Exhibit 10.11(b)

 

CHANGE IN TERMS AGREEMENT

 

Principal

 

Loan Date

 

Maturity

 

Loan No.

 

call/coll

 

Account

 

Officer

 

Initials

 

$

4,000,000.00

 

04-10-2002

 

04-10-2004

 

1000137188-18

 

 

 

SWEEP

 

***

 

 

 

 

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.  Any item above
containing “***” has been omitted due to text length limitations.

 

Borrower:

NEW MEXICO UTILITIES, INC.
4700 Irving Boulevard NW, Suite 2O1
Albuquerque, NM 87114

Lender:

BANK OF THE WEST
New Mexico Business Banking #223M
500 Marquette, 14th Floor
Albuquerque, NM 87102
(888) 457-2892

 

Principal Amount:   $4,000,000.00

Date of Agreement: July 10, 2003

 

DESCRIPTION OF EXISTING INDEBTEDNESS.  The Promissory Note dated April 10, 2002
in the original principal amount of $4,000,000.00 and Business Loan Agreement
dated April 10, 2002.

 

DESCRIPTION OF COLLATERAL. Unsecured.

 

DESCRIPTION OF CHANGE IN TERMS.

 

1.     Extension of Maturity Date.  The Maturity Date provided for in the
Promissory Note shall be extended from April 10, 2004 to April 30, 2005.

 

2.     Modification of MONTHLY LOAN FEE.  Heading captioned “MONTHLY LOAN FEE”
of the Promissory Note is deleted in its entirety and the following is
substituted in lieu thereof:

 

MONTHLY LOAN FEE.  Borrower will pay to Lender a monthly loan fee in the amount
of $400.00, which fee shall be payable on a monthly basis and represent an
unconditional and non-refundable payment to Lender in consideration of Lender’s
agreement to enter in to this Note.

 

3.     Deleting GUARANTOR(S) AGREE TO FURNISH LENDER WITH THE FOLLOWING.
 Heading captioned “GUARANTOR(S) AGREE TO FURNISH LENDER WITH THE FOLLOWING” of
the Business Loan Agreement is deleted in its entirety.

 

4.     Conditions Precedent.  As a condition precedent to the effectiveness of
this Change in Terms Agreement, (a) Borrower agrees to provide a commercial
guaranty executed by Southwest Water Company; (b) Borrower agrees to pay to
Lender a renewal fee of $250.00.

 

CONTINUING VALIDITY.  Except as expressly changed by this Agreement, the terms
of the original obligation or obligations, including all agreements evidenced or
securing the obligations(s), remain unchanged and in full force and effect. 
Consent by Lender to this Agreement does not waive Lender’s right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms.  Nothing in this Agreement will constitute a
satisfaction of the obligations(s).  It is the intention of Lender to retain as
liable parties all makers and endorsers of the original obligations(s),
including accommodation parties, unless a party is expressly released by Lender
in writing, Any maker or endorser, including accommodation makers, will not be
released by virtue of this Agreement.  If any person who signed the original
obligation does not sign this Agreement below, then all persons signing below
acknowledge that this Agreement is given conditionally, based on the
representation to Lender that the non-signing party consents to the changes and
provisions of this Agreement or otherwise will not be released by it.  This
waiver applies not only to any initial extension, modification or release, but
also all such subsequent actions.

 

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWER
AGREES TO THE TERMS OF THE AGREEMENT.

 

CIT SIGNERS:

NEW MEXICO UTILITIES, INC.

 

By:

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

 

Bobby L. Gay, V.P. & General Manager of NEW
MEXICO UTILITIES, INC.

 

Michael O. Quinn, Secretary & Treasure of NEW
MEXICO UTILITIES. INC.

 

 

BANK OF THE WEST

 

By:

/s/  Elizabeth R. Allbright

 

 

 

Elizabeth R. Allbright, Vice President of BANK OF
THE WEST

 

 

--------------------------------------------------------------------------------

 

COMMERCIAL GUARANTY

 

Principal

 

Loan Date

 

Maturity

 

Loan No.

 

call/coll

 

Account

 

Officer

 

Initials

 

 

 

 

 

 

 

 

 

 

 

 

 

***

 

 

 

 

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.  Any item above
containing “***” has been omitted due to text length limitations.

