EXHIBIT 10.2
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FOURTH MODIFICATION AND REAFFIRMATION AGREEMENT
THIS AGREEMENT, dated as of October 30, 2006, by and between
BIRMINGHAM UTILITIES, INC. (the "Borrower"), a Connecticut corporation, having
its chief executive office at 230 Beaver Street, Ansonia, Connecticut,
BIRMINGHAM H2O SERVICES, INC. ("Birmingham H2O") and EASTERN CONNECTICUT
REGIONAL WATER COMPANY, INC. ("Eastern" and collectively with Birmingham H2O,
the "Guarantor") each a Connecticut corporation having its chief executive
office at 230 Beaver Street, Ansonia, Connecticut and CITIZENS BANK OF
CONNECTICUT, a Connecticut stock savings bank with a place of business at 209
Church Street, New Haven, Connecticut (the "Bank").
WITNESSETH:
WHEREAS, the Borrower executed a Commercial Revolving Promissory
Note dated December 30, 2003 in the original principal amount of $7,000,000.00
(the "Note"), pursuant to a Commercial Loan Agreement dated November 20, 2002,
as modified by a First Modification and Reaffirmation Agreement dated December
30, 2003, a Second Modification and Reaffirmation Agreement dated as of April
28, 2005, certain letter agreements dated as of April 21, 2006 and July 26, 2006
and a Third Modification and Reaffirmation Agreement dated as of August 28, 2006
(collectively the "Loan Agreement") in connection with a $7,000,000.00 revolving
loan facility (the "Revolving Loan"); and
WHEREAS, the Revolving Loan is unconditionally guaranteed by
Birmingham H2O pursuant to its Guaranty dated December 30, 2003 (the "Biningham
H2O Guaranty") and by Eastern pursuant to its Guaranty dated as of April 28,
2005 (the "Eastern Guaranty" and collectively with the Birmingham H2O Guaranty,
the "Guaranty"); and
WHEREAS, in connection with the Revolving Loan, Borrower and/or
Guarantor executed and delivered various other documents, instruments and/or
indemnities to Bank, each as modified (hereinafter collectively, including
without limitation the Note, the Loan Agreement and the Guaranty, the "Loan
Documents"); and
WHEREAS, the Borrower has requested and the Bank has agreed to
modify certain terms of the Revolving Loan, extend the maturity date of the
Revolving Loan, and increase the Revolving Loan to the maximum principal sum of
Nine Million and 00/100 Dollars ($9,000,000.00) (as so increased, the "Increased
Revolving Loan"); and
WHEREAS, the Bank has agreed to make the Increased Revolving Loan
and to modify the Loan Documents in certain respects, on the condition that (a)
the Borrower execute and deliver a Commercial Revolving Promissory Note in the
amount of $9,000,000.00 (the "Increased Note") to evidence the Increased
Revolving Loan, and (b) that the Borrower modify and reaffirm the Loan
Agreement, and (c) the Guarantor unconditionally, jointly and severally guaranty
of the payment and performance of Borrower under the Increased Note, and (d) on
the other conditions set forth below; and
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WHEREAS, the Guarantor acknowledges and agrees that it will receive
direct and indirect benefit from the modification and extension of the Revolving
Loan;
NOW, THEREFORE, in consideration of the Increased Revolving Loan and
mutual promises and covenants contained herein, the parties hereto agree as
follows:
I. REAFFIRMATION OF NOTE BALANCE
As of the date hereof; there is $6,655,000.00 of outstanding
principal balance due Bank under the Note.
II. MODIFICATION OF LOAN AGREEMENT
The Loan Agreement is amended in the following respects:
III. A. PARAGRAPH 1.1, AMOUNT, IS AMENDED TO READ AS FOLLOWS:
"1.1 -- Amount. Upon the terms and conditions set forth
in this Agreement, the Bank agrees to lend to Borrower, from time to
time, up to the sum of NINE MILLION AND 00/100 DOLLARS
($9,000,000.00) (the "Revolving Loan Amount"). The Revolving Loan
Amount shall consist of the following:
A. Direct advances for capital expenditures and for
working capital equal to the sum of $9,000,000.00 less the face
amount of any outstanding Letters of Credit (as hereinafter defined)
(the "Working Capital Advances"), subject to the terms of
subparagraphs C and D, below; and
B. One or more Commercial Stand-By Letters of Credit for
the benefit of such persons as Borrower shall designate (each a
"Letter of Credit") up to the aggregate outstanding face amount of
Three Hundred Thousand and 00/100 ($300,000.00).
