EXHIBIT 10.15
AMENDED AND RESTATED
CREDIT AGREEMENT
BETWEEN
SOUTHWEST WATER COMPANY
AND
XXXXX FARGO BANK, NATIONAL ASSOCIATION
DECEMBER 23, 1997
TABLE OF CONTENTS
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PAGE(S)
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ARTICLE I DEFINITIONS............................................ 1
SECTION 1.01. Defined Terms.......................................... 1
SECTION 1.02. Other Definitional Provisions.......................... 6
ARTICLE II THE CREDIT............................................. 6
SECTION 2.01. The Revolving Loans.................................... 6
(a) The Revolving Commitment........................ 6
(b) Making the Revolving Loans...................... 6
(c) Reduction of the Revolving Commitment........... 7
(d) Revolving Note.................................. 7
SECTION 2.02. Mandatory Repayment.................................... 7
SECTION 2.03. Interest Computation and Payment....................... 7
SECTION 2.04. Commitment Fee......................................... 7
ARTICLE III GENERAL PROVISIONS CONCERNING THE LOANS................ 8
SECTION 3.01. Use of Proceeds........................................ 8
SECTION 3.02. [Intentionally Omitted]................................ 8
SECTION 3.03. Payments............................................... 8
SECTION 3.04. Payment on Non-Business Days........................... 8
SECTION 3.05. Reduced Return......................................... 8
SECTION 3.06. Indemnities............................................ 8
SECTION 3.07. Funding Sources........................................ 9
ARTICLE IV CONDITIONS OF LENDING.................................. 9
SECTION 4.01. Conditions Precedent to Initial Loans.................. 9
SECTION 4.02. Conditions Precedent to Each Borrowing................. 10
ARTICLE V REPRESENTATIONS AND WARRANTIES......................... 11
SECTION 5.01. Representations and Warranties......................... 11
(a) Organization.................................... 11
(b) Authorization; No Conflict...................... 11
(c) Governmental Consents........................... 11
(d) Validity........................................ 12
(e) Financial Condition............................. 12
(f) Litigation...................................... 12
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TABLE OF CONTENTS
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(continued)
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(g) Employee Benefit Plans............................... 12
(h) Disclosure........................................... 12
(i) Environmental Matters................................ 13
(j) Employee Matters..................................... 13
(k) Solvency............................................. 13
(l) Title to Properties.................................. 13
(m) Tax Returns.......................................... 14
(n) Compliance with Other Agreements and Applicable Laws. 14
ARTICLE VI COVENANTS................................................... 14
SECTION 6.01. Affirmative Covenants....................................... 14
(a) Financial Information................................ 14
(b) Notices and Information.............................. 15
(c) Corporate Existence, Etc............................. 17
(d) Payment of Taxes and Claims.......................... 17
(e) Maintenance of Properties; Insurance................. 17
(f) Inspection........................................... 17
(g) Compliance with Laws Etc............................. 17
(h) Hazardous Waste Studies.............................. 18
SECTION 6.02. Negative Covenants.......................................... 18
(a) Leverage Ratio....................................... 18
(b) Consolidated Tangible Net Worth...................... 18
(c) Consolidated Net Profit.............................. 18
(e) Liens Etc............................................ 18
(f) Debt................................................. 19
(g) Consolidation, Merger or Dissolution................. 19
(h) Loans, Investments, Secondary Liabilities............ 19
(i) Asset Sales.......................................... 20
(j) Hostile Tender Offers................................ 21
(k) Distributions........................................ 21
(l) Transactions with Affiliates......................... 21
(m) Books and Records.................................... 21
(n) Restructure.......................................... 21
ARTICLE VII. EVENTS OF DEFAULT........................................... 21
SECTION 7.01. Events of Default........................................... 21
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TABLE OF CONTENTS
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(continued)
PAGE(S)
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ARTICLE VIII. MISCELLANEOUS............................................... 25
SECTION 8.01. Amendments, Etc............................................. 25
SECTION 8.02. Notices, Etc................................................ 25
SECTION 8.03. Right of Setoff: Security Interest in Deposit Accounts..... 25
SECTION 8.04. No Waiver; Remedies......................................... 25
SECTION 8.05. Costs and Expenses.......................................... 25
SECTION 8.06. Participations.............................................. 26
SECTION 8.07. Effectiveness: Binding Effect............................... 26
SECTION 8.08. Governing Law............................................... 26
SECTION 8.10. Waiver of Notices........................................... 28
SECTION 8.11. Entire Agreement............................................ 29
SECTION 8.12. Separability of Provisions.................................. 29
SECTION 8.13. Execution in Counterparts................................... 29
Schedules
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5.01(f) - Litigation
5.01(i) - Environmental Matters
6.02(e) - Liens
Exhibits
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A - Form of Note
B - Form of Legal Opinion
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AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of December 23, 1997 is
entered into between SOUTHWEST WATER COMPANY, a Delaware corporation (the
"Borrower") and XXXXX FARGO BANK, NATIONAL ASSOCIATION (the "Bank").
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RECITALS
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WHEREAS, the Borrower has previously entered into with First Interstate
Bank of California, the successor by merger of which is the Bank, a Credit
Agreement dated as of December 22, 1992, as amended by First Amendment dated
July 29, 1993, Second Amendment dated June 24, 1994, Third Amendment dated June
30, 0000, Xxxxxx Xxxxxxxxx dated March 26, 1996 and Letter Extensions dated June
30, 1997, September 1, 1997 and November 1, 1997 (collectively, the "Original
Credit Agreement"), pursuant to which the Bank has provided a revolving credit
facility to the Borrower; and
WHEREAS, the Borrower and the Bank desire to amend the Original Credit
Agreement to, among other things (i) extend the Maturity Date to July 1, 1999;
(ii) revise the financial covenants; and (iii) revise the Events of Default.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements contained herein, the parties hereto agree to amend and restate
the Original Credit Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
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terms have the following meanings:
"Agreement": This Amended and Restated Credit Agreement, as amended,
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supplemented or modified from time to time.
"Bank": As set forth in the introductory paragraph of this Agreement.
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"Borrower": As set forth in the introductory paragraph of this Agreement.
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"Borrowing": As defined in Section 2.01.
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"Business Day": Has the meaning set forth in the Revolving Note.
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"Capital Leases": As applied to any Person, any lease of any property
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(whether real, personal or mixed) by that Person as lessee which would, in
accordance with GAAP, be required to be accounted for as a capital lease on the
balance sheet of that Person.
"Change of Control": Shall be deemed to have occurred at such times as:
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(a) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Act of 1934), becomes the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of
more than thirty percent (30%) of the total voting power of all classes of stock
then outstanding of Borrower normally entitled to vote in the election of
directors; or (b) the Borrower shall fail to own directly one hundred percent
(100%) of the issued and outstanding common stock of Suburban, NMUI or ECO or
shall lose voting control of Suburban's, NMUI's or ECO's issued and outstanding
common stock. A change of control shall not include a transfer of NMUI's
operating assets through a condemnation or sale in lieu of condemnation.
"Commitment": The Bank's obligation to make Loans to the Borrower pursuant
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to Article II in the amount or amounts referred to therein.
"Consolidated EBITDA" means, for any period of Borrower and its
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Subsidiaries on a consolidated basis, Consolidated Net Income for such period,
plus interest expense (net of capitalized interest expense) and provision for
income taxes for such period, plus depreciation and amortization for such
period.
"Consolidated Liabilities": At any date of determination, the total
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liabilities of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP (including, without limitation, (1) any
balance sheet liability with respect to a Pension Plan recognized pursuant to
Financial Accounting Standards Board Statements 87 or 88 and (2) any withdrawal
liability under Section 4201 of ERISA with respect to a withdrawal from a
Multiemployer Plan, as such liability may be set forth in a notice of withdrawal
liability under Section 4219 (and as adjusted from time to time subsequent to
the date of such notice) less (1) deferred taxes, (2) contributions in aid of
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construction ("CIAC"), (3) unamortized investment tax credits, (4) deferred
revenue on CIAC, and (5) deposits for CIAC for capital improvement projects.
