1. | FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS | |
1.1 | Line of Credit Amount. | |
(a) | During the availability period described below, the Bank will provide a line of credit to the Borrower. The amount of the line of credit (the Facility No. 1 Commitment) is Fifty-Five Million and 00/100 Dollars ($55,000,000.00). | |
(b) | This is a revolving line of credit. During the availability period, the Borrower may repay principal amounts and reborrow them. | |
(c) | The Borrower agrees not to permit the principal balance outstanding to exceed the Facility No. 1 Commitment. If the Borrower exceeds this limit, the Borrower will immediately pay the excess to the Bank upon the Banks demand. |
1.3 | Repayment Terms. | |
(a) | The Borrower will pay interest on May 31, 2007, and then on the last day of each month thereafter until payment in full of any principal outstanding under this facility. | |
(b) | The Borrower will repay in full any principal, interest or other charges outstanding under this facility no later than the Facility No. 1 Expiration Date. Any interest period for an optional interest rate (as described below) shall expire no later than the Facility No. 1 Expiration Date. | |
1.4 | Interest Rate. | |
(a) | The interest rate is a rate per year equal to the Banks Prime minus 1.5 percentage points. | |
(b) | The Prime Rate is the rate of interest publicly announced from time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Banks costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may |
price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Banks Prime Rate. |
(a) | The LIBOR Rate plus 0.25 percentage point. | |
1.6 | Letters of Credit. | |
(a) | During the availability period, at the request of the Borrower, the Bank will issue: standby letters of credit with a maximum maturity of three hundred sixty-five (365) days but not to extend more than three hundred sixty-five (365) days beyond the Facility No. 1 Expiration Date. The standby letters of credit may include a provision providing that the maturity date will be automatically extended each year for an additional year unless the Bank gives written notice to the contrary. | |
(b) | The amount of the letters of credit outstanding at any one time (including the drawn and unreimbursed amounts of the letters of credit) may not exceed Ten Million and 00/100 Dollars ($10,000,000.00). | |
(c) | In calculating the principal amount outstanding under the Facility No. 1 Commitment, the calculation shall include the amount of any letters of credit outstanding, including amounts drawn on any letters of credit and not yet reimbursed. | |
(d) | The following letter of credit is outstanding from the Bank for the account of the Borrower: |
Letter of Credit Number | Amount | |||||||
3060134 | $500,000.00 |
(e) | The Borrower agrees: |
(i) | Any sum drawn under a letter of credit may, at the option of the Bank, be added to the principal amount outstanding under this Agreement. The amount will bear interest and be due as described elsewhere in this Agreement. | ||
(ii) | If there is a default under this Agreement, to immediately deposit cash collateral with the Bank as required under Section B.2 (Deposit Events.) of each Bank form Application and Agreement for Standby Letter of Credit signed by the Borrower. | ||
(iii) | The issuance of any letter of credit and any amendment to a letter of credit is subject to the Banks written approval and must be in form and content satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank. | ||
(iv) | To sign the Banks form Application and Agreement for Commercial Letter of Credit or Application and Agreement for Standby Letter of Credit, as applicable. | ||
(v) | To pay any issuance and/or other fees that the Bank notifies the Borrower will be charged for issuing and processing letters of credit for the Borrower. | ||
(vi) | To allow the Bank to automatically charge its checking account for applicable fees, discounts, and other charges. |
2. | OPTIONAL INTEREST RATES |
2.2 | LIBOR Rate. The election of LIBOR Rates shall be subject to the following terms and requirements: | |
(a) | The interest period during which the LIBOR Rate will be in effect will be one or two weeks, one month, two months, three months, four months, five months, six months, seven months, eight months, nine months, ten months, eleven months or twelve months. The first day of the interest period must be a day other than a Saturday or a Sunday on which banks are open for business in New York and London and dealing in offshore dollars (a LIBOR Banking Day). The last day of the interest period and the actual number of days during the interest period will be determined by the Bank using the practices of the London inter-bank market. | |
(b) | Each LIBOR Rate Portion will be for an amount not less than One Hundred Thousand and 00/100 Dollars ($100,000.00). | |
(c) | The LIBOR Rate means the interest rate determined by the following formula. (All amounts in the calculation will be determined by the Bank as of the first day of the interest period.) |
Where, | |||