 

Borrower:

NEW MEXICO UTILITIES, INC.
4700 Irving Boulevard NW, Suite 201
Albuquerque NM  87114

Lender:

BANK OF THE WEST
New Mexico Business Banking #223J
5501 Jefferson NE
Albuquerque, NM 87109
(888) 457-2692

Guarantor:

SOUTHWEST WATER COMPANY
225 N. Barranca Avenue, Suite 200
West Covina, CA 91791

 

 

 

AMOUNT OF GUARANTY.  The amount of this Guaranty is Unlimited.

 

CONTINUING UNLIMITED GUARANTY.  For good and valuable consideration, SOUTHWEST
WATER COMPANY (“Guarantor”) absolutely and unconditionally guarantees and
promises to pay to BANK OF THE WEST (“Lender”) or its order, in legal tender of
the United States of America, the Indebtedness (as that term is defined below)
of NEW MEXICO UTILITIES, INC. (“Borrower”) to Lender on the terms and conditions
set forth in this Guaranty.  Under this Guaranty, the liability of Guarantor is
unlimited and the obligations of Guarantor are continuing.

 

INDEBTEDNESS GUARANTEED.  The Indebtedness guaranteed by this Guaranty includes
and any and all of Borrower’s Indebtedness to Lender and is used in the most
comprehensive sense and means and includes any and all of Borrower’s
liabilities, obligations and debts to Lender, now  existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness, lease
obligations, other obligations, and liabilities of Borrower, or any of them, and
any present or future judgments against Borrower, or any of them; and whether
any such Indebtedness is voluntarily or involuntarily incurred, due or not due,
absolute or contingent, liquidate or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or primarily
or secondarily, or as guarantor or surety; whether recovery on the Indebtedness
may be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

 

DURATION OF GUARANTY.  This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor’s other obligations
under this Guaranty shall have been performed in full.  If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing.  Guarantor’s written
notice of revocation must be mailed to Lender, by certified mail, at Lender’s
address listed above or such other place as Lender may designate in writing
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor’s written
revocation.  For this purpose and without limitation, the term “new
indebtedness” does not include Indebtedness which at the time of notice of
revocation is contingent, unliquidated, undetermined or not due and which later
becomes absolute, liquidated, determined or due.  This Guaranty will continue to
bind Guarantor for all Indebtedness incurred by Borrower or committed by Lender
prior to receipt of Guarantor’s written notice of revocation, including any
extensions, renewals, substitutions or modifications of the indebtedness.  All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor’s revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness.  This Guaranty shall
bind Guarantor’s estate as to Indebtedness created both before and after
Guarantor’s death or incapacity, regardless of Lender’s actual notice of
Guarantor’s death Subject to the foregoing, Guarantor’s executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect.  Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty.  A revocation Lender receives from any one or more Guarantors shall
not affect the liability of any remaining Guarantors under this Guaranty.  It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor’s written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor’s written revocation of this Guaranty shall not constitute a
termination of this Guaranty.  This Guaranty is binding upon Guarantor and
Guarantor’s heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to be zero dollars ($0.00).

 

GUARANTOR’S AUTHORIZATION TO LENDER.  Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor’s liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower’s sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

 

GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower’s request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty to do not conflict with or result
in a default under any agreement or other instrument binding upon Guarantor and
do not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor’s assets, or any
interest therein; (F) upon Lender’s request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor’s financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor’s financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor’s financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established

 

--------------------------------------------------------------------------------

 

adequate means of obtaining from Borrower on a continuing basis information
regarding Borrower’s financial condition.  Guarantor agrees to keep adequately
informed from such means of any facts, events, or circumstances which might in
any way affect Guarantor’s risks under this Guaranty, and Guarantor further
agrees that, absent a request for information, Lender shall have no obligation
to disclose to Guarantor any information or documents acquired by Lender in the
course of its relationship with Borrower.

 

GUARANTOR’S FINANCIAL STATEMENTS.  Guarantor agrees to furnish Lender with the
following:

 

Additional Requirements.  Annual Statements.  Not later than April 15th of each
year, a copy of the annual financial report of the Guarantor for such year,
audited by a firm or certified public accountants acceptable to Lender.

