Document:

Exhibit 10.2

                                   SCHEDULE OF

                       NON-EMPLOYEE DIRECTOR COMPENSATION

                           FOR 2008 - 2009 BOARD TERM

o    Board membership               A stock  option  grant to each  non-employee
                                    director of 50,000 options,  with a one year
                                    vesting  period.  The  total  options  to be
                                    awarded to all  non-employee  directors as a
                                    group for service as  directors is capped at
                                    200,000 options.

o    Board Chairman                 A  stock  option  grant  to  the  individual
                                    serving as Chairman of 25,000 options with a
                                    one  year  vesting  period  for  service  as
                                    Chairman  and  cash   compensation  to  such
                                    individual  of $24,000 per year (paid $6,000
                                    per quarter).

o    Corporate Governance           $10,000 per year  (paid $2,500/quarter) cash
     Committee Members              compensation.

o    Corporate Governance           $22,500 per year  (paid $5,625/quarter) cash
     Committee Chairman             compensation.

o    Audit Committee Members        $10,000 per year  (paid $2,500/quarter) cash
                                    compensation.

o    Audit Committee Chairman       $20,000 per year  (paid $5,000/quarter) cash
                                    compensation.

o    Compensation Committee         $4,000 per year  (paid $1,000/quarter)  cash
     Members                        compensation.

o    Compensation Committee         $10,000 per year  (paid $2,500/quarter) cash
     Chairman                       compensation.a5765449_ex101.htm

    Exhibit 10.1

     

    

     

     

    AMENDED
AND RESTATED
CREDIT
AGREEMENT

     

    

     

    

     

    Dated as
of June 3, 2005

     

    

     

    

     

    among

     

    

     

    

     

    AMERICAN
STATES WATER COMPANY,

     

    as
Borrower,

     

    THE
LENDERS NAMED HEREIN

     

    and

     

    WELLS
FARGO BANK, NATIONAL ASSOCIATION,

     

    as
Administrative Agent and Lead Arranger

     

     

     

     

     

    
      

    

     

      
        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE OF
CONTENTS

       

      
        
          	 	
                   

                	
                  Page

                
	 	 	 	 
	
                  Article 1. DEFINITIONS AND
      ACCOUNTING TERMS

                	
                   1

                
	 	 	 	 
	 	
                  1.1

                	
                  Defined
      Terms

                	
                  1

                
	 	
                  1.2

                	
                  Use of Defined
      Terms

                	
                  27

                
	 	
                  1.3

                	
                  Accounting Terms; Covenant
      Calculations

                	
                  27

                
	 	
                  1.4

                	
                  Rounding

                	
                  27

                
	 	
                  1.5

                	
                  Exhibits and
      Schedules

                	
                  28

                
	 	
                  1.6

                	
                  References to "Borrower
      and its Subsidiaries"

                	
                  28

                
	 	
                  1.7

                	
                  Miscellaneous
      Terms

                	
                  28

                
	 	 	 	 
	Article 2. ADVANCES AND
      LETTERS OF CREDIT	
                  29

                
	 	 	 	 
	 	
                  2.1

                	
                  Advances-General.

                	
                  29

                
	 	
                  2.2

                	
                  Alternate Base Rate
      Advances

                	
                  30

                
	 	
                  2.3

                	
                  Eurodollar Rate
      Advances.

                	
                  30

                
	 	
                  2.4

                	
                  Conversion and
      Continuation of Advances.

                	
                  31

                
	 	
                  2.5

                	
                  Letters of
      Credit.

                	
                  32

                
	 	
                  2.6

                	
                  Termination or Reduction
      of the Commitments.

                	
                  36

                
	 	
                  2.7

                	
                  Administrative Agent's
      Right to Assume Funds Available for Advances

                	
                  37

                
	 	
                  2.8

                	
                  Swing
      Line.

                	
                  37

                
	 	
                  2.9

                	
                  Adjusting Purchase
      Payments

                	
                  39

                
	 	 	 	 
	Article 3. PAYMENTS AND
      FEES	
                  41 

                
	 	 	 	 
	 	
                  3.1

                	
                  Principal and
      Interest.

                	
                  41

                
	 	
                  3.2

                	
                  Unused Revolving Facility
      Commitment Fee

                	
                  42

                
	 	
                  3.3

                	
                  Closing Fees; Arrangement
      Fee; Agency Fee etc.

                	
                  42

                
	 	
                  3.4

                	
                  Letter of Credit
      Fees

                	
                  43

                
	 	
                  3.5

                	
                  Increased Commitment
      Costs

                	
                  43

                
	 	
                  3.6

                	
                  Eurodollar Costs and
      Related Matters.

                	
                  44

                
	 	
                  3.7

                	
                  Late Payments and Default
      Rate

                	
                  47

                
	 	
                  3.8

                	
                  Computation of Interest
      and Fees

                	
                  47

                
	 	
                  3.9

                	
                  Non‐Banking
      Days

                	
                  48

                
	 	
                  3.10

                	
                  Manner and Treatment of
      Payments.

                	
                  48

                
	 	
                  3.11

                	
                  Funding
      Sources

                	
                  49

                
	 	
                  3.12

                	
                  Failure to Charge Not
      Subsequent Waiver

                	
                  49

                
	 	
                  3.13

                	
                  Administrative Agent's
      Right to Assume Payments Will be Made

                	
                  49

                
	 	
                  3.14

                	
                  Fee Determination
      Detail

                	
                  50

                
	 	
                  3.15

                	
                  Survivability

                	
                  50

                
	 	 	 	 
	Article 4. REPRESENTATIONS AND
      WARRANTIES	
                  51

                
	 	 	 	 
	 	
                  4.1

                	
                  Existence and
      Qualification; Power; Compliance With Laws

                	
                  51

                

        

         

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  4.2

                	
                  Authority; Compliance With
      Other Agreements and Instruments and Government
      Regulations

                	
                  51

                
	 	
                  4.3

                	
                  No Governmental Approvals
      Required

                	
                  52

                
	 	
                  4.4

                	
                  Subsidiaries.

                	
                  52

                
	 	
                  4.5

                	
                  Financial
      Statements

                	
                  53

                
	 	
                  4.6

                	
                  No Other Liabilities; No
      Material Adverse Changes

                	
                  53

                
	 	
                  4.7

                	
                  Title to and Location of
      Property

                	
                  53

                
	 	
                  4.8

                	
                  Intangible
      Assets

                	
                  53

                
	 	
                  4.9

                	
                  Litigation

                	
                  54

                
	 	
                  4.10

                	
                  Binding
      Obligations

                	
                  54

                
	 	
                  4.11

                	
                  No
      Default

                	
                  54

                
	 	
                  4.12

                	
                  ERISA.

                	
                  54

                
	 	
                  4.13

                	
                  Regulation U;
      Investment Company Act

                	
                  55

                
	 	
                  4.14

                	
                  Disclosure

                	
                  55

                
	 	
                  4.15

                	
                  Tax
      Liability

                	
                  55

                
	 	
                  4.16

                	
                  Projections

                	
                  55

                
	 	
                  4.17

                	
                  Hazardous
      Materials

                	
                  55

                
	 	
                  4.18

                	
                  Employee
      Matters

                	
                  56

                
	 	
                  4.19

                	
                  Fiscal
      Year

                	
                  56

                
	 	
                  4.20

                	
                  Solvency

                	
                  56

                
	 	 
	Article 5. AFFIRMATIVE
      COVENANTS (OTHER THAN INFORMATION AND REPORTING
      REQUIREMENTS)	
                  57

                
	 	 	 	 
	 	
                  5.1

                	
                  Payment of Taxes and Other
      Potential Liens

                	
                  57

                
	 	
                  5.2

                	
                  Preservation of
      Existence

                	
                  57

                
	 	
                  5.3

                	
                  Maintenance of
      Properties

                	
                  57

                
	 	
                  5.4

                	
                  Maintenance of
      Insurance

                	
                  57

                
	 	
                  5.5

                	
                  Compliance With
      Laws

                	
                  57

                
	 	
                  5.6

                	
                  Inspection
      Rights

                	
                  58

                
	 	
                  5.7

                	
                  Keeping of Records and
      Books of Account

                	
                  58

                
	 	
                  5.8

                	
                  Compliance With
      Agreements

                	
                  58

                
	 	
                  5.9

                	
                  Use of
      Proceeds

                	
                  58

                
	 	
                  5.10

                	
                  Hazardous Materials
      Laws

                	
                  58

                
	 	
                  5.11

                	
                  Minimum Debt
      Rating

                	
                  59

                
	 	
                  5.12

                	
                  Syndication
      Process

                	
                  59

                
	 	 
	Article 6. NEGATIVE
      COVENANTS	
                  60

                
	 	 	 	 
	 	
                  6.1

                	
                  Prepayment of
      Indebtedness

                	
                  60

                
	 	
                  6.2

                	
                  Prepayment of Subordinated
      Obligations

                	
                  60

                
	 	
                  6.3

                	
                  Disposition of
      Property

                	
                  60

                
	 	
                  6.4

                	
                  Mergers

                	
                  60

                
	 	
                  6.5

                	
                  Hostile Tender
      Offers

                	
                  61

                
	 	
                  6.6

                	
                  Distributions

                	
                  61

                
	 	
                  6.7

                	
                  ERISA

                	
                  61

                
	 	
                  6.8

                	
                  Change in Nature of
      Business

                	
                  61

                
	 	
                  6.9

                	
                  Liens and Negative
      Pledges

                	
                  61

                

        

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  6.10

                	
                  Indebtedness and Guaranty
      Obligations

                	
                  62

                
	 	
                  6.11

                	
                  Transactions with
      Affiliates

                	
                  62

                
	 	
                  6.12

                	
                  Total Funded Debt
      Ratio

                	
                  63

                
	 	
                  6.13

                	
                  Interest Coverage
      Ratio

                	
                  63

                
	 	
                  6.14

                	
                  Investments and
      Acquisitions

                	
                  63

                
	 	
                  6.15

                	
                  Operating
      Leases

                	
                  64

                
	 	
                  6.16

                	
                  Amendments

                	
                  64

                
	 	
                  6.17

                	
                  Use of Lender's
      Name

                	
                  64

                
	 	
                  6.18

                	
                  Change of Fiscal
      Periods

                	
                  64

                
	 	 	 	 
	Article 7. INFORMATION AND
      REPORTING REQUIREMENTS	
                  65

                
	 	 	 	 
	 	
                  7.1

                	
                  Financial and Business
      Information

                	
                  65

                
	 	
                  7.2

                	
                  Compliance
      Certificates

                	
                  67

                
	 	 	 	 
	Article 8.
      CONDITIONS	
                  69

                
	 	 	 	 
	 	
                  8.1

                	
                  Closing Date
      Advances

                	
                  69

                
	 	
                  8.2

                	
                  Any
      Advance

                	
                  70

                
	 	 	 	 
	Article 9. EVENTS OF DEFAULT
      AND REMEDIES UPON EVENT OF DEFAULT	
                  72

                
	 	 	 	 
	 	
                  9.1

                	
                  Events of
      Default

                	
                  72

                
	 	
                  9.2

                	
                  Remedies Upon Event of
      Default

                	
                  74

                
	 	 	 	 
	Article 10. THE
      ADMINISTRATIVE AGENT	
                  77

                
	 	 	 	 
	 	
                  10.1

                	
                  Appointment and
      Authorization

                	
                  77

                
	 	
                  10.2

                	
                  Administrative Agent and
      Affiliates

                	
                  77

                
	 	
                  10.3

                	
                  Proportionate Interest in
      any Collateral

                	
                  77

                
	 	
                  10.4

                	
                  Lenders' Credit
      Decisions

                	
                  77

                
	 	
                  10.5

                	
                  Action by Administrative
      Agent.

                	
                  78

                
	 	
                  10.6

                	
                  Liability of Administrative
      Agent

                	
                  79

                
	 	
                  10.7

                	
                  Indemnification

                	
                  80

                
	 	
                  10.8

                	
                  Successor Administrative
      Agent

                	
                  80

                
	 	
                  10.9

                	
                  No Obligations of
      Borrower

                	
                  81

                
	 	 	 	 
	Article 11.
      MISCELLANEOUS	
                  82

                
	 	 	 	 
	 	
                  11.1

                	
                  Cumulative Remedies; No
      Waiver

                	
                  82

                
	 	
                  11.2

                	
                  Amendments;
      Consents

                	
                  82

                
	 	
                  11.3

                	
                  Costs and
      Expenses

                	
                  83

                
	 	
                  11.4

                	
                  Nature of Lenders'
      Obligations

                	
                  84

                
	 	
                  11.5

                	
                  Survival of Representations
      and Warranties

                	
                  84

                
	 	
                  11.6

                	
                  Notices

                	
                  84

                
	 	
                  11.7

                	
                  Execution of Loan
      Documents

                	
                  85

                
	 	
                  11.8

                	
                  Binding Effect;
      Assignment.

                	
                  85

                
	 	
                  11.9

                	
                  Right of
      Setoff

                	
                  88

                

        

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  11.10

                	
                  Sharing of Setoffs

                	
                  88

                
	 	
                  11.11

                	
                  Indemnity by Borrower

                	
                  89

                
	 	
                  11.12

                	
                  Nonliability of the Lenders

                	
                  90

                
	 	
                  11.13

                	
                  No Third Parties Benefited

                	
                  91

                
	 	
                  11.14

                	
                  Confidentiality

                	
                  91

                
	 	
                  11.15

                	
                  Further Assurances

                	
                  92

                
	 	
                  11.16

                	
                  Integration

                	
                  92

                
	 	
                  11.17

                	
                  Governing Law

                	
                  92

                
	 	
                  11.18

                	
                  Severability of Provisions

                	
                  92

                
	 	
                  11.19

                	
                  Headings

                	
                  92

                
	 	
                  11.20

                	
                  Time of the Essence

                	
                  93

                
	 	
                  11.21

                	
                  Foreign Lenders and Participants

                	
                  93

                
	 	
                  11.22

                	
                  Waiver of Right to Trial by Jury

                	
                  93

                
	 	
                  11.23

                	
                  Purported Oral Amendments.

                	
                  94

                
	 	
                  11.24

                	
                  Replacement of Lender

                	
                  94

                
	 	
                  11.25

                	
                  USA Patriot Act Notice

                	
                  94

                

        

      

       

       

       

      Exhibits

       

      A           -           Assignment
and Acceptance

      B           -           Compliance
Certificate

      C           -           Letter
of Credit Agreement

      D           -           Note

      E           -           Opinion
of Counsel

      F           -           Request
for Borrowing

      G           -           Request
for Continuation/Conversion

      H           -           Request
for Letter of Credit

       

      I          
 -           Adjusting
Purchase Payments

       

      Schedules

       

      1.1           Lender
Commitments/Pro Rata Shares

      1.3           Material
Contracts

      4.4           Subsidiaries

      4.7           Existing
Liens, Negative Pledges and Rights of Others

      4.8           Intangible
Assets

      4.9           Material
Litigation

      4.17         Hazardous
Materials Matters

      6.14         Existing
Investments

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    

    AMENDED AND RESTATED CREDIT
AGREEMENT

     

    Dated as
of June 3, 2005

     

    This
AMENDED AND RESTATED CREDIT AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement") is
entered into by and among AMERICAN STATES WATER COMPANY, a California
corporation ("Borrower"), each
lender whose name is set forth on the signature pages of this Agreement and each
lender that may hereafter become a party to this Agreement pursuant to Section 11.8
(each a "Lender" and
collectively, "Lenders"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and Lead
Arranger.

     

    In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

     

    Article 1.

    DEFINITIONS
AND ACCOUNTING TERMS

     

    1.1 Defined
Terms.  As used in this Agreement, the following terms shall
have the meanings set forth below:

     

    "Acquired Person"
means (a) any Person that is the subject of an Acquisition after the
Closing Date and (b) any assets constituting a discrete business or
operation unit that is the subject of an Acquisition after the Closing
Date.

     

    "Acquisition" means
any transaction, or any series of related transactions, consummated after the
Closing Date, by which Borrower or any of its Subsidiaries directly or
indirectly (a) acquires any ongoing business or all or substantially all of
the assets of any firm, partnership, joint venture, limited liability company,
corporation or division thereof, whether through purchase of assets, merger or
otherwise, (b) acquires in one transaction or as the most recent
transaction in a series of transactions control of Securities of a Person
engaged in an ongoing business representing more than 50% of the ordinary voting
power for the election of directors or other governing position if the business
affairs of such Person are managed by a board of directors or other governing
body or (c) acquires control of more than 50% of the ownership interest in
any partnership, joint venture, limited liability company, business trust or
other Person that is not managed by a board of directors or other governing
body.

     

    "Administrative Agent"
means Wells Fargo when acting in its capacity as the Administrative Agent under
any of the Loan Documents, or any successor Administrative Agent.

     

    "Administrative Agent's
Office" means the Administrative Agent's address as set forth on the
signature pages of this Agreement, or such other address as the Administrative
Agent hereafter may designate by written notice to Borrower and the
Lenders.

     

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    "Advance" means any
advance made or to be made by any Lender to Borrower as provided in Section 2.1(a).

     

    "Advances for
Construction" means funds advanced by any person in connection with the
addition of utility plant which funds are subject to refund and, in accordance
with GAAP as in effect on the date hereof, are reflected as "Other Credits" in
the financial statements of Borrower and its Subsidiaries, until
refunded.

     

    "Aerojet Write-Off"
means any write-off of regulatory assets that may be required as a result of the
failure of the California Public Utilities Commission to approve all, or in
part, the request of SCW to amortize the remainder of the costs in the
memorandum account established by SCW to record the costs incurred in connection
with prosecuting the water contamination lawsuits filed by SCW against the State
of California and Aerojet General Corporation.

     

    "Affiliate" means, as
to any Person, any other Person which directly or indirectly controls, or is
under common control with, or is controlled by, such Person.  As used
in this definition, "control" (and the correlative terms, "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of Securities or partnership or other ownership interests, by
contract or otherwise); provided that, in any
event, any Person that owns, directly or indirectly, 10% or more of the
Securities having ordinary voting power for the election of directors or other
governing body of a corporation that has more than 100 record holders of such
Securities, or 10% or more of the partnership or other ownership interests of
any other Person that has more than 100 record holders of such interests, will
be deemed to be an Affiliate of such corporation, partnership or other
Person.

     

    "Aggregate Effective
Amount" means, as of any date of determination and with respect to all
Letters of Credit then outstanding, the sum of (a) the
aggregate effective face amounts of all such Letters of Credit not then paid by
Issuing Lender plus (b) the
aggregate amounts paid by Issuing Lender under such Letters of Credit not then
reimbursed to Issuing Lender by Borrower pursuant to Section 2.5(d)
and not the subject of one or more Advances made pursuant to Section 2.5(e)
or (f).

     

    "Alternate Base Rate"
means, as of any date of determination, the rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the higher of
(a) the Prime Rate in effect on such date and (b) the Federal Funds
Rate in effect on such date plus 1⁄2 of 1% (50 basis
points).

     

    "Alternate Base Rate
Advance" means an Advance that bears interest in relation to the
Alternate Base Rate as provided in Section 3.1(b).

     

    "Applicable Alternate Base
Rate Margin" means, with respect to any Alternate Base Rate Advance, for
each Pricing Period, the interest rate margin set forth below (expressed in
basis points per annum) opposite the Applicable Pricing Level for that Pricing
Period:

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              Applicable

              Pricing

              Level

            	
               

               

              Margin

            	 
      
	 	 	 	 
	 	
              I

            	
              0

            	 
      
	 	
              II

            	
              0

            	 
      
	 	
              III

            	
              0

            	 
      
	 	
              IV

            	
              0

            	 
      
	 	
              V

            	
              0

            	 
      

    

     

    "Applicable Commitment Fee
Margin" means, for each Pricing Period, the margin set forth below
(expressed in basis points per annum) opposite the Applicable Pricing Level for
that Pricing Period:

     

    
      	 	
              Applicable

              Pricing

              Level

            	
               

               

              Margin

            	 
      
	 	 	 	 
	 	
              I

            	
              7.5

            	 
      
	 	
              II

            	
              10.0

            	 
      
	 	
              III

            	
              12.5

            	 
      
	 	
              IV

            	
              15.0

            	 
      
	 	
              V

            	
              17.5

            	 
      

    

     

    "Applicable Eurodollar Rate
Margin" means, with respect to any Eurodollar Rate Advance, for each
Pricing Period, the interest rate margin set forth below (expressed in basis
points per annum) opposite the Applicable Pricing Level for that Pricing
Period:

     

    
      	 	
              Applicable

              Pricing

              Level

            	
               

               

              Margin

            	 
      
	 	 	 	 
	 	
              I

            	
              50.0

            	 
      
	 	
              II

            	
              62.5

            	 
      
	 	
              III

            	
              75.0

            	 
      
	 	
              IV

            	
              87.5

            	 
      
	 	
              V

            	
              100.0

            	 
      

    

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    "Applicable Letter of Credit
Fee Rate" means, as of any date of determination, the then effective
Applicable Eurodollar Rate Margin.

     

    "Applicable Pricing
Level" means,  for each Pricing Period the pricing level set forth
below opposite the Debt Rating achieved by Borrower as of the first day of that
Pricing Period:

     

    
      	 	
              Pricing
      Level

            	
              Debt
      Rating

            
	 	 	 
	 	
              I

            	
              Greater
      than or equal to A1 / A+

            
	 	
              II

            	
              Less
      than A1 / A+ but greater than or equal to A2 / A

            
	 	
              III

            	
              Less
      than A2 / A but greater than or equal to A3 / A-

            
	 	
              IV

            	
              Less
      than A3 / A- but greater than or equal to Baa2/BBB

            
	 	
              V

            	
              Less
      than Baa2/BBB

            

    

     

    provided that in the
event that the then prevailing Debt Ratings are "split ratings", Borrower will
receive the benefit of the higher Debt Rating, unless the split is a
"double split rating" (in which case the pricing level applicable to the middle
Debt Rating will apply) or a "triple split rating" (in which case the pricing
level applicable to the Debt Rating above the Debt Rating applicable to the
lowest pricing level will apply).  For purposes hereof, a Debt Rating
is only a "split rating" if the Debt Rating applies to a different pricing
level.

     

    "Assignment and
Acceptance" means an assignment and acceptance agreement substantially in
the form of Exhibit A.

     

    "Banking Day" means
any Monday, Tuesday, Wednesday, Thursday or Friday, other than a day on which
banks are authorized or required to be closed in California or
New York.

     

    "Borrowing" means a
borrowing consisting of simultaneous Advances of the same type.

     

    "Capital Expenditure"
means any expenditure that is treated as a capital expenditure under GAAP, including any
expenditure that is required to be capitalized in accordance with GAAP that
relates to an asset subject to a Capital Lease.

     

    "Capital Lease" means,
as to any Person, a lease of any Property by that Person as lessee that is, or
should be in accordance with GAAP (including Financial
Accounting Standards Board Statement No. 13, as amended or superseded from
time to time), recorded as a "capital lease" on the balance sheet of that Person
prepared in accordance with GAAP.

     

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    "Capital Lease
Obligations" means all monetary obligations of a Person under any Capital
Lease.

     

    "Cash" means, when
used in connection with any Person, all monetary and non-monetary items owned by
that Person that are treated as cash in accordance with GAAP.

     

    "Cash Equivalents"
means, when used in connection with any Person, that Person's Investments
in:

     

    (a)           Government
Securities due within one year after the date of the making of the
Investment;

     

    (b)           readily
marketable direct obligations of any State of the United States of America or
any political subdivision of any such State or any public agency or
instrumentality thereof given on the date of such Investment a credit rating of
at least Aa by Moody's or AA by S&P, in each case due within one year from
the making of the Investment;

     

    (c)           certificates
of deposit issued by, bank deposits in, eurodollar deposits through, bankers'
acceptances of, and repurchase agreements covering Government Securities
executed by any Lender or any bank incorporated under the Laws of the United
States of America, any State thereof or the District of Columbia
and  having on the date of such Investment combined capital, surplus
and undivided profits of at least $250,000,000, or total assets of at least
$5,000,000,000, in each case due within one year after the date of the making of
the Investment;

     

    (d)           certificates
of deposit issued by, bank deposits in, eurodollar deposits through, bankers'
acceptances of, and repurchase agreements covering Government Securities
executed by any Lender or any branch or office located in the United States of
America of a bank incorporated under the Laws of any jurisdiction outside the
United States of America having on the date of such Investment combined capital,
surplus and undivided profits of at least $500,000,000, or total assets of at
least $15,000,000,000, in each case due within one year after the date of the
making of the Investment;

     

    (e)           repurchase
agreements covering Government Securities executed by a broker or dealer
registered under Section 15(b) of the Securities Exchange Act of 1934, as
amended, having on the date of the Investment capital of at least $50,000,000,
due within 90 days after the date of the making of the Investment; provided that the
maker of the Investment receives written confirmation of the transfer to it of
record ownership of the Government Securities on the books of a "primary dealer"
in such Government Securities or on the books of such registered broker or
dealer, as soon as practicable after the making of the Investment;

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

               (f)           readily
marketable commercial paper or other debt Securities issued by corporations
doing business in and incorporated under the Laws of the United States of
America or any State thereof or of any corporation that is the holding company
for a bank described in clause (c) or (d) above given on
the date of such Investment a credit rating of at least P-1 by Moody's or A-1 by
S&P, in each case due within one year after the date of the making of the
Investment;

     

               (g)           "money
market preferred stock" issued by a corporation incorporated under the Laws of
the United States of America or any State thereof (i) given on the date of
such Investment a credit rating of at least Aa by Moody's and AA by S&P, in
each case having an investment period not exceeding 50 days or (ii) to
the extent that investors therein have the benefit of a standby letter of credit
issued by Lender or a bank described in clauses (c) or (d) above; provided that
(y) the amount of all such Investments issued by the same issuer does not
exceed $5,000,000 and (z) the aggregate amount of all such Investments does
not exceed $10,000,000;

     

               (h)           a
readily redeemable "money market mutual fund" sponsored by a bank described in
clause (c)
or (d) hereof,
or a registered broker or dealer described in clause (e) hereof, that has
and maintains an investment policy limiting its investments primarily to
instruments of the types described in clauses (a) through (g) hereof and given
on the date of such Investment a credit rating of at least Aa by Moody's and AA
by S&P; and

     

               (i)           corporate
notes or bonds having an original term to maturity of not more than one year
issued by a corporation incorporated under the Laws of the United States of
America, or a participation interest therein; provided that
(i) commercial paper issued by such corporation is given on the date of
such Investment a credit rating of at least Aa by Moody's and AA by S&P,
(ii) the amount of all such Investments issued by the same issuer does not
exceed $5,000,000 and (iii) the aggregate amount of all such Investments
does not exceed $10,000,000.

     

    "Certificate" means a
certificate signed by a Senior Officer or Responsible Official (as applicable)
of the Person providing the certificate.

     

    "Change in Control"
means any of the following events:  (a) the sale, lease, transfer
or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Borrower and its Subsidiaries taken as a
whole to any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act), (b) Borrower shall fail to own,
directly or indirectly, 100% of the outstanding capital stock or other equity
interests of any Closing Date Subsidiary, (c) any Person or two or more
Persons acting in concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation, will result in
its or their acquisition of, control over, 20% or more of the capital stock or
other equity interests of Borrower, (d) during any period of up to
24 consecutive months, commencing after the Closing Date, individuals who
at the beginning of such 24-month period were directors of Borrower (together
with any new director whose election by Borrower's board of directors or whose
nomination for election by Borrower's shareholders was approved by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of Borrower then in office or (e) any transaction or series of
related transactions constituting a "change in control" or similar occurrence
under documentation evidencing or governing Indebtedness of Borrower and/or any
of its Subsidiaries of $1,000,000 or more, which gives the holder(s) of such
Indebtedness the right to accelerate or otherwise require payment of such
Indebtedness prior to the maturity date thereof.  As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange
Act.

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

     

    "Closing Date" means
the time and Banking Day on which the conditions set forth in Section 8.1 are
satisfied or waived.  The Administrative Agent shall notify Borrower
and the Closing Date Lenders of the date that is the Closing Date.

     

    "Closing Date Lenders"
means Wells Fargo, CoBank, ACB, Union Bank of California, N.A., Comerica Bank,
The Northern Trust Company, and any other lender party to this Agreement as of
the Closing Date.

