EXHIBIT 10.11A
FIRST AMENDMENT TO CREDIT AGREEMENT
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THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
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June 30, 2000, is entered into between BANK OF AMERICA, N.A. ("Bank"), and
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SOUTHWEST WATER COMPANY, a Delaware corporation ("Borrower").
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RECITAL
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A. Borrower and Bank have previously entered into that certain Credit
Agreement dated as of July 30, 1999 (the "Credit Agreement"), pursuant to which
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Bank has made certain loans and financial accommodations available to Borrower.
Terms used herein without definition shall have the meanings ascribed to them in
the Credit Agreement.
B. Borrower and Bank wish to (i) to increase the Revolving Commitment as
set forth in the Credit Agreement from $4,000,000 to $7,000,000, and (ii) allow
additional debts to be incurred by Borrower under Section 6.02 of the Credit
Agreement.
C. Bank is willing to amend the Credit Agreement under the terms and
conditions set forth in this Amendment. Borrower is entering into this Amendment
with the understanding and agreement that, except as specifically provided
herein, none of Bank's rights or remedies as set forth in the Credit Agreement
is being waived or modified by the terms of this Amendment.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendments to Credit Agreement.
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(a) Throughout the Credit Agreement, references to "Reference Rate"
are hereby amended to read "Prime Rate".
(b) The definition of "Revolving Commitment" as set forth in Section
1.01 of the Credit Agreement, the amount "$4,000,000" is hereby
amended to read $7,000,000."
(c) Exhibit A to the Credit Agreement, the form of "Revolving Note",
is hereby replaced in its entirety with Exhibit A attached
hereto, and any and all references to the "Revolving Note" in the
Credit Agreement shall be references to the Revolving Note as
amended hereby.
(d) In clause (iii) of Section 6.02(f) of the Agreement, the words
"including $4,000,000 of unsecured debt of the Borrower to
Mellon" are amended to read "including $7,000,000 of unsecured
debt of the Borrower to Mellon."
(c) In clause (v) of Section 6.02(f) of the Credit Agreement, the
amount $20,000,000 is amended to read $26,000,000."
2. Effectiveness of this Amendment. Bank must have received the following
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items, in form and content acceptable to Bank, before this Amendment is
effective and before Bank is required to extend any credit to Borrower as
provided for by this Amendment.
(a) Amendment. This Amendment fully executed in a sufficient number of
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counterparts for distribution to Bank and Borrower.
(b) Authorizations. Evidence that the execution, delivery and
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performance by Borrower and each guarantor or subordinating creditor of
this Amendment and any instrument or agreement required under this
Amendment have been duly authorized.
(c) Representations and Warranties. The representations and
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warranties set forth in the Credit Agreement must be true and correct.
(d) First Amended and Restated Promissory Note. The First Amended and
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Restated Revolving Note substantially in the form of Exhibit A, attached
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hereto, with any appropriate insertions and duly executed by Borrower.
(f) Other Required Documentation. All other documents and legal
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matters in connection with the transactions contemplated by this Amendment
shall have been delivered or executed or recorded and shall be in form and
substance satisfactory to Bank.
3. Representations and Warranties. The Borrower represents and warrants
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as follows:
(a) Authority. The Borrower has the requisite corporate power and
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authority to execute and deliver this Amendment and to perform its
obligations hereunder and under the Loan Documents (as amended or modified
hereby) to which it is a party. The execution, delivery and performance by
the Borrower of this Amendment and the performance by Borrower of each Loan
Document (as amended or modified hereby) to which it is a party have been
duly approved by all necessary corporate action of Borrower and no other
corporate proceedings on the part of Borrower are necessary to consummate
such transactions.
(b) Enforceability. This Amendment has been duly executed and
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delivered by the Borrower. This Amendment and each Loan Document (as
amended or modified hereby) is the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, and is
in full force and effect.