(i) | London Inter-Bank Offered Rate means for any applicable interest period, the rate per annum equal to the British Bankers Association LIBOR Rate (BBA LIBOR), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the interest period for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period. If such rate is not available at such time for any reason then the rate for that interest period will be determined by such alternate method as reasonably selected by the Bank. A London Banking Day is a day on which banks in London are open for business and dealing in offshore dollars. | ||
(ii) | 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. |
(d) | The Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon Pacific time on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate will be set, as specified above. For example, if there are no intervening holidays or weekend days in any of the relevant locations, the request must be made at least three days before the LIBOR Rate takes effect. | |
(e) | The Bank will have no obligation to accept an election for a LIBOR 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 interest period, of a LIBOR Rate Portion are not available in the London inter-bank market; or | ||
(ii) | The LIBOR Rate does not accurately reflect the cost of a LIBOR Rate Portion. |
(f) | Each prepayment of a LIBOR Rate Portion, whether 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. |
(g) | The prepayment fee shall be equal to the amount (if any) by which |
(iii) | the additional interest which would have been payable on the amount prepaid had it not been paid until the last day of the interest period, using the Initial Money Market Funds Rate, exceeds | ||
(iv) | the interest rate which would have been recoverable by the Bank by reinvesting the amount prepaid for the period starting on the date on which it was prepaid and ending on the last day of the interest period, using the Subsequent Money Market Funds Rate. | ||
The following definitions will apply to the calculation of the prepayment fee: | |||
Money Market means one or more wholesale rate markets available to the Bank, including the LIBOR, Eurodollar, and SWAP rate markets as applicable and available, or such other appropriate Money Market as determined by the Bank in its sole discretion. | |||
Initial Money Market Funds Rate means the fixed interest rate per annum, determined solely by the Bank on the date that the Borrower requests the LIBOR Rate Portion, as the rate at which the Bank would be able to borrow funds in the Money Market in the amount of the LIBOR Rate Portion and with an interest period equal to the interest period of the LIBOR Rate Portion. | |||
Subsequent Money Market Funds Rate means the fixed interest rate per annum, determined solely by the Bank on the date of the prepayment, as the rate at which the Bank would be able to reinvest funds in the Money Market in the prepaid amount of the LIBOR Rate Portion for a period of time approximating the period starting on the date of the prepayment and ending on the last day of the original interest period of the LIBOR Rate Portion. | |||
The Bank may adjust the Initial Money Market Funds Rate and the Subsequent Money Market Funds Rate to reflect the compounding, accrual basis, or other costs of the LIBOR Rate Portion. The rates shall include adjustments for reserve requirements, federal deposit insurance, and any other similar adjustment which the Bank deems appropriate. Each of the rates is the Banks estimate only, and the Bank is under no obligation to actually purchase or match funds for any transaction or reinvest any prepayment. The rates are not fixed by or related in any way to any rate the Bank quotes or pays for deposits accepted through its branch system. The rates will be based on information from either the Telerate or Reuters information services, The Wall Street Journal, or other information sources the Bank deems appropriate. |
3. | FEES AND EXPENSES | |
3.1 | Fees. | |
(a) | Periodic Commitment Fee. The Borrower agrees to pay a periodic commitment fee in the amount of Twelve Thousand Dollars ($12,000). | |
This fee is due on the date of the Agreement, and on May 31st of 2008 and May 31st of each year thereafter until the expiration of the availability period. | ||
(b) | Late Fee. To the extent permitted by law, the Borrower agrees to pay a late fee in an amount not to exceed four percent (4%) of any payment that is more than fifteen (15) days late. The imposition and payment of a late fee shall not constitute a waiver of the Banks rights with respect to the default. |
4. | DISBURSEMENTS, PAYMENTS AND COSTS | |
4.1 | Disbursements and Payments. | |
(a) | Each payment by the Borrower will be made in U.S. Dollars and immediately available funds by direct debit to a deposit account as specified below or, for payments not required to be made by direct debit, by mail to the address shown on the Borrowers statement or at one of the Banks banking centers in the United States. | |
(b) | Each disbursement by the Bank and each payment by the Borrower will be evidenced by records kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign one or more promissory notes. | |
4.2 | Telephone and Telefax Authorization. | |