     

    "Closing Date
Subsidiaries" means SCW, American States Utility Services, Inc., a
California corporation, Chaparral City Water Company, an Arizona corporation,
California Cities Water Company, Inc., a California corporation, AWR Merger
Company, a California corporation, and Fort Bliss Water Services Company, a
Texas corporation.

     

    "Code" means the
Internal Revenue Code of 1986, as amended or replaced and as in effect from time
to time.

     

    "Commitment" means
with respect to each Lender, the commitment of such Lender to make Advances
(expressed as the maximum aggregate amount of the Advances to be made by such
Lender hereunder), as such commitment may be (a) reduced from time to time
pursuant to Section 2.6 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 11.8.  The
initial amount of each Lender's Commitment is set forth on Schedule 1.1 or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable.  The initial aggregate amount of the
Lenders' Commitments is $85,000,000.

     

    "Compliance
Certificate" means a certificate in the form of Exhibit B,
properly completed and signed by the president or chief financial officer of
Borrower.

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

     

    "Continuation," "Continue" and "Continued" each
refers to a continuation of Eurodollar Rate Advances from one Eurodollar Period
to the next Eurodollar Period pursuant to Section 2.4(c).

     

    "Contractual
Obligation" means, as to any Person, any provision of any outstanding
Security issued by that Person or of any material agreement, instrument or
undertaking to which that Person is a party or by which it or any of its
Property is bound.

     

    "Conversion," "Convert" and "Converted" each
refers to a conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.4(a)
or 2.4(b).

     

    "Debtor Relief Laws"
means the Bankruptcy Code of the United States of America, as amended from time
to time, and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws from time to time in effect affecting the rights of creditors
generally.

     

    "Debt Ratings" means,
as of each date of determination, (a) in the event such a credit rating is
issued by either Moody's or S&P, the bank debt credit rating assigned to the
Indebtedness evidenced by this Agreement by that credit reporting agency, or (b)
if no bank debt credit rating is assigned, the most creditworthy credit rating,
actual or implicit, assigned to senior unsecured Indebtedness of Borrower by
that credit rating agency.

     

    "Default" means any
event that, with the giving of any applicable notice or passage of time
specified in Section 9.1, or
both, would be an Event of Default.

     

    "Default Rate"
means the interest rate prescribed in Section 3.7.

     

    "Designated Deposit
Account" means a deposit account to be maintained by Borrower with Wells
Fargo or one of its Affiliates, as from time to time designated by Borrower by
written notification to the Administrative Agent.

     

    "Designated Eurodollar
Market" means, with respect to any Eurodollar Rate Advance, the London
Eurodollar Market.

     

    "Disqualified Stock"
means any capital stock, warrants, options or other rights to acquire capital
stock (but excluding any debt Security which is convertible, or exchangeable,
for capital stock), which, by its terms (or by the terms of any Security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the Maturity Date.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

     

    "Disposition" means
the sale, transfer or other disposition (each, a "Transfer") in any
single transaction or series of related transactions of any asset, or group of
related assets, of Borrower or any Subsidiary other than (a) a
Transfer of Cash, Cash Equivalents, Investments (other than Investments in a
Subsidiary), Inventory or other assets sold or otherwise disposed of in the
ordinary course of business of Borrower or any Subsidiary, (b) a Transfer
of equipment sold or otherwise disposed of where substantially similar equipment
in replacement thereof has theretofore been acquired, or thereafter within 90
days is acquired, by Borrower or any Subsidiary and (c) a Transfer of
obsolete assets no longer useful in the business of Borrower or any Subsidiary
whose carrying value on the books of Borrower or such Subsidiary is less than
$1,000,000 and (d) a Transfer to Borrower or a wholly-owned Subsidiary of
Borrower.

     

    "Distribution" means,
with respect to any equity interest or Security issued by a Person, or any
warrant or right to acquire any equity interest or Security of a Person,
(a) the retirement, redemption, purchase, or other acquisition for value by
such Person of any such equity interest or Security, (b) the declaration or
(without duplication) payment by such Person of any dividend in Cash or in
Property (other
than in common stock or an equivalent equity interest of such Person) on
or with respect to any such equity interest or Security, (c) any Investment
by such Person in the holder of any such equity interest or Security, and
(d) any other payment by such Person constituting a distribution under
applicable Laws with respect to such equity interest or Security.

     

    "Dollars" or "$" means United
States of America dollars.

     

    "EBITDA" means, with
respect to any fiscal period, the sum of (a) Net
Income for that period, plus (b) any
extraordinary loss reflected in such Net Income, minus (c) any
extraordinary gain reflected in such Net Income, plus
(d) Interest Expense of Borrower and its Subsidiaries for that period,
plus
(e) the aggregate amount of federal and state taxes on or measured by
income of Borrower and its Subsidiaries for that period (whether or not payable
during that period), plus
(f) depreciation and amortization expense of Borrower and its Subsidiaries
for that period, plus (g) (i)
the  actual amount of the Aerojet Write-Off taken during such period
(provided that for purposes of this calculation, such amount shall not exceed
$16,000,000) and (ii) all other non-cash, extraordinary expenses of Borrower and
its Subsidiaries for that period acceptable, in the case of clause (ii), to the
Requisite Lenders, in each case as determined in accordance with GAAP,
consistently applied and, in the case of items (d), (e), (f), and (g) only to the
extent reflected in the determination of Net Income for that
period.

     

    "Eligible Assignee"
means (a) another Lender, (b) with respect to any Lender, any
Affiliate of that Lender, (c) any commercial bank having total assets of
$250,000,000 or more, (d) any (i) savings bank, savings and loan
association, finance company or similar financial institution or entity or
(ii) insurance company engaged in the business of writing insurance which,
in either case (A) has total assets of $250,000,000 or more, (B) is
engaged in the business of lending money and extending credit under credit
facilities similar to those extended under this Agreement and (C) is
operationally and procedurally able to meet the obligations of a Lender
hereunder to the same degree as a commercial bank (as reasonably determined by
the assigning Lender) and (e) any other financial institution (including a mutual
fund or other fund) having total assets of $250,000,000 or more which meets the
requirements set forth in subclauses (B) and (C) of clause (d) above;
provided that
each Eligible Assignee must either (x) be organized under the Laws of the
United States of America, any State thereof or the District of Columbia or
(y) be organized under the Laws of the Cayman Islands or any country which
is a member of the Organization for Economic Cooperation and Development, or a
political subdivision of such a country, and (1) act hereunder through a
branch, agency or funding office located in the United States of America
and (2) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to Section 11.21.

     

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

     

    "ERISA" means the
Employee Retirement Income Security Act of 1974, and any regulations issued
pursuant thereto, as amended or replaced and as in effect from time to
time.

     

    "ERISA Affiliate"
means, with respect to any Person, any Person (or any trade or business, whether
or not incorporated) that is under common control with that Person within the
meaning of Section 414 of the Code.

     

    "Eurodollar Banking
Day" means any Banking Day on which dealings in Dollar deposits are
conducted by and among banks in the Designated Eurodollar Market.

     

    "Eurodollar Base Rate"
means with respect to any Eurodollar Rate Advance comprising part of the same
Borrowing, the interest rate per annum (rounded upward, if necessary, to the
nearest 1/100th of 1%) at which deposits in Dollars are offered by the
Eurodollar Reference Lender to prime banks in the Designated Eurodollar Market
at or about 10:00 a.m. local time in the Designated Eurodollar Market, two
(2) Eurodollar Banking Days before the first day of the applicable Eurodollar
Period in an aggregate amount approximately equal to the amount of the Advance
to be made by the Eurodollar Reference Lender comprising part of such Borrowing
and for a period of time comparable to the number of days in the applicable
Eurodollar Period.  The determination of the Eurodollar Base Rate by
the Administrative Agent shall be conclusive in the absence of manifest
error.

     

    "Eurodollar Lending
Office" means, as to each Lender, its office or branch so designated by
written notice to Borrower and the Administrative Agent as its Eurodollar
Lending Office.  If no Eurodollar Lending Office is designated by a
Lender, its Eurodollar Lending Office shall be its office at its address for
purposes of notices hereunder.

     

     

    
      
        
        

      

      
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    "Eurodollar Market"
means a regular established market located outside the United States of
America by and among banks for the solicitation, offer and acceptance of Dollar
deposits in such banks.

     

    "Eurodollar
Obligations" means eurocurrency liabilities, as defined in
Regulation D or any comparable regulation of any Governmental Agency having
jurisdiction over any Lender.

     

    "Eurodollar Period"
means, as to each Eurodollar Rate Advance comprising part of the same Borrowing,
the period commencing on the date specified by Borrower pursuant to Section 2.1(b)
and ending 1, 2, 3 or 6 months (or, if available to all Lenders, 9 or 12
months) thereafter, as specified by Borrower in the applicable Request for
Borrowing or Request for Continuation/Conversion provided
that:

     

    (a)           The
first day of any Eurodollar Period shall be a Eurodollar Banking
Day;

     

    (b)           Any
Eurodollar Period that would otherwise end on a day that is not a Eurodollar
Banking Day shall be extended to the immediately succeeding Eurodollar Banking
Day unless such Eurodollar Banking Day falls in another calendar month, in which
case such Eurodollar Period shall end on the immediately preceding Eurodollar
Banking Day; and

     

    (c)           No
Eurodollar Period for any Eurodollar Rate Advance shall extend beyond the
Maturity Date.

     

    "Eurodollar Rate"
means, with respect to any Eurodollar Rate Advance comprising part of the same
Borrowing, an interest rate per annum (rounded upward, if necessary, to the
nearest 1/100th of one percent) determined pursuant to the following
formula:

     

    
    

     

    
      	 	Eurodollar  	 	Eurodollar	Base	
              Rate

            	 
	 	Rate 	
              =

            	1.00-Eurodollar	 	
              Reserve

            	 
	 	 	 	 	 Percentage	 	 	 

    

                                        

                              

    "Eurodollar Rate
Advance" means an Advance that bears interest in relation to the
Eurodollar Rate as provided in Section 3.1(c).

     

    "Eurodollar Reference
Lender" means Wells Fargo or the Administrative Agent if Wells Fargo is
no longer the Administrative Agent.

     

    "Eurodollar Reserve
Percentage" means, with respect to any Eurodollar Rate Advance comprising
part of the same Borrowing, the maximum reserve percentage (expressed as a
decimal, rounded upward, if necessary, to the nearest 1/100th of one percent) in
effect on the date the Eurodollar Base Rate for the Borrowing of which such
Eurodollar Rate Advance is a part is determined (whether or not such reserve
percentage is applicable to any Lender) under regulations issued from time to
time by the Federal Reserve Board for determining the maximum reserve
requirement (including any
emergency, supplemental or other marginal reserve requirement) with respect to
eurocurrency funding (currently referred to as "eurocurrency liabilities")
having a term comparable to the Eurodollar Period for such Eurodollar Rate
Advance.  The determination by the Administrative Agent of any
applicable Eurodollar Reserve Percentage shall be conclusive in the absence of
manifest error.

     

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

     

    "Event of Default"
shall have the meaning provided in Section 9.1.

     

    "Federal Funds Rate"
means, as of any date of determination, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such date opposite the caption "Federal Funds
(Effective)".  If for any relevant date such rate is not yet published
in H.15(519), the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for
U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such
successor, the "Composite 3:30 p.m. Quotation") for such date under the
caption "Federal Funds Effective Rate".  If on any relevant date the
appropriate rate for such date is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such date will be the
arithmetic mean of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that date by
each of three leading brokers of Federal funds transactions in New York
City selected by the Administrative Agent.  For purposes of this
Agreement, any change in the Alternate Base Rate due to a change in the Federal
Funds Rate shall be effective as of the opening of business on the effective
date of such change.

     

    "Fiscal Quarter" means
any fiscal quarter of Borrower and its Subsidiaries ending on each March 31,
June 30, September 30 and December 31.

     

    "Fiscal Year" means
the fiscal year of Borrower and its Subsidiaries ending on each
December 31.

     

    "GAAP" means, as of
any date of determination, accounting principles (a) set forth as generally
accepted in then currently effective Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (b) set forth as
generally accepted in then currently effective Statements of the Financial
Accounting Standards Board or (c) that are then approved by such other
entity as may be approved by a significant segment of the accounting profession
in the United States of America.  The term "consistently
applied," as used in connection therewith, means that the accounting
principles applied are consistent in all material respects with those applied at
prior dates or for prior periods.

     

    "Government
Securities" means readily marketable (a) direct full faith and
credit obligations of the United States of America or obligations guaranteed by
the full faith and credit of the United States of America and
(b) obligations of an agency or instrumentality of, or corporation owned,
controlled or sponsored by, the United States of America that are generally
considered in the securities industry to be implicit obligations of the United
States of America.

     

     

    
      
        
        

      

      
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    "Governmental Agency"
means (a) any international, foreign, federal, state, county or municipal
government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body or (c) any court or administrative tribunal
of competent jurisdiction.

     

    "Guaranty Obligation"
means, as to any Person, any (a) guarantee by that Person of Indebtedness
of, or other obligation performable by, any other Person or (b) assurance
given by that Person to an obligee of any other Person with respect to the
performance of an obligation by, or the financial condition of, such other
Person, whether direct, indirect or contingent, including any
purchase or repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans, capital
contributions or otherwise) to such other Person, any agreement to support the
solvency or level of any balance sheet item of such other Person or any
"keep-well" or other arrangement of whatever nature given for the purpose of
assuring or holding harmless such obligee against loss with respect to any
obligation of such other Person; provided, however, that the
term Guaranty Obligation shall not include endorsements of instruments for
deposit or collection or similar arrangements in the ordinary course of
business.  The amount of any Guaranty Obligation in respect of
Indebtedness shall be deemed to be an amount equal to the stated or determinable
amount of the related Indebtedness (unless the Guaranty Obligation is limited by
its terms to a lesser amount, in which case to the extent of such amount) or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the Person in good faith.  The amount
of any other Guaranty Obligation shall be deemed to be zero unless and until the
amount thereof has been (or in accordance with Financial Accounting Standards
Board Statement No. 5 should be) quantified and reflected or disclosed in
the consolidated financial statements (or notes thereto) of Borrower and its
Subsidiaries.

     

    "Hazardous Materials"
means oil or petrochemical products, poly-chlorinated biphenyls, asbestos, urea
formaldehyde, flammable explosives, radioactive materials, hazardous wastes,
toxic substances or related materials, including any substances considered
"hazardous substances," "hazardous wastes," "hazardous materials," "infectious
wastes", "pollutant substances", "solid waste" or "toxic substances" under any
Hazardous Materials Laws.

     

    "Hazardous Materials
Laws" means all Laws pertaining to the treatment, transportation or
disposal of Hazardous Materials on or about any Real Property owned or leased by
Borrower or any Subsidiary thereof, or any portion thereof, including without
limitation the following:  the Federal Water Pollution Control Act
(33 U.S.C. § 1251, et seq.), the
Federal Resource Conservation and Recovery Act of 1976 (42 U.S.C.
§ 6901, et seq.), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. § 9601, et seq.) and the
Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials
Transportation Act, as amended (44 U.S.C. § 1801, et seq.), the
Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the
California Health and Safety Code (Section 25100, et seq.), the
California Water Code and the California Administrative Code, in each case as
such Laws are amended from time to time.

     

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

     

    "Indebtedness" means,
as to any Person (without duplication), (a) indebtedness of such Person for
borrowed money or for the deferred purchase price of Property (excluding trade and
other accounts payable in the ordinary course of business in accordance with
ordinary trade terms), including any
Guaranty Obligation for any such indebtedness, (b) indebtedness of such
Person of the nature described in clause (a) that is
non-recourse to the credit of such Person but is secured by assets of such
Person, to the extent of the fair market value of such assets as determined in
good faith by such Person, (c) Capital Lease Obligations of such Person,
(d) indebtedness of such Person arising under bankers' acceptance
facilities or under facilities for the discount of accounts receivable of such
Person, (e) any direct or contingent obligations of such Person under
letters of credit issued for the account of such Person and (f) any net
obligations of such Person under Interest Rate Protection
Agreements.  For the avoidance of doubt, (i) Advances for Construction
of any Subsidiary of the Borrower in the ordinary course of business, and (ii)
the purchase price obligation in connection with a Military Utility
Privatization, to the extent that such obligation is recorded as a liability
offset by a receivable in the same amount on the financial statements of
Borrower, will not constitute Indebtedness hereunder.

     

    "Intangible Assets"
means assets that are considered intangible assets under GAAP, including customer
lists, goodwill, covenants not to compete, copyrights, trade names, trademarks
and patents.

     

    "Interest Coverage
Ratio" means, as of the last day of any Fiscal Quarter, the ratio of (a)  EBITDA
for the Rolling Period ending on that date, to (b) Interest Expense of
Borrower and its Subsidiaries for such Rolling Period.

     

    "Interest Expense"
means, with respect to any Person and as of the last day of any fiscal period,
the sum of
(a) all interest, fees, charges and related expenses (in each case as such
expenses are calculated according to GAAP) paid or payable (without duplication)
for that fiscal period by that Person to a lender in connection with borrowed
money (including any
obligations for fees, charges and related expenses payable to the issuer of any
letter of credit) or the deferred purchase price of assets that are considered
"interest expense" under GAAP plus (b) the
portion of rent paid or payable (without duplication) for that fiscal period by
that Person under Capital Lease Obligations that should be treated as interest
in accordance with Financial Accounting Standards Board Statement
No. 13.

     

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

     

    "Interest Rate Protection
Agreement" means a written agreement between Borrower  and one
or more financial institutions providing for "swap", "cap", "collar" or other
interest rate protection with respect to any Indebtedness.

     

    "Investment" means,
when used in connection with any Person, any investment by or of that Person,
whether by means of purchase or other acquisition of stock or other Securities
of any other Person or by means of a loan, advance creating a debt, capital
contribution, guaranty or other debt or equity participation or interest in any
other Person, including any
partnership, limited liability company and joint venture interests of such
Person.  The amount of any Investment shall be the amount actually
invested (minus
any return of capital with respect to such Investment which has actually been
received in Cash or has been converted into Cash), without adjustment for
subsequent increases or decreases in the value of such Investment.

     

    "Issuing Lender" means
Wells Fargo, when acting in its capacity as Issuing Lender under any of the Loan
Documents (including such other
Persons that may act as agent for and on behalf of Wells Fargo) or any successor
Issuing Lender.

     

    "Laws" means,
collectively, all international, foreign, federal, state and local statutes,
treaties, rules, regulations, ordinances, codes and administrative or judicial
precedents.

     

    "Lead Arranger" means
Wells Fargo Bank, National Association.

     

    "Lender" means each
Closing Date Lender and each lender that may hereafter become a party to this
Agreement pursuant to Section 11.8.

     

    "Letter of Credit"
means any of the standby letters of credit issued by the Issuing Lender under
the Revolving Facility pursuant to Section 2.5,
either as originally issued or as the same may be supplemented, modified,
amended, extended, restated or supplanted.

     

    "Letter of Credit
Agreement" means the standby letter of credit
agreement  executed by Borrower in connection with the Original Credit
Agreement and attached hereto in the form of Exhibit C,
either as originally executed or as it may from time to time be supplemented,
modified, amended, extended, restated or supplanted.

     

    "Letter of Credit Collateral
Account" means a deposit account to be maintained at Wells Fargo in the
name of the Administrative Agent, for the benefit of the Lenders, which account
shall be held as collateral for any and all Obligations incurred by Borrower or
its Subsidiaries in connection with any Letter of Credit outstanding subsequent
to the Maturity Date.

     

    "Lien" means any
mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, lien or charge of any kind, whether voluntarily
incurred or arising by operation of Law or otherwise, affecting any Property,
including any
conditional sale or other title retention agreement, any lease in the nature of
a security interest, and/or the filing of any financing statement (other than a precautionary
financing statement with respect to a lease that is not in the nature of a
security interest) under the UCC or comparable Law of any jurisdiction with
respect to any Property.

     

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

     

    "Loan Documents"
means, collectively, this Agreement, the Notes, the Letter of Credit Agreement,
any Request for Borrowing, any Request for Letter of Credit (and any
corresponding application and/or reimbursement agreement with respect to any
Letter of Credit), any Compliance Certificate, and any other agreements of any
type or nature hereafter executed and delivered by Borrower or any other Party
to the Administrative Agent or to any Lender in any way relating to or in
furtherance of this Agreement, in each case either as originally executed or as
the same may from time to time be supplemented, modified, amended, restated,
extended or supplanted.

     

    "Margin Stock" means
"margin stock" as such term is defined in Regulation U.

     

    "Material Adverse
Effect" means any set of circumstances or events which (a) has had
or would reasonably be expected to have any material adverse effect whatsoever
upon the validity or enforceability of any Loan Document, (b) has been or
would reasonably be expected to be material and adverse to the business,
condition (financial or otherwise), prospects or operations of Borrower and its
Subsidiaries, taken as a whole, (c) has materially impaired or would
reasonably be expected to materially impair the ability of Borrower to perform
the Obligations, or (d) has materially impaired or would reasonably be expected
to materially impair the ability of Borrower to perform its Obligations under
the Loan Documents.

     

    "Material Contracts"
means, collectively, (a) the agreements identified on Schedule 1.3 attached
hereto and (b) any other agreement that would, if terminated, materially
affect the business, condition (financial or otherwise), prospects or operations
of Borrower and its Subsidiaries, taken as a whole.

     

    "Maturity Date" means
the earlier of (a) June 3, 2010 and (b) the termination or
cancellation of the Revolving Facility (and all of the Commitments pertaining
thereto) pursuant to the terms of this Agreement.

     

    "Maximum Revolving Credit
Amount" means $85,000,000.00.

     

    "Military Utility
Privatization" means the acquisition of a water or wastewater system or
systems from the U.S. Government pursuant to 10 USC §2688 in connection with a
contract to provide utility services. It is understood that, in accordance with
GAAP as in effect on the date hereof, the water and wastewater systems acquired
are not reflected as fixed assets on the financial statements of the Borrower
and the purchase price obligation is recorded as a liability offset by a
receivable in the same amount, thereby having no effect on the financial
position of the Borrower.

     

    "Monthly Payment Date"
means the last Banking Day of each calendar month.

     

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

     

    "Moody's" means
Moody's Investor Service, Inc. and its successors.

     

    "Multiemployer Plan"
means any employee benefit plan of the type described in Section 4001(a)(3)
of ERISA to which Borrower or any of its ERISA Affiliates contributes, is
obligated to contribute or has had an obligation to contribute.

     

    "Negative Pledge"
means a Contractual Obligation which contains a covenant binding on Borrower or
any Subsidiary that prohibits Liens on any of its Property, other than (a) any
such covenant contained in a Contractual Obligation granting or relating to a
particular Lien which affects only the Property that is the subject of such Lien
and (b) any such covenant that does not apply to Liens securing the
Obligations.

     

    "Net Income" means,
with respect to any fiscal period, the consolidated net income of Borrower and
its Subsidiaries for that period, determined in accordance with GAAP,
consistently applied.

     

    "Note" means any of
the promissory notes made by Borrower to a Lender evidencing Advances under that
Lender's Commitment, substantially in the form of Exhibit D,
either as originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or supplanted.

     

    "Obligations" means
all present and future obligations of every kind or nature of Borrower at any
time and from time to time owed to the Lenders, the Administrative Agent and/or
the Issuing Lender, under any one or more of the Loan Documents, whether due or
to become due, matured or unmatured, liquidated or unliquidated, or contingent
or noncontingent, including obligations
of performance as well as obligations of payment, and including interest
that accrues after the commencement of any proceeding under any Debtor Relief
Law by or against Borrower.

     

    "Opinion of Counsel"
means the favorable written legal opinion of O'Melveny & Myers LLP, special
counsel to Borrower, substantially in the form of Exhibit E.

     

    "Original Administrative
Agent" means Wells Fargo Bank, National Association, in its capacity as
administrative agent under the Original Credit Agreement.

     

    "Original Credit
Agreement" means the Credit Agreement, dated as of June 6, 2002 by and
among Borrower, each of the Original Lenders from time to time parties thereto,
and the Original Administrative Agent, as amended, supplemented or otherwise
modified from time to time prior to the date hereof.

     

    "Original Lenders"
means each of the Lenders from time to time parties to the Original Credit
Agreement.

     

    "Party" means any Person
other than Lenders and/or Administrative Agent, which now or hereafter is a
party to any of the Loan Documents.

     

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

     

    "PBGC" means the
Pension Benefit Guaranty Corporation or any successor thereof established under
ERISA.

     

    "Pension Plan" means
any "pension plan" (as such term is defined in Section 3(2) of ERISA),
other than a
Multiemployer Plan, which is maintained by Borrower or to which Borrower
contributes or has or has had an obligation to contribute.

     

    "Permitted
Acquisition" means  an Acquisition by Borrower or any
wholly-owned Subsidiary of Borrower of all or substantially all of the assets
of, or all of the capital stock or other equity interests of, an Acquired Person
engaged in similar or related line(s) of business as Borrower or any of its
Subsidiaries, provided,
that:

     

    (a)           if
such Acquisition is of all of the capital stock or other equity interests of the
Acquired Person, such Acquired Person is merged with and into Borrower or such
Subsidiary substantially simultaneously with such party's acquisition of such
capital stock or other equity interests or becomes a wholly-owned Subsidiary of
Borrower or such Subsidiary;

     

    (b)           in
the case of the Acquisition of the capital stock or other equity interest of an
Acquired Person, the board of directors (or comparable governing body) of such
Acquired Person shall have duly approved such Acquisition;

     

    (c)           Borrower
shall have delivered a pro-forma Compliance Certificate for the most recently
completed Rolling Period, demonstrating that, upon giving effect to the proposed
Acquisition as of the last day of such Rolling Period, Borrower and its
Subsidiaries shall be in compliance with the covenants set forth in Sections 6.12
and 6.13;

     

    (d)           such
Acquired Person shall have had a positive "EBITDA" for the twelve-month fiscal
period immediately preceding the date of such Acquisition (with EBITDA
calculated for such Acquired Person in a manner consistent with the calculation
of EBITDA for Borrower and its Subsidiaries specified herein);

     

    (e)           at
the time of such Acquisition, each of the representations and warranties
contained in the Loan Documents shall be true and correct in all material
respects (except to the extent
such representations and warranties expressly relate to an earlier
date),  no Default or Event of Default shall have occurred and remain
in effect and after giving effect to such Acquisition, on a pro forma combined
basis, (i) no Default of Event of Default would have occurred at any time
during the twelve-month fiscal period immediately preceding the date of such
Acquisition assuming that such Acquisition had occurred on the first day of such
period and (ii) Borrower and its Subsidiaries, on a projected basis, will
be in compliance with Section 6.12 and
6.13, as of
each of the four Fiscal Quarters ending after the date of the Acquisition, as
reflected in updated projections provided by Borrower to the Administrative
Agent and the Lenders prior to the effective date of such
Acquisition;

     

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

     

    (f)           if
such Acquisition involves the purchase of an interest in a partnership between
Borrower (or a Subsidiary of Borrower) as a general partner and entities
unaffiliated with Borrower or such Subsidiary as the other partners, such
transaction shall be effected by having such equity interest acquired by a
corporate holding company directly or indirectly wholly-owned by Borrower newly
formed for the sole purpose of effecting such transaction;

     

    (g)           the
Indebtedness assumed or consideration paid or payable in cash in connection with
such Acquisition shall not exceed the lesser of (x) $15,000,000 and
(y) the fair market value thereof; and

     

    (h)           the
Indebtedness assumed or consideration paid or payable in cash in connection with
such Acquisition, when taken together with each other Permitted Acquisitions
consummated since the Closing Date shall not exceed $25,000,000 in the
aggregate.

     

    "Permitted Acquisition
Indebtedness" means Indebtedness in existence at the time of, and assumed
by Borrower or its Subsidiaries in connection with, a Permitted Acquisition
provided that (a) such Indebtedness was not created in contemplation of such
Permitted Acquisition and (b) the aggregate amount of all such Indebtedness does
not at any time exceed $10,000,000.