 

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

 

GUARANTOR’S WAIVERS.  Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any nonpayment of the Indebtedness or of any nonpayment
related to any collateral, or notice of any action or nonaction on the part of
Borrower, Lender, any surety, endorser, or other guarantor in connection with
the Indebtedness or in connection with the creation of new of additional Lender,
any surety, endorser, or other guarantor in connection with the Indebtedness or
in connection with the creation of new or additional loans or obligations; (C)
to resort for payment or to proceed directly or at once against any person,
including Borrower or any other guarantor; (D) to proceed directly against or
exhaust any collateral held by Lender from Borrower, any other guarantor, or any
other person; (E) to give notice of the terms, time, and place of any public or
private sale of personal property security held by Lender from Borrower or to
comply with any other applicable provisions of the Uniform Commercial Code; (F)
to pursue any other remedy with Lender’s power; or (G) to commit any act or
omission of any kind, or at any time, with respect to any matter whatsoever.

 

Guarantor also waives any and all rights or defenses arising by reason of (A)
any “one action” or “anti-deficiency” law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender’s commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender with destroys or otherwise adversely affects
Guarantor’s subrogation rights or Guarantor’s rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower’s
liability form any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender with is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness.  If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower’s
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

 

Guarantor further waives and agrees not to asset or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

 

GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS.  Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor’s full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law.  If any such waiver is determined to be contrary to any applicable law of
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.

 

SUBORDINATION OF BORROWER’S DEBTS TO GUARANTOR.  Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent.  Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower.  In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors. 
By voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender. 
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness.  If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender. 
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

 

MISCELLANEOUS PROVISIONS.  The following miscellaneous provision are a part of
this Guaranty:

 

Amendments.       This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Guaranty.  No alteration of or amendment to this
Guaranty shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses.   Guarantor agrees to pay upon demand all of Lender’s
costs and expenses, including Lender’s reasonable attorneys’ fees and Lender’s
legal expenses, incurred in connection with the enforcement of this Guaranty. 
Lender may hire or pay someone else to help enforce this Guaranty, and Guarantor
shall pay the costs and expenses of such enforcement Costs and expenses include
Lender’s reasonable attorneys fees and legal expenses whether or not there is a
lawsuit, including reasonable attorneys fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. 
Lender may also recover from Guarantor all court, alternative dispute resolution
or other collection costs (including, without limitation, fees and charges of
collection agencies) actually incurred by Lender

 

Caption Headings.   Caption headings in this Guaranty are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Guaranty.

 

Governing Law.   This Guaranty will be governed by, construed and enforced in
accordance with federal law and the laws of the State of New Mexico.  However,
in the event that the enforceability or validity of any provision of this
Guaranty is challenged or questioned, such provision shall be governed by
whichever applicable state or federal law would uphold or would enforce such
challenged or questioned provision.  The loan transaction which is evidence by
the Note and this Guaranty has been applied for, considered, approved and made,
and all necessary loan documents have been accepted by Lender in the State of
New Mexico.

 

Choice of Venue.   If there is a lawsuit, Guarantor agrees upon Lender’s request
to submit to the jurisdiction of the courts of the State of New Mexico, in the
county in which Borrower’s following address is located:  4700 Irving Boulevard
NW.  Suite 201, Albuquerque.  NM

 

2

--------------------------------------------------------------------------------

 

87114.

 

Integration.   Guarantor further agrees that Guarantor has read and fully
understands the terms of this Guaranty; Guarantor has had the opportunity to be
advised by Guarantor’s attorney with respect to this Guaranty; the Guaranty
fully reflects Guarantor’s intentions and parol evidence is not required to
interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds
Lender harmless from all losses, claims, damages, and costs (including Lender’s
attorneys’ fees) suffered or incurred by Lender as a result of any breach by
Guarantor of the warranties, representations and agreements of this paragraph.