"Consolidated Net Income" means, in respect of any period of the Borrower
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and its Subsidiaries, the consolidated net income after taxes of the Borrower
and its Subsidiaries as such would appear on the consolidated statement of
earnings of Borrower and its Subsidiaries prepared in accordance with GAAP,
consistently applied, minus nonrecurring or extraordinary income.
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"Consolidated Tangible Net Worth": At any date of determination, the sum
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of the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) of the Borrower and its consolidated Subsidiaries
minus (i) treasury stock, (ii) intangible assets (including, without limitation,
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franchises, patents, patent applications, trademarks, brand names, goodwill,
purchased contracts, water rights and deferred charges
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(including unamortized debt discount and expense and organization costs) and
research and development expenses) and (iii) receivables, advances, loans and
all other amounts due from employees, officers, shareholders and/or affiliates
(excluding Borrower's wholly-owned Subsidiaries), on a consolidated basis
determined in conformity with GAAP.
"Debt": As applied to any Person, (i) all indebtedness for borrowed money,
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(ii) that portion of obligations with respect to Capital Leases which is
properly classified as a liability on a balance sheet in conformity with GAAP,
(iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
which purchase price is (y) due more than six months from the date of incurrence
of the obligation in respect thereof, or (z) evidenced by a note or similar
written instrument; (v) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that person; (vi) reimbursement obligations under letters of credit;
and (vii) other contingent liabilities.
"Distribution": With respect to any Person shall mean that such Person has
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paid any dividend or returned any capital to, its stockholders or equity holders
as such or authorized or made any other distribution, payment or delivery of
property or cash to its stockholders or equity holders as such, or redeemed,
retired, purchased, or otherwise acquired, directly or indirectly, for
consideration, any shares of any class of its capital stock or equity interests
(or any options, warrants or rights issued by such Person with respect to its
capital stock or equity interests), or set aside any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to purchase
or otherwise acquire for a consideration any shares of any class of the capital
stock or any equity interests of such Person (or any options, warrants or rights
issued by such Person with respect to its capital stock or equity interests).
Without limiting the foregoing, "Distributions" with respect to any Person shall
also include all payments made or required to be made by such Person with
respect to any stock appreciation rights plans, equity incentive or the setting
aside of any funds for the foregoing purposes.
"Dollars and $": Dollars in lawful currency of the United States of
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America.
"EBITDA Coverage Ratio" means, for any period of Borrower and its
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Subsidiaries on a consolidated basis, Consolidated EBITDA divided by the sum of
the total interest expense plus current portion of long-term Debt plus current
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portion of advances for construction plus Distributions.
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"ECO": ECO Resources, Inc., a Texas corporation.
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"Employee Benefit Plan": Any Pension Plan, any employee welfare benefit
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plan, or any other employee benefit plan which is described in Section 3(3) of
ERISA and which is maintained for employees of the Borrower or any ERISA
Affiliate of the Borrower.
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"ERISA": The Employee Retirement Income Security Act of 1974, as amended
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to the date hereof and from time to time hereafter.
"ERISA Affiliate": As applied to any Person, any trade or business
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(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of Section
414(b) and (c) of the Internal Revenue Code.
"GAAP": Generally accepted accounting principles set forth in the opinions
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and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
or any public commission having regulatory responsibility over the Borrower or
any Subsidiary.
"Internal Revenue Code": The Internal Revenue Code of 1986, as amended to
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the date hereof and from time to time hereafter and any successor statute.
"Lien": Any lien, mortgage, deed of trust, pledge, security interest,
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charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Loans": Loans made to the Borrower pursuant to Section 2.01.
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"Loan Documents": This Agreement, the Revolving Note and each agreement,
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document, instrument and guarantee required by the Bank in connection with this
Agreement and/or the credit extended hereunder.
"Maturity Date": July 1, 1999.
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"Mellon": means Mellon Bank, N.A.
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"Multiemployer Plan": A "multiemployer plan" as defined in Section
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4001(a)(3) of ERISA which is maintained for employees of the Borrower or any
ERISA Affiliate of the Borrower.
"NAIC" means National Association of Insurance Companies.
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"NMUI": New Mexico Utilities, Inc., a New Mexico corporation.
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"Pension Plan": Any employee plan which is subject to Section 412 of the
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Internal Revenue Code and which is maintained for employees of the Borrower or
any ERISA Affiliate of the Borrower, other than a Multiemployer Plan.
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"Person": An individual, partnership, corporation, limited liability
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company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Potential Event of Default": A condition or event which, after notice or
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lapse of time or both, would constitute an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure period.
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"Regulation G, T, U and X": Regulations G, T, U and X, respectively,
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promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time, and any successors thereto.
"Revolving Commitment": The amount of $2,000,000 as such amount may be
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reduced pursuant to Section 2.01(c).
"Revolving Loans": As defined in Section 2.01(a).
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"Revolving Note": As defined in Section 2.01(d).
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"S.E.C.": The United States Securities and Exchange Commission and any
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successor institution or body which performs the functions or substantially all
of the functions thereof.
"Solvent": When used with respect to any Person that as of the date as to
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which the Person's solvency is to be measured:
(i) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities) as they
become absolute and matured;
(ii) it has sufficient capital to conduct its business; and
(iii) it is able to meet its debts as they mature.
"Subsidiary": A corporation of which shares of stock having ordinary
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voting power (other than stock having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned, directly, or indirectly
through one or more intermediaries, or both, by the Borrower.
"Suburban": Suburban Water Systems, a California corporation.
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"Suburban Loan Documents" means that Amended and Restated Credit Agreement
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dated as of the date hereof between the Bank and Suburban, and each agreement,
document, instrument and guarantee required by the Bank in connection with such
Amended and Restated Credit Agreement and/or the credit extended thereunder.
"Termination Event": (i) a "Reportable Event" described in Section 4043 of
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ERISA and the regulations issued thereunder (other than a "Reportable Event" not
subject to the provision for 30-day notice to the Pension Benefit Guaranty
Corporation under such regulations) with respect to any Pension Plan, or (ii)
the withdrawal of the Borrower or any of its ERISA Affiliates from a Pension
Plan during a plan year in which it was a "substantial employer" as defined in
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Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to
6
terminate a Pension Plan or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Pension Plan by the Pension Benefit Guaranty Corporation under
Section 4042 of ERISA, or (v) any other event or condition which might
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan under Section 4042 of ERISA, or (vi) the
imposition of a lien with respect to any Pension Plan pursuant to Section 412(n)
of the Internal Revenue Code.
SECTION 1.02. Other Definitional Provisions.
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(a) All terms defined in this Agreement shall have the defined meanings
when used in the Revolving Note or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Revolving Note, and any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
subsection 1.01, and accounting terms partly defined in subsection 1.01 to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(d) So long as the Borrower does not have any Subsidiaries, references to
a Subsidiary or Subsidiaries in this Agreement shall be deemed to be deleted.
ARTICLE II
THE CREDIT
SECTION 2.01. The Revolving Loans.
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(a) The Revolving Commitment. The Bank agrees, on the terms and conditions
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hereinafter set forth, to make loans ("Revolving Loans") to the Borrower from
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time to time during the period from the date hereof to and including the
Maturity Date in an aggregate amount not to exceed the Revolving Commitment, as
such amount may be reduced pursuant to Section 2.01(c). Within the limits of
the Revolving Commitment and prior to the Maturity Date, the Borrower may
borrow, repay pursuant to Section 2.02(b) and reborrow under this Section.