(c) Representations and Warranties. The representations and
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warranties contained in each Loan Document (other than any such
representations or warranties that, by their
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terms, are specifically made as of a date other than the date hereof) are
correct on and as of the date hereof as though made on and as of the date
hereof.
(d) No Default. No event has occurred and is continuing that
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constitutes an Event of Default.
4. Choice of Law. The validity of this Amendment, its construction,
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interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of California governing contracts only to be performed in that
State.
5. Counterparts. This Amendment may be executed in any number of
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counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment or the Consent by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment or such Consent.
6. Due Execution. The execution, delivery and performance of this
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Amendment are within the power of Borrower, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.
7. Reference to and Effect on the Loan Documents.
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(a) Upon and after the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to "the Credit Agreement", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as modified and amended hereby.
(b) Except as specifically amended above, the Credit Agreement and all
other Loan Documents, are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed and shall constitute
the legal, valid, binding and enforceable obligations of Borrower to Bank.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of Bank under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
(d) To the extent that any terms and conditions in any of the Loan
Documents shall contradict or be in conflict with any terms or conditions
of the Credit Agreement, after giving effect to this Amendment, such terms
and conditions are hereby deemed modified or amended accordingly to reflect
the terms and conditions of the Credit Agreement as modified or amended
hereby.
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8. Ratification. Borrower hereby restates, ratifies and reaffirms each
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and every term and condition set forth in the Credit Agreement, as amended
hereby, and the Loan Documents effective as of the date hereof.
9. Estoppel. To induce Bank to enter into this Amendment and to continue
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to make advances to Borrower under the Credit Agreement, Borrower hereby
acknowledges and agrees that, after giving effect to this Amendment, as of the
date hereof, there exists no Event of Default and no right of offset, defense,
counterclaim or objection in favor of Borrower as against Bank with respect to
the Obligations.
10. Acknowledgment and Agreement re Section 6.02(i) of the Suburban Loan
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Document. The parities hereto agree and acknowledge that, notwithstanding the
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lead-in paragraph of Section 6.02 of the Suburban Loan Document, subsection (i)
thereof (Debt) limits only Debt of Suburban and not Debt of Southwest.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date
first above written.
"Borrower"
SOUTHWEST WATER COMPANY,
a Delaware corporation
By: /s/ THOMAS C. TEKULVE
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Name: Thomas C. Tekulve
Title: Vice President - Finance
By: /s/ ANTON C. GARNIER
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Name: Anton C. Garnier
Title: President
"BANK"
BANK OF AMERICA, N.A.,
A National Association
By: /s/ DEBORAH L. MILLER
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Name: Deborah L. Miller
Title: Senior Vice President
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EXHIBIT A
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FIRST AMENDED AND RESTATED REVOLVING NOTE
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$7,000,000 Costa Mesa, California
June 30, 2000
FOR VALUE RECEIVED, the undersigned SOUTHWEST WATER COMPANY, a
Delaware corporation ("Borrower") promises to pay to the order of BANK OF
AMERICA, N.A. ("Bank") at its office at 675 Anton Blvd., Costa Mesa, California,
or at such other place as the holder hereof may designate, in lawful money of
the United States of America and in immediately available funds, the principal
sum of Seven Million Dollars ($7,000,000), or so much thereof as may be advanced
and be outstanding, with interest thereon, to be computed on each advance from
the date of its disbursement (computed on the basis of a 360-day year and actual
days elapsed, which results in more interest than if a 365-day year were used)
either (i) at a fluctuating rate per annum equal to the Prime Rate minus one
quarter (0.25) of a percentage point in effect from time to time, or (ii) at an
optional rate per annum determined by Bank to be one and one-quarter (1.25%)
percentage points above Bank's IBOR in effect on the first day of the applicable
IBOR Rate Term. When interest is determined in relation to the Prime Rate, each
change in the rate of interest hereunder shall become effective on the opening
of business on the day specified in the public announcement of a change in
Bank's Prime Rate. With respect to each IBOR option selected hereunder, Bank is
hereby authorized to note the date, principal amount, interest rate and
applicable IBOR Rate Term thereto and any payments made thereon on Bank's books
and records (either manually or by electronic entry) and/or on any schedule
attached to this Note, which notations shall be prima facie evidence of the
accuracy of the information noted. This Note amends, restates in its entirety,
and replaces that certain Revolving Note dated as of July 30, 1999 in the
original amount of Four Million Dollars ($4,000,000), made by Borrower payable
to the order of Bank, pursuant to that certain Credit Agreement dated as of July
30, 1999 between Borrower and Bank.
A. DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after
each:
1. "Business Day" means any day except a Saturday, Sunday or any other day
designated as a holiday under Federal or California statute or regulation, or
for amounts bearing interest at an offshore rate, a Business Day is any day
except a Saturday, Sunday or any other day designated as a holiday under Federal
or California statute or regulation on which Bank is open for business in
California and dealing in offshore dollars.
2. "IBOR Rate Portion" means a portion of the principal amount outstanding
under this Note which is bearing interest at a rate related to IBOR. No IBOR
Rate Portion shall be less than Two Hundred Fifty Thousand Dollars ($250,000).
3. "IBOR Rate Term" means a period commencing on a Business Day and
continuing for no shorter than one (1) month and no longer than six (6) months,
as designated
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by Borrower, during which all or a portion of the outstanding principal balance
of this Note bears interest determined in relation to Bank's IBOR; provided
however, that no IBOR Rate Term shall extend beyond the scheduled Maturity Date
hereof. The last day of the interest period will be determined by Bank using the
offshore dollar inter-bank market. If any IBOR Rate Term would end on a day
which is not a Business Day, then such IBOR Rate Term shall be extended to the
next succeeding Business Day.
4. "IBOR Rate" means the interest rate determined by the following formula,
rounded upward, if necessary, to the nearest 1/100 of one percent. (All amounts
in the calculation will be determined by Bank as of the first day of the
interest period.)
IBOR Rate = IBOR Base Rate
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(1.00 - Reserve Percentage)
(a) "IBOR Base Rate" means the interest rate at which Bank's Grand
Cayman Branch, Grand Cayman, British West Indies, would offer U.S.
dollar deposits for the applicable interest period to other major
banks in the offshore dollar inter-bank market.
(b) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
5. "Prime Rate" means the rate of interest publicly announced from time to
time by Bank in San Francisco, California, as its Prime Rate. The Prime Rate is
set by Bank based on various factors, including Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans. Bank may price loans to its customers at, above or below
the Prime Rate.
B. INTEREST:
1. Payment of Interest. Interest accrued on this Note shall be payable on
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the first day of each month, commencing July 1, 2000.
2. Selection of Interest Rate Options. At any time any portion of this
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Note bears interest determined in relation to Bank's IBOR, it may be continued
by Borrower at the end of the IBOR Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or in
relation to Bank's IBOR for a new IBOR Rate Term designated by Borrower. At any
time any portion of this Note bears interest determined in relation to the Prime
Rate, Borrower may convert all or a portion thereof so that it bears interest
determined in relation to Bank's IBOR for a IBOR Rate Term designated by
Borrower. At the time each advance is requested hereunder or Borrower wishes to
select the IBOR option for all or a portion of the outstanding principal balance
hereof, and at the end of each IBOR Rate Term, Borrower shall give Bank notice
specifying (a) the interest rate option
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selected by Borrower, (b) the principal amount subject thereto, and (c) if the
IBOR option is selected, the length of the applicable IBOR Rate Term. Any such
notice may be given by telephone so long as, with respect to each IBOR
selection, such notice is given to Bank prior to 10:00 a.m., California time, on
the first day of the IBOR Rate Term. For each IBOR option requested hereunder,
Bank will quote the applicable IBOR Rate to Borrower at approximately 10:00
a.m., California time, on the first day of the IBOR Rate Term. If Borrower does
not immediately accept the rate quoted by Bank, any subsequent acceptance by
Borrower shall be subject to a re-determination by Bank of the applicable IBOR
Rate; provided however, that if Borrower fails to accept any such rate by 11:00
a.m., California time, on the Business Day such quotation is given, then the
quoted rate shall expire and Bank shall have no obligation to permit a IBOR
option to be selected on such day. If no specific designation of interest is
made at the time any advance is requested hereunder or at the end of any IBOR
Rate Term, Borrower shall be deemed to have made a Prime Rate interest selection
for such advance or the principal amount to which such IBOR Rate Term applied.