(a) | The Bank may honor telephone or telefax instructions for advances or repayments or for the designation of optional interest rates and telefax requests for the issuance of letters of credit given, or purported to be given, by any one of the individuals authorized to sign loan agreements on behalf of the Borrower, or any other individual designated by any one of such authorized signers. | |
(b) | Advances will be deposited in and repayments will be withdrawn from account number 14872-00230 owned by the Borrower or such other of the Borrowers accounts with the Bank as designated in writing by the Borrower. | |
(c) | The Borrower will indemnify and hold the Bank harmless from all liability, loss, and costs in connection with any act resulting from telephone or telefax instructions the Bank reasonably believes are made by any individual authorized by the Borrower to give such instructions. This paragraph will survive this Agreements termination, and will benefit the Bank and its officers, employees, and agents. | |
4.3 | Direct Debit (Pre-Billing). | |
(a) | The Borrower agrees that the Bank will debit deposit account number 14872-00230 owned by the Borrower or such other of the Borrowers accounts with the Bank as designated in writing by the Borrower (the Designated Account) on the date each payment of principal and interest and any fees from the Borrower becomes due (the Due Date). | |
(b) | Prior to each Due Date, the Bank will mail to the Borrower a statement of the amounts that will be due on that Due Date (the Billed Amount). The bill will be mailed a specified number of calendar days prior to the Due Date, which number of days will be mutually agreed from time to time by the Bank and the Borrower. The calculations in the bill will be made on the assumption that no new extensions of credit or payments will be made between the date of the billing statement and the Due Date, and that there will be no changes in the applicable interest rate. | |
(c) | The Bank will debit the Designated Account for the Billed Amount, regardless of the actual amount due on that date (the Accrued Amount). If the Billed Amount debited to the Designated Account differs from the Accrued Amount, the discrepancy will be treated as follows: |
(i) | If the Billed Amount is less than the Accrued Amount, the Billed Amount for the following Due Date will be increased by the amount of the discrepancy. The Borrower will not be in default by reason of any such discrepancy. | ||
(ii) | If the Billed Amount is more than the Accrued Amount, the Billed Amount for the following Due Date will be decreased by the amount of the discrepancy. |
Regardless of any such discrepancy, interest will continue to accrue based on the actual amount of principal outstanding without compounding. The Bank will not pay the Borrower interest on any overpayment. | ||
(d) | The Borrower will maintain sufficient funds in the Designated Account to cover each debit. If there are insufficient funds in the Designated Account on the date the Bank enters any debit authorized by this Agreement, the Bank may reverse the debit. | |
(e) | The Borrower may terminate this direct debit arrangement at any time by sending written notice to the Bank at the address specified at the end of this Agreement. If the Borrower terminates this arrangement, then the principal amount outstanding under this Agreement will at the option of the Bank bear interest at a rate per annum which is 0.5 percentage point higher than the rate of interest otherwise provided under this Agreement. |
5. | CONDITIONS |
5.2 | Governing Documents. If required by the Bank, a copy of the Borrowers organizational documents. | |
5.3 | Guaranties. Guaranty signed by California Water Service Group (CWSG). |
5.6 | Insurance. Evidence of insurance coverage, as required in the Covenants section of this Agreement. | |
6. | REPRESENTATIONS AND WARRANTIES |
6.13 | ERISA Plans. | |
(a) | Each Plan (other than a multiemployer plan) is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law except where failure to be in compliance could not reasonably be expected to have a material adverse effect on the Borrowers business condition (financial or otherwise) or ability to repay this credit. Each Plan has received a favorable determination letter from the IRS and to the best knowledge of the Borrower, nothing has occurred which would cause the loss of such qualification. The Borrower has fulfilled its obligations, if any, under the minimum funding standards of ERISA and the Code with respect to each Plan, and has not incurred any liability with respect to any Plan under Title IV of ERISA where such liability could reasonably be expect to have a material adverse effect on the Borrowers business condition (financial or otherwise) or ability to repay this credit. | |
(b) | There are no claims, lawsuits or actions (including by any governmental authority), and there has been no prohibited transaction or violation of the fiduciary responsibility rules, with respect to any Plan which has resulted or could reasonably be expected to result in a material adverse effect. | |
(c) | With respect to any Plan subject to Title IV of ERISA: |
(i) | No reportable event has occurred under Section 4043(c) of ERISA for which the PBGC requires 30-day notice. | ||
