EXHIBIT 10.4B
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of December 1, 1994, by and between SOUTHWEST WATER COMPANY, a Delaware
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
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WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of December 2, 1992, as amended from time to time ("Credit Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.
NOW, THEREFORE, the Credit Agreement is hereby amended as follows:
1. Section 1.1 shall be amended by deleting "December 1, 1994" as the last
day on which Bank will make advances under the Line of Credit, and by
substituting for said date "December 1, 1995," with such change to be effective
upon the execution and delivery to Bank of a promissory note substantially in
the form of Exhibit A attached hereto (which promissory note shall replace and
be deemed the Line of Credit Note defined in and made pursuant to the Credit
Agreement) and all other contracts,
instruments and documents required by Bank to evidence such change.
2. Section 1.2(c) shall be deleted in its entirety, and the following
substituted therefor:
"(c) Commitment Fee. Borrower shall pay to Bank a non-refundable fee
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for the Line of Credit equal to one-half percent (1/2%) per annum of
the daily unused balance of the Line of Credit, calculated on a
calendar quarter basis, which fee shall be due and debited to
Borrower's account not later than ten days after billing is sent by
Bank."
3. Section 5.8 shall be amended by deleting the letter (c)
and the following substituted therefor:
"(c) additional indebtedness for unsecured borrowings which do not
exceed $10,000,000.00 in the aggregate at any time for Borrower and
Subsidiaries combined,"
4. Except as specifically provided herein, all terms and
conditions of the Credit Agreement remain in full force and
effect, without waiver or modification. All terms defined in the
Credit Agreement shall have the same meaning when used in this
Amendment. This Amendment and the Credit Agreement shall be read
together, as one document.
5. Borrower hereby remakes all representations and
warranties contained in the Credit Agreement and reaffirms all
covenants set forth therein. Borrower further certifies that as
of the date of this Amendment there exists no Event of Default as
defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both
would constitute any such Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the day and year first written
above.
WELLS FARGO BANK,
SOUTHWEST WATER COMPANY NATIONAL ASSOCIATION
By: /S/ ANTON C. GARNIER By: /S/ NANCY K. GOREY
Nancy K. Gorey
Title: PRESIDENT Vice President
By: /S/ DIANE CASTELLO PITTS
Title: CONTROLLER / TREASURER
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REVOLVING LINE OF CREDIT NOTE
$5,000,000.00 El Monte, California
December 1, 1994
FOR VALUE RECEIVED, the undersigned Southwest Water Company ("Borrower")
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank")
at its office at 9000 Flair Drive, El Monte, 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 Five Million
Dollars ($5,000,000.00), 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, actual days
elapsed) either (i) at a fluctuating rate per annum equal to the Prime Rate in
effect from time to time, or (ii) at a fixed rate per annum determined by Bank
to be one and thirty hundredths percent (1.30%) above the Money Market Funds
Rate in effect on the first day of the applicable Fixed 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 date each Prime Rate change is
announced within Bank. With respect to each Money Market Funds Rate interest
selection hereunder, Bank is hereby authorized to note the date, principal
amount, interest rate and Fixed Rate Term applicable 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.
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.
2."Fixed Rate Term" means a period commencing on a Business Day and continuing
for thirty (30), ninety (90) or one hundred eighty (180) days, as designated by
Borrower, during which all or a portion of the outstanding principal balance of
this Note bears interest determined in relation to the Money Market Funds Rate;
provided however, that no Fixed Rate Term may be selected for a principal amount
less than Five Hundred Thousand Dollars ($500,000.00); and provided further,
that no Fixed Rate Term shall extend beyond the scheduled maturity date hereof.
If any Fixed Rate Term would end on a day which is not a Business Day, then such
Fixed Rate Term shall be extended to the next succeeding Business Day.
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3."Money Market Funds Rate" means the rate per annum which Bank estimates and
quotes to its borrowers as the rate, adjusted for reserve requirements, federal
deposit insurance and any other amount which Bank deems appropriate, at which
funds in the amount of a loan and for a period of time comparable to the term of
such loan are available for purchase in the money market on the date such loan
is made, with the understanding that the Money Market Funds Rate is Bank's
estimate only and that Bank is under no obligation to actually purchase and/or
match funds for any transaction. This rate is not fixed by or related in any
way to any rate that Bank quotes or pays for deposits accepted through its
branch system.