3. Additional IBOR Provisions.
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(a) If Bank at any time shall determine that for any reason adequate and
reasonable means do not exist for ascertaining Bank's IBOR, then Bank shall
promptly give notice thereof to Borrower. If such notice is given and until such
notice has been withdrawn by Bank, than (i) no new IBOR option may be selected
by Borrower, and (ii) any portion of the outstanding principal balance hereof
which bears interest determined in relation to Bank's IBOR, subsequent to the
end of the IBOR Rate Term applicable thereto, shall bear interest determined in
relation to the Prime Rate.
(b) If any law, treaty, rule, regulation or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof (each, a "Change in Law") shall make it unlawful for Bank
(i) to make IBOR options available hereunder, or (ii) to maintain interest rates
based on Bank's IBOR, then in the former event, any obligation of Bank to make
available such unlawful IBOR options shall immediately be cancelled, and in the
latter event, any such unlawful IBOR-based interest rates then outstanding shall
be converted, at Bank's option, so that interest on the portion of the
outstanding principal balance subject thereto is determined in relation to the
Prime Rate; provided however, that if any such Change in Law shall permit any
IBOR-based interest rates to remain in effect until the expiration of the IBOR
Rate Term applicable thereto, then such permitted IBOR-based interest rates
shall continue in effect until the expiration of such IBOR Rate Term. Upon the
occurrence of any of the foregoing events, Borrower shall pay to Bank
immediately upon demand such amounts as may be necessary to compensate Bank for
any fines, fees, charges, penalties or other costs incurred or payable by Bank
as a result thereof and which are attributable to any IBOR options made
available to Borrower hereunder, and any reasonable allocation made by Bank
among its operations shall be conclusive and binding upon Borrower.
(c) If any Change in Law or compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority shall:
(i) subject Bank to any tax, duty or other charge with respect to any IBOR
options, or change the basis of taxation of payments to Bank of
principal, interest, fees or any other amount payable hereunder (except
for changes in the rate of tax on the overall net income of Bank); or
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(ii) impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of advances or
loans by, or any other acquisition of funds by any office of Bank;
or
(iii) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any IBOR options hereunder and/or to reduce any
amount receivable by Bank in connection therewith, then in any such case,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any additional costs incurred by Bank and/or
reductions in amounts received by Bank which are attributable to such IBOR
options. In determining which costs incurred by Bank and/or reductions in
amounts received by Bank are attributable to any IBOR options made available to
Borrower hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.
4. Default Interest. During the continuance of an Event of Default, the
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outstanding principal balance of this Note shall bear interest until paid in
full at an increased rate per annum (computed on the basis of a 360-day year and
actual days elapsed, which results in more interest than if a 365-day year were
used) equal to two percent (2%) above the rate of interest from time to time
applicable to this Note.
C. BORROWING AND REPAYMENT:
1. Borrowing and Repayment. Borrower may from time to time during the term
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of this Note borrow, partially or wholly repay its outstanding borrowings, and
re-borrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on the "Maturity Date" (as defined in the Credit Agreement).