(ii) | No action by the Borrower or any ERISA Affiliate to terminate or withdraw from any Plan has been taken and no notice of intent to terminate a Plan has been filed under Section 4041 of ERISA. |
(iii) | No termination proceeding has been commenced with respect to a Plan under Section 4042 of ERISA, and no event has occurred or condition exists which might constitute grounds for the commencement of such a proceeding. |
(d) | The following terms have the meanings indicated for purposes of this Agreement: |
(i) | Code means the Internal Revenue Code of 1986, as amended from time to time. | ||
(ii) | ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. | ||
(iii) | ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code. | ||
(iv) | PBGC means the Pension Benefit Guaranty Corporation. | ||
(v) | Plan means a pension, profit-sharing, or stock bonus plan intended to qualify under Section 401(a) of the Code, maintained or contributed to by the Borrower or any ERISA Affiliate, including any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA. |
7. | COVENANTS |
(a) | Within ten (10) days after the date of filing with the Securities and Exchange Commission (SEC), the annual financial statements of CWSG, certified and dated by an authorized financial officer. These financial statements must be audited (with an opinion satisfactory to the Bank) by a Certified Public Accountant acceptable to the Bank. The statements shall be prepared on a consolidated, consolidating, and unconsolidated basis. | |
(b) | Within ten (10) days after the date of filing with the SEC, quarterly financial statements of CWSG (other than the last fiscal quarter of any fiscal year), certified and dated by an authorized financial officer. These financial statements may be company-prepared. the statements shall be prepared on a consolidated, condolidating, and unconsolidated basis. | |
(c) | Within the same time periods that the annual and quarterly financial statements are required under subparagraphs (a) and (b) immediately above, a compliance certificate of CWSG signed by an authorized financial officer, and setting forth (i) the information and computations (on a consolidated basis and in sufficient detail) of the Debt to Capitalization Ratio (as defined in Paragraph 8.15 below) and the Interest Coverage Ratio (as defined in Paragraph 8.16 below) to establish compliance with those financial covenants at the end of the period covered by the financial statements then being furnished and (ii) whether there existed as of the date of such financial statements and whether there exists as of the date of the certificate, any default under this Agreement and, if any such default exists, specifying the nature thereof and the action CWSG is taking and proposes to take with respect thereto. | |
(d) | Copies of the Form 10-K Annual Report and Form 10-Q Quarterly Report for CWSG within ten (10) days after the date of filing with the SEC, provided that all such reports shall be deemed delivered when delivered to the SEC and posted to EDGAR. | |
(e) | The annual financial projections of CWSG covering the forthcoming fiscal year and specifying the assumptions used in creating the projections. The projections shall be provided to the Bank by April 30th of each year. |
(a) | Acquiring goods, supplies, or merchandise on normal trade credit. | |
(b) | Endorsing negotiable instruments received in the usual course of business. | |
(c) | Obtaining surety bonds in the usual course of business. | |
(d) | Liabilities, lines of credit and leases in existence on the date of this Agreement disclosed in writing to the Bank. | |
(e) | Additional debts and lease obligations for the acquisition of fixed assets, to the extent permitted under Paragraph 7.4(d) of this Agreement. | |
(f) | Additional debts assumed in connection with acquisitions permitted under Paragraph 7.7(b) of this Agreement. | |
(g) | Additional obligations of the Borrower consisting of first mortgage bonds or unsecured senior notes substantially similar in amount and structure to those certain first mortgage bonds and unsecured senior notes that are outstanding as of the date of this Agreement. | |
(h) | Operating leases entered into the ordinary course of business. | |
(i) | Contingent obligations in respect of customary indemnification and purchase price adjustment obligations incurred in connection with asset sales permitted by this Agreement. | |
(j) | Contingent liabilities granted in favor of title insurers in the ordinary course of business. |
(a) | Liens and security interests in favor of the Bank. | |
(b) | Liens for taxes not yet delinquent. | |
(c) | Liens outstanding on the date of this Agreement disclosed in writing to the Bank. | |
(d) | Additional purchase money security interests in assets acquired after the date of this Agreement, if the total principal amount of debts secured by such liens does not exceed Five Million Dollars ($5,000,000) at any one time. | |
(e) | Liens securing first mortgage bonds permitted under the preceding paragraph. | |
(f) | Landlords, carriers, warehousemens, mechanics, materialmens, repairmens or other like liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the Borrower. | |