4."Prime Rate" means at any time the rate of interest most recently announced
within Bank at its principal office in San Francisco as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
B.INTEREST:
1.Payment of Interest. Interest accrued on this Note shall be payable on the
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first day of each month, commencing January 1, 1995.
2.Selection of Interest Rate Options. At any time any portion of the
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outstanding principal balance of this Note bears interest determined in relation
to the Money Market Funds Rate, it may be continued by Borrower at the end of
the Fixed Rate Term applicable thereto so that it bears interest determined in
relation to the Prime Rate or in relation to the Money Market Funds Rate for a
new Fixed Rate Term designated by Borrower. At any time any portion of the
outstanding principal balance 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 the Money Market Funds Rate for a Fixed
Rate Term designated by Borrower. At the time each advance is requested
hereunder or Borrower wishes to select the Money Market Funds Rate interest
option for all or a portion of the outstanding principal balance hereof, and at
the end of each Fixed 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 interest is to be determined in relation to the Money Market
Funds Rate, the length of the applicable Fixed Rate Term. Any such notice may
be given by telephone so long as, with respect to each selection by Borrower of
a Fixed Rate Term, Bank receives written confirmation from Borrower not later
than three (3) Business Days after such telephone notice is given. If no
specific designation of interest is made at the time any advance is requested
hereunder
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or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a
Prime Rate interest selection for such advance or the principal amount to which
such Fixed Rate Term applied.
3.Default Interest. From and after the maturity date of this Note, or such
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earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, 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, actual days elapsed) equal to four percent (4%) 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 of
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this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with 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 any
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 December 1, 1995.
2.Advances. Advances hereunder, to the total amount of the principal sum stated
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above, may be made by the holder at the written request of any two (2) of the
following: (a) Diane C. Pitts or Michael O. Quinn or Anton C. Garnier or Dan
Evans, acting together, 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 any
Borrower with the holder, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each 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 any Borrower.
3.Application of Payments. Each payment made on this Note shall be credited
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first, to any interest then due and second, to the outstanding principal balance
hereof. 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
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relation to the Money Market Funds Rate, with such payments applied to the
oldest Fixed Rate Term first.
4.Prepayment.
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(a)Prime Rate. Borrower may prepay principal on any portion of this Note which
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bears interest determined in relation to the Prime Rate at any time, in any
amount and without penalty.
(b)Money Market Funds Rate. Borrower may prepay principal on any portion of
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this Note which bears interest determined in relation to the Money Market Funds
Rate at any time and in the minimum amount of Five Hundred Thousand Dollars
($500,000.00); provided however, that if the outstanding principal balance of
such portion of this Note is less than said amount, the minimum prepayment
amount shall be the entire outstanding principal balance thereof. In
consideration of Bank providing this prepayment option to Borrower, or if any
such portion of this Note shall become due and payable at any time prior to the
last day of the Fixed Rate Term applicable thereto by acceleration or otherwise,
Borrower shall pay to Bank immediately upon demand a fee which is the sum of the
discounted monthly differences for each month from the month of prepayment
through the month in which such Fixed Rate Term matures, calculated as follows
for each such month:
(i)Determine the amount of interest which would have accrued each month on the
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amount prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term applicable thereto.
(ii)Subtract from the amount determined in (i) above the amount of interest
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which would have accrued for the same month on the amount prepaid for the
remaining term of such Fixed Rate Term at the Money Market Funds Rate in effect
on the date of prepayment for new loans made for such term and in a principal
amount equal to the amount prepaid.
(iii)If the result obtained in (ii) for any month is greater than zero, discount
that difference by the Money Market Funds Rate used in (ii) above.
Each Borrower acknowledges that prepayment of such amount will 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. Each 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 (2.00%)
above the Prime Rate in
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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 December 2, 1992,
as amended from time to time. Any default in the payment or performance of any
obligation, or any defined event of default, under said 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 this
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Note, at the holder's option, 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 each
Borrower, and the obligation, if any, of the holder to extend any further credit
hereunder shall immediately cease and terminate. Each 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 any Borrower.
2.Obligations Joint and Several. Should more than one person or entity sign
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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 accordance
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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.
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SOUTHWEST WATER COMPANY
By: /S/ ANTON C. GARNIER
Title: PRESIDENT
By: /S/ DIANE CASTELLO PITTS
Title: CONTROLLER / TREASURER
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