     

    "Permitted Capital Asset
Indebtedness" means Indebtedness of Borrower and its Subsidiaries
consisting of Capital Lease Obligations, or otherwise incurred to finance the
purchase or construction of capital assets (which shall be deemed to exist if
the Indebtedness is incurred at or within 90 days before or after the purchase
or construction of the capital asset), or to refinance any such Indebtedness;
provided that
the aggregate principal amount of such Indebtedness shall not exceed $10,000,000
at any one time outstanding (as determined in accordance with GAAP consistently
applied).

     

    "Permitted
Encumbrances" means:

     

    (a)           Inchoate
Liens incident to construction on or maintenance of Property; or Liens incident
to construction on or maintenance of Property now or hereafter filed of record
for which adequate reserves have been set aside (or deposits made pursuant to
applicable Law) and which are being contested in good faith by appropriate
proceedings and have not proceeded to judgment, provided that, by
reason of nonpayment of the obligations secured by such Liens, no such Property
is subject to an impending risk of loss or forfeiture;

     

    (b)           Liens
for taxes and assessments on Property which are not yet past due; or Liens for
taxes and assessments on Property for which adequate reserves have been set
aside and are being contested in good faith by appropriate proceedings and have
not proceeded to judgment, provided that, by
reason of nonpayment of the obligations secured by such Liens, no such Property
is subject to an impending risk of loss or forfeiture;

     

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

     

    (c)           defects
and irregularities in title to any Property which in the aggregate do not
materially impair the fair market value or use of the Property for the purposes
for which it is or may reasonably be expected to be held;

     

    (d)           easements,
exceptions, reservations, or other agreements for the purpose of pipelines,
conduits, cables, wire communication lines, power lines and substations,
streets, trails, walkways, drainage, irrigation, water, and sewerage purposes,
dikes, canals, ditches, the removal of oil, gas, coal, or other minerals, and
other like purposes affecting Property which in the aggregate do not materially
burden or impair the fair market value or use of such Property for the purposes
for which it is or may reasonably be expected to be held;

     

    (e)           easements,
exceptions, reservations, or other agreements for the purpose of facilitating
the joint or common use of Property in or adjacent to a shopping center or
similar project affecting Property which in the aggregate do not materially
burden or impair the fair market value or use of such Property for the purposes
for which it is or may reasonably be expected to be held;

     

    (f)           rights
reserved to or vested in any Governmental Agency to control or regulate, or
obligations or duties to any Governmental Agency with respect to, the use of any
Property;

     

    (g)           rights
reserved to or vested in any Governmental Agency to control or regulate, or
obligations or duties to any Governmental Agency with respect to, any right,
power, franchise, grant, license, or permit;

     

    (h)           present
or future zoning laws and ordinances or other laws and ordinances restricting
the occupancy, use, or enjoyment of Property;

     

    (i)           statutory
Liens, other than those described in clauses (a) or (b) above, arising in
the ordinary course of business with respect to obligations which are not
delinquent or are being contested in good faith, provided that, if
delinquent, adequate reserves have been set aside with respect thereto and, by
reason of nonpayment, no Property is subject to an impending risk of loss or
forfeiture;

     

    (j)           covenants,
conditions, and restrictions affecting the use of Property which in the
aggregate do not materially impair the fair market value or use of the Property
for the purposes for which it is or may reasonably be expected to be
held;

     

    (k)           rights
of tenants under leases and rental agreements covering Property entered into in
the ordinary course of business of the Person owning such Property;

     

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

     

    (l)           Liens
consisting of pledges or deposits to secure obligations under workers'
compensation laws or similar legislation, including Liens of judgments
thereunder which are not currently dischargeable;

     

    (m)           Liens
consisting of pledges or deposits of Property to secure performance in
connection with operating leases made in the ordinary course of business, provided the
aggregate value of all such pledges and deposits (excluding the property subject
to such lease) in connection with any such lease does not at any time exceed 10%
of the annual fixed rentals payable under such lease;

     

    (n)           Liens
consisting of deposits of Property to secure bids made with respect to, or
performance of, contracts (other than contracts
creating or evidencing an extension of credit to the depositor);

     

    (o)           Liens
consisting of any right of offset, or statutory bankers' lien, on bank deposit
accounts maintained in the ordinary course of business so long as such bank
deposit accounts are not established or maintained for the purpose of providing
such right of offset or bankers' lien;

     

    (p)           any
(i) interest or title of a lessor or sublessor under any lease not prohibited by
this Agreement, but only to the extent such interest or title pertains solely to
the property leased, (ii) Lien or restriction that the interest or title of such
lessor or sublessor may be subject to, or (iii) subordination of the interest of
the lessee or sublessee under such lease to any Lien or restriction referred to
in the preceding clause (ii), so long as the holder of such Lien or restriction
agrees to recognize the rights of such lessee or sublessee under such
lease;

     

    (q)           Liens
consisting of deposits of Property to secure statutory obligations of Borrower;
and

     

    (r)           Liens
consisting of deposits of Property to secure (or in lieu of) surety, appeal or
customs bonds.

     

    "Permitted Right of
Others" means a Right of Others consisting of (a) an interest (other than a legal or
equitable co-ownership interest, an option or right to acquire a legal or
equitable co-ownership interest and any interest of a ground lessor under a
ground lease), that does not materially impair the fair market value or use of
Property for the purposes for which it is or may reasonably be expected to be
held, (b) an option or right to acquire a Lien that would be a Permitted
Encumbrance or other encumbrance permitted pursuant to Section 6.9,
(c) the subordination of a lease or sublease in favor of a financing entity
and (d) a license, or similar right, of or to Intangible Assets or other
similar Property granted in the ordinary course of business.

     

    "Person" means any
individual or entity, including a trustee,
corporation, limited liability company, general partnership, limited
partnership, joint stock company, trust, estate, unincorporated organization,
business association, firm, joint venture, Governmental Agency, or other
entity.

     

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

     

    "Platform" means an
electronic delivery system (which may be provided by Administrative Agent, an
Affiliate of Administrative Agent or any Person that is not an Affiliate of
Administrative Agent), such as IntraLinks or a substantially similar electronic
system.

     

    "Pricing Occurrence"
means with respect to any change in the  Debt Rating which results in
a change in the Applicable Pricing Level, the date which is five (5)
Banking Days after the Administrative Agent has received evidence reasonably
satisfactory to it of such change.

     

    "Pricing Period" means
(a) the period commencing on the Closing Date and ending on the first
Pricing Occurrence to occur thereafter and (b) each subsequent period
commencing on the date of a Pricing Occurrence and ending on the next Pricing
Occurrence to occur.

     

    "Prime Rate" means the
rate of interest most recently announced within Wells Fargo, at its principal
office in San Francisco, California, as its "prime rate."  The
"prime rate" is one of several base rates used by Wells Fargo and serves as the
basis upon which effective rates of interest are calculated for loans and other
credits making reference thereto.  The "prime rate" is evidenced by
the recording thereof after its announcement in such internal publication or
publications as Wells Fargo may designate.  Any change in the Prime
Rate shall take effect on the day the change is announced within Wells
Fargo.

     

    "Projections" means
the financial projections of Borrower and its Subsidiaries heretofore and
hereafter distributed by or on behalf of Borrower to the Administrative
Agent.

     

    "Property" means any
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible.

     

    "Pro Rata Share" of
any amount means, with respect to any Lender at any time, the product of (a) a
fraction the numerator of which is the amount of such Lender's Commitment (or,
if such Commitment shall have expired or been terminated, the amount of such
Lender's Advances), and the denominator of which is the aggregate Commitments or
Advances, as the case may be, at such time, multiplied by
(b) such amount.  Schedule 1.1 sets
forth the Pro Rata Shares of the Closing Date Lenders as of the Closing
Date.

     

    "Quarterly Payment
Date" means each March 31, June 30, September 30 and  December
31.

     

    "Real Property" means,
as of any date of determination, all real property then or theretofore owned,
leased or occupied by Borrower or any Subsidiary.

     

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

     

    "Regulation D"
means Regulation D, as at any time amended, of the Board of Governors of
the Federal Reserve System, or any other regulation in substance substituted
therefor.

     

    "Regulation U"
means Regulation U, as at any time amended, of the Board of Governors of
the Federal Reserve System, or any other regulation in substance substituted
therefor.

     

    "Request for
Borrowing" means a written request for a Borrowing substantially in the
form of Exhibit F,
signed by a Responsible Official of Borrower, and properly completed to provide
all information required to be included therein.

     

    "Request for
Continuation/Conversion" means a written request to Continue or Convert a
Borrowing substantially in the form of Exhibit G,
signed by a Responsible Official of Borrower, and properly completed to provide
all information required to be included therein.

     

    "Request for Letter of
Credit" means a written request for a Letter of Credit substantially in
the form of Exhibit H,
signed by a Responsible Official of Borrower, and properly completed to provide
all information required to be included therein.

     

    "Requirement of Law"
means, as to any Person, the articles or certificate of incorporation and
by-laws or other organizational or governing documents of such Person, and any
Law, or judgment, award, decree, writ or determination of a Governmental Agency,
in each case applicable to or binding upon such Person or any of its Property or
to which such Person or any of its Property is subject.

     

    "Requisite Lenders"
means, (a) as of any date of determination if the Commitments are then in
effect, Lenders having in the aggregate more than 50% of such aggregate
Commitments, and (b) as of any date of determination if the Commitments
have then been terminated and there is then any outstanding Indebtedness
evidenced by the Notes, the Swing Line Documents and/or Letters of Credit,
Lenders owed or holding in the aggregate more than 50% of then applicable
Revolving Credit Facility Usage.

     

    "Responsible Official"
means, as to any Person, (a) when used with reference to a Person other
than an individual, a corporate officer of such Person, general partner of such
Person, corporate officer of a corporate general partner of such Person,
corporate officer of a corporate general partner of a partnership that is a
general partner of such Person, manager or managing member (in the case of a
Person that is a limited liability company), or any other responsible official
thereof duly acting on behalf thereof, and (b) when used with reference to
a Person who is an individual, such Person.  The Lenders shall be
entitled to conclusively rely upon any document or certificate that is signed or
executed by a Responsible Official of Borrower or any Subsidiary as having been
authorized by all necessary corporate, partnership, limited liability company
and/or other action on the part of  Borrower or such
Subsidiary.

     

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

     

    "Revolving Credit Facility
Usage" means, as of any date of determination, the sum of (a) the
aggregate principal amount of funded Indebtedness then outstanding under the
Notes plus
(b) the Aggregate Effective Amount under all outstanding Letters of Credit
plus
(c) the Swing Line Outstandings.

     

    "Revolving Facility"
means the revolving credit facility provided hereunder in respect of the
aggregate Commitments.

     

    "Right of Others"
means, as to any Property in which a Person has an interest, any legal or
equitable right, title or other interest (other than a Lien) held by any other
Person in that Property, and any option or right held by any other Person to
acquire any such right, title or other interest in that Property, including any option
or right to acquire a Lien; provided, however, that
(a) no covenant restricting the use or disposition of Property of such
Person contained in any Contractual Obligation of such Person and (b) no
provision contained in a contract creating a right of payment or performance in
favor of a Person that conditions, limits, restricts, diminishes, transfers or
terminates such right shall be deemed to constitute a Right of
Others.

     

    "Rolling Period" means
any period of four consecutive Fiscal Quarters of Borrower and its
Subsidiaries.

     

    "S&P" means
Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. and
its successors.

     

    "Sale and Leaseback"
means, with respect to any Person, the sale of Property owned by that Person
(the "Seller") to another Person (the "Buyer"), together with the substantially
concurrent leasing of such Property by the Buyer to the Seller.

     

    "SCW" means Southern
California Water Company, a California corporation and wholly-owned Subsidiary
of Borrower.

     

    "Security" means any
capital stock, share, voting trust certificate, bond, debenture, note or other
evidence of Indebtedness, limited partnership interest, member interest, or any
warrant, option or other right to purchase or acquire any of the
foregoing.

     

    "Senior Officer" means
(a) the chief executive officer, (b) the president, (c) any
executive vice president, (d) the chief financial officer, (e) the
treasurer, or (f) any assistant treasurer, in each case of any
Person.

     

    "Solvent" means, as of
any date of determination, and as to any Person, that on such
date:  (a) the fair valuation of the assets of such Person is
greater than the fair valuation of such Person's probable liability in respect
of existing debts; (b) such Person does not intend to, and does not believe
that it will, incur debts beyond such Person's ability to pay as such debts
mature; (c) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, which would leave such Person
with assets remaining which would constitute unreasonably small capital after
giving effect to the nature of the particular business or transaction (including, in the
case of Borrower, the transactions occurring on the Closing Date); and
(d) such Person is generally paying its debts as they become
due.  For purposes of the foregoing (1) the "fair valuation" of
any assets means the amount realizable within a reasonable time, either through
collection or sale, of such assets at their regular market value, which is the
amount obtainable by a capable and diligent businessman from an interested buyer
willing to purchase such assets within a reasonable time under ordinary
circumstances; and (2) the term "debts" includes any legal liability
whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or
contingent.

     

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

     

    "Special Eurodollar
Circumstance" means the application or adoption after the Closing Date of
any Law or interpretation, or any change therein or thereof, or any change in
the interpretation or administration thereof by any Governmental Agency, central
bank or comparable authority charged with the interpretation or administration
thereof, or compliance by any Lender or its Eurodollar Lending Office with any
request or directive (whether or not having the force of Law) of any such
Governmental Agency, central bank or comparable authority.

     

    "Stockholders' Equity"
means, as of any date of determination and with respect to Borrower and its
Subsidiaries, the consolidated stockholders' equity of Borrower and its
Subsidiaries as of that date determined in accordance with GAAP; provided that there
shall be excluded from Stockholders' Equity (i) any amount attributable to
Disqualified Stock and (ii) any actual reduction attributable to the Aerojet
Write-Off in an amount not to exceed $16,000,000.

     

    "Swing Line" means the
revolving line of credit established by the Swing Line Lender in favor of
Borrower pursuant to Section 2.8.

     

    "Swing Line Documents"
means the promissory note and any other documents executed by Borrower in favor
of the Swing Line Lender in connection with the Swing Line.

     

    "Swing Line Lender"
means Wells Fargo.

     

    "Swing Line Loans"
means loans made by the Swing Line Lender to Borrower pursuant to Section 2.8.

     

    "Swing Line
Outstandings" means, as of any date of determination, the aggregate
principal Indebtedness of Borrower on all Swing Line Loans then
outstanding.

     

    "Subordinated
Obligations" means, as of any date of determination (without
duplication), any Indebtedness of Borrower or any Subsidiary on that date which
has been subordinated in right of payment to the Obligations in a manner
reasonably satisfactory to the Administrative Agent and the Requisite Lenders
and contains
such other protective terms with respect to senior debt (such as payment
blockage) as the Administrative Agent and the Requisite Lenders may reasonably
require.

     

     

    
      
        
        

      

      
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    "Subsidiary" means, as
of any date of determination and with respect to any Person, any corporation,
limited liability company or partnership (whether or not, in any case,
characterized as such or as a "joint venture"), whether now existing or
hereafter organized or acquired:  (a) in the case of a
corporation or limited liability company, of which a majority of the Securities
having ordinary voting power for the election of directors or other governing
body (other than Securities having such power only by reason of the happening of
a contingency) are at the time beneficially owned by such Person and/or one or
more Subsidiaries of such Person, or (b) in the case of a partnership, of
which a majority of the partnership or other ownership interests are at the time
beneficially owned by such Person and/or one or more of its
Subsidiaries.  Any reference to a "Subsidiary" or "Subsidiaries"
shall, unless otherwise provided, be deemed to be a reference to a Subsidiary
(or Subsidiaries, as the case may be) of Borrower.

     

    "Termination Date"
means the date on which the Advances and all other Obligations under this
Agreement and the other Loan Documents (including, without limitation,
Obligations with respect to any Letters of Credit which remain outstanding
subsequent to the Maturity Date pursuant to Section
2.5(a))  are indefeasibly paid in full, in Cash, and Borrower
shall have no further right to borrow any moneys or obtain other credit
extensions or financial accommodations under this Agreement or any of the other
Loan Documents.

     

    "to the best knowledge
of" means, when modifying a representation, warranty or other statement
of any Person, that the fact or situation described therein is known by the
Person (or, in the case of a Person other than a natural Person, known by a
Responsible Official of that Person) making the representation, warranty or
other statement, or with the exercise of reasonable due diligence under the
circumstances (in accordance with the standard of what a reasonable Person in
similar circumstances would have done) would have been known by the Person (or,
in the case of a Person other than a natural Person, would have been known by a
Responsible Official of that Person).

     

    "Total Funded Debt"
means, as of any date of determination, without duplication, the sum of (a) all
principal Indebtedness of Borrower and its Subsidiaries for borrowed money
(including
Subordinated Obligations and any other subordinated indebtedness, debt
Securities issued by Borrower and any of its Subsidiaries, the aggregate
principal Indebtedness outstanding under the Notes and the Aggregate Effective
Amount of all outstanding Letters of Credit) on that date plus (b) the
aggregate amount of the principal portion of all Capital Lease Obligations of
Borrower and its Subsidiaries plus (c) any Guaranty
Obligations of Borrower and its Subsidiaries with respect to the Indebtedness of
others of the types referred to in (a) and (b) above.

     

     

    
      
        
        

      

      
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    "Total Funded Debt
Ratio" means, as of the last day of any Fiscal Quarter, the ratio of (a) Total
Funded Debt as of such date to (b) the sum of (i) Total
Funded Debt as of such date plus Stockholders'
Equity as of such date.

     

    "Type" refers to the
distinction between Advances bearing interest at the Alternate Base Rate and
Advances bearing interest at the Eurodollar Rate.

     

    "UCC" means the
Uniform Commercial Code as the same may from time to time be enacted and in
effect in the State of California; provided that, in the
event by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Administrative Agent's or any Lender's Lien on any
collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of
California, the term "UCC" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.

     

    "Wells Fargo" means
Wells Fargo Bank, National Association.

     

    1.2     Use of Defined
Terms.  Any defined term used in the plural shall refer to all
members of the relevant class, and any defined term used in the singular shall
refer to any one or more of the members of the relevant class.

     

    1.3     Accounting Terms; Covenant
Calculations.  All accounting terms not specifically defined in
this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
GAAP applied on a consistent basis, except as otherwise
specifically prescribed herein.  In the event that GAAP changes during
the term of this Agreement such that the covenants contained in Sections 6.12
and 6.13 would
then be calculated in a different manner or with different components,
(i) Borrower and the Lenders agree to amend this Agreement in such respects
as are necessary to conform those covenants as criteria for evaluating
Borrower's financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (ii) Borrower shall be deemed to
be in compliance with the covenants contained in the aforesaid Sections if
and to the extent that Borrower would have been in compliance therewith under
GAAP as in effect immediately prior to such change, but shall have the
obligation to deliver each of the materials described in Article 7 to the
Administrative Agent and the Lenders, on the dates therein specified, with
financial data presented in a manner which conforms with GAAP as in effect
immediately prior to such change.

     

    1.4     Rounding.  Any
financial ratios required to be maintained by Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by
which such ratio is expressed in this Agreement and rounding the result up or
down to the nearest number (with a round-up if there is no nearest number) to
the number of places by which such ratio is expressed in this
Agreement.

     

     

    
      
        
        

      

      
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    1.5     Exhibits and
Schedules.  All Exhibits and Schedules to this Agreement,
either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this
reference.  A matter disclosed on any Schedule shall be deemed
disclosed on all Schedules.

     

    1.6     References to "Borrower and
its Subsidiaries".  Any reference herein
to  "Borrower and its Subsidiaries" or the like shall refer solely to
Borrower during such times, if any, as Borrower shall have no
Subsidiaries.

     

    1.7     Miscellaneous
Terms.  The term "or" is disjunctive; the term "and" is
conjunctive.  The term "shall" is mandatory; the term "may" is
permissive.  Masculine terms also apply to females; feminine terms
also apply to males.  The term "including" is by way of example and
not limitation.

     

     

    
      
        
        

      

      
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    Article 2.

    ADVANCES
AND LETTERS OF CREDIT

     

    2.1     Advances-General.

     

    (a)     Subject to
the terms and conditions set forth in this Agreement, from time to time on any
Banking Day during the period from the Closing Date to but not including the
Maturity Date, each Lender severally agrees to make Advances ("Advances") to
Borrower under the Revolving Facility in such amounts as Borrower may request
provided that, after giving
effect to such Advances, (i) Revolving Credit Facility Usage does not
exceed the Maximum Revolving Credit Amount and (ii) as to each Lender, such
Lender's Pro Rata Share of Revolving Credit Facility Usage does not exceed such
Lender's Commitment.  All Advances shall be made by the Lenders
ratably according to their respective Commitments.  Within the limits
of each Lender's Commitment in effect from time to time and subject to the
foregoing, Borrower may borrow under this Section 2.1(a),
prepay Advances pursuant to Section 3.1 and
reborrow under this Section 2.1(a).

     

    (b)     Subject to
the next sentence, each Borrowing shall be made pursuant to a Request for
Borrowing which shall specify (i) the date of such requested Borrowing,
(ii)  the Type of Advances comprising such Borrowing, (iii) the amount
of such Borrowing, and (iv) in the case of a Borrowing consisting of
Eurodollar Rate Advances, the Eurodollar Period therefor.  Unless the
Administrative Agent has notified, in its sole and absolute discretion, Borrower
to the contrary not less than three (3) days prior to the date of any Borrowing,
a Borrowing may be requested by telephone by a Responsible Official
of  Borrower, in which case Borrower shall confirm such request by
promptly delivering a Request for Borrowing (conforming to the preceding
sentence) in person or by telecopier to the Administrative Agent.  The
Administrative Agent shall incur no liability whatsoever hereunder in acting
upon any telephonic request for a Borrowing purportedly made by a Responsible
Official of  Borrower, and Borrower hereby agrees to indemnify the
Administrative Agent from any loss, cost, expense or liability as a result of so
acting.

     

    (c)     Promptly
following receipt of a Request for Borrowing, the Administrative Agent shall
notify each Lender by telephone or telecopier (and if by telephone, promptly
confirmed by telecopier) of the date of the requested Borrowing, the Type of
Advances comprising such Borrowing, the Eurodollar Period (if applicable), and
the amount corresponding to that Lender's ratable share of the
Borrowing.  Not later than 1:00 p.m., California time, on the
date specified for any Borrowing (which must be a Banking Day), each Lender
shall make its ratable share of the Borrowing in immediately available funds
available to the Administrative Agent at the Administrative Agent's
Office.  Upon satisfaction or waiver of the applicable conditions set
forth in Article 8, all
Advances shall be credited on that date in immediately available funds to the
Designated Deposit Account.

     

     

    
      
        
        

      

      
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    (d)     Anything
in paragraph (b) above to the contrary notwithstanding, Borrower may not
(a) request Alternate Base Rate Advances for any Borrowing if the aggregate
amount of such Borrowing is less than $500,000 (and any such Borrowing exceeding
such minimum amount shall be in an integral multiple of $100,000), provided that the
foregoing minimum amount shall not apply to an Alternate Base Rate Advance that
causes the aggregate amount borrowed under the Revolving Facility to equal the
full amount available for Advances hereunder or Advances pursuant to Section 2.5, or
(b) elect Eurodollar Rate Advances for any Borrowing (i) if the
aggregate amount of such Borrowing is less than $1,000,000 (and any such
Borrowing exceeding such minimum amount shall be in an integral multiple of
$500,000) or (ii) if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.4,
3.5 or 3.6.

     

    (e)     The
Advances made by each Lender under its Commitment shall be evidenced by that
Lender's Note.

     

    (f)     A Request
for Borrowing shall be irrevocable upon the Administrative Agent's first
notification thereof.

     

    (g)     The
Administrative Agent, on behalf of the Lenders, is hereby authorized to make
Borrowings available to Borrower upon fulfillment of the applicable conditions
set forth in Article 8. Upon
fulfillment of such applicable conditions, the proceeds of Borrowings shall
either be credited in immediately available funds to the Designated Deposit
Account or remitted directly to one or more third parties, as directed by
Borrower and approved by the Administrative Agent. The proceeds of any Borrowing
consisting of Eurodollar Rate Advances shall be so credited or remitted on the
first day of the applicable Eurodollar Period for such Borrowings.

     

    2.2     Alternate Base Rate
Advances.  Each request by Borrower for a Borrowing comprised
of Alternate Base Rate Advances shall be made pursuant to a Request for
Borrowing (or telephonic or other request for Borrowing referred to in the
second sentence of Section 2.1(b),
if applicable) received by the Administrative Agent, at the Administrative
Agent's Office, not later than 11:00 a.m. California time, at least one (1)
Banking Day before the requested Borrowing.  All Advances shall
constitute Alternate Base Rate Advances unless properly designated as a
Eurodollar Rate Advance pursuant to Section 2.3 or
2.4.

     

    2.3     Eurodollar Rate
Advances.

     

    (a)     Each
request by Borrower for a Borrowing comprised of Eurodollar Rate Advances shall
be made pursuant to a Request for Borrowing (or telephonic or other request for
Borrowing referred to in the second sentence of Section 2.1(b),
if applicable) received by the Administrative Agent, at the Administrative
Agent's Office, not later than 9:00 a.m., California time, at least three
(3) Eurodollar Banking Days before the first day of the applicable
Eurodollar Period.

     

     

    
      
        
        

      

      
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    (b)     On the
date which is two (2) Eurodollar Banking Days before the first day of the
applicable Eurodollar Period, the Administrative Agent shall confirm its
determination of the applicable Eurodollar Rate (which determination shall be
conclusive in the absence of manifest error) and promptly shall give notice of
the same to Borrower and the Lenders by telephone or telecopier (and if by
telephone, promptly confirmed by telecopier).

     

    (c)     Unless the
Administrative Agent and the Requisite Lenders otherwise consent, Eurodollar
Rate Advances may not be outstanding under more than  five (5)
separate Eurodollar Periods at any one time.

     

    (d)     No
Borrowing comprised of Eurodollar Rate Advances may be requested during the
continuation of a Default or Event of Default.

     

    (e)     Nothing
contained herein shall require any Lender to fund any Eurodollar Rate Advance in
the Designated Eurodollar Market.

     

    2.4     Conversion and Continuation
of Advances.

     

    (a)     Optional
Conversion.  Borrower may on any Banking Day, upon notice given
to the Administrative Agent not later than 9:00 a.m. (California time) on
the third Eurodollar Banking Day prior to the date of a proposed Conversion if
the Conversion is into Eurodollar Rate Advances, or one Banking Day prior to the
date of a proposed Conversion if the Conversion is into Alternate Base Rate
Advances, and subject to the provisions of Sections 3.5 and
3.6, Convert
all or any portion of the Advances of one Type outstanding under the Revolving
Facility (and, in the case of Eurodollar Rate Advances, having the same
Eurodollar Period) into Advances of the other Type under the Revolving Facility;
provided that
any Conversion of Eurodollar Rate Advances into Alternate Base Rate Advances on
other than the last day of a Eurodollar Period for such Eurodollar Rate Advances
shall be subject to Section 3.6(e),
any Conversion of Alternate Base Rate Advances into Eurodollar Rate Advances
shall be in an amount not less than $1,000,000 or integral multiples of $500,000
in excess thereof and no Conversion of any Advances shall result in more than
five (5) separate Eurodollar Periods being outstanding under the Revolving
Facility.  Each such notice of Conversion shall be made pursuant to a
Request for Continuation/Conversion and shall, within the restrictions specified
above, specify (i) the date of such Conversion, (ii) the aggregate
amount and Type of the Advances (and, in the case of Eurodollar Rate Advances,
the Eurodollar Period therefor) to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Eurodollar Period for such Advances.  Each request for Conversion
shall be irrevocable and binding on Borrower.

     

    (b)     Certain Mandatory
Conversions.

     

    (i)     On the
date on which the aggregate unpaid principal amount of Eurodollar Rate Advances
comprising any Borrowing shall be reduced, by payment or prepayment or
otherwise, to less than $1,000,000 such Advances shall automatically Convert
into Alternate Base Rate Advances.

     

     

    
      
        
        

      

      
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    (ii)     If
Borrower shall fail to select the duration of any Eurodollar Period for any
outstanding Eurodollar Rate Advances in accordance with the provisions contained
in Section 2.1(b)
and in clause
(a) or (c) of this Section 2.4,
each such Eurodollar Rate Advance will automatically, on the last day of the
then existing Eurodollar Period therefor, Convert into an Alternate Base Rate
Advance.