(g) | Pledges or deposits in the ordinary course of business in connection with workers compensation, unemployment insurance and other social security legislation, other than any lien imposed by ERISA. | |
(h) | Deposits to secure the performance of bids, trade contracts and leases, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business. | |
(i) | Easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower. | |
(j) | Liens securing judgments for the payment of money not constituting an event of default hereunder or securing appeal or other surety bonds related to such judgments. | |
(k) | Liens arising solely by virtue of any statutory or common law provisions relating to bankers liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution. |
7.5 | Maintenance of Assets. | |
(a) | Not to sell, assign, lease, transfer or otherwise dispose of any part of the Borrowers business or the Borrowers assets except in the ordinary course of the Borrowers business and except for such dispositions as may be necessary in connection with remedial actions taken by the Borrower to remedy certain Plans, as disclosed to the Bank prior to the date of this Agreement. | |
(b) | Not to sell, assign, lease, transfer or otherwise dispose of any assets for less than fair market value, or enter into any agreement to do so. | |
(c) | Not to enter into any sale and leaseback agreement covering any of its fixed assets. | |
(d) | To maintain and preserve all rights, privileges, and franchises the Borrower now has, except to the extent the failure to do so could not be reasonably expected to have a material adverse effect on the Borrowers business condition (financial or otherwise) or ability to repay this credit. | |
(e) | To make any repairs, renewals, or replacements to keep the Borrowers properties in good working condition (ordinary wear and tear excluded). | |
(f) | Additional debts assumed in connection with acquisitions permitted under Paragraph 7.7(b) of this Agreement. |
7.6 | Loans. Not to make any loans, advances or other extensions of credit to any individual or entity, except for: | |
(a) | Existing extensions of credit disclosed to the Bank in writing. | |
(b) | Extensions of credit to the Borrowers current subsidiaries. | |
(c) | Extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business to non-affiliated entities. | |
7.7 | Additional Negative Covenants. Not to, without the Banks written consent: | |
(a) | Enter into any consolidation, merger, or other combination, or become a partner in a partnership, a member of a joint venture, or a member of a limited liability company. | |
(b) | Acquire or purchase a business or its assets for a consideration, including assumption of direct or contingent debt, in excess of Ten Million Dollars ($10,000,000) in the aggregate in each fiscal year. Before making any such acquisition, the Borrower must obtain the prior, effective written consent or approval of the board of directors or equivalent governing body of the business being acquired. | |
(c) | Engage in any business activities substantially different from the Borrowers present business. | |
(d) | Liquidate or dissolve the Borrowers business. | |
(e) | Voluntarily suspend the Borrowers business for more than seven (7) days in any thirty (365) day period. | |
7.8 | Notices to Bank. To promptly notify the Bank in writing of: | |
(a) | Any lawsuit over Five Million and 00/100 Dollars ($5,000,000.00) against the Borrower (or any guarantor). | |
(b) | Any substantial dispute between any governmental authority and the Borrower (or any guarantor). | |
(c) | Any event of default under this Agreement, or any event which, with notice or lapse of time or both, would constitute an event of default. | |
(d) | Any material adverse change in the Borrowers (or any guarantors) business condition (financial or otherwise), operations, properties or prospects, or ability to repay the credit. | |
(e) | Any change in the Borrowers name, legal structure, place of business, or chief executive office if the Borrower has more |
than one place of business. | ||
(f) | Any actual contingent liabilities of the Borrower (or any guarantor), and any such contingent liabilities which are reasonably foreseeable, where such liabilities are in excess of Five Million and 00/100 Dollars ($5,000,000.00) in the aggregate. | |
7.9 | General Business Insurance. To maintain insurance as is usual for the business it is in. |
7.12 | ERISA Plans-Notices. With respect to a Plan subject to Title IV of ERISA, to give prompt written notice to the Bank of: | |
(a) | The occurrence of any reportable event under Section 4043(c) of ERISA for which the PBGC requires 30-day notice. | |
(b) | Any action by the Borrower or any ERISA Affiliate to terminate or withdraw from a Plan or the filing of any notice of intent to terminate under Section 4041 of ERISA. | |
(c) | The commencement of any proceeding with respect to a Plan under Section 4042 of ERISA. | |
7.13 | Books and Records. To maintain adequate books and records. |
7.15 | Cooperation. To take any action reasonably requested by the Bank to carry out the intent of this Agreement. | |
8. | DEFAULT AND REMEDIES |
(a) | A reportable event shall occur under Section 4043(c) of ERISA with respect to a Plan. | |