 

interpretation.      In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be deemed
to have been used in the plural where the context and construction so require;
and where there is more than one Borrower named in this Guaranty or when this
Guaranty is executed by more than one Guarantor, the words “Borrower” and
“Guarantor” respectively shall mean all and any one or more of them.  The words
“Guarantor,” “Borrower,” and “Lender” include the heirs, successors, assigns,
and transferees of each of them.  If a court finds that any provision of this
Guaranty is not valid or should not be enforced, that fact by itself will not
mean that the rest of this Guaranty will not be valid or enforced.  Therefore, a
court will enforce the rest of the provisions of this Guaranty even if a
provision of this Guaranty may be found to be invalid or unenforceable.  If any
one or more of Borrower of Guarantor are corporations, partnerships, limited
liability companies, or similar entities, it is not necessary for lender to
inquire into the powers of Borrower or Guarantor or of the officers, directors,
partners, managers, or other agents acting or purporting to act on their behalf,
and any Loan indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed under this Guaranty.

 

Notices.   Any notice required to be given under this Guaranty shall be given in
writing, and, except for revocation notices by Guarantor, shall be effective
when actually delivered, when actually received by telefacsimile (unless
otherwise required by law), when deposited with a nationally recognized
overnight courier, or, if mailed, when deposited in the United States mail, as
first class, certified or registered mail postage prepaid, directed to the
addresses shown near the beginning of this Guaranty.  All revocation notices by
Guarantor shall be in writing and shall be effective upon delivery to Lender as
provided in the Section of this Guaranty entitled “DURATION OF GUARANTY.”  Any
party may change its address for notices under this Guaranty by giving formal
written notice to the other parties, specifying that the purpose of the notice
is to change the party’s address.  For notice purposes, Guarantor agrees to keep
Lender informed at all times of Guarantor’s current address unless otherwise
provided or required by law.  if there is more than one Guarantor, any notice
given by Lender to any Guarantor is deemed to be notice given to all Guarantors.

 

No Waiver by Lender.         Lender shall not be deemed to have waived any
rights under this Guaranty unless such waiver is given in writing and signed by
Lender.  No delay or omission on the part of Lender in exercising any right
shall operate us a waiver of such right or any other right.  A waiver by Lender
of a provision of this Guaranty shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any
other provision of this Guaranty.  No prior waiver by Lender, nor any cause of
dealing between Lender and Guarantor, shall constitute a waiver of any of
Lender’s rights or of any of Guarantor’s obligations as to any future
transactions.  Whenever the consent of Lender is required under this Guaranty,
the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole discretion of
Lender.

 

Successors and Assigns.   Subject to any limitations stated in this Guaranty on
transfer of Guarantor’s interest, this Guaranty shall be binding upon and inure
to the benefit of the parties, their successors and assigns.

 

DEFINITIONS.     The following capitalized words and terms shall have the
following meaning when used in this Guaranty.  Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America.  Words and terms used in the singular shall
include the plural, and the plural shall include the singular, as the context
may require.  Words and terms not otherwise defined in this Guaranty shall have
the meanings attributed to such terms in the Uniform Commercial Code:

 

Borrower   The word “Borrower” means NEW MEXICO UTILITIES, INC, and includes all
co-signers and co-makers signing the Note.

 

GAAP    The word “GAAP” means generally accepted accounting principles.

 

Guarantor.   The word “Guarantor” means each and every person or entity signing
this Guaranty, including without limitation SOUTHWEST WATER COMPANY.

 

Guaranty.   The word “Guaranty” means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.

 

Indebtedness.        The word “indebtedness” means Borrower’s Indebtedness to
Lender as more particularly described in this Guaranty

 

Lender.   The word “Lender” means BANK OF THE WEST, its successors and assigns.

 

Note.       The word “Note” means and includes without limitation all of
Borrower’s promissory notes and/or credit agreements evidencing Borrower’s loan
obligations in favor of Lender, together with all renewals of, extensions of,
modifications of, refinancing of, consolidations of and substitutions for
promissory notes or credit agreements,

 

Related Documents.   The words “Related Documents” mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.

 

3

--------------------------------------------------------------------------------

 

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS.  IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”.  NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS
GUARANTY IS DATED JULY 10, 2003.