C. Notwithstanding the foregoing subparagraph A, in no
event shall Working Capital Advances (reduced as aforesaid by the
face amount of Letters of Credit) exceed $8,000,000.00 until such
time as Borrower's earnings before interest, taxes, depreciation and
amortization ("EBITDA") as shown on Borrower's financial statement,
on a rolling four-quarters basis, equals or exceeds $2,900,000.00.
EBITDA for purposes of the provisions of this subparagraph C shall
be measured from time to time on a rolling fourquarters basis,
looking back at the immediately preceding four fiscal quarters as
provided in Paragraph 5.8.D, below. If at any time EBITDA as so
measured does not equal or exceed $2,900,000.00, any outstanding
Working Capital Advances in excess of $8,000,000.00 ("Excess
Borrowing") shall be immediately due and payable, and shall be
immediately repaid by Borrower. Failure to repay Excess Borrowing
shall be an Event of Default hereunder.
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D. In no event will the outstanding aggregate of the
Working Capital Advances, including the face amount of all
outstanding Letters of Credit exceed $9,000,000.00 or such lesser
amount as maybe advanced pursuant to subparagraph C, above."
B. PARAGRAPH 1.6, MATURITY DATE, IS AMENDED AS FOLLOWS:
"1.6 -- Maturity Date. The Loan is payable in full on
September 28, 2007 (the "Revolving Loan Maturity Date")."
C. PARAGRAPH 5.8, FINANCIAL COVENANTS, IS AMENDED BY THE ADDITION OF
THE FOLLOWING SUBPARAGRAPH D, AS FOLLOWS:
"D. EBITDA. Borrower shall determine and test earnings
before interest, taxes, depreciation and amortization ("EBITDA") on
a rolling four-quarter basis, looking back at the immediately
preceding four fiscal quarters. If at any time EBIDTA on a rolling
four-quarter basis is less than $2,900,000.00, Working Capital
Advances shall not exceed $8,000,000.00, as provided in Paragraph
1.1.C, above. This covenant shall be tested as of the end of each
fiscal quarter."
D. SECTION 6, DEFAULTS, IS AMENDED BY THE ADDITION OF CLAUSE (XI),
AS FOLLOWS:
"(XI) failure to repay immediately any Excess Borrowing
as hereinabove defined in Paragraph 1.1.C."
E. In all other respects, the Loan Agreement is ratified and
affirmed and continues in full force and effect.
III. MODIFICATION OF LOAN AGREEMENT AND LOAN DOCUMENTS
A. The Loan Agreement and Loan Documents are modified to the extent
required to incorporate the Increased Revolving Loan, the changed Maturity Date,
and the modification to the Loan Agreement. All references in the Loan Documents
to "Revolving Loan" shall mean the Increased Revolving Loan; all references to
"Revolving Note" or "Note" shall mean the Increased Note; all references to
Maturity Date or Revolving Loan Maturity Date shall mean September 28, 2007.
B. In all other respects, the Loan Documents are ratified and
affirmed and continue in full force and effect.
IV. MODIFICATION AND REAFFIRMATION OF GUARANTY
Birmingham H2O and Eastern each hereby consent to the Increased
Revolving Loan, the extension of the Maturity Date and the modifications
contained herein and hereby ratify and confirm: (a) that it unconditionally
reaffirms to Bank its obligations under Birmingham H2O
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Guaranty, and (b) Borrower's Obligations include, without limitation, the
Increased Note and Loan Documents, as modified hereby. Birmingham H2O and
Eastern each acknowledge that its reaffirmation and ratification of the Guaranty
is a material inducement for Bank to enter into this Agreement and that Bank
would not do so without said reaffirmation and ratification. This Agreement, the
Birmingham H2O Guaranty and the Eastern Guaranty are Birmingham H20's and
Eastern's valid and binding obligations, respectively, enforceable against
Birmingham H2O and Eastern in accordance with their terns.
V. REAFFIRMATION
A. Subject to the amendments and modifications set forth in this
Agreement and in the other documents and instruments executed and delivered this
day in connection with the Revolving Loan, (i) each Borrower and Guarantor
adopts, publishes and reaffirms all of the representations, warranties and
covenants (both affirmative and negative) and indemnities and waivers made by
such Borrower or Guarantor, as the case may be, contained in the Loan Agreement
and each of the Loan Documents, and (ii) all of the representations and
warranties set forth in the Loan Agreement and the Loan Documents are true and
correct as if made on behalf of each Borrower and Guarantor on the date hereof.
