Exhibit 10.2

 
RBS CITIZENS, NATIONAL ASSOCIATION
63 Eugene O’Neill Drive
New London, Connecticut 06103

September 15, 2009

David C. Benoit
Vice President-Finance and Treasurer
Connecticut Water Service, Inc.
93 West Main Street
Clinton, CT 06413

Re:                 Modification of Revolving Credit Facility

Dear Mr. Benoit:

We are pleased to confirm the willingness of RBS Citizens, National Association,
successor-by-merger to Citizens Bank of Connecticut (the “Bank”) to amend the
terms and conditions of the existing demand revolving credit facility (the
“Facility”) provided to Connecticut Water Service, Inc. (the “Company”) pursuant
to a letter agreement between the Bank and the Company dated as of May 8, 2002
(as amended and in effect, the “Letter Agreement”), as amended by that certain
letter agreement between the Bank and the Company dated as of May 17, 2002, by
that certain letter agreement between the Bank and the Company dated as of June
12, 2003, by that certain letter agreement between the Bank and the Company
dated as of March 12, 2004, by that certain letter agreement between the Bank
and the Company dated as of January 30, 2006, and by that certain letter
agreement between the Bank and the Company dated as of November 20, 2007.  The
Letter Agreement is hereby amended as follows:

1.           Paragraph 1 of the Letter Agreement, entitled “Amount” is hereby
amended and restated in its entirety to read as follows:

“The aggregate principal amount of loans and advances (“Advances”) outstanding
under the Facility shall not exceed $15,000,000 at any time during the period
commencing on the effective date of this Letter Agreement and terminating on the
Maturity Date.”

2.           Paragraph 2 of the Letter Agreement, entitled “Term”, is hereby
amended and restated in its entirety to read as follows:

“This Facility shall expire, terminate and be repayable on June, 1, 2011 (the
“Maturity Date”), unless renewed by the Bank.”

3.           Any and all references to the “Maturity Date” set forth in the
Letter Agreement shall be amended to refer to, and mean, June 1, 2011.

4.           Paragraph 8 of the Letter Agreement, entitled “Facility Fee”, is
hereby deleted in its entirety, and replaced with the following:

“8.           Unused Fee.

In consideration of the Bank’s agreement to make the Facility available to the
Company, the Company shall pay to the Bank a non-refundable “Unused Fee” at the
rate of 0.250% (i.e. 25.0 basis points) per annum multiplied by the average
daily unused portion of the Facility (the “Unused Fee”).  The Unused Fee shall
be payable monthly in arrears commencing on September 1, 2009 and on the first
day of each calendar month thereafter and computed on the basis of a 360-day
year and assessed for the actual number of days elapsed.”

5.           Any and all references to the “Fixed Rate” and/or “Fixed Rate
Advances” set forth in the Letter Agreement (including without limitation
Paragraph 5 thereof) are hereby deleted, it being the intention of the Company
and the Bank that the Company shall not hereafter have any option to have any
Advances (in whole or in part) bear interest at the Fixed Rate.

6.           Paragraph 5 of the Letter Agreement is hereby amended as follows:

(a)           The definition of “Prime Rate Advances” set forth in Paragraph 5
of the Letter Agreement is hereby amended to mean Advances bearing interest, at
the option of the Bank, at a fluctuating rate equal to the Bank’s Prime Rate in
effect from time to time plus the Applicable Margin.

(b)           The definition of “Applicable Margin” set forth in Paragraph 5 of
the Letter Agreement is hereby amended and restated in its entirety to read as
follows:

“           “Applicable Margin” means 2.50% (i.e. 250 basis points) per annum.”

7.           Amendment to Promissory Note.  The Demand Promissory Note dated May
8, 2002 made by the Company as Maker to the order of the Bank as Payee (the
“Note”) is hereby amended to (a) increase the principal amount thereof to
$15,000,000, and (b) to provide that such Note will be payable on the Maturity
Date, which amendment shall be evidenced by an allonge to the Note executed by
the Company in substantially the form attached hereto as Exhibit A (the “Second
Allonge”), which Second Allonge shall be permanently attached to the Note, and
which Second Allonge is hereby incorporated in the Letter Agreement by reference
and made a part thereof.