 

THIS GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS GUARANTY IS AND
SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

 

GUARANTOR:

 

 

 

 

 

SOUTHWEST WATER COMPANY

 

 

 

 

 

By:

/s/ Richard J. Shields

(Seal)

By:

/s/ Thomas C. Tekulve

(Seal)

 

Richard J. Shields, Chief Financial Officer of
SOUTHWEST WATER COMPANY

 

Thomas C. Tekulve, Vice President/Treasurer of
SOUTHWEST WATER COMPANY

 

4

--------------------------------------------------------------------------------

 

CORPORATE RESOLUTION TO GRANT COLLATERAL / GUARANTEE

 

Principal
$4,000,000.00

 

Loan Date
04-10-2002

 

Maturity
04-10-2004

 

Loan No
1000137188-18

 

Call / Coll

 

Account

 

Officer
***

 

Initials

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.  Any item above
containing “***” has been omitted due to text length limitations.

 

Borrower:

 

NEW MEXICO UTILITIES, INC.
4700 Irving Boulevard NW, Suite 201
Albuquerque, NM 87114

 

Lender:

 

BANK OF THE WEST
New Mexico Business Banking #223J
5501 Jefferson NE
Albuquerque, NM 87109
(888) 457-2692

 

 

 

 

 

 

 

Corporation:

 

SOUTHWEST WATER COMPANY
225 N. Barranca Avenue, Suite 200
West Covina, CA 91791

 

 

 

 

 

1. THE UNDERSIGNED, DO HERBY CERTIFY THAT:

 

THE CORPORATION’S EXISTENCE.  The complete and correct name of the Corporation
is SOUTHWEST WATER COMPANY (“Corporation”).  The Corporation is a corporation
for profit which is, and at all times shall be, duly organized, validly
existing, and in good standing under and by virtue of the laws of the State of
Delaware.  The Corporation is duly authorized to transact business in all other
states in which the Corporation is doing business, having obtained all necessary
filings, governmental licenses and approvals for each state in which the
Corporation is doing business.  Specifically, the Corporation is, and at all
times shall be, duly qualified as a foreign corporation in all states in which
the failure to so qualify would have a material adverse effect on its business
or financial condition.  The Corporation has the full power and authority to own
its properties and to transact the business in which it is presently engaged or
presently proposes to engage.  The Corporation maintains an office at 225 N.
Barranca Avenue, Suite 200, West Covina, CA 91791.  Unless the Corporation has
designated otherwise in writing, the principal office is the office at which the
Corporation keeps its books and records.  The Corporation will notify Lender
prior to any change in the location of the Corporation’s state of organization
or any change in the Corporation’s name.  The Corporation shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to the Corporation and the Corporation’s business
activities.

 

RESOLUTIONS ADOPTED.  At a meeting of the Directors of the Corporation, or if
the Corporation is a close corporation having no Board of Directors then at a
meeting of the Corporation’s shareholders, duly called and held on
                                , at which a quorum was present and voting, or
by other duly authorized action in lieu of a meeting, the resolutions set forth
in this Resolution were adopted.

 

OFFICERS.  The following named persons are officers of SOUTHWEST WATER COMPANY:

 

NAMES

TITLES

AUTHORIZED

 

ACTUAL SIGNATURES

 

 

 

 

 

Richard J. Shields

Chief Financial Officer

Y

X 

/s/ Richard J.  Shields

 

 

 

 

 

Thomas Tekulve

Vice President/Treasurer

Y

X 

/s/ Thomas Tekulve

 

 

ACTIONS AUTHORIZED.  Any two (2) of the authorized persons listed above may
enter into any agreements of any nature with Lender, and those agreements will
bind the Corporation.  Specifically, but without limitation, any two (2) of such
authorized persons are authorized, empowered, and directed to do the following
for and on behalf of the Corporation:

 

Guaranty.  To guarantee or act as surety for loans or other financial
accommodations to Borrower from Lender on such guarantee or surety terms as may
be agreed upon between the officers of the Corporation and Lender and in such
sum or sums of money as in their judgment should be guaranteed or assured, (the
“Guaranty”).