     

    (iii)     Upon the
occurrence and during the continuance of any Event of Default and upon notice
from the Administrative Agent to Borrower at the request of the Requisite
Lenders, (x) each Eurodollar Rate Advance will automatically, on the last
day of the then existing Eurodollar Period therefor, Convert into an Alternate
Base Rate Advance and (y) the obligation of the Lenders to make, or to
Convert Advances into, or to Continue, Eurodollar Rate Advances shall be
suspended.

     

                            (c)     Continuations.  Borrower
may, on any Eurodollar Banking Day, upon notice given to the Administrative
Agent not later than 9:00 a.m. (California time) on the third Eurodollar
Banking Day prior to the date of the proposed Continuation and subject to the
provisions of Sections 3.5 and
3.6, Continue
all or any portion of the Eurodollar Rate Advances outstanding under a Facility
having the same Eurodollar Period; provided that any
such Continuation shall be made only on the last day of a Eurodollar Period for
such Eurodollar Rate Advances, no Continuation of Eurodollar Rate Advances shall
be in an amount less than $1,000,000 and no Continuation of any Eurodollar Rate
Advances shall result in more than five (5) separate Eurodollar Periods being
outstanding under the Revolving Facility.  Each such notice of
Continuation shall be made pursuant to a Request for Continuation/Conversion and
shall, within the restrictions specified above, specify (i) the date of
such Continuation, (ii) the aggregate amount and category of, and the
Eurodollar Period for, the Advances being Continued and (iii) the duration
of the initial Eurodollar Period for the Eurodollar Rate Advances subject to
such Continuation.  Each notice of Continuation shall be irrevocable
and binding on Borrower.

     

    2.5     Letters of
Credit.

     

                            (a)     Subject to
the terms and conditions hereof, at any time and from time to time from the
Closing Date to but not including the Maturity Date, the Issuing Lender shall
issue such Letters of Credit under the Revolving Facility for the benefit of
Borrower and/or its wholly-owned Subsidiaries as Borrower may request by a
Request for Letter of Credit; provided that giving
effect to all such Letters of Credit, (i) Revolving Credit Facility Usage
does not exceed the Maximum Revolving Credit Amount and (ii) the Aggregate
Effective Amount under all outstanding Letters of Credit shall not exceed
$20,000,000.  Each Letter of Credit shall be in a form reasonably
acceptable to the Issuing Lender.  Unless the Issuing Lender and the
Requisite Lenders otherwise consent, the term of any Letter of Credit shall not
exceed three years. Unless all the Lenders otherwise consent in a writing
delivered to the Administrative Agent, the term of any Letter of Credit shall
not extend beyond the date that is one year after the Maturity Date; provided, however,
that no Letter of Credit shall extend beyond the Maturity Date unless, on or
prior to the Maturity Date, Borrower shall have (a) deposited into the Letter of
Credit Collateral Account an amount equal to one hundred five percent (105%) of
the Aggregate Effective Amount of all Letters of Credit outstanding on the
Maturity Date and (b) executed and delivered to the Administrative Agent such
security agreements or other similar agreement as shall be reasonably required
to provide the Administrative Agent, for the benefit of the Lenders, with a
first priority perfected security interest in such Letter of Credit Collateral
Account. Notwithstanding such deposit into the Letter of Credit Collateral
Account, in the event that any Letter of Credit remains outstanding subsequent
to the Maturity Date, (a) the Termination Date shall be extended until such time
as all Obligations in connection with such Letters of Credit shall have been
fully performed and paid in full and (b) each of the Lenders agrees to continue
to comply with the provisions of this Section 2.5 until the
Termination Date, as so extended.  A Request for Letter of Credit
shall be irrevocable absent the consent of the Issuing Lender.

     

     

    
      
        
        

      

      
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    (b)     Each
Request for Letter of Credit shall be submitted to the Issuing Lender, with a
copy to the Administrative Agent, at least three (3) Banking Days prior to the
date upon which the related Letter of Credit is proposed to be issued. The
Administrative Agent shall promptly notify the Issuing Lender whether such
request, and the issuance of a Letter of Credit pursuant thereto, conforms to
the requirements of this Agreement.  Upon issuance of a Letter of
Credit, the Issuing Lender shall promptly notify the Administrative Agent of the
amount and terms thereof.  Unless the Issuing Lender has notified, in
its sole and absolute discretion, Borrower to the contrary not less than three
(3) days prior to the date of any Request for Letter of Credit, a Request for
Letter of Credit may be delivered to the Issuing Lender by facsimile by a
Responsible Official of  Borrower, in which case Borrower shall
confirm such request by promptly delivering a Request for Letter of Credit
(conforming to the preceding sentence) in person  to the Issuing
Lender.  The Issuing Lender shall incur no liability whatsoever
hereunder in acting upon any  Request for Letter of Credit received by
facsimile purportedly made by a Responsible Official of  Borrower, and
Borrower hereby agrees to indemnify the Issuing Lender from any loss, cost,
expense or liability as a result of so acting.

     

    (c)     Upon
issuance of a Letter of Credit, each Lender shall be deemed to have purchased a
pro rata participation in such Letter of Credit from the Issuing Lender in
proportion to that Lender's Pro Rata Share of the Revolving
Facility.  Without limiting the scope and nature of each Lender's
participation in any Letter of Credit, to the extent that the Issuing Lender has
not been reimbursed by Borrower for any payment required to be made by the
Issuing Lender under any Letter of Credit, each Lender shall, pro rata according
to its Pro Rata Share of the Revolving Facility, reimburse the Issuing Lender
through the Administrative Agent promptly upon demand for the amount of such
payment.  The obligation of each Lender to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected by the
occurrence of an Event of Default or any other occurrence or
event.  Any such reimbursement shall not relieve or otherwise impair
the obligation of Borrower to reimburse the Issuing Lender for the amount of any
payment made by the Issuing Lender under any Letter of Credit together with
interest as hereinafter provided.

     

     

    
      
        
        

      

      
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    (d)     Borrower
agrees to pay to the Issuing Lender through the Administrative Agent an amount
equal to any payment made by the Issuing Lender with respect to each Letter of
Credit within one (1) Banking Day after demand made by the Issuing Lender
therefor, together with interest on such amount from the date of any payment
made by the Issuing Lender at the rate applicable to Alternate Base Rate
Advances under the Revolving Facility for the period commencing on the date of
any such payment and continuing through the first Banking Day following such
demand and thereafter at the Default Rate.  The principal amount of
any such payment shall be used to reimburse the Issuing Lender for the payment
made by it under the Letter of Credit.  Each Lender that has
reimbursed the Issuing Lender pursuant to Section 2.5(c)
for its Pro Rata Share of any payment made by the Issuing Lender under a Letter
of Credit shall thereupon acquire a pro rata participation, to the extent of
such reimbursement, in the claim of the Issuing Lender against Borrower under
this Section 2.5(d)
and shall share, in accordance with that pro rata participation, in any payment
made by Borrower with respect to such claim.  Upon receipt of any such
reimbursement from Borrower, the Issuing Lender shall pay to the Administrative
Agent, for the ratable benefit of those Lenders that had reimbursed the Issuing
Lender pursuant to Section 2.5(c)
for their respective Pro Rata Shares of any payment made by the Issuing Lender
under a Letter of Credit to which such reimbursement applies, the amount of such
reimbursement.

     

    (e)     Borrower
may, pursuant to a Request for Borrowing, request that Advances be made pursuant
to Section 2.1(a)
to provide funds for the payment required by Section 2.5(d).  The
proceeds of such Advances shall be paid directly to the Issuing Lender to
reimburse it for the payment made by it under the Letter of Credit.

     

    (f)     If
Borrower fails to make the payment required by Section 2.5(d)
within the time period therein set forth, in lieu of the reimbursement to the
Issuing Lender under Section 2.5(c)
the Issuing Lender may (but is not required to), without notice to or the
consent of Borrower, instruct the Administrative Agent to cause Advances to be
made by the Lenders under the Revolving Facility in an aggregate amount equal to
the amount paid by the Issuing Lender with respect to that Letter of Credit and,
for this purpose, the conditions precedent set forth in Article 8 shall
not apply.  The proceeds of such Advances shall be paid to the Issuing
Lender to reimburse it for the payment made by it under the Letter of
Credit.

     

     

    
      
        
        

      

      
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    (g)     The
issuance of any supplement, modification, amendment, renewal, or extension to or
of any Letter of Credit shall be treated in all respects the same as the
issuance of a new Letter of Credit.

     

    (h)     The
obligation of Borrower to pay to the Issuing Lender the amount of any payment
made by the Issuing Lender under any Letter of Credit shall be absolute,
unconditional, and irrevocable, subject only to performance by the Issuing
Lender of its obligations to Borrower under Section 5108 of the
UCC.  Without limiting the foregoing, Borrower's obligations shall not
be affected by any of the following circumstances:

     

                    (i)     any lack
of validity or enforceability of the Letter of Credit, this Agreement, or any
other agreement or instrument relating thereto;

     

                    (ii)     any
amendment or waiver of or any consent to departure from the Letter of Credit,
this Agreement, or any other agreement or instrument relating thereto, with the
written consent of Borrower executed by a Responsible Official of
Borrower;

     

                    (iii)     the
existence of any claim, setoff, defense, or other rights that Borrower may have
at any time against the Issuing Lender, the Administrative Agent or any Lender,
any beneficiary of the Letter of Credit (or any Persons for whom any such
beneficiary may be acting) or any other Person, whether in connection with the
Letter of Credit, this Agreement, or any other agreement or instrument relating
thereto, or any unrelated transactions;

     

                    (iv)     any
demand, statement, or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever so long
as any such document reasonably appeared to comply with the terms of the Letter
of Credit;

     

                    (v)     payment by
the Issuing Lender in good faith under the Letter of Credit against presentation
of a draft or any accompanying document which does not strictly comply with the
terms of the Letter of Credit;

     

                    (vi)     the
existence, character, quality, quantity, condition, packing, value or delivery
of any Property purported to be represented by documents presented in connection
with any Letter of Credit or for any difference between any such Property and
the character, quality, quantity, condition, or value of such Property as
described in such documents;

     

                    (vii)     the time,
place, manner, order or contents of shipments or deliveries of Property as
described in documents presented in connection with any Letter of Credit or the
existence, nature and extent of any insurance relative thereto;

     

     

    
      
        
        

      

      
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    (viii)     the
solvency or financial responsibility of any party issuing any documents in
connection with a Letter of Credit;

     

    (ix)        any
failure or delay in notice of shipments or arrival of any Property;

     

    (x)         any error
in the transmission of any message relating to a Letter of Credit not caused by
the Issuing Lender, or any delay or interruption in any such
message;

     

    (xi)        any error,
neglect or default of any correspondent of the Issuing Lender in connection with
a Letter of Credit;

     

    (xii)       any
consequence arising from acts of God, war, insurrection, civil unrest,
disturbances, labor disputes, emergency conditions or other causes beyond the
control of the Issuing Lender; and

     

    (xiii)       so long as
the Issuing Lender in good faith determines that the contract or document
appears to comply with the terms of the Letter of Credit, the form, accuracy,
genuineness or legal effect of any contract or document referred to in any
document submitted to the Issuing Lender in connection with a Letter of
Credit.

     

    Notwithstanding
anything to the contrary contained in this Section 2.5(h),
Borrower shall retain any and all rights it may have against the Issuing Lender
for any liability arising solely out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.

     

    (i)     The
Issuing Lender shall be entitled to the protection accorded to the
Administrative Agent pursuant to Section 10.6
(subject to the standards set forth therein), mutatis mutandis.

     

    (j)     The
Uniform Customs and Practice for Documentary Credits, as published in its most
current version by the International Chamber of Commerce, shall be deemed a part
of this Section and shall apply to all Letters of Credit to the extent not
inconsistent with applicable Law.

     

    2.6     Termination or Reduction of
the Commitments.

     

                        (a)     Optional.  Borrower
may at any time or from time to time, upon not less than three (3) Banking Days'
notice to the Administrative Agent, terminate in whole or reduce in part the
Commitments, provided that each
partial reduction of the Commitments shall be in an aggregate amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof.

     

     

    
      
        
        

      

      
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    (b)     Mandatory.  The
Commitments shall be automatically and permanently reduced to zero on the
Maturity Date.

     

    (c)     Reduction Pro Rata; No
Reinstatements.  Each reduction of the Commitments shall be
applied to the respective Commitments of the Lenders according to their
respective Pro Rata Shares.  Commitments once terminated or reduced
may not be reinstated.

     

    2.7     Administrative Agent's Right
to Assume Funds Available for Advances.  Unless the
Administrative Agent shall have been notified by any relevant Lender no later
than 10:00 a.m., California time, on the Banking Day of the proposed
funding by the Administrative Agent of any Borrowing that such
Lender does not intend to make available to the Administrative Agent such
Lender's portion of the total amount of such Borrowing, the Administrative Agent
may assume that such Lender has made such amount available to the Administrative
Agent on the date of the Borrowing and the Administrative Agent may, in reliance
upon such assumption, make available to Borrower a corresponding
amount.  If the Administrative Agent has made funds available to
Borrower based on such assumption and such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender.  If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent promptly shall notify Borrower and Borrower shall pay such corresponding
amount to the Administrative Agent.  The Administrative Agent also
shall be entitled to recover from such Lender interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to Borrower to the date such corresponding
amount is recovered by the Administrative Agent, at a rate per annum equal to
the daily Federal Funds Rate.  Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its Commitments or to
prejudice any rights which the Administrative Agent or Borrower may have against
any Lender as a result of any default by such Lender hereunder.

     

    2.8     Swing
Line.

     

    (a)     The
Swing Line Lender shall from time to time from the Closing Date through the
day prior to the Maturity Date make Swing Line Loans to Borrower in such
amounts as Borrower may request, provided that (a) after giving effect to
such Swing Line Loan,  Revolving Credit Facility Usage does not exceed the
Maximum Revolving Credit Amount, (b) after giving effect to such
Swing Line Loan, the Swing Line Outstandings do not exceed $10,000,000
and/or, (c) without the consent of all of the Lenders, no Swing Line Loan
may be made during the continuation of an Event of Default if written notice of
such Event of Default shall have been provided to Swing Line Lender by the
Administrative Agent or a Lender sufficiently in advance of the making of such
Swing Line Loan.  Borrower may borrow, repay and reborrow under this
Section.  Borrowings under the Swing Line may be made in amounts which
are integral multiples of $100,000 (or the remaining availability under the
Swing Line) upon telephonic request by a Responsible Official of Borrower made
to the Administrative Agent not later than 2:00 p.m.,
California time, on the Banking Day of the requested borrowing (which telephonic
request shall be promptly confirmed in writing by telecopier or electronic
mail).  Promptly after receipt of such a request for borrowing, the
Administrative Agent shall provide telephonic verification to the Swing Line
Lender that, after giving effect to such request, availability for Loans will
exist under Section 2.1(a)
(and such verification shall be promptly confirmed in writing by telecopier or
electronic mail).  Each repayment of a Swing Line Loan shall be in an
amount which is an integral multiple of $100,000 (or the Swing Line
Outstandings).  Borrower shall notify the Swing Line Lender of its
intention to make a repayment of a Swing Line Loan not later than 1:00 p.m.
California time on the date of repayment. If Borrower instructs the Swing Line
Lender to debit its demand deposit account at the Swing Line Lender in the
amount of any payment with respect to a Swing Line Loan, or the Swing Line
Lender otherwise receives repayment, after 3:00 p.m., California time, on a
Banking Day, such payment shall be deemed received on the next Banking
Day.  The Swing Line Lender shall promptly notify the Administrative
Agent of the Swing Loan Outstandings each time there is a change
therein.

     

     

    
      
        
        

      

      
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    (b)    Swing Line
Loans shall bear interest at a fluctuating rate per annum equal to the Alternate
Base Rate plus
the Applicable Alternate Base Rate Margin.  Interest shall be payable
on such dates, not more frequent than monthly, as may be specified by the Swing
Line Lender and in any event on the Maturity Date.  The Swing Line
Lender shall be responsible for invoicing Borrower for such
interest.  The interest payable on Swing Line Loans is solely for the
account of the Swing Line Lender (subject to clause (d)
below).

     

    (c)    Subject to
subsection (e)
below, the principal amount of all Swing Line Loans shall be due and payable on
the earlier of (i) the maturity date agreed to by the Swing Line Lender and
Borrower with respect to such loan (which maturity date shall not be a date more
than ten (10) consecutive Banking Days from the date of advance thereof) or
(ii) the Maturity Date.

     

    (d)    Upon the
making of a Swing Line Loan, each Lender shall be deemed to have purchased from
the Swing Line Lender a participation therein in an amount equal to that
Lender's Pro Rata Share of the Revolving Facility times the amount of
the Swing Line Loan.  Upon demand made by the Swing Line Lender, each
Lender shall, according to its Pro Rata Share of the Revolving Facility,
promptly provide to the Swing Line Lender its purchase price therefor in an
amount equal to its participation therein.  The obligation of each
Lender to so provide its purchase price to the Swing Line Lender shall be
absolute and unconditional (except only demand made by the Swing Line Lender)
and shall not be affected by the occurrence of a Default or Event of Default;
provided that
no Lender shall be obligated to purchase its Pro Rata Share of (i) Swing
Line Loans to the extent that, after giving effect to such Swing Line Loan,
Revolving Credit Facility Usage exceeds the Maximum Revolving Credit Amount,
(ii) Swing Line Loans to the extent that, after giving effect to such Swing
Line Loan, Swing Line Outstandings exceed  $5,000,000 and
(iii) any Swing Line Loan made (absent the consent of all of the Lenders)
during the continuation of an Event of Default if written notice of such Event
of Default shall have been provided to Swing Line Lender by the Administrative
Agent or a Lender sufficiently in advance of the making of such Swing Line
Loan.  Each Lender that has provided to the Swing Line Lender the
purchase price due for its participation in Swing Line Loans shall thereupon
acquire a pro rata participation, to the extent of such payment, in the claim of
the Swing Line Lender against Borrower for principal and interest and shall
share, in accordance with that pro rata participation, in any principal payment
made by Borrower with respect to such claim and in any interest payment made by
Borrower (but only with respect to periods subsequent to the date such Lender
paid the Swing Line Lender its purchase price) with respect to such
claim.

     

     

    
      
        
        

      

      
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    (e)     In the
event that any Swing Line Loan remains outstanding for ten (10) consecutive
Banking Days, then on the next Banking Day (unless Borrower has made other
arrangements acceptable to the Swing Line Lender to repay such Swing Line Loan,
in full), Borrower shall request a Loan pursuant to Section 2.1(a)
sufficient to repay the aggregate principal amount of such Swing Line Loan
together with any and all accrued and unpaid interest with respect
thereto.  In addition, the Swing Line Lender may, at any time, in its
sole discretion, by written notice to Borrower and the Lenders, demand payment
of the Swing Line Loans by way of a Advance in the full amount or any portion of
the Swing Line Outstandings.  In each case, the Administrative Agent
shall automatically provide the responsive Advances made by each Lender to the
Swing Line Lender (which the Swing Line Lender shall then apply to the Swing
Line Outstandings).  In the event that Borrower fails to request a
Loan within the time specified by Section 2.2 on
any such date, the Administrative Agent may, but is not required to, without
notice to or the consent of Borrower, cause Alternate Base Rate Advances to be
made by the Lenders under the Revolving Facility in amounts which are sufficient
to reduce the Swing Line Outstandings as required above.  The proceeds
of such Advances shall be paid directly to the Swing Line Lender for application
to the Swing Line Outstandings.

     

    2.9     Adjusting Purchase
Payments. Principal amounts
outstanding under the Commitment (as defined in the Original Credit Agreement)
on the Closing Date (the "Carryover Principal Balance"), shall remain
outstanding hereunder.  Concurrently with the effectiveness of this
Agreement, the Lenders agree to purchase and sell undivided interests in the
Carryover Principal Balance by making or receiving adjusting purchase payments
as specified in Exhibit I hereto (the
"Adjusting Purchase Payment(s)") so that the Carryover Principal Balance will be
properly allocated and owing to the Lenders under the Notes in accordance with
the Pro Rata Shares specified in Schedule 1.1
hereto.  Each Lender making an Adjusting Purchase Payment shall
deliver it to the Agent and the Agent shall forward such Adjusting Purchase
Payments to the Lenders entitled thereto promptly after receipt in accordance
with the allocations specified in Exhibit
I.  On the Closing Date, in addition to any other Advances that
may be made, each Lender shall be deemed as having an Advance outstanding in the
amount of its Pro Rata Share of the Carryover Principal Balance.  As
of the Effective Date, the Lenders shall hold participations in all issued and
outstanding Letters of Credit in accordance with their Pro Rata
Shares.

     

     

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

       

       

      As of the
Closing Date, Revolving Credit Facility Usage is $60,181,000 which amount
consists of (i) $49,000,000 of outstanding Advances under the Revolving
Facility, (ii) issued and outstanding Letters of Credit with an Aggregate
Effective Amount of $11,181,000.00 and (iii) no outstanding Swing Line
Loans.

       

       

      
        
          
          

        

        
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    Article 3.

    PAYMENTS
AND FEES

     

    3.1     Principal and
Interest.

     

    (a)  Interest
shall be payable on the outstanding daily unpaid principal amount of each
Advance from the date thereof until payment in full is made and shall accrue and
be payable at the rates set forth or provided for herein before and after
Default, before and after maturity, before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law, with
interest on overdue interest at the Default Rate to the fullest extent permitted
by applicable Laws.

     

    (b)  Interest
accrued on each Alternate Base Rate Advance shall be due and payable on each
Monthly Payment Date.  Except as otherwise
provided in Section 3.7, the
unpaid principal amount of any Alternate Base Rate Advance shall bear interest
at a fluctuating rate per annum equal to the Alternate Base Rate plus the Applicable
Alternate Base Rate Margin.  Each change in the interest rate under
this Section 3.1(b)
due to a change in the Alternate Base Rate shall take effect simultaneously with
the corresponding change in the Alternate Base Rate.

     

    (c)  Interest
accrued on each Eurodollar Rate Advance which is for a term of three months or
less shall be due and payable on the last day of the related Eurodollar
Period.  Interest accrued on each other Eurodollar Rate Advance shall
be due and payable on the date which is three months after the date such
Eurodollar Rate Advance was made (and, in the event that all of the Lenders have
approved a Eurodollar Period of longer than six months, every three months
thereafter through the last day of the Eurodollar Period) and on the last day of
the related Eurodollar Period.  Except as otherwise
provided in Section 3.7, the
unpaid principal amount of any Eurodollar Rate Advance shall bear interest at a
rate per annum equal to the Eurodollar Rate for that Eurodollar Rate Advance
plus the
Applicable Eurodollar Rate Margin.

     

    (d)  If not
sooner paid, the principal Indebtedness evidenced by the Notes shall be payable
as follows:

     

    (i)  the
amount, if any, by which the principal Indebtedness evidenced by the Notes at
any time exceeds the Maximum Revolving Credit Amount shall be payable
immediately; and

     

    (ii)  the
principal Indebtedness evidenced by the Notes shall in any event be payable on
the Maturity Date.

     

    (e)  The
principal Indebtedness evidenced by the Notes may, at any time and from time to
time, voluntarily be paid or prepaid in whole or in part without premium or
penalty, except
that with respect to any voluntary prepayment under this subsection,
(i) any partial prepayment shall be not less than $1,000,000 and shall be
an integral multiple of $500,000, except as provided in
Section 2.8(a),
(ii) the Administrative Agent shall have received written notice of any
prepayment by 9:00 a.m. California time on the date that is (x) in the
case of a Eurodollar Rate Advance three (3) Banking Days before the date of
prepayment unless the prepayment is of a Eurodollar Rate Advance to be made at
the end of its applicable Eurodollar Period and (y) in the case of an
Alternate Base Rate Advance or a prepayment of a Eurodollar Rate Advance made at
the end of its applicable Eurodollar Period, one (1) Banking Day before the date
of prepayment, which notice shall identify the date and amount of the prepayment
and the Advance(s) being prepaid, (iii) each prepayment of principal on any
Eurodollar Rate Advance shall be accompanied by payment of interest accrued to
the date of payment on the amount of principal paid, and (iv) any payment
or prepayment of all or any part of any Eurodollar Rate Advance on a day other
than the last day of the applicable Eurodollar Period shall be subject to Section 3.6(e).

     

    
      
        
        

      

      
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    3.2     Unused Revolving Facility
Commitment Fee.  From the Closing Date to but not including the
Maturity Date, Borrower shall pay to the Administrative Agent, for the ratable
accounts of the applicable Lenders in accordance with their respective Pro Rata
Shares, a commitment fee equal to the Applicable Commitment Fee Margin times the average
daily amount by which the Maximum Revolving Credit Amount exceeds the sum of (a) the
aggregate principal amount of funded Indebtedness then outstanding under the
Notes plus
(b) the Aggregate Effective Amount under all outstanding Letters of
Credit.  The commitment fee shall be payable quarterly in arrears on
each Quarterly Payment Date.

     

    3.3     Closing Fees; Arrangement
Fee; Agency Fee etc.

     

    (a)  On the
Closing Date, Borrower shall pay to the Closing Date Lenders, through the
Administrative Agent, the closing fees in the amount heretofore agreed upon by
letter agreement among Borrower and each Closing Date Lender.  All
such fees shall be fully earned when paid and shall be
non-refundable.

     

    (b)  On the
date of the execution hereof, Borrower shall pay to the Administrative Agent,
for the sole account of the Lead Arranger, an arrangement fee in the amount
heretofore agreed upon by letter agreement between Borrower and the Lead
Arranger.  Such arrangement fee is for the services of the Lead
Arranger in arranging the credit facility under this Agreement, is fully earned
as of the date hereof and is nonrefundable.

     

    (c)  Borrower
shall pay to the Administrative Agent an annual agency fee in such amounts and
at such times as heretofore agreed upon by letter agreement between Borrower and
the Administrative Agent.  The agency fee is for the services to be
performed by the Administrative  Agent in acting as Administrative
Agent and is fully earned on the date paid.  The agency fee paid to
the Administrative Agent is solely for its own account and is
nonrefundable.

     

     

    
      
        
        

      

      
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    3.4     Letter of Credit
Fees.  With respect to each Letter of Credit, Borrower shall
pay the following fees:

     

    (a)  concurrently
with the issuance of each Letter of Credit and on each Quarterly Payment Date
thereafter so long as such Letter of Credit shall remain outstanding, to the
Administrative Agent for the ratable accounts of the Lenders in accordance with
their respective Pro Rata Shares, a standby letter of credit fee in an amount
equal to the product of the then Applicable Letter of Credit Fee Rate times the then
outstanding undrawn amount of such Letter of Credit, for the period commencing
on such payment date and ending on the next succeeding Quarterly Payment Date or
for the remaining term of such Letter of Credit, whichever is shorter; provided, however, that the
applicable standby letter of credit fee payable in connection with the original
issuance of any Letter of Credit (and on each anniversary date thereof if such
Letter of Credit is renewed or extended) shall be no less than $410;
and

     

    (b)  concurrently
with the issuance of each Letter of Credit, and on each Quarterly Payment Date
thereafter so long as such Letter of Credit shall remain outstanding, to the
Issuing Lender for its own account, a fronting fee equal to 0.125% (12.5 basis
points) per annum on the daily average stated amount of such Letter of
Credit.

     

    In
addition to the foregoing, in connection with a Letter of Credit and activity
relating thereto, Borrower also shall pay amendment, transfer, issuance,
negotiation and such other fees as the Issuing Lender normally charges, in the
amounts set forth from time to time as the Issuing Lender's published scheduled
fees for such services.  Each of the fees payable with respect to
Letters of Credit under this Section is earned when due and is
nonrefundable.