(b) Making the Revolving Loans. The Borrower may borrow under the
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Revolving Commitment on any Business Day, provided that the Borrower shall give
the Bank
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notice pursuant to the terms of the Note specifying (i) the amount of the
proposed Borrowing and (ii) the requested date of the Borrowing. Upon
satisfaction of the applicable conditions
8
set forth in Article IV, the proceeds of all such Loans will then be made
available to the Borrower by the Bank by crediting the account of the Borrower
on the books of the Bank, or as otherwise directed by the Borrower.
(c) Reduction of the Revolving Commitment. The Borrower shall have the
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right, upon at least two Business Days' notice to the Bank, to terminate in
whole or reduce in part the unused portion of the Revolving Commitment, without
premium or penalty, provided that each partial reduction shall be in the
aggregate amount of $100,000 or an integral multiple thereof and that such
reduction shall not reduce the Revolving Commitment to an amount less than the
amount outstanding hereunder on the effective date of the reduction. Such
notice shall be irrevocable and such reduction shall not be reinstated.
(d) Revolving Note. The Loans made by the Bank pursuant hereto shall be
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evidenced by an amended and restated promissory note of the Borrower,
substantially in the form of Exhibit A, with any appropriate insertions (the
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"Revolving Note"), payable to the order of the Bank and representing the
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obligation of the Borrower to pay the aggregate unpaid principal amount of all
Revolving Loans made by the Bank, with interest thereon as prescribed in Section
2.03. The Bank is hereby authorized to record in its books and records and on
any schedule annexed to the Revolving Note, the date and amount of each
Revolving Loan made by the Bank, the date and amount of each payment of
principal thereof, and the applicable interest rate, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
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recorded; provided that failure by the Bank to effect such recordation shall not
affect the Borrower's obligations hereunder. Prior to the transfer of a
Revolving Note, the Bank shall record such information on any schedule annexed
to and forming a part of such Revolving Note.
SECTION 2.02. Mandatory Repayment. The aggregate principal amount of the
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Revolving Loans outstanding on the Maturity Date, together with accrued interest
thereon, shall be due and payable in full on the Maturity Date. If at any time
the aggregate outstanding Borrowings exceed the Revolving Commitment then in
effect, the Borrower shall immediately repay the excess to the Bank without
penalty or premium.
SECTION 2.03. Interest Computation and Payment. The outstanding principal
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balance of the Revolving Loans shall bear interest at the rates of interest set
forth in the Revolving Note. Interest shall be computed on the basis of a 360-
day year, actual days elapsed. Interest shall be payable at the times and place
set forth in the Revolving Note.
SECTION 2.04. Commitment Fee. Borrower shall pay to Bank a fee for the
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Revolving Commitment equal to one-quarter of one percent (0.25%) per annum of
the daily unused balance of the Revolving Commitment, calculated on the basis of
a 360-day year, actual days elapsed, which fee shall be due and payable by
Borrower to Bank, or debited to Borrower's account with Bank, if so maintained,
not later than ten (10) days after billing is sent by Bank.
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ARTICLE III
GENERAL PROVISIONS CONCERNING THE LOANS
SECTION 3.01. Use of Proceeds. The proceeds of the Loans hereunder shall
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be used by the Borrower (i) for general corporate purposes, working capital and
acquisitions of the Borrower and its wholly-owned Subsidiaries, and (ii) to
finance capital additions to the water utility and other operations of the
Borrower and its wholly-owned Subsidiaries.
SECTION 3.02. [Intentionally Omitted]
SECTION 3.03. Payments. Borrower authorizes Bank to collect all
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principal, interest and fees due under this Agreement and the Revolving Note by
charging Borrower's demand deposit account number 4619-041657 with Bank, or any
other demand deposit account maintained by Borrower with Bank, for the full
amount thereof. Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such deficiency shall
be immediately due and payable by Borrower.
SECTION 3.04. Payment on Non-Business Days. Whenever any payment to be
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made hereunder or under the Revolving Note shall be stated to be due on a day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
SECTION 3.05. Reduced Return. If the Bank shall have determined that any
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applicable law, regulation, rule or regulatory requirement generally applicable
to banks located in California and (collectively in this Section 3.05
"Requirement") regarding capital adequacy, or any change therein, or any change
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in the interpretation or administration thereof by any United States federal or
state governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Bank's capital as a
consequence of its Commitment and obligations hereunder to a level below that
which would have been achieved but for such Requirement, change or compliance
(taking into consideration the Bank's policies with respect to capital adequacy)
by an amount deemed by the Bank to be material (which amount shall be determined
by the Bank's reasonable allocation of the aggregate of such reductions
resulting from such events), then from time to time, within five (5) Business
Days after demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank for such reduction.
The Bank does not presently have knowledge of any new Requirement or any pending
change in any existing Requirement which would result in such additional amounts
being owed.
SECTION 3.06. Indemnities. Whether or not the transactions contemplated
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hereby shall be consummated, the Borrower agrees to indemnify, pay and hold the
Bank, and
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the shareholders, officers, directors, employees and agents of the Bank
("Indemnified Person"), harmless from and against any and all claims,
------------------
liabilities, losses, damages, costs and expenses (whether or not any of the
foregoing Indemnified Persons is a party to any litigation), including, without
limitation, reasonable attorneys' fees and costs (including, without limitation,
the reasonable estimate of the allocated cost of in-house legal counsel and
staff) and costs of investigation, document production, attendance at a
deposition, or other discovery, prior to the assumption of defense by the
Borrower, with respect to or arising out of any proposed acquisition by the
Borrower or any of its Subsidiaries of any Person or any securities (including a
self-tender), this Agreement or any use of proceeds hereunder, or any claim,
demand, action or cause of action being asserted against the Borrower or any of
its Subsidiaries (collectively, the "Indemnified Liabilities"), provided that
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the Borrower shall have no obligation hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of any such
Indemnified Persons. If any claim is made, or any action, suit or proceeding is
brought, against any Indemnified Person pursuant to this Section, the
Indemnified Person shall notify the Borrower within thirty (30) days of the Bank
being notified in writing of any such claim or the commencement of such action,
suit or proceeding, and the Borrower will assume the defense of such action,
suit or proceeding, employing counsel selected by Borrower's insurance carrier,
or selected by the Borrower and reasonably satisfactory to the Indemnified
Person, and pay the fees and expenses of such counsel. This covenant shall
survive termination of this Agreement and payment of the outstanding Revolving
Note for a period of six (6) years.
SECTION 3.07. Funding Sources. Nothing in this Agreement shall be deemed
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to obligate the Bank to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by the Bank that it has obtained or
will obtain the funds for any Loan in any particular place or manner.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. Conditions Precedent to Initial Loans. The obligation of
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the Bank to make its initial Loan is subject to the conditions precedent that:
(a) The Bank shall have received on or before the day of the initial
Borrowing the following, each dated prior to or as of such day, in form and
substance satisfactory to the Bank:
(i) The Revolving Note issued by the Borrower to the order of the
Bank;
(ii) Copies of the Articles, Certificate of Incorporation,
partnership agreement or other organizational document of the Borrower,
certified as of a recent date by the Secretary of State of its state of
formation or incorporation;
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(iii) Copies of the Bylaws, if any, of the Borrower, certified by the
Secretary or an Assistant Secretary of the Borrower;
(iv) Copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower, in form and substance satisfactory to the
Bank, approving the Loan Documents and the Borrowings hereunder;
(v) An incumbency certificate executed by the Secretary or an
Assistant Secretary of the Borrower or equivalent document, certifying the names
and signatures of the officers of the Borrower or other Persons authorized to
sign the Loan Documents and the other documents to be delivered hereunder;
(vi) Executed copies of all Loan Documents;
(vii) Opinion from Borrower's counsel substantially in the form of
Exhibit B hereto;
(b) The Bank shall have completed its due diligence review of the Borrower,
and the scope and results thereof shall be satisfactory to Bank in its
discretion;
(c) All information previously furnished by Borrower to Bank shall be true
and correct in all material respects;
(d) All fees required to be paid at closing shall have been paid;
(e) All corporate and legal proceedings and all instruments and documents
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in content, form and substance to the Bank and its
counsel, and the Bank and such counsel shall have received any and all further
information and documents which the Bank or such counsel may reasonably have
requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities; and
(f) Nothing shall have occurred and the Bank shall not have become aware of
any fact or condition not previously known, which the Bank shall determine has,
or could reasonably be expected to have, a material adverse effect on the rights
or remedies of the Bank, or on the ability of the Borrower to perform its
obligations to the Bank or which has, or could reasonably be expected to have, a
materially adverse effect on the performance, business, property, assets,
condition (financial or otherwise) or prospects of Borrower and its Subsidiaries
taken as a whole.
