under this Agreement, or the assignment of the Purchased Assets are set forth on Schedule 2.8 hereto. The execution, delivery and performance of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby will not (i) violate any provision of the Articles of Organization or Bylaws of the Seller; (ii) except as set forth on Schedule 2.8 , violate, conflict with or result in the breach of any of the terms or conditions of, result in modification of the effect of, or otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any material instrument, contract or other agreement to which the Seller, Parent or BHC is a party or to which any of them or their assets or properties may be bound or subject; (iii) violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, the Seller, Parent or BHC or upon the securities, properties, assets or business of the Seller, Parent, or BHC; (iv) violate any statute, law or regulation of any jurisdiction as such statute, law or regulation relates to the Seller, Parent, or BHC or to the securities, properties, assets or business of the Seller, Parent, or BHC; (v) except as set forth on Schedule 2.8 , violate any Permit; (vi) except as set forth in Schedule 2.8 , require the approval or consent of any foreign, federal, state, local or other governmental or regulatory body or the approval or consent of any other person; or (vii) result in the creation of any lien or other encumbrance on the assets or properties of the Seller.

     2.9 Actions and Proceedings . Other than as described in Section 2.7 hereof, and except as disclosed on Schedule 2.9 , there are no outstanding orders, judgments, injunctions, awards or decrees of any court, governmental or regulatory body or arbitration tribunal against or involving the Seller or any of its securities, assets, or properties. There are no actions, suits or claims or legal, administrative or arbitral proceedings or, to the best knowledge of the Seller, Parent, BARLACO, or BHC, investigations (whether or not the defense thereof or liabilities in respect thereof are covered by insurance) pending or, to the best knowledge of the Seller, Parent, BARLACO, or BHC, threatened against or involving the Seller or any of its securities, assets or properties. To the best knowledge of the Seller, Parent, BARLACO, or BHC, there is no fact, event or circumstance that may give rise to any suit, action, claim, investigation or proceeding that individually or in the aggregate could have a material adverse effect upon the transactions contemplated hereby or upon the assets, properties, business, operations or condition (financial or otherwise) of the Seller.

     2.10 Contracts and Other Agreements . There have been delivered or made available to the Buyer true and complete copies of all of the Assigned Agreements. All of such Assigned Agreements are valid, subsisting, in full force and effect, binding upon the Seller, and to the best knowledge of the Seller, Parent, BARLACO, and BHC, binding upon the other parties thereto in accordance with their terms, and the Seller has paid in full or accrued all amounts now due thereunder and has satisfied in full or provided for all of its liabilities and obligations thereunder which are presently required to be satisfied or provided for, and is not in default under any of them, nor, to the best knowledge of the Seller, Parent, BARLACO, and BHC, is any other party

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to any Assigned Agreement in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default thereunder.

     2.11 Real Property . (a) Schedule 2.11 contains a correct legal description, street address and tax parcel identification number of all tracts, parcels, and subdivided lots in which Seller has an ownership interest. Schedule 2.11 contains a complete list of all real property that is currently leased, or has been leased at any time during the last five years, by Seller. The real property set forth in Schedule 2.11 shall be referred to herein as “ Real Property .”

               (b) To the knowledge of the Seller, Parent, BARLACO, and BHC, there is not (i) any claim of adverse possession or prescriptive rights involving any of the Real Property, (ii) any structure located on any Real Property which encroaches on or over the boundaries of neighboring or adjacent properties, or (iii) any structure of any other party which encroaches on or over the boundaries of any such Real Property.

               (c) Except as set forth on Schedule 2.11 (i) all of the buildings, plants, pipes, and structures included, relating to, or connecting to the Real Property are in condition and repair sufficient to render water utility service to the public and (ii) Seller has maintained and operated such buildings, plants, pipes and structures using its water utility engineering and operating judgment concerning the timing and extent of maintenance, including the deferral of some maintenance where such deferral would not jeopardize Seller’s ability to render water utility service to its customers. Buyer understands that the Purchased Assets are mostly old water utility assets that require constant attention and maintenance to continue to deliver water utility service to customers. Attached as Schedule 2.11 is a list of repairs and replacements performed over the past five years and a plan of future capital improvements that Seller anticipates will be required over the next five years.

     2.12 Tangible Property . The Seller’s water distribution system, including pumping facilities, purification equipment, mains, pipes, fire cisterns, basins, fountains, troughs, meters, and hydrants, office, shop, stores, transportation, laboratory, and other equipment, machinery, furniture, leasehold improvements, fixtures, structures, any related capitalized items and other tangible property material to the business of the Seller included in the Purchased Assets (“ Tangible Property ”) are in operating condition as described in Section 2.11 of this Agreement, and except as otherwise set forth in this Agreement, the Seller has not received notice that any of its Tangible Property is in violation of any existing law or any building, zoning, health, safety or other ordinance, code or regulation.

     2.13 Title to Assets; Liens .

               (a) With respect to the Purchased Assets other than those identified in Section 1.1(a) and Section 1.1(b), the Seller owns outright and has good marketable title to all of the Purchased Assets free and clear of any claim, lien or other encumbrance; provided, however, with respect to Seller’s rights, franchises, and privileges, including the water and distribution rights conferred by Seller’s charter included in the Purchased Assets, Seller is transferring such rights to the maximum extent possible under applicable laws.

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               (b) With respect to the Purchased Assets identified in Section 1.1(a), Seller has or at Closing will have good marketable title to such assets free and clear of any liens and encumbrances other than (i) voluntarily created monetary liens or encumbrances which shall be discharged prior to Closing or (ii) liens and encumbrances which do not materially and adversely effect the use of the Purchased Assets in connection with Seller’s business and the business to be assumed by Buyer.

               (c) The Purchased Assets constitute all of the assets, properties or rights that are useful or necessary for the conduct of the Seller’s business as currently conducted on the date hereof and as of the Closing Date, except to the extent set forth on Schedule 2.13 .