(b) | Any Plan termination (or commencement of proceedings to terminate a Plan) or the full or partial withdrawal from a Plan by the Borrower or any ERISA Affiliate. |
Debt to Capitalization Ratio means the ratio of Funded Debt to the sum of Net Worth plus Funded Debt. | ||
Funded Debt of any person shall mean (i) all Indebtedness of such person for borrowed money or which have been incurred in connection with the acquisition of assets in each case having a final maturity of one or more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a |
period or periods more than one year from the date of origin), including all payments in respect thereof that are required to be made within one year from the date of any determination of Funded Debt, whether or not the obligation to make such payments shall constitute a current liability of the obligor under GAAP, (ii) all Capitalized Rentals of such person, and (iii) all guaranties by such person of Funded Debt of others. | ||
Indebtedness of a person means all obligations of such person which in accordance with GAAP shall be classified upon a balance sheet of such person as liabilities of such person, and in any event shall include all (i) obligations of such person for borrowed money or which has been incurred in connection with the acquisition of property or assets, (ii) obligations secured by any lien upon property or assets owned by such person, even though such person has not assumed or become liable for the payment of such obligations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such person, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Rentals and (v) guaranties of obligations of others of the character referred to in this definition. Notwithstanding the foregoing, the term Indebtedness as it relates to CWSG shall not include obligations of CWSG with respect to advances for construction from third parties. | ||
Capitalized Rentals of any person shall mean as of the date of any determination thereof the amount at which the aggregate Rentals due and to become due under all capitalized leases under which such person is a lessee would be reflected as a liability on a consolidated balance sheet of such person. | ||
Rentals shall mean and include as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by a person, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by such person (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called percentage leases shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. | ||
Net Worth means the value of consolidated total assets (including leaseholds and leasehold improvements and reserves against assets) less total liabilities, including but not limited to accrued and deferred income taxes. |
Interest Coverage Ratio means, as of any date of determination, the ratio of (a) EBITDA for the period of the four prior fiscal quarters ending on such date to (b) Interest Charges for such period. | ||
EBITDA means, for any period, for CWSG on a consolidated basis, an amount equal to net income for such period plus (a) the following to the extent deducted in calculating such net income: (i) Interest Charges for such period, (ii) the provision for Federal, state, local and foreign income taxes payable by CWSG for such period, (iii) depreciation and amortization expense for such period, (iv) other extraordinary losses of CWSG reducing such net income which do not represent a cash item in such period or any future period and minus (b) the following to the extent included in calculating such net income: (i) Federal, state, local and foreign income tax credits of CWSG for such period and (ii) all extraordinary non-cash gains and non-cash items increasing net income for such period. |
Interest Charges means, for any period, for CWSG on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of CWSG in connection with borrowed money to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of CWSG with respect to such period under capital leases that is treated as interest in accordance with GAAP. | ||
This ratio will be calculated at the end of each reporting period for which the Bank requires financial statements using the results of the twelve-month period ending with that reporting period. | ||
9. | ENFORCING THIS AGREEMENT; MISCELLANEOUS |
9.2 | California Law. This Agreement is governed by California law. |
(a) | This Dispute Resolution Provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any renewals, extensions or modifications); or (ii) any document related to this agreement (collectively a Claim). For the purposes of this Dispute Resolution Provision only, the term parties shall include any parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management or administration of any obligation described or evidenced by this agreement. | |
(b) | At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the Act). The Act will apply even though this agreement provides that it is governed by the law of a specified state. | |
(c) | Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (AAA), and the terms of this Dispute Resolution Provision. In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control. If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, the Bank may designate another arbitration organization with similar procedures to serve as the provider of arbitration. | |