     

    3.5        Increased Commitment
Costs.  If any Lender shall determine in good faith that the
introduction after the Closing Date of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein or any change in the
interpretation or administration thereof by any central bank or other
Governmental Agency charged with the interpretation or administration thereof,
or compliance by such Lender (or its Eurodollar Lending Office) or any
corporation controlling such Lender, with any request, guideline or directive
regarding capital adequacy (whether or not having the force of Law) of any such
central bank or other authority not imposed as a result of such Lender's or such
corporation's failure to comply with any other Laws, affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines in good faith that the amount of
such capital is increased, or the rate of return on capital is reduced, as a
consequence of its obligations under this Agreement, then, within five
(5) days after demand of such Lender, Borrower shall pay to such Lender,
from time to time as specified in good faith by such Lender, additional amounts
sufficient to compensate such Lender in light of such circumstances, to the
extent reasonably allocable to such obligations under this Agreement, provided that
Borrower shall not be obligated to pay any such amount which arose prior to the
date which is 180 days preceding the date of such demand or is attributable to
periods prior to the date which is 180 days preceding the date of such
demand.  Each Lender's determination of such amounts shall be
conclusive in the absence of manifest error.

     

     

    
      
        
        

      

      
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    3.6     Eurodollar Costs and Related
Matters.

     

    (a)  In the
event that any Governmental Agency imposes on any Lender any reserve or
comparable requirement (including any
emergency, supplemental or other reserve) with respect to the Eurodollar
Obligations of that Lender, other than the Eurodollar
Reserve Percentage, Borrower shall pay that Lender within five (5) days
after demand all amounts necessary to compensate such Lender (determined as
though such Lender's Eurodollar Lending Office had funded 100% of its Eurodollar
Rate Advances in the Designated Eurodollar Market) in respect of the imposition
of such reserve requirements (provided that
Borrower shall not be obligated to pay any such amount which arose prior to the
date which is 180 days preceding the date of such demand or is attributable to
periods prior to the date which is 180 days preceding the date of such
demand).  Any Lender's determination of such amount shall be
conclusive in the absence of manifest error.

     

    (b)  If, after
the date hereof, the existence or occurrence of any Special Eurodollar
Circumstance:

     

    (i)  shall
subject any Lender or its Eurodollar Lending Office to any tax, duty or other
charge or cost with respect to any Eurodollar Rate Advance, any of its Notes
evidencing Eurodollar Rate Advances or its obligation to make Eurodollar Rate
Advances, or shall change the basis of taxation of payments to any Lender
attributable to the principal of or interest on any Eurodollar Rate Advance or
any other amounts due under this Agreement in respect of any Eurodollar Rate
Advance, any of its Notes evidencing Eurodollar Rate Advances or its obligation
to make Eurodollar Rate Advances, excluding
(A) taxes imposed on or measured in whole or in part by its overall net
income by (1) any jurisdiction (or political subdivision thereof) in which
it is organized or maintains its principal office or Eurodollar Lending Office
or (2) any jurisdiction (or political subdivision thereof) in which it is
"doing business" and (B) any withholding taxes or other taxes based on
gross income imposed by the United States of America for any period with respect
to which it has failed to provide Borrower with the appropriate form or forms
required by Section 11.21,
to the extent such forms are then required by applicable Laws;

     

    (ii)  shall
impose, modify or deem applicable any reserve not applicable or deemed
applicable on the date hereof (including any reserve
imposed by the Board of Governors of the Federal Reserve System (other than the Eurodollar
Reserve Percentage), special deposit, capital or similar requirements against
assets of, deposits with or for the account of, or credit extended by, any
Lender or its Eurodollar Lending Office); or

     

     

    
      
        
        

      

      
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    (iii)  shall
impose on any Lender or its Eurodollar Lending Office or the Designated
Eurodollar Market any other condition affecting any Eurodollar Rate Advance, any
of its Notes evidencing Eurodollar Rate Advances, its obligation to make
Eurodollar Rate Advances or this Agreement, or shall otherwise affect any of the
same;

     

    and the
result of any of the foregoing, as determined in good faith by such Lender,
increases the cost to such Lender or its Eurodollar Lending Office of making or
maintaining any Eurodollar Rate Advance or in respect of any Eurodollar Rate
Advance, any of its Notes evidencing Eurodollar Rate Advances or its obligation
to make Eurodollar Rate Advances or reduces the amount of any sum received or
receivable by such Lender or its Eurodollar Lending Office with respect to any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Advances or
its obligation to make Eurodollar Rate Advances (assuming such Lender's
Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advances in the
Designated Eurodollar Market), then, within five (5) Banking Days after
demand by such Lender (with a copy to the Administrative Agent), Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender for such increased cost or reduction (determined as though such Lender's
Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advances in the
Designated Eurodollar Market); provided that
Borrower shall not be obligated to pay any such amount which arose prior to the
date which is 180 days preceding the date of such demand or is attributable to
periods prior to the date which is 180 days preceding the date of such
demand.  A statement of any Lender claiming compensation under this
subsection shall be conclusive in the absence of manifest
error.

     

    (c)  If, after
the date hereof, the existence or occurrence of any Special Eurodollar
Circumstance shall, in the good faith opinion of any Lender, make it unlawful or
impossible for such Lender or its Eurodollar Lending Office to make, maintain or
fund its portion of any Borrowing consisting of Eurodollar Rate Advances, or
materially restrict the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the Designated Eurodollar Market, or to determine or
charge interest rates based upon the Eurodollar Rate, then such Lender's
obligation to make Eurodollar Rate Advances shall be suspended for the duration
of such illegality or impossibility and the Administrative Agent forthwith shall
give notice thereof to the other Lenders and Borrower.  Upon receipt
of such notice, the outstanding principal amount of such Lender's affected
Eurodollar Rate Advances, together with accrued interest thereon, automatically
shall be converted to Alternate Base Rate Advances on either (i) the last
day of the Eurodollar Period(s) applicable to such Eurodollar Rate Advances if
such Lender may lawfully continue to maintain and fund such Eurodollar Rate
Advances to such day(s) or (ii) immediately if such Lender may not lawfully
continue to fund and maintain such Eurodollar Rate Advances to such
day(s).  Each Lender agrees to endeavor promptly to notify Borrower of
any event of which it has actual knowledge, occurring after the Closing Date,
which will cause such Lender to notify Borrower as set forth in the first
sentence of this Section, and agrees to designate a different Eurodollar Lending
Office if such designation will avoid the need for such notice and will not, in
the good faith judgment of such Lender, otherwise be materially disadvantageous
to such Lender.  In the event that any Lender is unable, for the
reasons set forth above, to make, maintain or fund any Eurodollar Rate Advance,
such Lender shall fund such Eurodollar Dollar Rate Advance as an Alternate Base
Rate Advance for the same period of time, and such amount shall be treated in
all respects as an Alternate Base Rate Advance.  In the event that any
Lender's obligation to make Eurodollar Rate Advances has been suspended under
this Section, such Lender shall promptly notify the Administrative Agent and
Borrower of the cessation of the Special Eurodollar Circumstance which gave rise
to such suspension.

     

     

    
      
        
        

      

      
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    (d)  If, with
respect to any proposed Borrowing comprised of Eurodollar Rate
Advances:

     

    (i)  the
Administrative Agent reasonably determines that, by reason of circumstances
affecting the Designated Eurodollar Market generally that are beyond the
reasonable control of the Lenders, deposits in Dollars (in the applicable
amounts) are not being offered to any Lender in the Designated Eurodollar Market
for the applicable Eurodollar Period; or

     

    (ii)  the
Requisite Lenders advise the Administrative Agent that the Eurodollar Rate as
determined by the Administrative Agent (A) does not represent the effective
pricing to such Lenders for deposits in Dollars in the Designated Eurodollar
Market in the relevant amount for the applicable Eurodollar Period, or
(B) will not adequately and fairly reflect the cost to such Lenders of
making the applicable Eurodollar Rate Advances;

     

    then the
Administrative Agent forthwith shall give notice thereof to Borrower and the
Lenders, whereupon until the Administrative Agent notifies Borrower that the
circumstances giving rise to such suspension no longer exist, the obligation of
the Lenders to make any future Eurodollar Rate Advances shall be
suspended.

     

    (e)  Upon
payment or prepayment of any Eurodollar Rate Advance on a day other than the
last day in the applicable Eurodollar Period (whether voluntarily,
involuntarily, by reason of acceleration, or otherwise), or upon the failure of
Borrower (for a reason other than the breach by a Lender of its obligation
pursuant to Section 2.1(a))
to borrow on the date or in the amount specified for a Borrowing comprised of
Eurodollar Rate Advances in any Request for Borrowing, Borrower shall pay to the
appropriate Lender within five (5) Banking Days after demand a prepayment
fee or failure to borrow fee, as the case may be (determined as though 100% of
the Eurodollar Rate Advance had been funded in the Designated Eurodollar Market)
equal to the sum of:

     

    (1)  the
amount, if any, by which (i) the additional interest would have accrued on
the amount prepaid or not borrowed at the Eurodollar Rate plus the Applicable
Eurodollar Rate Margin if that amount had remained or been outstanding through
the last day of the applicable Eurodollar Period exceeds (ii) the
interest that such Lender could recover by placing such amount on deposit in the
Designated Eurodollar Market for a period beginning on the date of the
prepayment or failure to borrow and ending on the last day of the applicable
Eurodollar Period (or, if no deposit rate quotation is available for such
period, for the most comparable period for which a deposit rate quotation may be
obtained); plus

     

     

    
      
        
        

      

      
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    (2)  all
out-of-pocket expenses incurred by such Lender reasonably attributable to such
payment, prepayment or failure to borrow.

     

    Each
Lender's determination of the amount of any prepayment fee payable under this
Section shall be conclusive in the absence of manifest error.

     

    (f)  Each
Lender agrees to endeavor promptly to notify Borrower of any event of which it
has actual knowledge, occurring after the Closing Date, which will entitle such
Lender to compensation pursuant to clause (a) or
clause (b)
of this Section, and agrees to designate a different Eurodollar Lending Office
if such designation will avoid the need for or reduce the amount of such
compensation and will not, in the good faith judgment of such Lender, otherwise
be materially disadvantageous to such Lender.  Any request for
compensation by a Lender under this Section shall set forth the basis upon
which it has been determined that such an amount is due from
Borrower,  a calculation of the amount due, and a certification that
the corresponding costs have been incurred by such Lender.

     

    3.7    Late Payments and Default
Rate.  If any installment of principal or interest or any fee
or cost or other amount payable under any Loan Document to the Administrative
Agent or any Lender is not paid when due, it shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the sum of the interest rate
otherwise applicable thereto hereunder (or, if no interest rate is otherwise
applicable thereto hereunder, the Alternate Base Rate) plus 2.00% (the
"Default
Rate"), to the fullest extent permitted by applicable
Laws.  While any Event of Default exists or after acceleration, at the
option of the Requisite Lenders, Borrower shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by Law) on the
principal amount of all outstanding Obligations, at the Default Rate, to the
fullest extent permitted by Law.  Accrued and unpaid interest on past
due amounts (including interest on
past due interest) shall be compounded monthly, on the last day of each calendar
month, to the fullest extent permitted by applicable Laws.

     

    3.8    Computation of Interest and
Fees.  Computation of interest on  Alternate Base
Rate Advances calculated with reference to the Prime Rate shall be calculated on
the basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed; computation of interest on Alternate Base Rate Advances
calculated by reference to the Federal Funds Rate, and on Eurodollar Rate
Advances and all fees under this Agreement shall be calculated on the basis of a
year of 360 days and the actual number of days elapsed.  Borrower
acknowledges that such latter calculation method will result in a higher yield
to the Lenders than a method based on a year of 365 or 366
days.  Interest shall accrue on each Advance for the day on which the
Advance is made; interest shall not accrue on an Advance, or any portion
thereof, for the day on which the Advance or such portion is
paid.  Any Advance that is repaid on the same day on which it is made
shall bear interest for one day.  Notwithstanding anything in this
Agreement to the contrary, interest in excess of the maximum amount permitted by
applicable Laws shall not accrue or be payable hereunder or under the Notes, and
any amount paid as interest hereunder or under the Notes which would otherwise
be in excess of such maximum permitted amount shall instead be treated as a
payment of principal.

     

     

    
      
        
        

      

      
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    3.9     Non-Banking
Days.  If any payment to be made by Borrower or any other Party
under any Loan Document shall come due on a day other than a Banking Day,
payment shall instead be considered due on the next succeeding Banking Day and
the extension of time shall be reflected in computing interest and
fees.

     

    3.10   Manner and Treatment of
Payments.

     

    (a)  Each
payment hereunder (except payments
pursuant to Sections 3.4,
3.5, 11.3, 11.11 and 11.21) or on the
Notes or under any other Loan Document shall be made to the Administrative Agent
at the Administrative Agent's Office, in immediately available funds not later
than 11:00 a.m. California time, on the day of payment (which must be a Banking
Day).  All payments received after such time, on any Banking Day,
shall be deemed received on the next succeeding Banking Day.  The
amount of all payments received by the Administrative Agent for the account of
each Lender shall be immediately paid by the Administrative Agent to the
applicable Lender in immediately available funds and, if such payment was
received by the Administrative Agent by 11:00 a.m., California time, on a
Banking Day and not so made available to the account of a Lender on that Banking
Day, the Administrative Agent shall reimburse that Lender for the cost to such
Lender of funding the amount of such payment at the Federal Funds
Rate.  All payments shall be made in lawful money of the United States
of America.

     

    (b)  Borrower
hereby authorizes the Administrative Agent to debit the Designated Deposit
Account to effect any payment due to the Lenders or the Administrative Agent
pursuant to this Agreement.  Any resulting overdraft in the Designated
Deposit Account shall be payable by Borrower to the Administrative Agent on the
next following Banking Day.

     

    (c)  Each
payment or prepayment on account of any Borrowing shall be applied pro rata
according to the outstanding Advances made by each Lender comprising such
Borrowing.

     

    (d)  Each
Lender shall use its best efforts to keep a record (in writing or by an
electronic data entry system) of Advances made by it and payments received by it
with respect to its Note and, subject to Section 10.6(g),
such record shall, as against Borrower,  be presumptive evidence of
the amounts owing.  Notwithstanding the foregoing sentence, the
failure by any Lender to keep such a record shall not affect Borrower's
obligation to pay the Obligations.

     

     

    
      
        
        

      

      
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    (e)  Each
payment of any amount payable by Borrower or any other Party to any Lender under
this Agreement or any other Loan Document shall be made free and clear of, and
without reduction by reason of, any taxes, assessments or other charges imposed
by any Governmental Agency, central bank or comparable authority, excluding
(i) taxes imposed on or measured in whole or in part by its overall net
income and franchise taxes imposed in lieu of net income taxes by (A) any
jurisdiction (or political subdivision thereof) in which it is organized or
maintains its principal office or Eurodollar Lending Office or (B) any
jurisdiction (or political subdivision thereof) in which it is "doing business"
and (ii) any withholding taxes or other taxes based on gross income imposed
by the United States of America for any period with respect to which it has
failed to provide Borrower with the appropriate form or forms required by Section 11.21,
to the extent such forms are then required by applicable Laws (all such
non-excluded taxes, assessments or other charges being hereinafter referred to
as "Taxes").  To
the extent that Borrower is obligated by applicable Laws to make any deduction
or withholding on account of Taxes from any amount payable to any Lender under
this Agreement, Borrower shall (1) make such deduction or withholding and
pay the same to the relevant Governmental Agency and (2) pay such
additional amount to that Lender as is necessary to result in that Lender's
receiving a net after-Tax amount equal to the amount to which that Lender would
have been entitled under this Agreement absent such deduction or
withholding.  If and when receipt of such payment results in an excess
payment or credit to that Lender on account of such Taxes, that Lender shall
promptly refund such excess to Borrower.

     

    3.11     Funding
Sources.  Nothing in this Agreement shall be deemed to obligate
any Lender to obtain the funds for any Advance in any particular place or manner
or to constitute a representation by any Lender that it has obtained
or will obtain the funds for any Advance in any particular place or
manner.

     

    3.12     Failure to Charge Not
Subsequent Waiver.  Any decision by the Administrative Agent or
any Lender not to require payment of any interest (including interest
arising under Section 3.7),
fee, cost or other amount payable under any Loan Document, or to calculate any
amount payable by a particular method, on any occasion shall in no way limit or
be deemed a waiver of the Administrative Agent's or such Lender's right to
require full payment of any interest (including interest
arising under Section 3.7),
fee, cost or other amount payable under any Loan Document, or to calculate an
amount payable by another method that is not inconsistent with this Agreement,
on any other or subsequent occasion, except as provided in
Sections 3.5 and
3.6.

     

    3.13     Administrative Agent's Right
to Assume Payments Will be Made.  Unless the Administrative
Agent shall have been notified by Borrower prior to the date on which any
payment to be made by Borrower hereunder is due that Borrower does not intend to
remit such payment (or otherwise cause sufficient funds to be available in the
Designated Deposit Account for debit pursuant to Section 3.10(b)),
the Administrative Agent may, in its discretion, assume that Borrower has
remitted such payment (or caused funds sufficient to make such payment to be
available) when so due and the Administrative Agent may, in its discretion and
in reliance upon such assumption, make available to each Lender on such payment
date, an amount equal to such Lender's share of such assumed
payment.  If Borrower has not in fact remitted such payment (or caused
funds sufficient to make such payment to be available) to the Administrative
Agent, each Lender shall forthwith on demand repay to the Administrative Agent
the amount of such assumed payment made available to such Lender, together with
interest thereon in respect of each day from and including the date such amount
was made available by the Administrative Agent to such Lender to the date such
amount is repaid to the Administrative Agent at the Federal Funds
Rate.

     

     

    
      
        
        

      

      
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    3.14     Fee Determination
Detail.  The Administrative Agent, and any Lender, shall
provide reasonable detail to Borrower regarding the manner in which the amount
of any payment to the Administrative Agent and the Lenders, or that Lender,
under Article 3 has
been determined, concurrently with demand for such payment.

     

    3.15     Survivability.  All
of Borrower's obligations under Sections 3.4
and 3.5
shall survive for the one year period following the Termination Date, and
Borrower shall remain obligated thereunder for all claims under such
Sections made by any Lender to Borrower prior to the expiration of such
period.

     

     

    
      
        
        

      

      
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    Article 4.

     

    REPRESENTATIONS
AND WARRANTIES

     

    Borrower
represents and warrants to the Administrative Agent and each of the Lenders
that:

     

    4.1 Existence and Qualification;
Power; Compliance With Laws.  Borrower is a corporation duly
formed, validly existing and in good standing under the Laws of the State of
California.  Borrower is duly qualified or registered to transact
business and is in good standing in the State of California, and each other jurisdiction
in which the conduct of its business or the ownership or leasing of its
Properties makes such qualification or registration necessary, except where the
failure so to qualify or register and to be in good standing could not
reasonably be expected to have a Material Adverse Effect.  Borrower
has all requisite power and authority to conduct its business, to own and lease
its Properties and to execute and deliver each Loan Document to which it is a
Party and to perform its Obligations.  The chief executive offices of
Borrower are located in San Dimas, California.  All outstanding
capital stock of Borrower is duly authorized, validly issued, fully paid and
non-assessable, and no holder thereof has any enforceable right of rescission
under any applicable state or federal securities or other
Laws.  Borrower is in compliance with all Laws and other legal
requirements applicable to its business, has obtained all authorizations,
consents, approvals, orders, licenses and permits from, and has accomplished all
filings, registrations and qualifications with, or obtained exemptions from any
of the foregoing from, any Governmental Agency that are necessary for the
transaction of its business, except where the
failure so to comply with Laws and other legal requirements applicable to its
business, obtain authorizations, etc., file, register, qualify or obtain
exemptions could not reasonably be expected to have a Material Adverse
Effect.

     

    4.2 Authority; Compliance With
Other Agreements and Instruments and Government
Regulations.  The execution and delivery by Borrower of the
Loan Documents to which it is a Party and payment of the Obligations have been
duly authorized by all necessary corporate or company action, as applicable, and
do not and will not:

     

    (a) Require
any consent or approval not heretofore obtained of any partner, director,
stockholder, member, security holder or creditor of Borrower;

     

    (b) Violate or
conflict with any provision of Borrower's charter, certificate of incorporation,
bylaws, or other organizational documents, as applicable;

     

    (c) Result in
or require the creation or imposition of any Lien (other than pursuant
to the Loan Documents) or Right of Others upon or with respect to any Property
now owned or leased or hereafter acquired by Borrower;

     

    (d) Violate
any Requirement of Law applicable to Borrower;

     

    (e) Result in
a breach of or constitute a default under, or cause or permit the acceleration
of any obligation owed under, any indenture or loan or credit agreement or any
other Contractual Obligation to which Borrower is a party or by which Borrower
or any of its Property is bound or affected;

     

    
      
        
        

      

      
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    and
Borrower is not in violation of, or default under, any Requirement of Law or
Contractual Obligation, or any indenture, loan or credit agreement described in
Section 4.2(e),
in any respect that could reasonably be expected to have a Material Adverse
Effect.

     

    4.3 No Governmental Approvals
Required.  Except as previously obtained or made, no
authorization, consent, approval, order, license or permit from, or filing,
registration or qualification with, any Governmental Agency is or will be
required to authorize or permit under applicable Laws the execution and delivery
by Borrower of the Loan Documents to which it is a Party and payment of the
Obligations.

     

    4.4 Subsidiaries.

     

    (a) Schedule 4.4
hereto correctly sets forth, as of the Closing Date, the names, form of legal
entity, number of shares of capital stock or membership or other equity
interests, as applicable, issued and outstanding, number of shares of capital
stock or membership or other equity interests, as applicable, owned by Borrower
or any Subsidiary of Borrower (specifying such owner) and jurisdictions of
organization of all Subsidiaries of Borrower.  Except as described
in Schedule 4.4, as
of the Closing Date, Borrower does not own any capital stock, membership
interest, other equity interest or debt Security which is convertible, or
exchangeable, for capital stock, membership interests or other equity interests
in any Person.  Unless otherwise indicated in Schedule 4.4, as
of the Closing Date, all of the outstanding shares of capital stock, all of the
outstanding membership interests or all of the units of other equity interest,
as the case may be, of each Subsidiary are owned of record and beneficially by
Borrower,  there are no outstanding options, warrants or other rights
to purchase capital stock of any such Subsidiary, and all such shares,
membership interests or other equity interests so owned are duly authorized,
validly issued, fully paid and non-assessable, and were issued in compliance
with all applicable state and federal securities and other Laws, and are free
and clear of all Liens, except for Permitted
Encumbrances and other encumbrances permitted pursuant to Section 6.9.

     

    (b) As of the
Closing Date, each Subsidiary is a legal entity of the type described in Schedule 4.4
duly formed, validly existing and, if such concept is legally recognized in such
Subsidiary's jurisdiction of organization, in "good standing" under the Laws of
its jurisdiction of organization, is duly qualified to do business as a foreign
organization and, if such concept is legally recognized in any applicable
jurisdiction, is in "good standing" as such in each jurisdiction in which the
conduct of its business or the ownership or leasing of its Properties makes such
qualification necessary (except where the
failure to be so duly qualified and in good standing could not reasonably be
expected to have a Material Adverse Effect), and has all requisite power and
authority to conduct its business and to own and lease its
Properties.

     

    
      
        
        

      

      
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    (c) Each
Subsidiary is in compliance with all Laws and other requirements applicable to
its business and has obtained all authorizations, consents, approvals, orders,
licenses, and permits from, and each such Subsidiary has accomplished all
filings, registrations, and qualifications with, or obtained exemptions from any
of the foregoing from, any Governmental Agency that are necessary for the
transaction of its business, except where the
failure to be in such compliance, obtain such authorizations, consents,
approvals, orders, licenses, and permits, accomplish such filings,
registrations, and qualifications, or obtain such exemptions, could not
reasonably be expected to have a Material Adverse Effect.

     

    4.5 Financial
Statements.  Borrower has furnished to the Lenders (a) the
audited consolidated financial statements of Borrower and its Subsidiaries for
the Fiscal Year ended December 31, 2004 and (b) the consolidating and
consolidated financial statements of Borrower and its Subsidiaries for the
Fiscal Quarter ended March 31, 2005.  Such financial statements
fairly present in all material respects the financial condition, results of
operations and changes in financial position as of such dates and for such
periods in conformity with GAAP consistently applied.

     

    4.6 No Other Liabilities; No
Material Adverse Changes.  As of the Closing Date, Borrower and
its Subsidiaries do not have any material liability or material contingent
liability required under GAAP to be reflected or disclosed, and not reflected or
disclosed, in the financial statements described in Section 4.5,
other than liabilities and
contingent liabilities arising in the ordinary course of business since the date
of such financial statements.  As of the Closing Date, no circumstance
or event has occurred that could reasonably be expected to have a Material
Adverse Effect since December 31, 2004.

     

    4.7 Title to and Location of
Property.  As of the Closing Date, except as set forth
in Schedule 4.7,
Borrower and its Subsidiaries have valid title to the Property (other than assets which are
the subject of a Capital Lease Obligation) reflected in the financial statements
described in Section 4.5,
other than items of
Property or exceptions to title which are in each case immaterial and Property
subsequently sold or disposed of in the ordinary course of
business.  Such Property is free and clear of all Liens and Rights of
Others, other
than Liens or Rights of Others described in Schedule 4.7 and
Permitted Encumbrances, other encumbrances permitted pursuant to Section 6.9, and
Permitted Rights of Others.

     

    4.8 Intangible
Assets.  Borrower and its Subsidiaries own, or possess the
right to use to the extent necessary in their respective businesses, all
material trademarks, trade names, copyrights, patents, patent rights, computer
software, licenses and other Intangible Assets that are used in the conduct of
their businesses as now operated, and no such Intangible Asset, to the best
knowledge of Borrower,  conflicts with the valid trademark, trade
name, copyright, patent, patent right or Intangible Asset of any other Person to
the extent that such conflict could reasonably be expected to have a Material
Adverse Effect.  Schedule 4.8
sets forth all patents, patent applications, trademarks, trade names and trade
styles used by Borrower or any of its Subsidiaries at any time within the
five (5) year period ending on the Closing Date.

     

    
      
        
        

      

      
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    4.9 Litigation.  Except
for (a) any matter fully covered as to subject matter and amount (subject
to applicable deductibles and retentions) by insurance for which the insurance
carrier has not asserted lack of subject matter coverage or reserved its right
to do so, (b) any matter, or series of related matters, involving a claim
against Borrower or any of its Subsidiaries of less than $250,000,
(c) matters of an administrative nature not involving a claim or charge
against Borrower or any Subsidiary of Borrower and (d) matters set forth in
Schedule 4.9,
there are no actions, suits, proceedings or investigations pending as to which
Borrower or any of its Subsidiaries have been served or have received notice or,
to the best knowledge of Borrower  threatened against or affecting
Borrower or any of its Subsidiaries or any Property of any of them before any
Governmental Agency.  None of  Borrower,  its
Subsidiaries, or, to the best knowledge of Borrower, any executive officer of
any such Persons has been indicted or convicted in connection with or is
engaging in any criminal conduct which constitutes a felony, or is currently
subject to any lawsuit or proceeding or, to the best of Borrower's knowledge,
under investigation in connection with any anti-racketeering or criminal conduct
or activity which constitutes a felony.

     

    4.10 Binding
Obligations.  Each of the Loan Documents to which Borrower is a
Party will, when executed and delivered by Borrower, constitute the legal, valid
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, except as enforcement
may be limited by Debtor Relief Laws or equitable principles relating to the
granting of specific performance and other equitable remedies as a matter of
judicial discretion.

     

    4.11 No
Default.  No event has occurred and is continuing that is a
Default or Event of Default.

     

    4.12 ERISA.

     

    (a) With
respect to each Pension Plan:

     

    (i) such
Pension Plan complies in all material respects with ERISA and any other
applicable Laws to the extent that noncompliance could reasonably be expected to
have a Material Adverse Effect;

     

    (ii) such
Pension Plan has not incurred any "accumulated funding deficiency" (as defined
in Section 302 of ERISA) that could reasonably be expected to have a
Material Adverse Effect;

     

    (iii) no
"reportable event" (as defined in Section 4043 of ERISA, but excluding such events
as to which the PBGC has by regulation waived the requirement therein contained
that it be notified within thirty days of the occurrence of such event) has
occurred that could reasonably be expected to have a Material Adverse Effect;
and

     

    (iv) neither
Borrower nor any of its Subsidiaries has engaged in any non-exempt "prohibited
transaction" (as defined in Section 4975 of the Code) that could reasonably
be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
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    (b) Neither
Borrower nor any of its Subsidiaries has incurred or expects to incur any
withdrawal liability to any Multiemployer Plan that could reasonably be expected
to have a Material Adverse Effect.