 

Grant Security.  To mortgage, pledge, transfer, ondorse, hypothecate, or
otherwise encumber and deliver to Lender any property now or hereafter belonging
to the Corporation or in which the Corporation now or hereafter may have an
interest, including without limitation all of the Corporation’s real property
and all of the Corporation’s personal property (tangible or intangible), as
security for the Guaranty, and as a security for the payment of any loans, any
promissory note, or any other or further indebtedness of NEW MEXICO UTILITIES,
INC. to Lender at any time owing, however the same may be evidenced.  Such
property may be mortgaged, pledged, transferred, endorsed, hypothecated or
encumbered at the time such loans are obtained or such indebtedness is incurred,
or at any other time or times, and may be either in addition to or in lieu of
any property theretofore mortgaged, pledged, transferred, endorsed, hypothecated
or encumbered.  The provisions of this Resolution authorizing or relating to the
pledge, mortgage, transfer, endorsement, hypothecation, granting of a security
interest in, or in any way encumbering, the assets of the Corporation shall
include, without limitation, doing so in order to lend collateral security for
the indebtedness, now or hereafter existing, and of any nature whatsoever, of
NEW MEXICO UTILITIES, INC. to Lender.  The Corporation has considered the value
to itself of lending collateral in support of such indebtedness, and the
Corporation represents to Lender that the Corporation is benefited by doing so.

 

Execute Security Documents.  To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and other
security agreements and financing statements which Lender may require and which
shall evidence the terms and conditions under and pursuant to which such liens
and encumbrances, or any of them, are given; and also to execute and deliver to
Lender any other written instruments, any chattel paper, or any other
collateral, of any kind or nature, which Lender may deem necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances. 
Notwithstanding the foregoing, any one of the above authorized persons may
execute, deliver, or record financing statements.

 

Further Acts.  To do and perform such other acts and things and to execute and
deliver such other documents and agreements, including agreements waiving the
right to a trial by jury, as the officers may in their discretion deem
reasonably necessary or proper in order to carry into effect the provisions of
this Resolution.

 

ASSUMED BUSINESS NAMES.  The Corporation has filed or recorded all documents or
filings required by law relating to all assumed business names used by the
Corporation.  Excluding the name of the Corporation, the following is a complete
list of all assumed business names under which the Corporation does business: 
None.

 

NOTICES TO LENDER.  The Corporation will promptly notify Lender in writing at
Lender’s address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Corporation’s name; (B) change
in the Corporation’s assumed business name(s); (C) change in the management of
the Corporation; (D) change in the authorized signer(s); (E) change in the
Corporation’s principal office address; (F) change in the Corporation’s state of
organization: (G) conversion of the Corporation to a new or different type of

 

--------------------------------------------------------------------------------

 

business entity; or (H) change in any other aspect of the Corporation that
directly or indirectly relates to any agreements between the Corporation and
Lender.  No change in the Corporation’s name or state of organization will take
effect until after Lender has received notice.

 

CERTIFICATION CONCERNING OFFICERS AND RESOLUTIONS.  The officers named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set opposite their respective names.  This
Resolution now stands of record on the books of the Corporation, is in full
force and effect, and has not been modified or revoked in any manner whatsover.

 

NO CORPORATE SEAL.  The Corporation has no corporate seal, and therefore, no
seal is affixed to this Resolution.

 

CONTINUING VALIDITY.  Any and all acts authorized pursuant to this Resolution
and performed prior to the passage of this Resolution are hereby ratified and
approved.  This Resolution shall be continuing. shall remain in full force and
effect and Lender may rely on it until written notice of its revocation shall
have been delivered to and received by Lender at Lender’s address shown above
(or such addresses as Lender may designate from time to time).  Any such notice
shall not affect any of the Corporation’s agreements or commitments in effect at
the time notice is given.

 

IN TESTIMONY WHEREOF, I have hereunto set my hand and attest that the signatures
set opposite the names listed above are their genuine signatures.

 

I have read all the provisions of this Resolution, and I personally and on
behalf of the Corporation certify that all statements and representations made
in this Resolution are true and correct.  This Corporate Resolution to Grant
Collateral / Guarantee is dated 7-30-03.

 

THIS RESOLUTION IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS RESOLUTION IS
AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO
LAW.

 

 

CERTIFIED TO AND ATTESTED BY:

 

 

 

 

X

/s/ [ILLEGIBLE]

(Seal)

 

Secretary

 

NOTE: If the officers signing the Resolution are designated by the foregoing
document as one of the officers authorized to act on the Corporation’s behalf,
it is advisable to have this Resolution signed by at least one non-authorized
officer of the Corporation.