SECTION 4.02. Conditions Precedent to Each Borrowing. The obligation of
--------------------------------------
the Bank to make a Loan on the occasion of each Borrowing (including the initial
Borrowing) shall be subject to the further conditions precedent that on the date
of such Borrowing (a) the following statements shall be true and the Bank shall
have received the notice required by Section 2.01(b), which notice shall be
deemed to be a certification by the Borrower that:
12
(i) The representations and warranties contained in Section 5.01 are
correct on and as of the date of such Borrowing as though made on
and as of such date,
(ii) No event has occurred and is continuing, or would result from such
Borrowing, which constitutes an Event of Default or Potential Event
of Default; and
(iii) Nothing shall have occurred and the Bank shall not have become aware
of any fact or condition not previously known, which the Bank shall
determine has, or could reasonably be expected to have, a material
adverse effect on the rights or remedies of the Bank, or on the
ability of the Borrower to perform its obligations to the Bank or
which has, or could reasonably be expected to have, a materially
adverse effect on the performance, business, property, assets,
condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries taken as a whole; and
(iv) All Loan Documents are in full force and effect,
and (b) the Bank shall have received such other approvals, opinions or documents
as the Bank may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties. The Borrower represents and
------------------------------
warrants as follows:
(a) Organization. The Borrower and each of its Subsidiaries is duly
------------
organized, validly existing and in good standing under the laws of the state of
its incorporation. The Borrower and each of its Subsidiaries is also duly
authorized, qualified and licensed in all applicable jurisdictions, and under
all applicable laws, regulations, ordinances or orders of public authorities, to
carry on its business in the locations and in the manner presently conducted.
(b) Authorization; No Conflict. The execution, delivery and performance by
--------------------------
the Borrower of the Loan Documents, and the making of Borrowings hereunder, are
within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Borrower's charter, by-
laws or other organizational document or (ii) any law or regulation (including,
without limitation, Regulations G, T, U and X and regulations of public utility
commissions or similar regulatory authorities) binding on or
13
affecting the Borrower or its properties, and will not constitute an event of
default under any material agreement to which Borrower is a party or by which
its assets or properties may be bound.
(c) Governmental Consents. No authorization or approval or other action
---------------------
by, and no notice to or filing with, any governmental authority or regulatory
body (except routine reports required pursuant to the Securities Exchange Act of
1934, as amended (if such act is applicable to the Borrower), which reports will
be made in the ordinary course of business) is required for the due execution,
delivery and performance by the Borrower of the Loan Documents.
(d) Validity. The Loan Documents are the binding obligations of the
--------
Borrower or other executing Person, if any, enforceable in accordance with their
respective terms; except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
(e) Financial Condition. The balance sheets of the Borrower and its
-------------------
consolidated Subsidiaries as at September 30, 1997,and the related consolidated
statements of income and changes in common stockholders' equity of the Borrower
and its consolidated Subsidiaries for the fiscal nine months then ended, copies
of which have been furnished to the Bank, fairly present the financial condition
of the Borrower and its consolidated Subsidiaries as at such dates and the
results of the operations of the Borrower and its consolidated Subsidiaries for
the period ended on such date, all in accordance with GAAP, consistently
applied, and since September 30, 1997 there has been no material adverse change
in the business, operations, properties, assets or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole.
(f) Litigation. Except as set forth in the Form 10-Q dated September 30,
----------
1997, and on Schedule 5.01(f) hereto, there is no known pending or threatened
action or proceeding affecting the Borrower or any of its Subsidiaries before
any court, governmental agency or arbitrator, which may materially adversely
affect the consolidated financial condition or operations of the Borrower or
which may have a material adverse effect on the Borrower's ability to perform
its obligations under the Loan Documents, having regard for its other financial
obligations.
(g) Employee Benefit Plans. The Borrower and each of its ERISA Affiliates
----------------------
is in compliance in all material respects with any applicable provisions of
ERISA and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans. No Termination Event has occurred with respect
to any Pension Plan. The excess of the actuarial present value of all benefit
liabilities under all Pension Plans (excluding in such computation Pension Plans
with assets greater than benefit liabilities) over the fair market value of the
assets allocable to such benefit liabilities are not greater than five percent
(5%) of Consolidated Tangible Net Worth. For purposes of the preceding
sentence, the term "benefit liabilities" shall have the meaning specified in
Section 4001 of ERISA.
14
(h) Disclosure. No representation or warranty of the Borrower contained in
----------
this Agreement or any other document, certificate or written statement furnished
to the Bank by or on behalf of the Borrower for use in connection with the
transactions contemplated by this Agreement contains any known untrue statement
of a material fact or omits to state a known material fact (known to the
Borrower in the case of any document not furnished by it) necessary in order to
make the statements contained herein or therein not misleading. There is no fact
known to the Borrower (other than matters of a general economic nature) which
materially adversely affects the business, operations, property, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries, taken
as a whole, which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Bank for use in connection with the
transactions contemplated hereby.
(i) Environmental Matters. Except as set forth in Schedule 5.01(i) hereto,
--------------------- ----------------
neither the Borrower nor any Subsidiary, nor any of their respective officers,
employees, representatives or agents, nor, to the best of their knowledge, any
other person, has treated, stored, processed, discharged, spilled, or otherwise
----------
disposed of any substance defined as hazardous or toxic by any applicable
federal, state or local law, rule, regulation, order or directive, or any waste
or by-product thereof, at any real property or any other facility owned, leased
or used by the Borrower or any Subsidiary, in violation of any applicable
statutes, regulations, ordinances or directives of any governmental authority or
court, which violations may result in liability to the Borrower or any
Subsidiary or any of their respective officers, employees, representatives,
agents or shareholders in an amount exceeding $500,000 for all such violations;
and the unresolved violations set forth in said Schedule 5.01(i) will not result
in liability to the Borrower or any Subsidiary or any of their respective
officers, employees, representatives, agents or shareholders in an amount
exceeding $500, 000 for all such unresolved violations. Except as set forth in
said Schedule, no employee or other person has made a claim or demand against
the Borrower or any Subsidiary based on alleged damage to health caused by any
such hazardous or toxic substance or by any waste or by-product thereof; and the
unsatisfied claims or demands against the Borrower or any Subsidiary set forth
in said Schedule 5.01(i) will not result in uninsured liability to the Borrower
or any Subsidiary or any of their respective officers, employees,
representatives, agents or shareholders in an amount exceeding $250,000 in
excess of reserves on the books of the Borrower for all such unsatisfied claims
or demands. Except as set forth in said Schedule 5.01(i), neither the Borrower
nor any Subsidiary has been charged by any governmental authority with
improperly using, handling, storing, discharging or disposing of any such
hazardous or toxic substance or waste or by-product thereof or with causing or
permitting any pollution of any body of water; and the outstanding related
charges set forth in said Schedule 5.01(i) will not result in liability to the
Borrower or any Subsidiary or any of their respective officers, employees,
representatives, agents or shareholders in an amount exceeding $500,000 for all
such outstanding charges.