     

    4.13 Regulation U;
Investment Company Act.  No part of the proceeds of any Advance
hereunder will be used to purchase or carry, or to extend credit to others for
the purpose of purchasing or carrying, any Margin Stock in violation of
Regulation U.  Neither Borrower nor any of its Subsidiaries is or
is required to be registered as an "investment company" under the Investment
Company Act of 1940.

     

    4.14 Disclosure.  No
written statement made by a Senior Officer of Borrower to the Administrative
Agent or any Lender pursuant to this Agreement, or in connection with any
Advance, as of the date thereof contained any untrue statement of a material
fact or omitted a material fact necessary to make the statement made not
misleading in light of all the circumstances existing at the date the statement
was made.

     

    4.15 Tax
Liability.  Borrower and its Subsidiaries have filed all tax
returns which are required to be filed, and have paid, or made provision for the
payment of, all taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by Borrower or
any of its Subsidiaries, except (a) such
taxes, if any, as are being contested in good faith by appropriate proceedings
and as to which adequate reserves have been established and maintained and
(b) immaterial taxes so long as no material Property of Borrower or any
Subsidiary is at impending risk of being seized, levied upon or
forfeited.

     

    4.16 Projections.  As
of the Closing Date, to the best knowledge of Borrower  the
assumptions set forth in the Projections most recently delivered to the
Administrative Agent are reasonable and consistent with each other and with all
facts known to Borrower, and the Projections are reasonably based on such
assumptions.  Nothing in this Section 4.16
shall be construed as a representation or covenant that the Projections in fact
will be achieved.

     

    4.17 Hazardous
Materials.  Except as described
in Schedule 4.17,
or as may subsequently be disclosed by Borrower in writing to the Administrative
Agent, (a) neither Borrower nor any of its Subsidiaries at any time has
disposed of, discharged, released or threatened the release of any Hazardous
Materials on, from or under the Real Property in violation of any Hazardous
Materials Law that would individually or in the aggregate constitute a Material
Adverse Effect, (b) no condition exists that violates any Hazardous
Material Law affecting any Real Property except for such
violations that would not individually or in the aggregate constitute a Material
Adverse Effect, (c) no Real Property or any portion thereof is or has been
utilized by Borrower or any Subsidiary as a site for the manufacture of any
Hazardous Materials and (d) to the extent that any Hazardous Materials are
used, generated or stored by Borrower or any Subsidiary on any Real Property, or
transported to or from such Real Property by Borrower, or any Subsidiary, such
use, generation, storage and transportation are in compliance in all material
respects with all Hazardous Materials Laws.

     

    
      
        
        

      

      
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    4.18 Employee
Matters.  There is no strike, work stoppage or labor dispute
with any union or group of employees pending or, to the best knowledge of
Borrower overtly threatened involving Borrower or any Subsidiary that
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.

     

    4.19 Fiscal
Year.  Borrower and its Subsidiaries each operate on a fiscal
year ending on December 31.

     

    4.20 Solvency.  After
giving effect to this Agreement and the other Loan Documents (including after
giving effect to Advances under this Agreement as of the Closing Date), Borrower
shall be Solvent.

     

    
      
        
        

      

      
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    Article 5.

     

    AFFIRMATIVE
COVENANTS

     

    (OTHER
THAN INFORMATION AND

     

    REPORTING
REQUIREMENTS)

     

    So long as
any Advance remains unpaid, or any other Obligation remains unpaid, or any
portion of any of the Commitments remains in force, Borrower shall, and shall
cause each of the Subsidiaries to, unless the Administrative Agent (with the
written approval of the Requisite Lenders) otherwise consents:

     

    5.1 Payment of Taxes and Other
Potential Liens.  Pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon any of them, upon
their respective Property or any part thereof and upon their respective income
or profits or any part thereof, except that Borrower
and its Subsidiaries shall not be required to pay or cause to be paid
(a) any tax, assessment, charge or levy that is not yet past due, or is
being contested in good faith by appropriate proceedings so long as the relevant
entity has established and maintains adequate reserves for the payment of the
same or (b) any immaterial tax so long as no material Property
of  Borrower or any Subsidiary is at impending risk of being seized,
levied upon or forfeited.

     

    5.2 Preservation of
Existence.  Preserve and maintain their respective existences
(except as
permitted by Section 6.4) in
their respective jurisdictions of formation and all material authorizations,
rights, franchises, privileges, consents, approvals, orders, licenses, permits,
or registrations from any Governmental Agency that are necessary for the
transaction of their respective business and qualify and remain qualified to
transact business in each jurisdiction in which such qualification is necessary
in view of their respective business or the ownership or leasing of their
respective Properties except where the
failure to so qualify or remain qualified could not reasonably be expected to
have a Material Adverse Effect.

     

    5.3 Maintenance of
Properties.  Maintain, preserve and protect all of their
respective Properties in good order and condition, subject to wear and tear in
the ordinary course of business, and not permit any waste of their respective
Properties, except (a) that
the failure to maintain, preserve and protect a particular item of Property that
is at the end of its useful life or that is not of significant value, either
intrinsically or to the operations of Borrower and Subsidiaries, taken as a
whole, shall not constitute a violation of this covenant, and (b) this
covenant shall not be construed to prohibit any Disposition otherwise permitted
pursuant to Section 6.3.

     

    5.4 Maintenance of
Insurance.  Maintain, or cause to be maintained, liability,
casualty and other insurance (subject to customary deductibles and retentions)
with responsible insurance companies in such amounts and against such risks as
is carried by responsible companies engaged in similar businesses and owning
similar assets.

     

    5.5 Compliance With
Laws.  Comply with all Requirements of Law noncompliance with
which could reasonably be expected to have a Material Adverse Effect, except that Borrower
and its Subsidiaries need not comply with a Requirement of Law then being
contested by any of them in good faith by appropriate proceedings.

     

    
      
        
        

      

      
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    5.6 Inspection
Rights.  Upon reasonable notice, at any time during regular
business hours and, as requested by the Administrative Agent (but not so as to
materially interfere with the business of Borrower or any of the Subsidiaries)
permit the Administrative Agent, or any Lender, or any authorized employee,
agent or representative thereof, to examine, audit and make copies and abstracts
from the records and books of account of (including any
software or CD Rom files relating thereto), and to visit and inspect the
Properties of, Borrower and its Subsidiaries and to discuss the affairs,
finances and accounts of Borrower and its Subsidiaries with any of their
officers, key employees or accountants and, upon request, furnish promptly to
the Administrative Agent or any Lender true copies of all financial information
made available to the board of directors or audit committee of the board of
directors of Borrower.  If any of the Properties, books or records of
Borrower or any of the Subsidiaries are in the possession of a third party,
Borrower authorizes that third party to permit the Administrative Agent or any
Lender or any agents thereof to have access to perform inspections or audits and
to respond to the Administrative Agent's or any Lender's request for information
concerning such Properties, books and records.  Notwithstanding the
foregoing, no prior notice of any such examination, audit, visit, inspection or
discussion shall be required if an Event of Default has occurred and remains in
effect.

     

    5.7 Keeping of Records and Books
of Account.  Keep adequate records and books of account
reflecting all financial transactions in conformity with GAAP, consistently
applied, and in material conformity with all applicable requirements of any
Governmental Agency having regulatory jurisdiction over Borrower and its
Subsidiaries.

     

    5.8 Compliance With
Agreements.  Promptly and fully comply with all Contractual
Obligations to which any one or more of them is a party, except for any such
Contractual Obligations (a) the performance of which would cause a Default
or (b) then being contested by any of them in good faith by appropriate
proceedings or (c) if the failure to comply could not reasonably be
expected to have a Material Adverse Effect.

     

    5.9 Use of
Proceeds.  Use the proceeds of all Advances to
(a) refinance certain Indebtedness of Borrower and its Subsidiaries (including SCW),
(ii) finance certain acquisitions and (c) provide for the working
capital and general corporate purpose need of Borrower and its
Subsidiaries.

     

    5.10 Hazardous Materials
Laws.  Keep and maintain all Real Property and each portion
thereof in compliance with all applicable Hazardous Materials Laws, except to
the extent that would not individually or in the aggregate constitute a Material
Adverse Effect, and promptly notify the Administrative Agent in writing
(attaching a copy of any pertinent written material) of (a) any and all
material enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened in writing by a Governmental Agency
pursuant to any applicable Hazardous Materials Laws, (b) any and all
material claims made or threatened in writing by any Person against Borrower or
any Subsidiary relating to damage, contribution, cost recovery, compensation,
loss or injury resulting from any Hazardous Materials and (c) discovery by
any Senior Officer of Borrower of any material occurrence or condition on any
real property adjoining or in the vicinity of such Real Property that could
reasonably be expected to cause such Real Property or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability or use
of such Real Property under any applicable Hazardous Materials
Laws.

     

    
      
        
        

      

      
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    5.11 Minimum Debt
Rating.  Maintain at all times a Debt Rating (in the case of
Borrower only) equal to (or better than) Baa3 or BBB-.   For
purposes of this Section 5.11, if the
prevailing Debt Ratings as of any date of determination are "split ratings", the
lower/lowest Debt Rating shall apply.

     

    5.12 Syndication
Process.  Cooperate in such respects as may be reasonably
requested by the Lead Arranger in connection with the syndication of the credit
facility under this Agreement, including the
provision of information (in form and substance acceptable to the Lead Arranger)
for inclusion in written materials furnished to prospective syndicate members
and the participation by Senior Officers of Borrower and its Subsidiaries in
meetings with prospective syndicate members.

     

    
      
        
        

      

      
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    Article 6.

     

    NEGATIVE
COVENANTS

     

    So long as
any Advance remains unpaid, or any other Obligation remains unpaid, or any
portion of any of the Commitments remains in force, Borrower shall not, and
shall not permit any of its Subsidiaries to, unless the Administrative Agent
(with the written approval of the Requisite Lenders or, if required by Section 11.2,
all of the Lenders) otherwise consents:

     

    6.1 Prepayment of
Indebtedness.  Prepay any principal or interest on any
Indebtedness of Borrower or any Subsidiary  prior to the date when
due, or make any payment or deposit with any Person that has the effect of
providing for the satisfaction of any Indebtedness of Borrower or any Subsidiary
prior to the date when due, except
(a) Indebtedness to the Administrative Agent and the Lenders under this
Agreement and the other Loan Documents, (b) the prepayment or refunding of
Indebtedness solely through the issuance of additional Indebtedness that is
permitted under this Agreement; provided that such
additional Indebtedness has either (i) a longer weighted average life than the
Borrowings hereunder, or (ii) a weighted average life that is equal to or longer
than the Indebtedness being refunded and (c) Indebtedness to other Persons
the prepayment of which is approved in advance by the Requisite Lenders in
writing.

     

    6.2 Prepayment
of Subordinated Obligations.  Pay any (a) principal
(including sinking fund payments) or any other amount (other than scheduled
interest payments) with respect to any Subordinated Obligation, or purchase or
redeem any Subordinated Obligation or deposit any monies, Securities or other
Property with any trustee or other Person to provide assurance that the
principal or any portion thereof of any Subordinated Obligation will be paid
when due or otherwise to provide for the defeasance of any Subordinated
Obligation or (b) scheduled interest on any Subordinated Obligation if the payment
thereof is then prohibited under the terms of the subordination provisions
governing such Subordinated Obligations.

     

    6.3 Disposition of Property.  Make any
Disposition of its Property, whether now owned or hereafter acquired, except
(a) Dispositions of obsolete Property or Property with no material
remaining useful life, (b) Dispositions in an aggregate amount not to
exceed $2,000,000 in any Fiscal Year ending after the Closing Date or $8,000,000
in the aggregate from and after the Closing Date to the Termination Date; provided that
(i) at the time of any such Disposition pursuant to clause (b) only,
no Default or Event of Default shall exist or shall result from such Disposition
and (ii) the sales price relating to a Disposition (pursuant to clause (a) or (b)) shall be paid in
Cash and/or Indebtedness or other evidence of an Investment permitted pursuant
to Section 6.14(h),
and (c) Dispositions pursuant to any order of any Governmental Agency in an
eminent domain proceeding and any settlement of any such
proceeding.

     

    6.4 Mergers.  Merge or consolidate with or into
any Person, except mergers and consolidations of a Subsidiary into Borrower
(with Borrower as the surviving entity), mergers of Subsidiaries with each other
or mergers entered into in connection with Permitted Acquisitions, provided that
(a) no Default or Event of Default would result therefrom and (b) any
such "surviving" entity shall have executed such amendments to the Loan
Documents, if any, as the Administrative Agent may reasonably determine are
appropriate as a result of such merger.

     

    
      
        
        

      

      
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    6.5 Hostile
Tender Offers.  Make any offer to purchase or acquire, or
consummate a purchase or acquisition of, five percent (5%) or more of the
voting interest in any corporation or other business entity if the board of
directors or management of such corporation or business entity has notified
Borrower that it opposes such offer or purchase and such notice has not been
withdrawn or superseded.

     

    6.6 Distributions.  Declare or pay or make any
form of Distribution, whether from capital, income or otherwise, and whether in
Cash or other Property, except:

     

    (a) Distributions
by any Subsidiary to Borrower or to any wholly-owned Subsidiary of
Borrower;

     

    (b) Distributions
consisting of dividends payable solely in capital stock or rights to purchase
capital stock so long as no Default or Event of Default then exists;
and

     

    (c) Distributions
consisting of (i) repurchases of preferred stock of Borrower in an amount not to
exceed $2,500,000 in the aggregate from and after the Closing Date and (ii)
dividends paid in Cash in a manner reasonably consistent with Borrower's past
practices made in any Fiscal Year if, in any such case,
no Default or Event of Default then exists and, giving effect thereto on a
pro-forma estimated basis, Borrower would be in compliance with Section 6.12 as
of the end of the then current Fiscal Quarter.

     

    6.7 ERISA.  (a) At any time, permit any
Pension Plan to:  (i) engage in any non-exempt "prohibited
transaction" (as defined in Section 4975 of the Code); (ii) fail to
comply with ERISA or any other applicable Laws; (iii) incur any material
"accumulated funding deficiency" (as defined in Section 302 of ERISA); or
(iv) terminate in any manner, which, with respect to each event listed
above, could reasonably be expected to result in a Material Adverse Effect or
(b) withdraw, completely or partially, from any Multiemployer Plan if to do
so could reasonably be expected to result in a Material Adverse
Effect.

     

    6.8 Change in
Nature of Business.  Make any change in the nature of the
business of Borrower and its Subsidiaries, taken as a whole, as at present
conducted; provided that a
Permitted Acquisition shall not be deemed such a change.

     

    6.9 Liens and
Negative Pledges.  Create, incur, assume or suffer to exist
any Lien or Negative Pledge of any nature upon or with respect to any of their
respective Properties, or engage in any Sale and Leaseback transaction with
respect to any of their respective Properties, whether now owned or hereafter
acquired, except:

     

    
      
        
        

      

      
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    (a) Liens and
Negative Pledges existing on the Closing Date and disclosed in Schedule 4.7 and
any renewals/extensions or amendments thereof, provided that the
obligations secured or benefited thereby are not increased;

     

    (b) Liens and
Negative Pledges under the Loan Documents;

     

    (c) Permitted
Encumbrances;

     

    (d) Liens
which secure Permitted Acquisition Indebtedness which were in existence at the
time of the Permitted Acquisition and were not created in contemplation of such
Permitted Acquisition; 

     

    (e) Liens
securing Permitted Capital Asset Indebtedness on and limited to the capital
assets acquired, constructed or financed with the proceeds of such Permitted
Capital Asset Indebtedness or with the proceeds of any Indebtedness directly or
indirectly refinanced by such Indebtedness; provided that the
aggregate principal amount of such Indebtedness secured by such Liens and
incurred by Borrower and/or its Subsidiaries after the Closing Date shall not
exceed $10,000,000 at any one time outstanding (as determined in accordance with
GAAP consistently applied); and

     

    (f) any
Negative Pledge with respect to the rights of a Subsidiary of Borrower under a
Military Utility Privatization entered into by such Subsidiary.

     

    6.10 Indebtedness and Guaranty
Obligations.  Create, incur or assume any Indebtedness or
Guaranty Obligation if an Event of Default has occurred and is continuing or if,
after giving effect thereto, Borrower would not be in compliance with the
provisions of Section 6.12 or
Section 6.13 or
an Event of Default would otherwise occur.  Notwithstanding the
foregoing, Borrower shall not permit any Subsidiary to create, incur, assume or
suffer to exist any Indebtedness or Guaranty Obligation, except (a) Permitted
Acquisition Indebtedness, (b) Permitted Capital Asset Indebtedness, (c) existing
Indebtedness set forth on Schedule 6.10(b), (d)
Indebtedness owed to Borrower or a wholly-owned Subsidiary, (e) unsecured term
Indebtedness (i.e., not revolving credit) that (i) either has a longer weighted
average life than the Borrowings hereunder or satisfies the requirements of
Section 6.1,
(ii) to the extent that a Governmental Agency has regulatory jurisdiction over
the issuance of such Indebtedness of such Subsidiary, the issuance of such
Indebtedness is permitted by such regulatory jurisdiction, (iii) is incurred in
the ordinary course of business of such Subsidiary and is substantially
consistent with the prior practices of SCW, and (iv) is provided by any Person
or Governmental Agency, other than a commercial bank under a credit agreement or
facility substantially similar thereto, and (f) other unsecured Indebtedness in
the aggregate principal amount not to exceed $1,000,000.

     

    6.11 Transactions with Affiliates.  Enter into
any transaction of any kind with any Affiliate of Borrower other than (without
duplication):  (a) salary, bonus, employee stock option and other
compensation arrangements with directors or officers in the ordinary course of
business; (b) Investments permitted pursuant to Section 6.14(d),
(c) Distributions permitted pursuant to Section 6.6;
(d) transactions with wholly-owned Subsidiaries; and
(e) transactions on overall terms at least as favorable to Borrower or its
Subsidiaries as would be the case in an arm's-length transaction between
unrelated parties of equal bargaining power.

     

    
      
        
        

      

      
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    6.12 Total
Funded Debt Ratio.  Permit the Total Funded Debt Ratio, as
of the last day of any Fiscal Quarter, to be greater than 0.65 to
1.00.

     

    6.13 Interest
Coverage Ratio.  Permit the Interest Coverage Ratio, as of
the last day of any Fiscal Quarter, to be less than 3.25 to 1.00.

     

    6.14 Investments and Acquisitions.  Make any
Acquisition or enter into any agreement to make any Acquisition unless approved
in advance by the Administrative Agent and the Requisite Lenders in writing, or
make or suffer to exist any Investment, other than:

     

    (a) Permitted
Acquisitions;

     

    (b) Investments
in existence on the Closing Date and disclosed on Schedule 6.14;

     

    (c) Investments
consisting of Cash Equivalents;

     

    (d) Investments
consisting of loans and advances to officers, directors and employees of
Borrower and its Subsidiaries for travel, entertainment, relocation, anticipated
bonus, exercise of stock options and analogous ordinary business purposes provided that the
aggregate amount of such Investments does not exceed $1,000,000 at any time
outstanding;

     

    (e) Investments
in a Subsidiary that is a wholly-owned Subsidiary of Borrower;

     

    (f) Investments
consisting of the extension of credit to customers or suppliers of Borrower and
its Subsidiaries in the ordinary course of business and any Investments received
in satisfaction or partial satisfaction thereof;

     

    (g) Investments
received in connection with the settlement of a bona fide dispute with another
Person provided
that the aggregate amount of such Investments does not exceed $500,000 at any
time outstanding;

     

    (h) Investments
representing all or a portion of the sales price of Property sold or services
provided to another Person provided that the
aggregate amount of such Investments does not exceed $500,000 at any time
outstanding; and

     

    (i) Investments
consisting of Indebtedness and Guaranty Obligations owed to Borrower or any of
its Subsidiaries.

     

    
      
        
        

      

      
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    6.15 Operating
Leases.  Incur any obligation to pay rent under an
operating lease in any Fiscal Year if to do so would result in the aggregate
obligation of Borrower and its Subsidiaries to pay rent under all operating
leases in that Fiscal Year to exceed $4,000,000.

     

    6.16 Amendments.  Amend or modify
any  term or provision of (a) any indenture, agreement or
instrument evidencing or governing any Subordinated Obligation or (b) any
material provision of any Material Contract, if in any such case such amendment
or modification in any respect will or may adversely affect the interest of the
Lenders.

     

    6.17 Use of
Lender's Name.  Use any Lender's name (or the name of any
of any Lender's Affiliates) in connection with any of their business operations
except to
identify the existence of the Revolving Facility and the names of the Lenders in
the ordinary course of Borrower's business or to comply with Borrower's
obligations under Law.  Nothing contained in this Agreement is
intended to permit or authorize Borrower to make any commitment or contract on
behalf of any Lender or the Administrative Agent.

     

    6.18 Change of
Fiscal Periods.  Change its Fiscal Year or any other fiscal
period with respect to which it reports financial results hereunder or
otherwise.

     

    
      
        
        

      

      
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    Article 7.

     

    INFORMATION
AND REPORTING REQUIREMENTS

     

    7.1 Financial and Business
Information.  So long as any Advance remains unpaid, or any
other Obligation remains unpaid, or any portion of any of the Commitments
remains in force, Borrower shall, unless the Administrative Agent (with the
written approval of the Requisite Lenders) otherwise consents, at Borrower's
sole expense, deliver to the Administrative Agent for distribution by it to the
Lenders, a sufficient number of copies for all of the Lenders of the
following:

     

    (a) (i) As
soon as practicable, and in any event within fifty (50) days after the end
of each Fiscal Quarter ending March 31, June 30 and September 30
(commencing with the Fiscal Quarter ending June 30, 2005), the
consolidating and consolidated balance sheet of Borrower and its Subsidiaries as
at the end of such Fiscal Quarter and the consolidating and consolidated
statements of income, operations and cash flows for such Fiscal Quarter, and the
portion of the Fiscal Year ended with such Fiscal Quarter, together with a
statement of Stockholders' Equity as of the last day of such  Fiscal
Quarter, all in reasonable detail, (ii) such financial statements shall be
certified by the president or chief financial officer of Borrower as fairly
presenting the financial condition, results of operations and cash flows of
Borrower and its Subsidiaries in accordance with GAAP (other than footnote
disclosures), consistently applied, as at such date and for such periods,
subject only to normal year-end accruals and audit adjustments.

     

    (b) (i) As
soon as practicable, and in any event within one hundred (100) days after the
end of each Fiscal Year, the consolidating and consolidated balance sheet of
Borrower and its Subsidiaries as at the end of such Fiscal Year and the
consolidating and consolidated statements of income, operations, stockholders'
equity and cash flows, in each case of Borrower and its Subsidiaries for such
Fiscal Year, all in reasonable detail.  Such financial statements
shall be prepared in accordance with GAAP, consistently applied, and such
consolidated financial statements shall be accompanied by a report of
PricewaterhouseCoopers LLP or other independent public accountants of recognized
standing selected by Borrower and reasonably satisfactory to the Requisite
Lenders, which report shall be prepared in accordance with generally accepted
auditing standards as at such date, and shall not be subject to any
qualifications or exceptions, and which report shall specifically disclose any
changes discovered by such accountants in Borrower's or its Subsidiaries'
applicable process of management of accounts, (ii) such accountants' report
shall be accompanied by a certificate stating that, in making the examination
pursuant to generally accepted auditing standards necessary for the
certification of such financial statements and such report, such accountants
have obtained no knowledge of any Default then existing or, if, in the opinion
of such accountants, any such Default shall exist, stating the nature and status
of such Default, and stating that such accountants have reviewed Borrower's
financial calculations as at the end of such Fiscal Year (which shall accompany
such certificate) under Sections 6.12
and 6.13,
have read such Sections (including the definitions of all defined terms
used therein) and that nothing has come to the attention of such accountants in
the course of such examination that would cause them to believe that the same
were not calculated by Borrower in the manner prescribed by this Agreement, and
(iii) in addition, Borrower shall deliver to the Administrative Agent a
copy of (A) any "management letter" prepared by such accountants in
conjunction with preparation of the foregoing report and (B) a separate
report prepared by such accountants in conjunction with preparation of the
foregoing report, pursuant to which separate report such accountants shall be
required to disclose any material changes discovered by such accountants in the
then current account management process (including the determination of returns
and reserves, inventory management practices, and accounts receivable management
practices).

     

    
      
        
        

      

      
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    (c) As soon as
practicable, and in any event not later than sixty (60) days subsequent to the
commencement of each Fiscal Year, a budget and projection of Borrower and its
Subsidiaries setting forth (i) by Fiscal Quarter for the four (4)
Fiscal Quarters of that Fiscal Year and (ii) on an annual basis for each
succeeding Fiscal Year thereafter through the Maturity Date, projected balance
sheets, statements of operations and statements of cash flow, all in reasonable
detail;

     

    (d) Promptly
after request by the Administrative Agent or any Lender, copies of any detailed
audit reports, management letters or recommendations submitted to Borrower (or
its board of directors) by independent accountants in connection with the
accounts or books of Borrower, or any of its Subsidiaries, or any audit of any
of them;

     

    (e) Promptly
after the same are available, and in any event within five (5) Banking Days
after filing with the Securities and Exchange Commission, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of Borrower or any of its Subsidiaries, and copies of all
annual, regular, periodic and special reports and registration statements which
Borrower or any of its Subsidiaries may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and not otherwise required to be
delivered to the Lenders pursuant to other provisions of this Section 7.1;

     

    (f) Promptly
after request by Lender, subject to confidentiality requirements of any
Governmental Agency, copies of any other report or other document that was filed
by Borrower, with any Governmental Agency;

     

    (g) Promptly
upon a Senior Officer of Borrower, becoming aware, and in any event within five
(5) Banking Days after becoming aware, of the occurrence of any
(i) "reportable event" (as such term is defined in Section 4043 of
ERISA, but excluding such events
as to which the PBGC has by regulation waived the requirement therein contained
that it be notified within thirty days of the occurrence of such event) or
(ii) non-exempt "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) involving any
Pension Plan or any trust created thereunder, telephonic notice specifying the
nature thereof, and, no more than two (2) Banking Days after such telephonic
notice, written notice again specifying the nature thereof and specifying what
action Borrower is taking or proposes to take with respect thereto, and, when
known, any action taken by the Internal Revenue Service with respect thereto;
provided that
no such notice shall be required pursuant to this Section 7.1(g)
if the anticipated liability is less than $100,000;

     

    
      
        
        

      

      
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    (h) As soon as
practicable, and in any event within two (2) Banking Days after a
Senior Officer of Borrower becomes aware of the existence of any condition or
event which constitutes a Default or Event of Default, telephonic notice
specifying the nature and period of existence thereof, and, no more than
two (2) Banking Days after such telephonic notice, written notice
again specifying the nature and period of existence thereof and specifying what
action Borrower is taking or proposes to take with respect thereto;

     

    (i) Promptly
upon a Senior Officer of Borrower becoming aware that (i) any Person has
commenced a legal proceeding with respect to a claim against Borrower or any of
its Subsidiaries that is $250,000 or more in excess of the amount thereof that
is fully covered by insurance, (ii) any creditor under a credit agreement
involving Indebtedness of $250,000 or more or any lessor under a lease involving
aggregate rent of $250,000 or more has asserted a default thereunder on the part
of Borrower or any of its Subsidiaries or, (iii) any Person has commenced a
legal proceeding with respect to a claim against Borrower or any of its
Subsidiaries under a contract that is not a credit agreement or material lease
with respect to a claim of in excess of $250,000 or which otherwise may
reasonably be expected to result in a Material Adverse Effect, a written notice
describing the pertinent facts relating thereto and what action Borrower and/or
its applicable Subsidiaries are taking or propose to take with respect thereto;
and

     

    (j) Such other
data and information as from time to time may be reasonably requested by the
Administrative Agent or the Requisite Lenders.

     

    Information required to be delivered
pursuant to this Section 7.1 (to the
extent any such documents are included in materials otherwise filed with the
Securities and Exchange Commission) shall be deemed to have been delivered on
the date (a) on which Borrower provides notice to Lenders that such information
has been posted on Borrower’s Internet website at the website address listed on
the signature page hereof or at another website identified in such notice and
accessible to Lenders without charge, or (b) on which documents are posted on
Borrower’s behalf on the Platform; provided that (i)
Company shall notify the Administrative Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents.