2. Advances. Advances hereunder, to the total amount of the principal sum
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stated above, may be made by the holder at the oral or written request of (a)
Anton C. Garnier, Peter J. Moerbeek, Thomas C. Tekulve or Leslie Ward-Cline, any
one acting alone, who are authorized to request advances and direct the
disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or (b) any
person, with respect to advances deposited to the credit of any account of
Borrower with the holder, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of Borrower
regardless of the fact that persons other than those authorized to request
advances may have authority to draw against such account. The holder shall have
no obligation to determine whether any person requesting an advance is or has
been authorized by Borrower.
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3. Application of Payments. Each payment made on this Note shall be
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credited first, to any interest then due and second, to the outstanding
principal balance hereof. Unless instructed otherwise by Borrower, all payments
credited to principal shall be applied first, to the outstanding principal
balance of this Note which bears interest determined in relation to the Prime
Rate, if any, and second, to the outstanding principal balance of this Note
which bears interest determined in relation to Bank's IBOR, with such payments
applied to the oldest IBOR Rate Term first.
4. Prepayment.
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(a) Prime Rate. Borrower may prepay principal on any portion of this Note
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which bears interest determined in relation to the Prime Rate at any time, in
any amount and without penalty.
(b) IBOR. Each prepayment of an IBOR Rate Portion, whether voluntary, by
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reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee as described
below. A "prepayment" is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this Agreement. The
prepayment fee shall be equal to the amount (if any) by which:
(i) the additional interest which would have been payable
during the interest period on the amount prepaid had it not been
prepaid, exceeds
(ii) the interest which would have been recoverable by Bank
by placing the amount prepaid on deposit in the domestic certificate of
deposit market, the eurodollar deposit market, or other appropriate
money market selected by Bank for a period starting on the date on which
it was prepaid and ending on the last day of the interest period for
such Portion (or the scheduled payment date for the amount prepaid, if
earlier).
Bank will have no obligation to accept an election of an IBOR
Rate Portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the IBOR Rate Term, of an IBOR Rate Portion are not
available in the offshore dollar inter-bank market; or
(ii) the IBOR Rate does not accurately reflect the cost of
an IBOR Rate Portion.
Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum two percent (2%) above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed).
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D. EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of
that certain Credit Agreement between Borrower and Bank dated as of July 30,
1999, as amended from time to time, including, without limitation, those terms
relating to arbitration of Disputes (the "Credit Agreement"). Any default in
the payment or performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute an "Event of
Default" under this Note.
E. MISCELLANEOUS:
1. Remedies. Upon the occurrence of any Event of Default, the holder of
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this Note, at the holder's option, without notice upon the occurrence of an
Event of Default pursuant to Section 7.01(g) of the Credit Agreement, and with
notice upon the occurrence of any other Event of Default, may declare all sums
of principal and interest outstanding hereunder to be immediately due and
payable without presentment, demand, protest or notice of dishonor, all of which
are expressly waived by Borrower, and the obligation, if any, of the holder to
extend any further credit hereunder shall immediately cease and terminate.
Borrower shall pay to the holder immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys'
fees (to include outside counsel fees and all allocated costs of the holder's
in-house counsel), incurred by the holder in connection with the enforcement of
the holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, and including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to Borrower.
2. Obligations Joint and Several. Should more than one person or entity
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sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
3. Governing Law. This Note shall be governed by and construed in
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accordance with the laws of the State of California, except to the extent Bank
has greater rights or remedies under Federal law, whether as a national bank or
otherwise, in which case such choice of California law shall not be deemed to
deprive Bank of any such rights and remedies as may be available under Federal
law.
4. Defined Terms. All capitalized terms not herein defined shall have the
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meanings given to them in the Credit Agreement.
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"Borrower"
SOUTHWEST WATER COMPANY,
a Delaware corporation
By:/s/ ANTON C GARNIER
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Anton C. Garnier
President & CEO
By:/s/ THOMAS C. TEKULVE
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Thomas C. Tekulve
Vice President - Finance
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