(j) Employee Matters. There is no known strike or work stoppage in
----------------
existence or threatened involving the Borrower or its Subsidiaries that may
materially adversely affect the consolidated financial condition or operations
of the Borrower or that may have a material adverse effect on the Borrower's
ability to perform its obligations under the Loan Documents, having regard for
its other financial obligations.
15
(k) Solvency. Borrower and each of its Subsidiaries is Solvent.
--------
(l) Title to Properties. Borrower and each of its Subsidiaries has good
-------------------
and marketable title to or interests in all of its properties and assets subject
to no liens, mortgages, pledges, security interests, encumbrances or charges of
any kind, except those granted to Bank and such others as are permitted under
Section 6.02(d) hereof.
(m) Tax Returns. Borrower and each of its Subsidiaries has filed, or
-----------
caused to be filed, in a timely manner all tax returns, reports and declarations
which are required to be filed by it (without requests for extension except as
previously disclosed in writing to Bank). All information in such tax returns,
reports and declarations is complete and accurate in all material respects.
Borrower and each of its Subsidiaries has paid or caused to be paid all taxes
due and payable or claimed due and payable in any assessment received by it,
except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower or its
Subsidiary and with respect to which adequate reserves have been set aside on
its books. Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not yet
due and payable and whether or not disputed.
(n) Compliance with Other Agreements and Applicable Laws. Neither Borrower
----------------------------------------------------
nor any of its Subsidiaries is in default in any material respect under, or in
violation in any material respect of any of the terms of, any agreement,
contract, instrument, lease or other commitment (including, but not limited to
any such agreement involving the debts or investments of Borrower or liens upon
its assets) to which it is a party or by which it or any of its assets are bound
and Borrower and each of its Subsidiaries is in compliance in all material
respects with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders of any foreign, Federal, State or local
governmental authority.
ARTICLE VI
COVENANTS
SECTION 6.01. Affirmative Covenants. So long as any Revolving Note shall
---------------------
remain unpaid or the Bank shall have any Commitment hereunder, the Borrower
will, unless the Bank shall otherwise consent in writing:
(a) Financial Information. Furnish to the Bank:
---------------------
(i) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, (1) a copy of the Borrower's
annual report to shareholders containing the audited consolidated balance
sheets of itself and its consolidated Subsidiaries as at the end of each
fiscal year and the related consolidated statements of income and changes
in common stockholders' equity (or comparable statement) employed in the
business and changes in financial
16
position and cash flow for such year, in each case prepared in accordance
with GAAP, setting forth in each case in comparative form the figures for
the previous year, accompanied by an unqualified report and opinion thereon
of independent certified public accountants acceptable to the Bank and, if
prepared, such accountants' letter to management, and (2) a copy of the
Borrower prepared consolidating financial statements prepared in connection
with each of the statements provided in subpart (1) above;
(ii) as soon as available, but in any event within forty-five (45)
days after the end of each fiscal quarter, the Borrower's unaudited
consolidated and consolidating balance sheets of itself and its
consolidated Subsidiaries as at the end of such period and the related
unaudited consolidated and consolidating statements of income and changes
in common stockholders' equity (or comparable statement) and changes in
financial position and cash flow for such period and year to date, setting
forth in each case in comparative form the figures as at the end of the
previous fiscal year as to the balance sheet and the figures for the
previous corresponding period as to the other statements, certified by a
duly authorized officer of the Borrower as being fairly stated in all
material respects subject to year end adjustments; all such financial
statements to be complete and correct in all material respects and to be
prepared in reasonable detail acceptable to the Bank and in accordance with
GAAP applied consistently throughout the periods reflected therein (except
as approved by such accountants and disclosed therein and except for the
exclusion of certain information and footnote disclosures omitted pursuant
to the rules and regulations of the S.E.C.); and
(iii) as soon as available, copies of all reports which the Borrower
sends to any of its security holders, and copies of all reports and
registration statements which the Borrower or any Subsidiary files with the
S.E.C. or any national securities exchange; and
(iv) (a) together with each delivery of financial statements of
Borrower and its Subsidiaries pursuant to subdivision (i) above, a
certificate, executed by the Borrower's chairman of the board (if an
officer) or its president or one of its vice presidents or by its chief
financial officer stating that the signers have reviewed the terms of this
Agreement and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of Borrower
and its Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such certificate, of any
condition or event that constitutes an Event of Default or Potential Event
of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Borrower has taken, is taking and proposes to take with respect thereto;
and (b) together with each delivery of financial
17
statements of Borrower and its Subsidiaries pursuant to subdivision (i) and
(ii) above, a certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 6.02 hereof;
(b) Notices and Information. Deliver to the Bank:
-----------------------
(i) promptly upon any officer of the Borrower obtaining knowledge (a)
of any condition or event which constitutes an Event of Default or
Potential Event of Default, (b) that any Person has given any notice to the
Borrower or any Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the type referred to
in Section 7.01(e), (c) of the institution of any litigation involving an
alleged liability (including possible forfeiture of property) of the
Borrower or any of its Subsidiaries equal to or greater than $500,000 which
is not, except for deductibles and self insurance reserves, fully covered
by insurance maintained by Borrower or any adverse determination in any
litigation involving a potential liability of the Borrower or any of its
Subsidiaries equal to or greater than $500,000 which is not, except for
deductibles and self insurance reserves, fully covered by insurance
maintained by Borrower or (d) of a material adverse change in the business,
operations, properties, assets or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, an officers' certificate
specifying the nature and period of existence of any such condition or
event, or specifying the notice given or action taken by such holder or
Person and the nature of such claimed default, Event of Default, Potential
Event of Default, event or condition, and what action the Borrower has
taken, is taking and proposes to take with respect thereto;
(ii) promptly upon becoming aware of the occurrence of any (a)
Termination Event, or (b) non-exempt "prohibited transaction", as such term
is defined in Section 4975 of the Internal Revenue Code or a transaction
prohibited by Section 406 of ERISA, in connection with any Employee Benefit
Plan or any trust created thereunder, a written notice specifying the
nature thereof, what action the Borrower has taken, is taking or proposes
to take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor, or the
Pension Benefit Guaranty Corporation with respect thereto;
(iii) with reasonable promptness copies of (a) all notices received
by the Borrower or any of its ERISA Affiliates of the Pension Benefit
Guaranty Corporation's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan and (b) all notices
received by the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA;
18
(iv) promptly, and in any event within 30 days after receipt thereof,
a copy of any notice, summons, citation, directive, letter or other form of
communication from any governmental authority or court in any way
concerning any action or omission on the part of the Borrower or any of its
Subsidiaries in connection with any substance defined as toxic or hazardous
by any applicable federal, state or local law, rule, regulation, order or
directive or any waste or byproduct thereof, or concerning the filing of a
lien upon, against or in connection with the Borrower, its Subsidiaries, or
any of their leased or owned real or personal property, in connection with
a Hazardous Substance Superfund or a Post-Closure Liability Fund as
maintained pursuant to (S) 9507 of the Internal Revenue Code; and
(v) promptly, and in any event within 30 days after request, such
other information and data with respect to the Borrower or any of its
Subsidiaries as from time to time may be reasonably requested by the Bank
and is reasonably available to Borrower.
(c) Corporate Existence, Etc. At all times preserve and keep in full force
-------------------------
and effect its and its Subsidiaries' corporate existence and rights, licenses
and franchises material to its business and those of each of its Subsidiaries;
provided, however, that the corporate existence of any such Subsidiary (except
-------- -------
Suburban) may be terminated if such termination is in the best interest of the
Borrower and is not materially disadvantageous to the holder of any Revolving
Note.