     

    7.2 Compliance
Certificates.  So long as any Advance remains unpaid, or
any other Obligation remains unpaid or unperformed, or any portion of any of the

     

    
      
        
        

      

      
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                       Commitments
remain outstanding, Borrower shall, at Borrower's sole expense, deliver to the
Administrative Agent for distribution by it to the Lenders concurrently with the
financial statements required pursuant to Sections 7.1(a)
and 7.1(b), a Compliance

                      
Certificate signed by the president or chief
financial officer of Borrower.

    

     

    
      
        
        

      

      
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    Article 8.

    CONDITIONS

     

    8.1 Closing
Date Advances.  The obligation of each Closing Date Lender
to make Advances on and after the Closing Date, and the obligation of the
Issuing Lender to issue additional Letters of Credit (as applicable), is subject
to the following conditions precedent, each of which shall be satisfied prior to
the making of any further Advances or the issuance of the additional Letters of
Credit (as applicable) (unless all of the Closing Date Lenders, in their sole
and absolute discretion, shall agree otherwise):

     

    (a) The
Administrative Agent shall have received all of the following, each of which
shall be originals unless otherwise specified, each properly executed by a
Responsible Official of each party thereto, each dated as of the Closing Date
and each in form and substance satisfactory to the Administrative Agent and its
legal counsel (unless otherwise specified or, in the case of the date of any of
the following, unless the Administrative Agent otherwise agrees or
directs):

     

    (1) at least
one (1) executed counterpart of this Agreement, together with arrangements
satisfactory to the Administrative Agent for additional executed counterparts,
sufficient in number for distribution to the Closing Date Lenders and
Borrower;

     

    (2) Notes
executed by Borrower in favor of each Closing Date Lender, each in a principal
amount equal to that Lender's Commitment;

     

    (3) the Swing
Line Documents executed by Borrower;

     

    (4) with
respect to Borrower, such documentation as the Administrative Agent may
reasonably require to establish the due organization, valid existence and good
standing of Borrower, its qualification to engage in business in each material
jurisdiction in which it is engaged in business or required to be so qualified,
its authority to execute, deliver and perform the Loan Documents to which it is
a Party, the identity, authority and capacity of each Responsible Official
thereof authorized to act on its behalf, including certified
copies of articles of incorporation and amendments thereto, bylaws and
amendments thereto, certificates of good standing and/or qualification to engage
in business, tax clearance certificates, certificates of corporate resolutions
or other applicable authorization documents, incumbency certificates,
Certificates of Responsible Officials, and the like;

     

    (5) the
Opinion of Counsel;

     

    (6) one or
more Requests for Borrowing, Requests for Letters of Credit or Requests for
Continuation/Conversion, as applicable;

     

    
      
        
        

      

      
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    (7) a
Certificate signed by a Senior Officer of Borrower certifying that the
conditions specified in Sections 8.1(d)
and 8.1(e) have
been satisfied; and

     

    (8) such other
assurances, certificates, documents, consents or opinions as the Administrative
Agent and/or any Closing Date Lender reasonably may require.

     

    (b) The fees
payable on or before the Closing Date pursuant to Section 3.3
shall have been paid.

     

    (c) The
reasonable costs and expenses of the Administrative Agent in connection with the
preparation of this Agreement and each of the other Loan Documents prepared in
connection therewith payable pursuant to Section 11.3,
and invoiced to Borrower prior to the Closing Date, shall have been
paid.

     

    (d) The
representations and warranties of Borrower contained in Article 4 shall
be true and correct in all material respects.

     

    (e) Borrower
and any other Parties shall be in compliance with all the terms and provisions
of the Loan Documents, and giving effect to the any Advances made, or Letters of
Credits issued, on the Closing Date, no Default or Event of Default shall have
occurred and be continuing.

     

    (f) All legal
matters relating to the Loan Documents shall be reasonably satisfactory to
Sheppard, Mullin, Richter & Hampton LLP, special counsel to
Lender.

     

    (g) The
Closing Date shall have occurred on or before June 6, 2005.

     

    8.2 Any
Advance.  The obligation of each Lender to make any
Advance, and the obligation of the Issuing Lender to issue any Letter of Credit,
is subject to the following conditions precedent (unless the Requisite Lenders
or, in any case where the approval of all of the Lenders is required pursuant to
Section 11.2,
all of the Lenders, in their sole and absolute discretion, shall agree
otherwise):

     

    (a) except (i) for
representations and warranties which expressly speak as of a particular date or
are no longer true and correct as a result of a change which is permitted by
this Agreement or (ii) as disclosed by Borrower and approved in writing by
the Requisite Lenders, the representations and warranties contained in Article 4 (other than Sections 4.4,
4.6 (first
sentence), 4.9
and 4.16) shall
be true and correct in all material respects on and as of the date of the
Advance or the Letter of Credit as though made on that date;

     

    (b) no
circumstance or event shall have occurred that constitutes a Material Adverse
Effect since the Closing Date;

     

    
      
        
        

      

      
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    (c) other than matters
described in Schedule 4.9 or
not required as of the Closing Date to be therein described, there shall not be
then pending or threatened any action, suit, proceeding or investigation against
or affecting Borrower or any Subsidiary of Borrower or any Property of any of
them before any Governmental Agency that constitutes a Material Adverse
Effect;

     

    (d) the
Administrative Agent shall have timely received a Request for Borrowing (or
telephonic or other request for Borrowing referred to in the second sentence of
Section 2.1(b),
if applicable), or the Issuing Lender shall have received a Request for Letter
of Credit, as the case may be, in compliance with Article 2;
and

     

    (e) the
Administrative Agent shall have received, in form and substance reasonably
satisfactory to the Administrative Agent, such other certificates, documents or
consents related to the foregoing as the Administrative Agent or Requisite
Lenders reasonably may require.

     

    
      
        
        

      

      
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    Article 9.

     

    EVENTS OF
DEFAULT AND REMEDIES UPON EVENT OF DEFAULT

     

    9.1 Events
of Default.  The existence or occurrence of any one or more
of the following events, whatever the reason therefor and under any
circumstances whatsoever, shall constitute an Event of Default:

     

    (a) Borrower
fails to pay any principal on any of the Notes, or any portion thereof, on the
date when due; or

     

    (b) Borrower
fails to pay any interest on any of the Notes, or any fees under Sections 3.2 or
3.4, or any
portion thereof, within five  (5) Banking Days after the date when due; or
fails to pay any other fee or amount payable to the Lenders or the
Administrative Agent under any Loan Document, or any portion thereof, within
five (5) Banking Days after written demand therefor; or

     

    (c) Borrower
fails to comply with, or cause or permit any of its Subsidiaries to fail to
comply with, any of the covenants contained in Article 6;
or

     

    (d) (i) Borrower
fails to comply with Section 7.1(i)
in the manner stated therein or (ii) Borrower fails to perform any other
reporting requirement set forth in Article 7 within
five (5) Banking Days of the date specified for performance therein;
or

     

    (e) Borrower
or any other Party fails to perform or observe any other covenant or agreement
(not specified in clause (a), (b), (c) or (d) above) contained
in any Loan Document on its part to be performed or observed and such default
shall continue unremedied for twenty (20) days after the giving of notice by the
Administrative Agent on behalf of the Requisite Lenders of such Default;
or

     

    (f) Any
representation or warranty of  Borrower or any other Party made in any
Loan Document, or in any certificate or other writing delivered by Borrower or
such other Party pursuant to any Loan Document, proves to have been incorrect
when made or reaffirmed in any material respect; or

     

    (g) Borrower
or any of its Subsidiaries (i) fails to pay the principal, or any principal
installment, of any present or future Indebtedness of $2,500,000 or more, or any
guaranty of present or future Indebtedness of $2,500,000 or more, on its part to
be paid, when due (or within any stated grace period), whether at the stated
maturity, upon acceleration, by reason of required prepayment or otherwise or
(ii) fails to perform or observe any other term, covenant or agreement on
its part to be performed or observed, or suffers any event of default to occur,
in connection with any present or future Indebtedness of $2,500,000 or more, or
of any guaranty of present or future Indebtedness of $2,500,000 or more, if as a
result of such failure or sufferance any holder or holders thereof (or an agent
or trustee on its or their behalf) has the right to declare such Indebtedness
due before the date on which it otherwise would become due or the right to
require  Borrower or any such Subsidiary to redeem or purchase, or
offer to redeem or purchase, all or any portion of such Indebtedness;
or

     

    
      
        
        

      

      
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    (h) Any Loan
Document, at any time after its execution and delivery and for any reason other than the agreement or
action (or omission to act) of the Administrative Agent or satisfaction in full
of all the Obligations, ceases to be in full force and effect or is declared by
a court of competent jurisdiction to be null and void, invalid or unenforceable
in any respect which is materially adverse to the interests of the Lenders; or
any Party thereto denies in writing that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
same; or

     

    (i) A final
judgment against Borrower or any of its Subsidiaries is entered for the payment
of money in excess of $2,500,000 (not covered by insurance or for which an
insurer has reserved its rights) and, absent procurement of a stay of execution,
such judgment remains unsatisfied for thirty (30) calendar days after the
date of entry of judgment, or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the Property of Borrower or any of its Subsidiaries and is not released,
vacated or fully bonded within thirty (30) calendar days after its issue or
levy; or

     

    (j) Borrower
or any of its Subsidiaries institutes or consents to the institution of any
proceeding under a Debtor Relief Law relating to it or to all or any material
part of its Property, or is unable or admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its Property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of that Person and the appointment continues
undischarged or unstayed for sixty (60) calendar days; or any proceeding under a
Debtor Relief Law relating to any such Person or to all or any part of its
Property is instituted without the consent of that Person and continues
undismissed or unstayed for sixty (60) calendar days; or

     

    (k) A Change
in Control occurs; or

     

    (l) The
dissolution or liquidation of Borrower, any of SCW or Chapparal City Water
Company, or any other Subsidiary that has, immediately prior to the commencement
of such dissolution or liquidation, assets having a fair market value of more
than $20,000,000  or Borrower or any such Subsidiary, or any of their
respective partners, members, directors or stockholders, as the case may be,
shall take action seeking to effect the dissolution or liquidation of Borrower
or such Subsidiary; or

     

    
      
        
        

      

      
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    (m) The
occurrence of an Event of Default (as such term is or may hereafter be
specifically defined in any other Loan Document) under any other Loan Document;
or

     

    (n) Any
Pension Plan maintained by Borrower is finally determined by the PBGC to have a
material "accumulated funding deficiency" as that term is defined in
Section 302 of ERISA in excess of an amount equal to 5% of the consolidated
total assets of Borrower as of the most-recently ended Fiscal Quarter;
or

     

    (o) Any holder
of a Subordinated Obligation asserts in writing that such Subordinated
Obligation is not subordinated to the Obligations in accordance with its terms
and Borrower does not promptly deny in writing such assertion and contest any
attempt by such holder to take action based on such assertion; or

     

    (p) Any event
occurs which gives the holder or holders of any Subordinated Obligation (or an
agent or trustee on its or their behalf) the right to declare such Subordinated
Obligation due before the date on which it otherwise would become due, or the
right (other
than by reason of a Change in Control) to require the issuer thereof, to
redeem or purchase, or offer to redeem or purchase, all or any portion of any
Subordinated Obligation, or a final judgment is entered by a court of competent
jurisdiction that any Subordinated Obligation is not subordinated in accordance
with its terms to the Obligations.

     

    9.2 Remedies
Upon Event of Default.  Without limiting any other rights
or remedies of the Administrative Agent or the Lenders provided for elsewhere in
this Agreement, or the other Loan Documents, or by applicable Law, or in equity,
or otherwise:

     

    (a) Upon the
occurrence, and during the continuance, of any Event of Default other than an Event
of Default described in Section 9.1(j):

     

    (1) the
commitments to make Advances and all other obligations of the Administrative
Agent or the Lenders and all rights of Borrower and any other Parties under the
Loan Documents shall be suspended without notice to or demand upon Borrower,
which are expressly waived by Borrower  except that all of
the Lenders or the Requisite Lenders (as the case may be, in accordance with
Section 11.2)
may waive an Event of Default or, without waiving, determine, upon terms and
conditions satisfactory to the Lenders or Requisite Lenders, as the case may be,
to reinstate the Commitments and such other obligations and rights and make
further Advances, which waiver or determination shall apply equally to, and
shall be binding upon, all the Lenders;

     

    (2) the
Issuing Lender may demand immediate payment by Borrower of an amount equal to
the Aggregate Effective Amount of all outstanding Letters of Credit to be held
by the Administrative Agent, on behalf of the Lenders, in an interest-bearing
cash collateral account as collateral for all of the Obligations;
and

     

    
      
        
        

      

      
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    (3) the
Requisite Lenders may request the Administrative Agent to, and the
Administrative Agent thereupon shall, terminate the Commitments and/or declare
all or any part of the unpaid principal of all Notes, all interest accrued and
unpaid thereon and all other amounts payable under the Loan Documents to be
forthwith due and payable, whereupon the same shall become and be forthwith due
and payable, without protest, presentment, notice of dishonor, demand or further
notice of any kind, all of which are expressly waived by Borrower.

     

    (b) Upon the
occurrence of any Event of Default described in Section 9.1(j):

     

    (1) the
Commitments shall terminate without notice to or demand upon Borrower, which are
expressly waived by Borrower, except that all of
the Lenders may waive the Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to all the Lenders, to reinstate the
Commitments and make further Advances, which determination shall apply equally
to, and shall be binding upon, all the Lenders;

     

    (2) an amount
equal to the Aggregate Effective Amount of all outstanding Letters of Credit
shall be immediately due and payable to the Issuing Lender without notice to or
demand upon Borrower, which are expressly waived by Borrower, to be held by the
Administrative Agent, on behalf of the Lenders, in an interest-bearing cash
collateral account as collateral for all of the Obligations; and

     

    (3) the unpaid
principal of all Notes, all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents shall be forthwith due and payable,
without protest, presentment, notice of dishonor, demand or further notice of
any kind, all of which are expressly waived by Borrower.

     

    (c) Upon the
occurrence of any Event of Default, the Lenders and the Administrative Agent, or
any of them, without notice to (except as expressly
provided for in any Loan Document) or demand upon Borrower, which are expressly
waived by Borrower (except as to notices
expressly provided for in any Loan Document), may proceed (but only with the
consent of the Requisite Lenders) to protect, exercise and enforce their rights
and remedies under the Loan Documents against Borrower and any other Party and
such other rights and remedies as are provided by Law or equity.

     

    
      
        
        

      

      
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    (d) The order
and manner in which the Lenders' rights and remedies are to be exercised shall
be determined by the Requisite Lenders in their sole discretion, and all
payments received by the Administrative Agent and the Lenders, or any of them,
shall be applied first to the costs and expenses (including reasonable
attorneys' fees and disbursements and the reasonably allocated costs of
attorneys employed by the Administrative Agent or by any Lender) of the
Administrative Agent and of the Lenders, and thereafter paid pro rata to the
Lenders in the same proportions that the aggregate Obligations owed to each
Lender under the Loan Documents bear to the aggregate Obligations owed under the
Loan Documents to all the Lenders, without priority or preference among the
Lenders.  Regardless of how each Lender may treat payments for the
purpose of its own accounting, for the purpose of computing Borrower's
Obligations hereunder and under the Notes, payments shall be applied first, to the costs
and expenses of the Administrative Agent and the Lenders, as set forth above,
second, to the
payment of accrued and unpaid interest due under any Loan Documents to and
including the date of such application (ratably, and without duplication,
according to the accrued and unpaid interest due under each of the Loan
Documents), and third, to the payment
of all other amounts (including principal and fees) then owing to the
Administrative Agent or the Lenders under the Loan Documents.  No
application of payments will cure any Event of Default, or prevent acceleration,
or continued acceleration, of amounts payable under the Loan Documents, or
prevent the exercise, or continued exercise, of rights or remedies of the
Lenders hereunder or thereunder or at Law or in equity.

     

    
      
        
        

      

      
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    Article 10.

    THE
ADMINISTRATIVE AGENT

     

    10.1 Appointment and Authorization.  Subject to
Section 10.8,
each Lender hereby irrevocably appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms thereof
or are reasonably incidental, as determined by the Administrative Agent,
thereto.  This appointment and authorization is intended solely for
the purpose of facilitating the servicing of the Revolving Facility and does not
constitute appointment of the Administrative Agent as trustee for any Lender or
as representative of any Lender for any other purpose and, except as
specifically set forth in the Loan Documents to the contrary, the Administrative
Agent shall take such action and exercise such powers only in an administrative
and ministerial capacity.

     

    10.2 Administrative Agent and Affiliates.  Wells
Fargo (and each successor Administrative Agent) has the same rights and powers
under the Loan Documents as any other Lender and may exercise the same as though
it were not the Administrative Agent, and the term "Lender" or "Lenders"
includes Wells Fargo in its individual capacity.  Wells Fargo (and
each successor Administrative Agent) and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust or other
business with Borrower, any Subsidiary thereof, or any Affiliate of Borrower or
any Subsidiary thereof, as if it were not the Administrative Agent and without
any duty to account therefor to the Lenders.  Wells Fargo (and each
successor Administrative Agent) need not account to any other Lender for any
monies received by it for reimbursement of its costs and expenses as
Administrative Agent hereunder, or (subject to Section 11.10)
for any monies received by it in its capacity as a Lender
hereunder.  The Administrative Agent shall not be deemed to hold a
fiduciary relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.

     

    10.3 Proportionate Interest in any
Collateral.  The Administrative Agent, on behalf of all the
Lenders, shall hold in accordance with the Loan Documents all items of
collateral (if any) or interests therein received or held by the Administrative
Agent.  Subject to the Administrative Agent's and the Lenders' rights
to reimbursement for their costs and expenses hereunder (including reasonable
attorneys' fees and disbursements and other professional services and the
reasonably allocated costs of attorneys employed by the Administrative Agent or
a Lender) and subject to the application of payments in accordance with Section 9.2(d),
each Lender shall have an interest in the Lenders' interest in such collateral
or interests therein in the same proportions that the aggregate Obligations owed
such Lender under the Loan Documents bear to the aggregate Obligations owed
under the Loan Documents to all the Lenders, without priority or preference
among the Lenders.

     

    10.4 Lenders'
Credit Decisions.  Each Lender agrees that it has,
independently and without reliance upon the Administrative Agent, any other
Lender or the directors, officers, agents, employees or attorneys of the
Administrative Agent or of any other Lender, and instead in reliance upon
information supplied to it by or on behalf of Borrower and upon such other
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement.  Each Lender also
agrees that it shall, independently and without reliance upon the Administrative
Agent, any other Lender or the directors, officers, agents, employees or
attorneys of the Administrative Agent or of any other Lender, continue to make
its own independent credit analyses and decisions in acting or not acting under
the Loan Documents.

     

    
      
        
        

      

      
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    10.5 Action by
Administrative Agent.

     

    (a) The
Administrative Agent may assume that no Default has occurred and is continuing,
unless the Administrative Agent (or the Lender that is then the Administrative
Agent) has received notice from Borrower stating the nature of the Default or
has received notice from a Lender stating the nature of the Default and that
such Lender considers the Default to have occurred and to be
continuing.

     

    (b) The
Administrative Agent has only those obligations under the Loan Documents as are
expressly set forth therein.

     

    (c) Except for any
obligation expressly set forth in the Loan Documents and as long as the
Administrative Agent may assume that no Event of Default has occurred and is
continuing, the Administrative Agent may, but shall not be required to, exercise
its discretion to act or not act, except that the
Administrative Agent shall be required to act or not act upon the instructions
of the Requisite Lenders (or of all the Lenders, to the extent required by Section 11.2)
and those instructions shall be binding upon the Administrative Agent and all
the Lenders, provided that the
Administrative Agent shall not be required to act or not act if to do so would
be contrary to any Loan Document or to applicable Law or would result, in the
reasonable judgment of the Administrative Agent, in substantial risk of
liability to the Administrative Agent.

     

    (d) If the
Administrative Agent has received a notice specified in clause (a), the
Administrative Agent shall immediately give notice thereof to the Lenders and
shall act or not act upon the instructions of the Requisite Lenders (or of all
the Lenders, to the extent required by Section 11.2),
provided that
the Administrative Agent shall not be required to act or not act if to do so
would be contrary to any Loan Document or to applicable Law or would result, in
the reasonable judgment of the Administrative Agent, in substantial risk of
liability to the Administrative Agent, and except that if the
Requisite Lenders (or all the Lenders, if required under Section 11.2)
fail, for five (5) Banking Days after the receipt of notice from the
Administrative Agent, to instruct the Administrative Agent, then the
Administrative Agent, in its sole discretion, may act or not act as it deems
advisable for the protection of the interests of the Lenders.

     

    (e) The
Administrative Agent shall have no liability to any Lender for acting, or not
acting, as instructed by the Requisite Lenders (or all the Lenders, if required
under Section 11.2),
notwithstanding any other provision hereof.

     

    
      
        
        

      

      
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    10.6 Liability
of Administrative Agent.  Neither the Administrative Agent
nor any of its directors, officers, agents, employees or attorneys shall be
liable for any action taken or not taken by them under or in connection with the
Loan Documents, except for their own
gross negligence or willful misconduct.  Without limitation on the
foregoing, the Administrative Agent and its directors, officers, agents,
employees and attorneys:

     

    (a) May treat
the payee of any Note as the holder thereof until the Administrative Agent
receives notice of the assignment or transfer thereof, in form satisfactory to
the Administrative Agent, signed by the payee, and may treat each Lender as the
owner of that Lender's interest in the Obligations for all purposes of this
Agreement until the Administrative Agent receives notice of the assignment or
transfer thereof, in form satisfactory to the Administrative Agent, signed by
that Lender;

     

    (b) May
consult with legal counsel (including in-house
legal counsel), accountants (including in-house accountants) and other
professionals or experts selected by it, or with legal counsel, accountants or
other professionals or experts for Borrower or any Subsidiary of Borrower and/or
any of their Affiliates or the Lenders, and shall not be liable for any action
taken or not taken by it in good faith in accordance with any advice of such
legal counsel, accountants or other professionals or experts;

     

    (c) Shall not
be responsible to any Lender for any statement, warranty or representation made
in any of the Loan Documents or in any notice, certificate, report, request or
other statement (written or oral) given or made in connection with any of the
Loan Documents;

     

    (d) Except to the extent
expressly set forth in the Loan Documents, shall have no duty to ask or inquire
as to the performance or observance by Borrower of any of the terms, conditions
or covenants of any of the Loan Documents or to inspect any Property, books or
records of Borrower or any Subsidiary of Borrower;

     

    (e) Will not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, effectiveness, sufficiency or value of any Loan
Document, any other instrument or writing furnished pursuant thereto or in
connection therewith;

     

    (f) Will not
incur any liability by acting or not acting in reliance upon any Loan Document,
notice, consent, certificate, statement, request or other instrument or writing
believed in good faith by it to be genuine and signed or sent by the proper
party or parties; and

     

    (g) Will not
incur any liability for any arithmetical error in computing any amount paid or
payable by Borrower or paid or payable to or received or receivable from any
Lender under any Loan Document, including principal,
interest, commitment fees, Advances and other amounts; provided that,
promptly upon discovery of such an error in computation, the Administrative
Agent, the Lenders and (to the extent applicable) Borrower shall make such
adjustments as are necessary to correct such error and to restore the parties to
the position that they would have occupied had the error not
occurred.

     

    
      
        
        

      

      
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    10.7 Indemnification.  Each Lender shall,
ratably in accordance with its Pro Rata Share of all of the then applicable
Commitments (if any of the Commitments are then in effect) and/or in accordance
with its proportion of the aggregate Indebtedness then evidenced by the Notes
(if all of the Commitments have then been terminated), indemnify and hold the
Administrative Agent and its directors, officers, agents, employees and
attorneys harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including reasonable
attorneys' fees and disbursements and allocated costs of attorneys employed by
the Administrative Agent) that may be imposed on, incurred by or asserted
against it or them in any way relating to or arising out of the Loan Documents
(other than
losses incurred by reason of the failure of Borrower to pay the Indebtedness
represented by the Notes) or any action taken or not taken by it as
Administrative Agent thereunder, except such as result
from its own gross negligence or willful misconduct.  Without
limitation on the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for that Lender's Pro Rata Share of any out-of-pocket cost or
expense incurred by the Administrative Agent in connection with the negotiation,
preparation, execution, delivery, amendment, waiver, restructuring,
reorganization (including a
bankruptcy reorganization), enforcement or attempted enforcement of the Loan
Documents, to the extent that Borrower or any other Party are required by Section 11.3 to
pay that cost or expense but fails to do so upon demand.  Nothing in
this Section 10.7
shall entitle the Administrative Agent or any indemnitee referred to above to
recover any amount from the Lenders if and to the extent that such amount has
theretofore been recovered from Borrower.  To the extent that the
Administrative Agent or any indemnitee referred to above is later reimbursed
such amount by Borrower, it shall return the amounts paid to it by the Lenders
in respect of such amount.

     

    10.8 Successor
Administrative Agent.  The Administrative Agent may, and at
the request of the Requisite Lenders shall, resign as Administrative Agent upon
reasonable notice to the Lenders and Borrower effective upon acceptance of
appointment by a successor Administrative Agent.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement,
the Requisite Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders, which successor Administrative Agent shall
be approved by Borrower (and such approval shall not be unreasonably withheld or
delayed).  If no successor Administrative Agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and
Borrower, a successor Administrative Agent from among the
Lenders.  Upon the acceptance of its appointment as successor
Administrative Agent hereunder, such successor Administrative Agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor
Administrative Agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be terminated.  After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article 10, and
Sections 11.3,
11.11
and 11.21,
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this
Agreement.  Notwithstanding the foregoing, if no successor
Administrative Agent has accepted appointment as Administrative Agent by the
date which is thirty (30) days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Administrative Agent as provided for
above.

     

    
      
        
        

      

      
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    10.9 No
Obligations of Borrower.  Nothing contained in this Article 10 shall
be deemed to impose upon Borrower any obligation in respect of the due and
punctual performance by the Administrative Agent of its obligations to the
Lenders under any provision of this Agreement, and Borrower shall have no
liability to the Administrative Agent or any of the Lenders in respect of any
failure by the Administrative Agent or any Lender to perform any of its
obligations to the Administrative Agent or the Lenders under this
Agreement.  Without limiting the generality of the foregoing, where
any provision of this Agreement relating to the payment of any amounts due and
owing under the Loan Documents provides that such payments shall be made by
Borrower to the Administrative Agent for the account of the Lenders, Borrower's
obligations to the Lenders in respect of such payments shall be deemed to be
satisfied upon the making of such payments to the Administrative Agent in the
manner provided by this Agreement.  In addition, Borrower may rely on
a written statement by the Administrative Agent to the effect that it has
obtained the written consent of the Requisite Lenders or all of the Lenders, as
applicable under Section 11.2, in
connection with a waiver, amendment, consent, approval or other action by the
Lenders hereunder, and shall have no obligation to verify or confirm the
same.

     

    
      
        
        

      

      
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    Article 11.

    MISCELLANEOUS

     

    11.1 Cumulative Remedies; No Waiver.  The
rights, powers, privileges and remedies of the Administrative Agent and the
Lenders provided herein or in any Note or other Loan Document are cumulative and
not exclusive of any right, power, privilege or remedy provided by Law or
equity.  No failure or delay on the part of the Administrative Agent
or any Lender in exercising any right, power, privilege or remedy may be, or may
be deemed to be, a waiver thereof; nor may any single or partial exercise of any
right, power, privilege or remedy preclude any other or further exercise of the
same or any other right, power, privilege or remedy.  The terms and
conditions of Article 8 hereof
are inserted for the sole benefit of the Administrative Agent and the Lenders;
the same may be waived in whole or in part, with or without terms or conditions,
in respect of any Borrowing without prejudicing the Administrative Agent's or
the Lenders' rights to assert them in whole or in part in respect of any other
Borrowing.