(d) | The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators. All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be confirmed and have judgment entered and enforced. | |
(e) | The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may dismiss the arbitration on the basis that the Claim is barred. For purposes of the application of any statutes of limitation, the service on AAA under |
applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s), except as set forth at subparagraph (j) of this Dispute Resolution Provision. The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement. | ||
(f) | The procedure described above will not apply if the Claim, at the time of the proposed submission to arbitration, arises from or relates to an obligation to the Bank secured by real property. In this case, all of the parties to this agreement must consent to submission of the Claim to arbitration. | |
(g) | To the extent any Claims are not arbitrated, to the extent permitted by law the Claims shall be resolved in court by a judge without a jury, except any Claims which are brought in California state court shall be determined by judicial reference as described below. | |
(h) | Any Claim which is not arbitrated and which is brought in California state court will be resolved by a general reference to a referee (or a panel of referees) as provided in California Code of Civil Procedure Section 638. The referee (or presiding referee of the panel) shall be a retired Judge or Justice. The referee (or panel of referees) shall be selected by mutual written agreement of the parties. If the parties do not agree, the referee shall be selected by the Presiding Judge of the Court (or his or her representative) as provided in California Code of Civil Procedure Section 638 and the following related sections. The referee shall determine all issues in accordance with existing California law and the California rules of evidence and civil procedure. The referee shall be empowered to enter equitable as well as legal relief, provide all temporary or provisional remedies, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a trial, including without limitation motions for summary judgment or summary adjudication . The award that results from the decision of the referee(s) will be entered as a judgment in the court that appointed the referee, in accordance with the provisions of California Code of Civil Procedure Sections 644(a) and 645. The parties reserve the right to seek appellate review of any judgment or order, including but not limited to, orders pertaining to class certification, to the same extent permitted in a court of law. | |
(i) | This Dispute Resolution Provision does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies. The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration or judicial reference. | |
(j) | Any arbitration, judicial reference or trial by a judge of any Claim will take place on an individual basis without resort to any form of class or representative action (the Class Action Waiver). Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action Waiver may be determined only by a court or referee and not by an arbitrator. The parties to this Agreement acknowledge that the Class Action Waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties agreement to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the Class Action Waiver. The Parties acknowledge and agree that under no circumstances will a class action be arbitrated. | |
(k) | By agreeing to binding arbitration or judicial reference, the parties irrevocably and voluntarily waive any right they may have to a trial by jury as permitted by law in respect of any Claim. Furthermore, without intending in any way to limit this Dispute Resolution Provision, to the extent any Claim is not arbitrated or submitted to judicial reference, the parties irrevocably and voluntarily waive any right they may have to a trial by jury to the extent permitted by law in respect of such Claim. This waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or found unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION, BY JUDICIAL REFERENCE, OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW. |
(a) | represent the sum of the understandings and agreements between the Bank and the Borrower concerning this credit; | |
(b) | replace any prior oral or written agreements between the Bank and the Borrower concerning this credit; and | |
(c) | are intended by the Bank and the Borrower as the final, complete and exclusive statement of the terms agreed to by them. |
Borrower: | Bank: | |||||
California Water Service Company | Bank of America, N.A. | |||||
By:
|
/s/ | By: | /s/ | |||
Martin Kropelnicki, Vice President, Chief | John C. Plecque, Senior Vice President | |||||
Financial Officer and Treasurer | ||||||
Address where notices to the Borrower are to be sent: | Address where notices to the Bank are to be sent: | |||||
1720 North First Street | Pasadena Attn: Notice Desk | |||||
San Jose, CA 95112 | CA9-702-05-71 | |||||
101 S. Marengo Avenue, 5th Floor | ||||||
Pasadena, CA 91101-2428 |