(d) Payment of Taxes and Claims. Pay, and cause each of its Subsidiaries
---------------------------
to pay, all taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its franchises,
business, income or property before any penalty or interest accrues thereon, and
all claims (including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by law have
or may become a lien upon any of its properties or assets, prior to the time
when any penalty or fine shall be incurred with respect thereto; provided that
no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
(e) Maintenance of Properties; Insurance. Maintain or cause to be
------------------------------------
maintained in good repair, working order and condition all material properties
used or useful in the business of the Borrower and its Subsidiaries and from
time to time will make or cause to be made all appropriate repairs, renewals and
replacements thereof. The Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other
19
corporations. The Borrower will comply with any other insurance requirement set
forth in any other Loan Document.
(f) Inspection. Permit any authorized representatives designated by the
----------
Bank to visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, including its and their financial and accounting records, and to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably requested.
(g) Compliance with Laws Etc. Exercise, and cause each of its Subsidiaries
-------------------------
to exercise, all due diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
including, without limitation, all rules and regulations of public utility
commissions or similar regulatory authorities, and all environmental laws,
rules, regulations and orders, noncompliance with which would materially
adversely affect the business, properties, assets, operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole.
(h) Hazardous Waste Studies. Promptly, and in any event within thirty (30)
-----------------------
days after submission, provide the Bank with copies of all such investigations,
studies, samplings and testings as may be requested by any governmental or
regulatory authority relative to any substance defined as hazardous or toxic by
any applicable federal, state or local law, rule, regulation, order or
directive, or any waste or by-product thereof, at or affecting any real property
or any facility owned, leased or used by the Borrower or any Subsidiary. The
foregoing shall not include sampling and testing of water, waste water and
effluent conducted by the Subsidiaries of Borrower on periodic bases as a normal
part of their water delivery and wastewater treatment businesses.
SECTION 6.02. Negative Covenants. So long as any Revolving Note shall
------------------
remain unpaid or the Bank shall have any Commitment hereunder, the Borrower will
not, without the written consent of the Bank:
(a) Leverage Ratio. At any time, permit the ratio of Consolidated
--------------
Liabilities to Consolidated Tangible Net Worth to be more than 2.30:1.00.
(b) Consolidated Tangible Net Worth. At any time, permit Consolidated
-------------------------------
Tangible Net Worth to be less than $28,500,000.
(c) Consolidated Net Profit. At the end of any fiscal quarter of the
-----------------------
Borrower, permit Consolidated Net Profit, determined on a four quarter rolling
basis, to be less than $1.00.
(d) EBITDA Coverage Ratio. At the end of any fiscal quarter of Borrower,
---------------------
permit the EBITDA Coverage Ratio, determined on a four quarter rolling basis, to
be less than 1.25:1.0.
20
(e) Liens Etc. Create or suffer to exist, or permit any of its
---------
Subsidiaries to create or suffer to exist, any Lien upon or with respect to any
of its properties, whether now owned or hereafter acquired, or assign, or permit
any of its Subsidiaries to assign, any right to receive income, in each case to
secure any Debt of any Person other than (i) Liens in favor of the Bank; (ii)
Liens reflected on the financial statements referred to in Section 5.01(e)
hereof and other Liens existing on the date hereof and set forth in Schedule
6.02(e) hereto; (iii) purchase money Liens upon or in any equipment acquired or
held by the Borrower or any Subsidiary in the ordinary course of business up to
a maximum of $500,000 to secure the purchase price of such equipment or to
secure indebtedness incurred solely for the purpose of financing the acquisition
of such equipment: (iv) Liens existing on property acquired by the Borrower or
any Subsidiary, and all refundings and extensions of any such Liens, and (v)
Liens, deposits and/or pledges made to secure the performance of operating
leases; provided that the principal amount of Debt secured by any such Lien
permitted hereunder shall not exceed an amount equal to (x) one hundred percent
(100%) of the cost of the real property subject to such lien or security
interest or (y) one hundred percent (100%) of the cost of the personal property
subject to such lien or security interest, and further provided that none of
such liens or security interests shall extend to other assets of the Borrower or
its Subsidiaries. The Bank acknowledges that (A) Suburban has an existing first
mortgage indenture encumbering substantially all of its assets to secure three
series (A, B and C) of first mortgage bonds and (B) NMUI has an existing first
mortgage indenture encumbering substantially all of its assets to secure its
Series A and Series B first mortgage bonds.
(f) Debt. Create, incur, assume or permit to exist, or permit any
----
Subsidiary to create, incur, assume or permit to exist, any indebtedness or
liabilities resulting from borrowings, loans or advances, whether matured or
unmatured, liquidated or unliquidated, joint or several, secured or unsecured,
except for (i) Debt incurred pursuant to this Agreement and the other Loan
Documents, (ii) Debt incurred pursuant to the Suburban Loan Documents; (iii)
Debts, revolving lines of credit and lease obligations of Borrower existing as
of, and disclosed to Bank prior to the date of this Agreement (including
$2,000,000 of unsecured debt of the Borrower to Mellon and $4,000,000 of
unsecured debt of Suburban to Mellon), (iv) secured indebtedness for purchase
money financing of equipment which is permitted under Section 6.02(e)(iii) not
to exceed an aggregate of $500,000, (v) unsecured funded bank debt not to exceed
an aggregate of $16,000,000 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) and (vi) intercompany Debt between Borrower and its wholly-
owned Subsidiaries or between such wholly-owned Subsidiaries.
(g) Consolidation, Merger or Dissolution. (i) Consolidate with or merge
------------------------------------
into any other Person, unless Borrower is the surviving entity and no event has
occurred and is continuing, or would result from such consolidation or merger,
which constitutes an Event of Default or Potential Event of Default, (ii) wind
up, liquidate or dissolve or (iii) agree to do any of the foregoing.
21
(h) Loans, Investments, Secondary Liabilities. Make or permit to remain
-----------------------------------------
outstanding, or permit any Subsidiary to make or permit to remain outstanding,
any loan or advance to, or guarantee, induce or otherwise become contingently
liable, directly or indirectly, in connection with the obligations, stock or
dividends of, or own, purchase or acquire any stock, obligations or securities
of or any other interest in, or make any capital contribution to, any other
Person, except that the Borrower and its Subsidiaries may:
(i) own, purchase or acquire certificates of deposit issued by a bank,
commercial paper rated Moody's P-1, municipal bonds rated Xxxxx'x XX or
better, direct obligations of the United States of America or its agencies,
and obligations guaranteed by the United States of America;
(ii) continue to own the existing capital stock of the Borrower's
Subsidiaries and make new purchases of the capital stock of other entities
as long as such new investments do not exceed in the aggregate Five Million
Dollars ($5,000,000) outstanding at any one time, without the Bank's prior
written approval;
(iii) endorse negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
(iv) allow the Borrower's wholly-owned Subsidiaries to make or permit
to remain outstanding advances from the Borrower's wholly-owned
Subsidiaries to the Borrower;
(v) make or permit to remain outstanding loans or advances to the
Borrower's wholly-owned Subsidiaries or enter into or permit to remain
outstanding guarantees in connection with the obligations of the Borrower's
wholly-owned Subsidiaries; provided, however, that any outstanding loans or
-------- -------
advances by Borrower to its wholly-owned Subsidiaries shall be evidenced by
negotiable promissory notes, in form and substance satisfactory to Bank,
and which notes shall provide for the assignment thereof to the Bank as
collateral security for the repayment of the Loans and any other
obligations of the Borrower hereunder upon the demand of the Bank;
(vi) make or permit to remain outstanding loans and advances to any of
its officers, shareholders or affiliates or enter into or permit to remain
outstanding guarantees in connection with the obligations of its officers,
shareholders or affiliates, in an aggregate amount for all such loans,
advances and guarantees not exceeding $100,000 in addition to the loans
outstanding and reflected on the Borrower's financial statements dated
September 30, 1997;
(vii) guaranty the indebtedness of Suburban under the Suburban Loan
Documents;
22
(viii) guaranty the indebtedness of Suburban under that certain
Credit Agreement between Suburban and Mellon dated as of the date hereof in
a maximum amount at any one time not to exceed $4,000,000 for principal,
plus all interest thereon and costs and expenses pertaining to the
enforcement of the guaranty and/or the collection of such indebtedness; and
(ix) guaranty the unsecured bank indebtedness of NMUI in a maximum
amount at any one time not to exceed $4,000,000 for principal, plus all
interest thereon and all costs and expenses pertaining to the enforcement
of the guaranty and/or the collection of such indebtedness.