 
 

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Please confirm the Company’s acceptance of the foregoing amendment to the
Facility by signing and returning to us the enclosed copy of this letter.

 
RBS CITIZENS, NATIONAL ASSOCIATION
(successor-by-merger to Citizens Bank of Connecticut)
 
By:  /s/  Anthony Castellon
Name:  Anthony Castellon
Title:  Senior Vice President
   

The Company hereby agrees to and accepts the terms and conditions contained in
the foregoing letter and confirms that the Bank, shall be entitled but shall not
be obliged, to rely upon and act in accordance with any communication (whether a
request for an Advance under this Facility or any other notice, request,
instruction or other communication whatsoever) which may be or purport to be
given by telephone or facsimile transmission on the Company’s behalf by any
person notified to the Bank by the Company as being authorized to give such
communication without inquiry by the Bank to make such communication.  The
Company hereby indemnifies the Bank and agrees to hold it harmless against all
losses, claims, actions, proceedings, damages, costs and expenses incurred or
sustained by the Bank as a result thereof or in connection therewith.

The persons authorized to give communication on the Company’s behalf are the
persons named on the certificate of incumbency delivered to the Bank pursuant to
Paragraph 9(e) of the Letter Agreement.

 
CONNECTICUT WATER SERVICE, INC
 
 
By:        /s/  David C. Benoit
Name:  David C. Benoit
Title:  Vice President, Finance and CFO
   

 
 

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Exhibit A

Second Allonge to Note

[follows on the next page]

 
 

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SECOND ALLONGE TO DEMAND PROMISSORY NOTE

 
September 15, 2009

THIS ALLONGE (“ALLONGE”) IS TO BE ATTACHED PERMANENTLY TO THE DEMAND PROMISSORY
NOTE MADE BY CONNECTICUT WATER SERVICE, INC. TO THE ORDER OF CITIZENS BANK OF
CONNECTICUT (PREDECESSOR-BY-MERGER OF RBS CITIZENS, NATIONAL ASSOCIATION), IN
THE ORIGINAL PRINCIPAL AMOUNT OF $9,000,000 ORIGINALLY DATED MAY 8, 2002, as
amended by that certain first allonge to demand promissory note dated november
20, 2007 (THE “NOTE”).

All capitalized terms used but not otherwise defined in this Allonge shall have
the meanings ascribed to such terms in the Note.

Except as set forth in this Allonge, the Note remains in full force and effect
and has not been modified or amended in any respect.

This Allonge and the Note shall be read, construed and interpreted as one and
the same instrument.

The Note is hereby amended to provide that:  (a) any and all references therein
to the principal amount of TWELVE MILLION AND NO/100 DOLLARS ($12,000,000.00),
however and wherever depicted, shall hereinafter mean and refer to the principal
amount of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00); and (b) the
unpaid principal amount of the Note shall be paid at the times and in the manner
set forth in Section 6 of the Letter Agreement, but if not sooner paid, the
entire unpaid principal amount of the Note, together with accrued and unpaid
interest thereon, shall be due and payable on the Maturity Date (as defined by
the Letter Agreement), unless such date shall be extended pursuant to Section 2
of the Letter Agreement..

To the extent necessary to assure the liability of Maker to the Bank or Holder
of the Note, the signature of Maker appearing below shall be construed as both
an endorsement and a reissue of the Note.

 
CONNECTICUT WATER SERVICE, INC
 
 
By:        /s/  David C. Benoit
Name:  David C. Benoit
Title:  Vice President, Finance and CFO
   

The foregoing Allonge is hereby acknowledged and agreed to as of the date first
set forth above.

RBS CITIZENS, NATIONAL ASSOCIATION
(successor-by-merger to Citizens Bank of Connecticut)
 
By:  /s/  Anthony Castellon
Name:  Anthony Castellon
Title:  Senior Vice President