EXHIBIT 10.11C
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THIRD AMENDMENT TO
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CREDIT AGREEMENT
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THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as
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of March 9, 2001 is entered into between BANK OF AMERICA, N.A., a national
association ("Bank"), and SOUTHWEST WATER COMPANY, a Delaware corporation
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("Borrower").
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RECITALS
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A. Borrower and Bank have previously entered into that certain
Credit Agreement dated as of July 30, 1999, as amended by that certain First
Amendment to Credit Agreement dated as of June 30, 2000, and that certain Second
Amendment to Credit Agreement dated as of September 29, 2000 (collectively, the
"Credit Agreement"), pursuant to which Bank has made certain loans and financial
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accommodations available to Borrower. Terms used herein without definition shall
have the meanings ascribed to them in the Credit Agreement.
B. Bank and Borrower wish 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.
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) The definition of "Revolving Commitment" set forth in
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Section 1.01 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
"`Revolving Commitment': The amount of
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$7,000,000 as such amount may be reduced pursuant
o Section 2.01 (c); provided however, that such
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amount shall be increased to $9,000,000 for a
period beginning on March 9, 2001 and ending on
August 1, 2001."
(b) In clause (iii) of Section 6.02 (f) of the Credit Agreement, the
words "including $7,000,000 of unsecured debt of the to Mellon" are amended to
read "including $7,000,000 of unsecured debt of the Borrower to Mellon, provided
however, that such amount shall be increased to $9,000,000 for a period
beginning on March 9, 2001 and ending on August 1, 2001."
(c) Clause (v) of Section 6.02(f) of the Credit Agreement, is hereby
amended and restated in its entirety to read as follows:
"(v) unsecured funded bank debt not to exceed an
aggregate of $26,000,000 at any time (including,
without limitation, unsecured funded bank debt
incurred pursuant to the Loan Documents and the
Suburban Loan Documents and unsecured funded bank
debt to Mellon as described in clause (iii) above);
provided however, that such amount shall be increased
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to $30,000,000 for a period beginning on March 9,
2001 and ending on August 1, 2001."
2. Effectiveness of this Amendment. Bank must have received the
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following 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
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of counterparts for distribution to Bank and Borrower.
(b) Amendment Fee. Receipt by Bank of the amendment fee set forth
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in Paragraph 3 below.
(c) Note. The Second Amended and Restated Revolving Note, the form
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of which is attached hereto as Exhibit A, fully executed by the Borrower.
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(d) 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.
(e) Representations and Warranties. The representations and
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warranties set forth in the Credit Agreement must be true and correct.
(f) Mellon Bank, N.A. and Borrower Amendment. Execution and
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delivery to Bank of the Mellon Bank, N.A. and Borrower Amendment, which includes
the same amendments contained in this Amendment.
(g) 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. Amendment Fee. Borrower shall pay to Bank an amendment fee in the
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amount of $____________________ for the processing and approval of this
Amendment, which fee will be fully earned on the date of this Amendment.
4. Representations and Warranties. The Borrower represents and
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warrants 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 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.
5. 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.
6. Counterparts. This Amendment may be executed in any number of
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counterparts and by different parties in 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 by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Amendment.
7. 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 approvals,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.
8. 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.
9. Ratification. Borrower hereby restates, ratifies and
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reaffirms each and every term and condition set forth in the Credit Agreement,
as amended hereby, and the Loan Documents effective as of the date hereof.
10. Estoppel. To induce Bank to enter into this Amendment and to
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continue 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.
IN WITNESS WHEREOF, the parties have entered into this Amendment
as of the date first above written.
"Bank" "Borrower"
BANK OF AMERICA, N.A. SOUTHWEST WATER COMPANY,
a national association a Delaware corporation
By: /s/DEBORAH L. MILLER By: /s/THOMAS C. TEKULVE
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Name: Deborah L. Miller Name: Thomas C. Tekulve
Title: Senior Vice President Title: Vice President - Finance
By: /s/PETER J. MOERBEEK
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Name: Peter J. Moerbeek,
Title: Chief Financial Officer
SECOND AMENDED AND RESTATED REVOLVING NOTE
$9,000,000 Costa Mesa, California
__________,2001
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 Nine Million Dollars ($9,000,000), 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 First Amended and Restated Revolving Note dated as of
June 30, 2000 in the original amount of Seven Million Dollars ($7,000,000), 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, as amended.
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 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
EXHIBIT A
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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
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payable on the first day of each month, commencing ______________, 2001.
2. Selection of Interest Rate Options. At any time any portion of
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this 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 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.,
EXHIBIT A
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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
(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
EXHIBIT A
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(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
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Default, the 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
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the term 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
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principal sum stated above, may be made by the holder at the oral or written
request of (a) ______________________, ___________________,
_____________________________, 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.
3. Application of Payments. Each payment made on this Note shall
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be 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.
EXHIBIT A
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4. Prepayment.
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(a) Prime Rate. Borrower may prepay principal on any portion of
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this Note 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
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voluntary, by 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).
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.
EXHIBIT A
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E. MISCELLANEOUS:
1. Remedies. Upon the occurrence of any Event of Default, the holder
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of 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
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entity 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
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have the meanings given to them in the Credit Agreement.
"Borrower"
SOUTHWEST WATER COMPANY,
a Delaware corporation
By:___________________________________
Title: _______________________________
By:___________________________________
Title: _______________________________
EXHIBIT A
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