(i) Asset Sales. Convey, sell, lease, transfer or otherwise dispose of, or
-----------
permit any Subsidiary to convey, sell, lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any part of its or its
Subsidiary's business, property or fixed assets outside the ordinary course of
business, whether now owned or hereafter acquired, except that the Borrower and
its Subsidiaries may convey, sell, lease, transfer or otherwise dispose of
business, property or fixed assets for consideration which in the aggregate does
not exceed $500,000 per year. The foregoing covenant shall not extend to any
property taken by eminent domain by any governmental authority or other person
or entity having the power of eminent domain or to any sale in lieu of
condemnation to a governmental authority or other person or entity having the
power of eminent domain made after threat of condemnation by such governmental
authority or other person or entity, or to the pending sale by Suburban of that
certain parcel of real estate commonly known as 00000 Xxxx Xxxxxxxxxx Xxxxxx, Xx
Xxxxxx, Xxxxxxxxxx, which property was the site of the former headquarters
facility of Borrower and Suburban.
(j) Hostile Tender Offers. Make any offer to purchase or acquire, or
---------------------
consummate a purchase or acquisition of, five percent (5%) or more of the
capital stock of any publicly held corporation or other publicly held business
entity, unless the board of directors of such corporation or business entity has
notified the Borrower that it invites or does not oppose such offer or purchase.
(k) Distributions. Upon the occurrence and during the continuance of an
-------------
Event of Default or Potential Event of Default, authorize, declare or pay, or
permit any of its Subsidiaries to authorize, declare or pay, any Distributions.
(l) Transactions with Affiliates. Neither Borrower nor any of its
----------------------------
Subsidiaries shall enter into any transaction for the purchase, sale or exchange
of property or the rendering of any service to or by any affiliate, except in
the ordinary course of and pursuant to the reasonable requirements of Borrower's
or its Subsidiary's business and upon fair and reasonable terms no less
favorable to the Borrower or its Subsidiary than Borrower or its Subsidiary
would obtain in a comparable arm's length transaction with an unaffiliated
person.
23
(m) Books and Records. Borrower will, and will cause each of its
-----------------
Subsidiaries to, keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of applicable law
shall be made of all dealings and transactions in relation to its business and
activities.
(n) Restructure. Make any change in Borrower's financial restructure, the
-----------
principal nature of Borrower's business operations (taken as a whole), or the
date of its fiscal year.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following events ("Events
----------------- ------
of Default") shall occur and be continuing:
----------
(a) Borrower shall fail to pay within three (3) days of the date when due,
any principal, interest, fees or other amounts payable under any of the Loan
Documents; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with the Loan Documents shall
prove to have been incorrect in any material respect when made; or
(c) Borrower shall fail to perform or observe any term, any affirmative or
negative covenant, including, but not limited to, those covenants set forth in
Sections 6.01 and 6.02 hereof, or any other agreement contained in this
Agreement on its part to be performed or observed (other than those referred to
in subsections (a) and (b) above); and with respect to any such default which by
its nature can be cured, such default shall continue for a period of twenty (20)
days from its occurrence; or
(d) The Borrower or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in any Loan Document other
than this Agreement and such default shall not have been remedied or waived
within any applicable grace period in such Loan Document or in (c) above; or
(e) an Event of Default shall occur under the Suburban Loan Documents; or
(f) (i) The Borrower or any of its Subsidiaries shall (A) fail to pay any
principal of, or premium or interest on, any Debt (including, without
limitation, Debt owing to Mellon), the aggregate outstanding principal amount of
which is at least $100,000 (excluding Debt evidenced by the Revolving Note when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Debt, or (B) fail
to perform or observe any term, covenant or condition on its part to be
performed
24
or observed under any agreement or instrument relating to any such Debt or
material to the performance, business, property, assets, condition (financing or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole,
when required to be performed or observed, and such failure shall continue after
the applicable grace period, if any, specified in such agreement or instrument;
or
(g) (i) The Borrower or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days (Bank may, in its discretion, cease
making Revolving Loans during the pendency of such action or proceeding); or
(iii) there shall be commenced against the Borrower or any of its Subsidiaries
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof (Bank may, in its
discretion, cease making Revolving Loans during the pendency of such action or
proceeding); or (iv) the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clauses (i), (ii) and (iii)
above; or (v) the Borrower or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due;
(h) One or more judgments or decrees shall be entered against the Borrower
or any of its Subsidiaries involving in the aggregate a liability (not paid or
fully covered by insurance or reserves) equal to or greater than $250,000 and
all such judgments or decrees shall not have been vacated, discharged, or stayed
or bonded pending appeal within thirty (30) days from the entry thereof; or
(i) (i) The Borrower or any of its ERISA Affiliates fails to make full
payment when due of all material amounts which, under the provisions of any
Pension Plan or Section 412 of the Internal Revenue Code, the Borrower or any of
its ERISA Affiliates is required to pay as contributions thereto and such
development is not remedied or reversed within fifteen (15) days after the
Borrower knows of such development;
25
(ii) any material accumulated funding deficiency occurs or exists,
whether or not waived, with respect-to any Pension Plan and such development is
not remedied or reversed within fifteen (15) days after the Borrower knows of
such development;
(iii) the excess of the actuarial present value of all benefit
liabilities under all Pension Plans over the fair market value of the assets of
such Pension Plans (excluding in such computation Pension Plans with assets
greater than benefit liabilities) allocable to such benefit liabilities are
greater than five percent (5%) of Consolidated Tangible Net Worth and such
development is not remedied or reversed within fifteen (15) days after the
Borrower knows of such development;
(iv) the Borrower or any of its ERISA Affiliates enters into any
transaction which has as its principal purpose the evasion of liability under
Subtitle D of Title IV of ERISA:
(v) (A) Any Pension Plan maintained by the Borrower or any of its
ERISA Affiliates shall be terminated within the meaning of Title IV of ERISA in
a distress termination, or (B) a trustee shall be appointed by an appropriate
United States district court in accordance with Section 4042 of ERISA to
administer any Pension Plan, or (C) the Pension Benefit Guaranty Corporation
(or any successor thereto) shall institute proceedings to terminate any Pension
Plan or to appoint a trustee to administer any Pension Plan in accordance with
Section 4042 of ERISA, or (D) the Borrower or any of its ERISA Affiliates shall
withdraw (under Section 4063 of ERISA) from a Pension Plan, if as of the date
of the event listed in subclauses (A)-(D) above or any subsequent date, either
the Borrower or its ERISA Affiliates has any material liability (such liability
to include, without limitation, any liability to the Pension Benefit Guaranty
Corporation, or any successor thereto, or to any other party under Sections
4062, 4063 or 4064 of ERISA or any other provision of law) resulting from or
otherwise associated with the events listed in subclauses (A)-(D) above;
(vi) As used in this subsection 7.01(h) the term "accumulated funding
deficiency" has the meaning specified in Section 412 of the Internal Revenue
Code, and the term "benefit liabilities" has the meaning specified in Section
4001 of ERISA;
(j) There shall be instituted against the Borrower or any Subsidiary, or
against any guarantor, any proceeding for which forfeiture of any property with
a value of $250,000 or more is a potential penalty and such proceeding remains
undismissed, undischarged or unbonded for a period of thirty (30) days from the
date the Borrower knows of such proceeding;
(k) A Change of Control shall have occurred; or
(l) The mortgage bonds of Suburban or NMUI shall fail to maintain a NAIC
rating of 1 or 2.