 

2

--------------------------------------------------------------------------------

 

CORPORATE RESOLUTION TO BORROW

 

Principal

 

Loan Date

 

Maturity

 

Loan No

 

Call/Coll

 

Account

 

Officer

 

Initials

$4,000,000.00

 

04-10-2002

 

04-10-2004

 

1000137188-18

 

 

 

SWEEP

 

***

 

 

 

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item .  Any item above
containing “* * *” has been omitted due to text length limitations.

 

Corporation:

 

NEW MEXICO UTILITIES, INC.

 

Lender:

 

BANK OF THE WEST

 

 

4700 Irving Boulevard NW, Suite 201

 

 

 

New Mexico Business Banking #223M

 

 

Albuquerque, NM 87114

 

 

 

500 Marquette, 14th Floor

 

 

 

 

 

 

Alburquerque, NM 87102

 

 

 

 

 

 

(888) 457-2692

 

I, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:

 

THE CORPORATION’S EXISTENCE.  The complete and correct name of the Corporation
is NEW MEXICO UTILITIES, INC. (“Corporation”).  The Corporation is a corporation
for profit which is, and at all times shall be, duly organized, validly
existing, and in good standing under and by virtue of the laws of the State of
New Mexico.  The Corporation is duly authorized to transact business in all
other states in which the Corporation is doing business.  Specifically, the
Corporation is, and at all times shall be, duly qualified as a foreign
corporation in all states in which the failure to so qualify would have a
material adverse effect on its business or financial condition.  The Corporation
has the full power and authority to own its properties and to transact the
business in which it is presently engaged or presently proposes to engage.  The
Corporation maintains an office at 4700 Irving Boulevard NW, Suite 201,
Albuquerque,  NM 87114.  Unless the Corporation has designated otherwise in
writing, the principal office is the office at which the Corporation keeps its
books and records.  The Corporation will notify Lender prior to any change in
the location of the Corporation’s state of organization or any change in the
Corporation’s name.  The Corporation shall do all things necessary to preserve
and to keep in full force and effect its existence, rights and privileges, and
shall comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental or quasi-governmental authority or court applicable
to the Corporation and the Corporation’s business activities.

 

RESOLUTIONS ADOPTED.  At a meeting of the Directors of the Corporation, or if
the Corporation is a close corporation having no Board of Directors then at a
meeting of the Corporation’s shareholders, duly called and held on Jan 14th
2003, at which a quorum was present and voting, or by other duly authorized
action in lieu of a meeting, the resolutions set forth in this Resolution were
adopted.

 

OFFICERS.  The following named persons are officers of NEW MEXICO UTILITIES,
INC:

 

NAMES

 

TITLES

 

AUTHORIZED

 

ACTUAL SIGNATURES

Bobby L. Gay

 

V.P. & General Manager

 

Y

X

/s/ [ILLEGIBLE]

 

Michael O. Quinn

 

Secretary & Treasurer

 

Y

X

/s/ [ILLEGIBLE]

 

 

ACTIONS AUTHORIZED.  Any two (2) of the authorized persons listed above may
enter into any agreements of any nature with Lender, and those agreements will
bind the Corporation.  Specifically but without limitation, any two (2) of such
authorized persons are authorized, empowered, and directed to do the following
for and on behalf of the Corporation:

 

Borrow Money.  To borrow, as a cosigner or otherwise, from time to time from
Lender, on such terms as may be agreed upon between the Corporation and Lender,
such sum or sums of money as in their judgment should be borrowed, without
limitation.

 

Execute Notes.  To execute and deliver to Lender the promissory note or notes,
or other evidence of the Corporation’s credit accommodations, on Lender’s forms,
at such rates of interest and on such terms as may be agreed upon, evidencing
the sums of money so borrowed or any of the Corporation’s indebtedness to
Lender, and also to execute and deliver to Lender one or more renewals,
extensions, modifications, refinancings, consolidations, or substitutions for
one or more of the notes, any portion of the notes, or any other evidence of
credit accommodations.