B. Each Borrower and Guarantor represents, acknowledges and affiiins
that it has no claim, defense, offset or counterclaim whatsoever against Bank
with respect to the Note, the Loan Agreement, any Loan Document, or any document
evidencing or securing any Loan or the modifications made herein, and that Bank
is relying on this representation in agreeing to said modifications. Each
Borrower and Guarantor further acknowledges that Bank would not agree to said
modifications unless each Borrower and Guarantor made the representations
contained in this paragraph and elsewhere in this Agreement freely and
willingly, after due consultation with its attorneys. Each Borrower and
Guarantor further represents that this Agreement and all of the Loan Documents
executed by it are its valid and binding obligations and enforceable in
accordance with their terms. Each Borrower and Guarantor further represents that
no Event of Default (as defined in the Loan Agreement or any of the Loan
Documents) has occurred nor, to its knowledge, has there occurred any event or
condition which, with notice or the passage of time or both would constitute an
Event of Default.
C. In furtherance of the immediately preceding paragraph, the
Borrower and Guarantor hereby release and forever discharge the Bank, its
officers, agents, successors and assigns, from any and all claims, actions,
causes of action, obligations and liabilities of any kind known or unknown which
the Borrower or Guarantor or any of them has or may have as of the date hereof
whether relating to the Note, the Loan Agreement or any Loan Document or any of
the transactions contemplated hereby or consummated in connection herewith, or
any negotiations in connection with any of the foregoing.
D. The parties agree that nothing contained herein shall in any way
impair the Note, the Loan Agreement or any other Loan Document, or any document
evidencing or securing the Revolving Loan. The parties further agree that
nothing contained herein or modified pursuant to this Agreement shall affect or
be construed to release or affect the liability of any other party or
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parties who may now or hereafter be liable under, pursuant to, or on account of
any Loan Document.
E. Each Borrower and Guarantor affirms its understanding of the
Events of Default enumerated in Section 6 of the Loan Agreement, as herein
modified.
F. Except as modified by this Agreement and by the other documents
and instruments executed and delivered in connection herewith, the Loan
Documents including all Exhibits and Schedules thereto shall remain unchanged
and in full force and effect. Borrower shall keep and perfonn all of the terms
and agreements contained therein.
G. This Agreement shall be binding upon and inure to the benefit of
the parties hereto, their respective heirs, successors and assigns. This
Agreement shall be construed in accordance with the laws of the State of
Connecticut and may only be amended in writing.
H. This Agreement may be signed in one or more counterparts all of
which shall constitute one document.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Modification and Reaffirmation Agreement to be duly executed as of the day and
year first above written.
Signed, Sealed and Delivered BANK:
In the Presence of: CITIZENS BANK OF CONNECTICUT
By: /s/ Paul M. Canelli
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Paul M. Canelli
Its Vice President
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BORROWER:
BIRMINGHAM UTILITIES, INC.
By: /s/ John S. Tomac
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John S. Tomac
Its President
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GUARANTOR
BIRMINGHAM H2O SERVICES, INC.
By: /s/ John S. Tomac
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John S. Tomac
Its President
EASTERN CONNECTICUT REGIONAL
WATER COMPANY, INC.
By: /s/ John S. Tomac
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John S. Tomac
Its President
STATE OF CONNECTICUT)
) ss: New Haven October 30, 2006
COUNTY OF NEW HAVEN )
Personally appeared Paul M. Canelli, Vice President of Citizens Bank
of Connecticut, hereunto duly authorized, signer and sealer of the foregoing
instrument, and acknowledged the s.ame to be his/her free acts and deed, and the
free act and deed of said banking association before me.
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Notary Public
My Commission Expires:
STATE OF CONNECTICUT)
) ss: New Haven, October 30, 2006
COUNTY OF NEW HAVEN )
Personally appeared John S. Tomac, President of Birmingham
Utilities, Inc., a Connecticut corporation, signer and sealer of the foregoing
instrument and acknowledged the sane to be his free act and deed as such
president and the free act and deed of said corporation, before me.
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Commissioner of the Superior Court
Notary Public
My Commission Expires:
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STATE OF CONNECTICUT)
) ss: New Haven,
COUNTY OF NEW HAVEN )
Personally appeared John S. Tomac, President of Birmingham H2O
Services, Inc., a Connecticut corporation, signer and sealer of the foregoing
instrument and acknowledged the same to be his free act and deed as such
president and the free act and deed of said corporation, before me.
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Commissioner of the Superior Court
Notary Public
My Commission Expires:
STATE OF CONNECTICUT)
) ss: New Haven, October 30, 2006
COUNTY OF NEW HAVEN )
Personally appeared John S. Tomac, President of Eastern Connecticut
Regional Water Company, Inc., a Connecticut corporation, signer and sealer of
the foregoing instrument and acknowledged the same to be his free act and deed
of said corporation, before me.
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