26
Then, (i) upon the occurrence of any Event of Default described in clause
7.01(g) above, the Commitment shall immediately terminate and all Loans
hereunder with accrued interest thereon, and all other amounts owing under the
Loan Documents shall automatically become due and payable, and (ii) upon the
occurrence of any other Event of Default, the Bank may, by notice to the
Borrower, declare the Commitment to be terminated forthwith, whereupon the
Commitment shall immediately terminate; and, by notice to the Borrower, declare
the Loans hereunder, with accrued interest thereon, and all other amounts owing
under the Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable. Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or accorded by law,
including, without limitation, the right to resort to any or all security for
any credit accommodation from the Bank subject hereto and to exercise any or all
of the rights of a beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Bank in connection with each of the Loan
Documents may be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
Notwithstanding any other provision of this Agreement, including Section 8.02,
notices to the Borrower under this Section shall be communicated in writing
(including telex or facsimile transmissions).
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
---------------
the Loan Documents nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 8.02. Notices, Etc. Except as otherwise set forth in this
------------
Agreement, all notices and other communications provided for hereunder shall be
in writing (including facsimile communication) and mailed certified mail, return
receipt requested or sent by facsimile or delivered, if to the Borrower, at its
address set forth on the signature page hereof; and if to the Bank, at its
address set forth on the signature page hereof; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other parties. All such notices and communications shall be effective upon
personal delivery or upon receipt when sent by facsimile, or on the date of
receipt or refusal indicated on the return receipt if sent by certified mail,
except that notices and communications to the Bank pursuant to Article II or VII
shall not be effective until received by the Bank.
SECTION 8.03. Right of Setoff: Security Interest in Deposit Accounts.
-------------------------------------------------------
Upon and only after the occurrence of any Event of Default not cured within any
applicable grace
27
period, the Bank is hereby authorized by the Borrower, at any time and from time
to time, without notice, (a) to set off against, and to appropriate and apply to
the payment of, the obligations and liabilities of the Borrower under the Loan
Documents (whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts owing by the Bank to the Borrower (whether
payable in Dollars or any other currency, whether matured or unmatured, and, in
the case of deposits, whether general or special, time or demand and however
evidenced) and (b) pending any such action, to the extent necessary, to hold
such amounts as collateral to secure such obligations and liabilities and to
return as unpaid for insufficient funds any and all checks and other items drawn
against any deposits so held as the Bank in its sole discretion may elect. The
Borrower hereby grants to the Bank a security interest in all deposits and
accounts maintained with the Bank and with any other financial institution. The
Bank is authorized to debit any account maintained with it by the Borrower for
any amount of principal, interest or fees which are then due and owing to the
Bank.
SECTION 8.04. No Waiver; Remedies. No failure on the part of either party
-------------------
hereto to exercise, and no delay in exercising, any right under any of the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.05. Costs and Expenses. Borrower shall pay to Bank immediately
------------------
upon demand the full amount of all costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of
Bank's in-house counsel), incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and each other of the Loan
Documents, and the preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents (including, without
limitation, in appellate, bankruptcy, insolvency, liquidation, reorganization,
moratorium or other similar proceedings) or the restructuring of the Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents, including, without limitation, any action for
declaratory relief.
SECTION 8.06. Participations. The Bank may sell, assign, transfer,
--------------
negotiate or grant participations to other financial institutions in all or part
of the obligations of the Borrower outstanding under the Loan Documents,
provided that any such sale, assignment, transfer, negotiation or participation
shall be in compliance with the applicable federal and state securities laws;
and provided further that any assignee or transferee agrees to be bound by the
terms and conditions of this Agreement. The Bank may, in connection with any
actual or proposed assignment or participation, disclose to the actual or
proposed assignee or participant, any information relating to the Borrower or
any of its Subsidiaries.
SECTION 8.07. Effectiveness: Binding Effect. This Agreement shall become
-----------------------------
effective when it shall have been executed by the Borrower and the Bank and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Bank and their respective
28
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
SECTION 8.08. Governing Law. The validity, interpretation and enforcement
-------------
of this Agreement and the other Loan Documents and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of California
(without giving effect to principles of conflicts of law).
SECTION 8.09. Arbitration.
-----------
(a) Arbitration. Upon the demand of any party, any Dispute shall be
-----------
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this Agreement. A "Dispute" shall mean any action, dispute,
claim or controversy of any kind, whether in contract or tort, statutory or
common law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who
fails or refuses to submit to arbitration following a lawful demand by any other
party shall bear all costs and expenses incurred by such other party in
compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by the
---------------
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in the County of
Los Angeles, California selected by the AAA or other administrator. If there is
any inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant to
the Dispute being arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having jurisdiction; provided however,
that nothing contained herein shall be deemed to be a waiver by any party that
is a bank of the protections afforded to it under 12 U.S.C. (S)91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
----------------------------------------------------------
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
29
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
--------------------------------------------
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may grant
any remedy or relief that a court of the state of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary, in
---------------
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (A) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (B) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (C) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (1) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (2) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.
(f) Real Property Collateral; Judicial Reference. Notwithstanding anything
--------------------------------------------
herein to the contrary, no Dispute shall be submitted to arbitration if the
Dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
30
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA, the
-------------
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
SECTION 8.10. Waiver of Notices. Borrower hereby expressly waives demand,
-----------------
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments, included in or evidencing any of the obligations,
and any and all other demands and notices of any kind or nature whatsoever with
respect to the obligations and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrower which Bank may elect to
give shall entitle Borrower to any other or further notice or demand in the
same, similar or other circumstances.
SECTION 8.11. Entire Agreement. This Agreement with Exhibits and
----------------
Schedules and the other Loan Documents embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 8.12. Separability of Provisions. In case any one or more of the
--------------------------
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION 8.13. Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
XXXXX FARGO BANK, SOUTHWEST WATER COMPANY
NATIONAL ASSOCIATION
By: /s/ XXXXXXX XXXXXXX XXXX By: /s/ XXXXX X. XXXXXXXX
------------------------ ---------------------
Name: Name: Xxxxx X. Xxxxxxxx
Title: Title: Vice President - Finance
Chief Financial Officer
By: /s/ XXXXXXX X. XXXX
-------------------
Name: Xxxxxxx X. Xxxx
Title: Corporate Controller
Address: Address:
San Xxxxxxx Valley Regional Commercial 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxxx Xxxx Xxxxxx, Xxxxxxxxxx 00000-0000
0000 Xxxx Xxxxxx Xxxxxx Xxxxx, Xxxxx 000 Attention: Xxxxx X. Xxxxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000 Vice President - Finance
Attention: Xxxxxxx Xxxxxxx Xxxx Chief Financial Officer
Title:
Facsimile (000) 000-0000 Facsimile: (000) 000-0000
32
SCHEDULE 5.01(f) - LITIGATION
-----------------------------
None other than as reported on Form 10-Q of Borrower for quarter ended September
30, 1997.
33
SCHEDULE 5.01(i) - ENVIRONMENTAL MATTERS
----------------------------------------
See Form 10-Q of Borrower for quarter ended September 30, 1997.
Also, there may have been minor hydraulic fluid leakage at the Maplegrove Street
site formerly operated by Southwest and Suburban as their headquarters.
Southwest and Suburban are currently investigating this matter but anticipate
that any remediation required will have a cost of less than $100,000.
34
SCHEDULE 6.02(e) - LIENS
------------------------
None except as disclosed in the audited consolidated financial statements of
Borrower for the fiscal year ended December 31, 1996.
35