 

Execute Security Documents.  To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and other
security agreements and financing statements which Lender may require and which
shall evidence the terms and conditions under and pursuant to which such liens
and encumbrances, or any of them, are given;  and also to execute and deliver to
Lender any other written instruments, any chattel paper, or any other
collateral, of any kind or nature, which Lender may deem necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances. 
Notwithstanding the foregoing, any one of the above authorized persons may
execute, deliver, or record financing statements.

 

Other Actions.  (1)  Enter into derivative transactions, including but not
limited to.  Interest rate swaps, caps, floors, collars, swap options, and
forwards; (2) Apply for letters of credit or seek the issuance of banker’s
acceptances under which the Corporation shall be liable to the Lender for
repayment.

 

Negotiate Items.  To draw, endorse, and discount with Lender all drafts, trade
acceptances, promissory notes, or other evidences of indebtedness payable to or
belonging to the Corporation  or in which the Corporation may have an interest,
and either to receive cash for the same or to cause such proceeds to be credited
to the Corporation’s account with Lender, or to cause such other disposition of
the proceeds derived therefrom as they may deem advisable.

 

Further Acts.  In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances under such lines,
and in all cases, to do and perform such other acts and things, to pay any and
all fees and costs, and to execute and deliver such other documents and
agreements, including agreements waiving the right to a trial by jury, as the
officers may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of this Resolution.

ASSUMED BUSINESS NAMES.  The Corporation has filed or record all documents or
filings required by law relating to all assumed business names used by the
Corporation.  Excluding the name of the Corporation the following is a complete
list of all assumed business names under which the Corporation does business:
None.

 

NOTICES TO LENDER.  The Corporation will promptly notify Lender in writing at
Lender’s address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Corporation’s name; (B) change
in the Corporation’s assumed business name(s); (C) change in the management of
the Corporation; (D) change in the authorized signer(s); (E) change in the
Corporation’s principal office address; (F) change in the Corporation’s state of
organization; (G) conversion of the Corporation to a new or different type of
business entity; or (H) change in any other aspect of the Corporation that
directly or indirectly relates to any agreements between the Corporation and
Lender.  No change in the Corporation’s name or state of organization will take
effect until after Lender has received notice.

 

--------------------------------------------------------------------------------

 

CERTIFICATION CONCERNING OFFICERS AND RESOLUTIONS.  The officers named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set opposite their respective names.  This
Resolution now stands of record on the books of the Corporation, is in full
force and effect, and has not been modified or revoked in any manner whatsoever.

 

NO CORPORATE SEAL.  The Corporation has no corporate seal, and therefore, no
seal is affixed to this Resolution.

 

CONTINUING VALIDITY.  Any and all acts authorized pursuant to this Resolution
and performed prior to the passage of this Resolution are hereby ratified and
approved.  This Resolution shall be continuing, shall remain in full force and
effect and Lender may rely on it until written notice of its revocation shall
have been delivered to and received by Lender at Lender’s address shown above
(or such addresses as Lender may designate from time to time).  Any such notice
shall not affect any of the Corporation’s agreements or commitments in effect at
the time notice is given.

 

IN TESTIMONY WHEREOF, I have hereunto set my hand and attest that the signatures
set opposite the names listed above are their genuine signatures.

 

I have read all the provisions of this Resolution, and I personally and on
behalf of the Corporation certify that all statements and representations made
in this Resolution are true and correct.  This Corporate Resolution to Borrow is
dated July 22, 2003.

 

 

CERTIFIED TO AND ATTESTED BY:

 

 

 

 

 

/s/ Michael O. Quinn

 

 

Michael O. Quinn, Secretary

 

NOTE: If the officers signing the Resolution are designated by the foregoing
document as one of the officers authorized to act on the Corporation’s behalf,
it is advisable to have this Resolution signed by at least one non-authorized
officer of the Corporation.

 

2

--------------------------------------------------------------------------------

 

New Mexico Utilities, Inc.

Phone:(505) 898-2661

Fax:(505) 898-6379

 

FAX TRANSMISSION

 

To: Tom T

 

Fax #:

 

From: Bob Gay

 

Date: 12-12-03

 

Pages: 9 including this cover sheet.

 

COMMENTS:

 

--------------------------------------------------------------------------------