     

    11.2 Amendments; Consents.  No amendment,
modification, supplement, extension, termination or waiver of any provision of
this Agreement or any other Loan Document, no approval or consent thereunder,
and no consent to any departure by Borrower or any other Party therefrom, may in
any event be effective unless in writing signed by the Administrative Agent with
the written approval of the Requisite Lenders (and, in the case of any
amendment, modification or supplement of or to any Loan Document to which
Borrower is a Party, signed by Borrower, and, in the case of any amendment,
modification or supplement to Article 10,
signed by the Administrative Agent), and then only in the specific instance and
for the specific purpose given; and, without the approval in writing of all the
Lenders, no amendment, modification, supplement, termination, waiver or consent
may be effective:

     

    (a) To amend
or modify the principal of, or the amount of principal, principal prepayments or
the rate of interest payable on, any Note, or the amount of the Revolving
Facility, or the Pro Rata Share of any Lender or the amount of any commitment
fee payable to any Lender, or any other fee or amount payable to any Lender (in
its capacity as a Lender) under the Loan Documents or to waive an Event of
Default consisting of the failure of Borrower to pay when due principal,
interest or any fee, or to provide for additional extensions of credit to
Borrower by the Lenders pursuant to the Loan Documents;

     

    (b) To
postpone any date fixed for any payment of principal of, prepayment of principal
of or any installment of interest on, any Note or any installment of any fee, or
to extend the term of the Revolving Facility;

     

    (c) To amend
the provisions of the definition of "Requisite Lenders" or "Maturity
Date";

     

    (d) To amend
or waive Article 8 or
this Section 11.2;
or

     

    
      
        
        

      

      
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    (e) To amend
any provision of this Agreement that expressly requires the consent or approval
of all the Lenders.

     

    Any
amendment, modification, supplement, termination, waiver or consent pursuant to
this Section 11.2
shall apply equally to, and shall be binding upon, all the Lenders and the
Administrative Agent.

     

    11.3 Costs and
Expenses.  Borrower agrees to pay within five
(5) Banking Days after demand, accompanied by an invoice therefor, all
reasonable, out-of-pocket expenses (except in the case of
the Administrative Agent's allocated in-house counsel costs described below,
which shall not be required to be "out-of-pocket") of the Administrative Agent
(including the
reasonable fees and out-of-pocket expenses of counsel to the Administrative
Agent (including reasonable allocated costs of in-house counsel employed by the
Administrative Agent) and of local counsel, if any, who may be retained by
counsel to the Administrative Agent) in connection with:

     

    (a) The
negotiation, preparation, execution and delivery of this Agreement and of each
other Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to this Agreement or any
other Loan Document as may from time to time hereafter be required, whether or
not the transactions contemplated hereby (or thereby) are consummated, provided that, Borrower's
maximum liability for fees and expenses of counsel to the Administrative Agent
in connection with the Closing Date shall not exceed $50,000;

     

    (b) The
preparation and review of the form of any document or instrument relevant to
this Agreement or any other Loan Document; and

     

    (c) The
preparation of any information or response required with respect to any
investigative request or inquiry, approval, findings of suitability or any other
response or communication involving a Governmental Agency arising out of this
Agreement, any other Loan Document or any Obligation evidenced by the Loan
Documents or the participation in any public or investigatory hearing or
meeting.

     

    Borrower
further agrees to pay, and to save the Administrative Agent, the Issuing Lender
and the Lenders harmless from all liability for, any stamp and similar taxes
that may be payable in connection with the execution or delivery of this
Agreement, the credit extensions made hereunder, or the issuance of the Notes,
the Letters of Credit or any other Loan Document.  Borrower also
agrees to reimburse the Administrative Agent and, after the occurrence and
during the continuance of an Event of Default, the Issuing Lender and each
Lender upon demand for all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and legal expenses of counsel and fees and expenses of
consultants to the Administrative Agent, the Issuing Lender and the Lenders)
incurred by the Administrative Agent, the Issuing Lender or such Lenders in
connection with (i) the negotiation of any restructuring or "work-out" with
Borrower whether or not consummated, of any Obligations, (ii) the
enforcement or attempted enforcement of any Obligations and any matter related
thereto and (iii) any bankruptcy of Borrower or any of its
Subsidiaries.  Any amount payable to the Administrative Agent or any
Lender under this Section 11.3 shall bear interest from
the fifth Banking Day following the date of demand, if not then paid, for
payment at the Default Rate.

     

    
      
        
        

      

      
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    11.4 Nature of
Lenders' Obligations.  The obligations of the Lenders
hereunder are several and not joint or joint and several.  Nothing
contained in this Agreement or any other Loan Document and no action taken by
the Administrative Agent or the Lenders or any of them pursuant hereto or
thereto may, or may be deemed to, make the Lenders a partnership, an
association, a joint venture or other entity, either among themselves or
with  Borrower or any Subsidiary or Affiliate of
Borrower.  A default by any Lender will not increase the Commitment of
any other Lender or the Pro Rata Share of the Revolving Facility
attributable to any other Lender.  Any Lender not in default may, if
it desires, assume (in such proportion as the nondefaulting Lenders agree) the
obligations of any Lender in default, but no Lender is obligated to do
so.

     

    11.5 Survival
of Representations and Warranties.  All representations and
warranties contained herein or in any other Loan Document, or in any certificate
or other writing delivered by or on behalf of any one or more of the Parties to
any Loan Document, will survive the making of the Advances hereunder and the
execution and delivery of the Notes, and have been or will be relied upon by the
Administrative Agent and each Lender, notwithstanding any investigation made by
the Administrative Agent or any Lender or on their behalf.

     

    11.6 Notices.  (a)  Except as
otherwise expressly provided in the Loan Documents, all notices, requests,
demands, directions and other communications provided for hereunder or under any
other Loan Document must be in writing and must be
mailed,  telecopied, dispatched by commercial courier or delivered to
the appropriate party at the address set forth on the signature pages of this
Agreement or other applicable Loan Document or, as to any party to any Loan
Document, at any other address as may be designated by it in a written notice
sent to all other parties to such Loan Document in accordance with this
Section.  Except as otherwise
expressly provided in any Loan Document, if any notice, request, demand,
direction or other communication required or permitted by any Loan Document is
given by mail it will be effective on the earlier of receipt or the fourth
Banking Day after deposit in the United States mail with first class or
airmail postage prepaid; if given by telecopier, when sent; if dispatched by
commercial courier, on the scheduled delivery date; or if given by personal
delivery, when delivered.

     

    (b)  Notwithstanding the
foregoing, Borrower agrees that Administrative Agent may make any material
delivered by Borrower to Administrative Agent, as well as any amendments,
waivers, consents and other written information, documents, instruments and
other materials relating to Borrower, any of its Subsidiaries, or any other
materials or matters relating to the Loan Documents or any of the transactions
contemplated hereby that Administrative Agent is required or authorized pursuant
to the terms hereof or of any Loan Document to provide to Lenders (collectively,
the “Communications”), available to Lenders by posting such notices on a
Platform.  Borrower acknowledges that (i) the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) a
Platform is provided “as is” and “as available” and (iii) neither Administrative
Agent nor any of its Affiliates warrants the accuracy, completeness, timeliness,
sufficiency, or sequencing of the Communications posted on a
Platform.  Administrative Agent and its Affiliates expressly disclaim
with respect to a Platform any liability for errors in transmission, incorrect
or incomplete downloading, delays in posting or delivery, or problems accessing
the Communications posted on such Platform and any liability for any losses,
costs, expenses or liabilities that may be suffered or incurred in connection
with such Platform.  No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by Administrative Agent or
any of its Affiliates in connection with any Platform.

     

    
      
        
        

      

      
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    (c)  Each Lender agrees that
notice to it (as provided in the next sentence) specifying that any
Communication has been posted to a Platform shall for purposes of this Agreement
constitute effective delivery to such Lender of such information, documents or
other materials comprising such Communication.  Each Lender agrees (i)
to notify, on or before the date such Lender becomes a party to this Agreement,
Administrative Agent in writing of such Lender’s e-mail address to which a
notice may be sent (and from time to time thereafter to ensure that
Administrative Agent has on record an effective e-mail address for such Lender)
and (ii) that any notice may be sent to such e-mail address.

     

    11.7 Execution
of Loan Documents.  Unless the Administrative Agent
otherwise specifies with respect to any Loan Document, (a) this Agreement
and any other Loan Document may be executed in any number of counterparts and
any party hereto or thereto may execute any counterpart, each of which when
executed and delivered will be deemed to be an original and all of which
counterparts of this Agreement or any other Loan Document, as the case may be,
when taken together will be deemed to be but one and the same instrument and
(b) execution of any such counterpart may be evidenced by a telecopier
transmission of the signature of such party.  The execution of this
Agreement or any other Loan Document by any party hereto or thereto will not
become effective until counterparts hereof or thereof, as the case may be, have
been executed by all the parties hereto or thereto.

     

    11.8 Binding
Effect; Assignment.

     

    (a) This
Agreement and the other Loan Documents to which Borrower is a Party will be
binding upon and inure to the benefit of Borrower, the Administrative Agent,
each of the Lenders, and their respective successors and assigns, except that Borrower
may not assign its rights hereunder or thereunder or any interest herein or
therein without the prior written consent of all the Lenders.  Each
Lender represents that it is not acquiring its Note with a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended (subject to any requirement that disposition of such Note must be within
the control of such Lender).  Any Lender may at any time pledge its
Note or any other instrument evidencing its rights as a Lender under this
Agreement to a Federal Reserve Bank, but no such pledge shall release that
Lender from its obligations hereunder or grant to such Federal Reserve Bank the
rights of a Lender hereunder absent foreclosure of such pledge.

     

    
      
        
        

      

      
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    (b) From time
to time following the Closing Date, each Lender may assign to one or more
Eligible Assignees all or any portion of its rights and obligations under this
Agreement (including all or a
portion of its Commitment, the Advances owing to it and the Note or Notes held
by it); provided that,
subject to subsection (f)
below, (i) such Eligible Assignee, if not then a Lender or an Affiliate of
the assigning Lender, shall be approved by the Administrative Agent and Borrower
(neither of which approvals shall be unreasonably withheld or delayed),
(ii) such assignment shall be evidenced by an Assignment and Acceptance, a
copy of which shall be furnished to the Administrative Agent as hereinbelow
provided, (iii) except in the case of
an assignment to an Affiliate of the assigning Lender, to another Lender or of
the entire remaining rights and obligations of the assigning Lender under this
Agreement, the assignment shall not assign a portion of such assigning Lender's
Commitments and/or Advances owing to such assigning Lender that is equivalent to
less than $3,000,000, and (iv) the effective date of any such assignment
shall be as specified in the Assignment and Acceptance, but not earlier than the
date which is five (5) Banking Days after the date the Administrative Agent
has received the Assignment and Acceptance.  Upon the effective date
of such Assignment and Acceptance, the Eligible Assignee named therein shall be
a Lender for all purposes of this Agreement, with the Commitments and/or
Advances therein set forth and, to the extent of such Commitments and/or
Advances, the assigning Lender shall be released from its further obligations
under this Agreement.  Borrower agrees that it shall execute and
deliver (against delivery by the assigning Lender to Borrower of such Lender's
Notes) to such assignee Lender, Notes evidencing that assignee Lender's
Commitments and/or Advances, and to the assigning Lender, Notes evidencing the
remaining balance of the Commitments and/or Advances retained by the assigning
Lender.

     

    (c) By
executing and delivering an Assignment and Acceptance, the Eligible Assignee
thereunder acknowledges and agrees that: (i) other than the representation
and warranty that it is the legal and beneficial owner of the rights and
obligations hereunder being assigned thereby free and clear of any adverse
claim, the assigning Lender has made no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness or sufficiency of this Agreement or any
other Loan Document; (ii) the assigning Lender has made no representation
or warranty and assumes no responsibility with respect to the financial
condition of Borrower or the performance by Borrower of the Obligations;
(iii) it has received a copy of this Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 7.1 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) it will, independently and without reliance upon the Administrative
Agent or any Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) it appoints and authorizes the
Administrative Agent to take such action and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by this Agreement; and
(vi) it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by it as a
Lender.

     

    
      
        
        

      

      
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    (d) The
Administrative Agent shall maintain at the Administrative Agent's Office a copy
of each Assignment and Acceptance delivered to it and a register (the "Register") of the
names and address of each of the Lenders and the Pro Rata Share of the
Commitments held by each Lender, giving effect to each Assignment and
Acceptance.  The Register shall be available during normal business
hours for inspection by Borrower or any Lender upon reasonable prior notice to
the Administrative Agent.  After receipt of a completed Assignment and
Acceptance executed by any Lender and an Eligible Assignee, and receipt of an
assignment fee of $3,500 from such Lender or Eligible Assignee, the
Administrative Agent shall, promptly following the effective date thereof,
provide to Borrower and the Lenders a revised Schedule 1.1
giving effect thereto.  Borrower, the Administrative Agent and the
Lenders shall deem and treat the Persons listed as Lenders in the Register as
the holders and owners of the Pro Rata Shares of the Revolving Facility listed
therein for all purposes hereof, and no assignment or transfer of any Lender's
rights and obligations hereunder shall be effective, in each case unless and
until an Assignment and Acceptance effecting the assignment or transfer thereof
shall have been accepted by the Administrative Agent and recorded in the
Register as provided above.  Prior to such recordation, all amounts
owed with respect to the applicable Pro Rata Share of the Revolving Facility
shall be owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Pro Rata Share of the Revolving
Facility.

     

    (e) Each
Lender may from time to time grant participations to one or more banks or other
financial institutions in or to all or a portion of its rights and/or
obligations under this Agreement; provided, however, that
(i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participating
banks or other financial institutions shall not be a Lender hereunder for any
purpose except,
if the participation agreement so provides, for the purposes of Sections 3.5,
3.6, 11.11 and 11.21 but only to the
extent that the cost of such benefits to Borrower does not exceed the cost which
Borrower would have incurred in respect of the Lender granting such
participation absent the participation, (iv) Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, (v) the participation interest shall be expressed as a
percentage of the granting Lender's Pro Rata Share of the Revolving Facility as
it then exists and shall not restrict an increase in the Revolving Facility (or
the aggregate Commitments pertaining thereto), or in the granting Lender's
rights and obligations hereunder, so long as the amount of the participation
interest is not affected thereby and (vi) the consent of the holder of such
participation interest shall not be required for amendments or waivers of
provisions of the Loan Documents other than those
which (A) extend any Amortization Date, any applicable Maturity Date or any
other date upon which any payment of money is due to the Lenders,
(B) reduce the rate of interest on the Notes, any fee or any other monetary
amount payable to the Lenders, (C) reduce the amount of any installment of
principal due under the Notes, or (D) release any Guarantor from its
Guaranty.

     

    
      
        
        

      

      
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    (f) Borrower
agrees that upon the occurrence and during the continuance of any Event of
Default, each Lender shall be entitled to assign its rights hereunder and under
the Loan Documents, or grant participation interests in its rights under this
Agreement and the Loan Documents, to any Person, in whole or in any part
thereof, notwithstanding any provisions contained herein (including those set
forth in subsection (b)
above) or in any other Loan Document to the contrary, except that, other than
(i) assignments by a Lender to an Affiliate of such Lender or to another
Lender or (ii) pledges described in the last sentence of subsection (a)
above,  no assignment shall be made without the approval of the
Administrative Agent.

     

    11.9 Right of
Setoff.  If an Event of Default has occurred and is
continuing, the Administrative Agent or any Lender (but in each case only with
the consent of the Requisite Lenders) may exercise its rights under applicable
Laws and, to the extent permitted by applicable Laws, apply any funds in any
deposit account maintained with it by Borrower and/or any Property of Borrower
in its possession against the Obligations.

     

    11.10 Sharing
of Setoffs.  Each Lender severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower, or otherwise, receives payment of the Obligations held by it
that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable
Laws:  (a) the Lender exercising the right of setoff, banker's
lien or counterclaim or otherwise receiving such payment shall purchase, and
shall be deemed to have simultaneously purchased, from each of the other Lenders
a participation in the Obligations held by the other Lenders and shall pay to
the other Lenders a purchase price in an amount so that the share of the
Obligations held by each Lender after the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff, banker's
lien or counterclaim or receipt of payment; and (b) such other adjustments
and purchases of participations shall be made from time to time as shall be
equitable to ensure that all of the Lenders share any payment obtained in
respect of the Obligations ratably in accordance with each Lender's share of the
Obligations immediately prior to, and without taking into account, the payment;
provided that,
if all or any portion of a disproportionate payment obtained as a result of the
exercise of the right of setoff, banker's lien, counterclaim or otherwise is
thereafter recovered from the purchasing Lender by Borrower or any Person
claiming through or succeeding to the rights of Borrower, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest.  Each
Lender that purchases a participation in the Obligations pursuant to this Section 11.10
shall from and after the purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations
purchased.  Borrower expressly consents to the foregoing arrangements
and agrees that any Lender holding a participation in an Obligation so purchased
pursuant to this Section 11.10
may exercise any and all rights of setoff, banker's lien or counterclaim with
respect to the participation as fully as if the Lender were the original owner
of the Obligation purchased.

     

    
      
        
        

      

      
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    11.11 Indemnity by Borrower.  Borrower agrees to
indemnify, save and hold harmless the Administrative Agent and each Lender and
their respective directors, officers, agents, attorneys and employees
(collectively the "Indemnitees") from
and against:  (a) any and all claims, demands, actions or causes
of action (except a claim,
demand, action, or cause of action for any amount excluded from the definition
of "Taxes" in Section 3.10(e))
if the claim, demand, action or cause of action arises out of or relates to
(i) any act or omission (or alleged act or omission) of Borrower, any
Subsidiary or other Affiliate of Borrower or any partner, officer, director,
stockholder,  or other equity interest holder of Borrower relating to
the Revolving Facility, (ii) the use or contemplated use of proceeds of any
Borrowing, (iii) the relationship of Borrower and the Lenders under this
Agreement, or (iv) the Loan Documents or the Revolving Facility in any
other manner or aspect; (b) any administrative or investigative proceeding
by any Governmental Agency arising out of or related to a claim, demand, action
or cause of action described in clause (a) above; and
(c) any and all liabilities, losses, reasonable costs or expenses (including reasonable
attorneys' fees and the reasonably allocated costs of attorneys employed by any
Indemnitee and disbursements of such attorneys and other professional services)
that any Indemnitee suffers or incurs as a result of the assertion of any
foregoing claim, demand, action or cause of action; provided that no
Indemnitee shall be entitled to indemnification for any liability, loss, cost or
expense caused by its own gross negligence or willful misconduct or for any
liability, loss, cost or expense asserted against it by another
Indemnitee.  If any claim, demand, action or cause of action is
asserted against any Indemnitee, such Indemnitee shall promptly notify Borrower,
but the failure to so promptly notify Borrower shall not affect Borrower's
obligations under this Section unless such failure materially prejudices
Borrower's right to participate in the contest of such claim, demand, action or
cause of action, as hereinafter provided.  Such Indemnitee may (and
shall, if requested by Borrower in writing) contest the validity, applicability
and amount of such claim, demand, action or cause of action and shall permit
Borrower to participate in such contest.  Any Indemnitee that proposes
to settle or compromise any claim or proceeding for which Borrower may be liable
for payment of indemnity hereunder shall give Borrower written notice of the
terms of such proposed settlement or compromise reasonably in advance of
settling or compromising such claim or proceeding and shall obtain Borrower's
prior consent (which shall not be unreasonably withheld or
delayed).  In connection with any claim, demand, action or cause of
action covered by this Section 11.11
against more than one Indemnitee, all such Indemnitees shall be represented by
the same legal counsel (which may be a law firm engaged by the Indemnitees or
attorneys employed by an Indemnitee or a combination of the foregoing) selected
by the Indemnitees, provided, that if
such legal counsel determines in good faith that representing all such
Indemnitees would or could result in a conflict of interest under Laws or
ethical principles applicable to such legal counsel or that a defense or
counterclaim is available to an Indemnitee that is not available to all such
Indemnitees, then to the extent reasonably necessary to avoid such a conflict of
interest or to permit unqualified assertion of such a defense or counterclaim,
each affected Indemnitee shall be entitled to separate representation by legal
counsel selected by that Indemnitee, with all such legal counsel using
reasonable efforts to avoid unnecessary duplication of effort by counsel for all
Indemnitees; and further provided that the
Administrative Agent (as an Indemnitee) shall at all times be entitled to
representation by separate legal counsel (which may be a law firm or attorneys
employed by the Administrative Agent or a combination of the
foregoing).  Any obligation or liability of Borrower to any Indemnitee
under this Section 11.11
shall survive the expiration or termination of this Agreement and the repayment
of all Borrowings and the payment and performance of all other Obligations owed
to the Lenders.

     

    
      
        
        

      

      
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    11.12 Nonliability of the Lenders.  Borrower
acknowledges and agrees that:

     

    (a) Any
inspections of any Property of Borrower or any Subsidiary of Borrower made by or
through the Administrative Agent or the Lenders are for purposes of
administration of the Revolving Facility only and Borrower is not entitled to
rely upon the same (whether or not such inspections are at the expense of
Borrower);

     

    (b) By
accepting or approving anything required to be observed, performed, fulfilled or
given to the Administrative Agent or the Lenders pursuant to the Loan Documents,
neither the Administrative Agent nor the Lenders shall be deemed to have
warranted or represented the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and such
acceptance or approval thereof shall not constitute a warranty or representation
to anyone with respect thereto by the Administrative Agent or the
Lenders;

     

    (c) The
relationship between Borrower and the Administrative Agent and the Lenders is,
and shall at all times remain, solely that of borrower and lenders; neither the
Administrative Agent nor the Lenders shall under any circumstance be construed
to be partners or joint venturers of Borrower, any Subsidiary of Borrower or any
of their respective Affiliates; neither the Administrative Agent nor the Lenders
shall under any circumstance be deemed to be in a relationship of confidence or
trust or a fiduciary relationship with Borrower, any Subsidiary of Borrower or
any of their respective Affiliates, or to owe any fiduciary duty to Borrower,
any Subsidiary of Borrower or any of their respective Affiliates; neither the
Administrative Agent nor the Lenders undertake or assume any responsibility or
duty to Borrower, any Subsidiary of Borrower or any of their respective
Affiliates to select, review, inspect, supervise, pass judgment upon or inform
Borrower, any Subsidiary of Borrower or any of their respective Affiliates of
any matter in connection with their Property or the operations of Borrower, any
Subsidiary of Borrower or any of their respective Affiliates; Borrower,
Subsidiary of Borrower and their respective Affiliates shall rely entirely upon
their own judgment with respect to such matters; and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by the Administrative Agent or the Lenders in connection with such matters is
solely for the protection of the Administrative Agent and the Lenders and
neither Borrower nor any other Person is entitled to rely thereon;
and

     

    
      
        
        

      

      
        -90-

        
          

        

      

      
        
        

      

       

    

    (d) The
Administrative Agent and the Lenders shall not be responsible or liable to any
Person for any loss, damage, liability or claim of any kind relating to injury
or death to Persons or damage to Property caused by the actions, inaction or
negligence of Borrower, any Subsidiary of Borrower and/or any of their
respective Affiliates and Borrower hereby indemnifies and holds the
Administrative Agent and the Lenders harmless on the terms set forth in Section 11.11
from any such loss, damage, liability or claim.

     

    11.13 No
Third Parties Benefited.  This
Agreement is made for the purpose of defining and setting forth certain
obligations, rights and duties of Borrower, the Administrative Agent and the
Lenders in connection with the Revolving Facility, and is made for the sole
benefit of Borrower, the Administrative Agent and the Lenders, and the
Administrative Agent's and the Lenders' successors and assigns.  Except as provided in
Sections 11.8
and 11.11, no
other Person shall have any rights of any nature hereunder or by reason
hereof.

     

    11.14 Confidentiality.  Each Lender agrees to
hold any confidential information that it may receive from Borrower pursuant to
this Agreement in confidence, except for
disclosure:  (a) to other Lenders or Affiliates of a Lender that
have agreed to keep such information confidential to the same extent as if they
were a party hereto; (b) to legal counsel and accountants for Borrower, any
Subsidiary of Borrower or any Lender; (c) to other professional advisors to
Borrower or any Subsidiary of Borrower or any Lender, provided that the
recipient has accepted such information subject to a confidentiality agreement
substantially similar to this Section 11.14;
(d) to regulatory officials having jurisdiction over that Lender;
(e) as required by Law or legal process, provided that each Lender agrees
to notify Borrower of any such disclosures unless prohibited by applicable Laws,
or in connection with any legal proceeding to which that Lender and Borrower or
any Subsidiary of Borrower are adverse parties; and (f) to another
financial institution in connection with a disposition or proposed disposition
to that financial institution of all or part of that Lender's interests
hereunder or a participation interest in its Note(s), provided that the
recipient has accepted such information subject to a confidentiality agreement
substantially similar to this Section 11.14.  For
purposes of the foregoing, "confidential information" shall mean any information
respecting Borrower or any Subsidiary of Borrower reasonably considered by
Borrower to be confidential, other than
(i) information previously filed with any Governmental Agency and available
to the public, (ii) information previously published in any public medium
from a source other than, directly or indirectly, that Lender, and
(iii) information previously disclosed by Borrower or such Subsidiary of
Borrower to any Person not associated with Borrower or such Subsidiary of
Borrower which does not owe a professional duty of confidentiality to Borrower
or such Subsidiary of Borrower or which has not executed an appropriate
confidentiality agreement with Borrower or such Subsidiary of
Borrower.  Nothing in this Section shall be construed to create
or give rise to any fiduciary duty on the part of the Administrative Agent or
the Lenders to Borrower or any Subsidiary of Borrower.

     

    
      
        
        

      

      
        -91-

        
          

        

      

      
        
        

      

       

    

    11.15 Further
Assurances.  Borrower shall, at its expense and without
expense to the Lenders or the Administrative Agent, do, execute and deliver such
further acts and documents as the Requisite Lenders or the Administrative Agent
from time to time reasonably require for the assuring and confirming unto the
Lenders or the Administrative Agent of the rights hereby created or intended now
or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Loan Document.

     

    11.16 Integration.  This Agreement, together
with the other Loan Documents and the letter agreements referred to in Section 3.3,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and supersedes all prior agreements, written or oral, on the
subject matter hereof.  In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of the Administrative
Agent or the Lenders in any other Loan Document shall not be deemed a conflict
with this Agreement.  Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

     

    11.17 Governing
Law.  EXCEPT TO THE EXTENT OTHERWISE PROVIDED THEREIN, EACH
LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
CALIFORNIA.  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN A STATE
OR FEDERAL COURT LOCATED IN THE STATE OF CALIFORNIA.  THE PARTIES
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN ANY SUCH COURT, AND THE PARTIES HEREBY WAIVE ANY
OBJECTION THEY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION AND HEREBY
CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY ANY SUCH COURT.  FURTHERMORE, THE PARTIES HEREBY WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO ASSERT
THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.16.

     

    11.18 Severability of Provisions.  Any provision
in any Loan Document that is held to be inoperative, unenforceable or invalid as
to any party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.

     

    11.19 Headings.  Article and
Section headings in this Agreement and the other Loan Documents are
included for convenience of reference only and are not part of this Agreement or
the other Loan Documents for any other purpose.

     

    
      
        
        

      

      
        -92-

        
          

        

      

      
        
        

      

       

    

    11.20 Time of
the Essence.  Time is of the essence of the Loan
Documents.

     

    11.21 Foreign
Lenders and Participants.  Each Lender, and each holder of
a participation interest herein,  that is incorporated or otherwise
organized under the Laws of a jurisdiction other than the United States of
America or any State thereof or the District of Columbia shall deliver to
Borrower (with a copy to the Administrative Agent), on or before the Closing
Date (or on or before accepting an assignment or receiving a participation
interest herein pursuant to Section 11.8, if
applicable) two duly completed copies, signed by a Responsible Official,
of  Form W-8BEN or W-8ECI (or other equivalent successor form)
satisfactory to Borrower and the Administrative Agent that no withholding under
the federal income tax laws is required with respect to such
Person.  Thereafter and from time to time, each such Person shall
(a) promptly submit to Borrower (with a copy to the Administrative Agent),
such additional duly completed and signed copies of such form (or such successor
form(s) as shall be adopted from time to time by the relevant United States
taxing authorities) as may then be available under then current United States
laws and regulations to avoid, or such evidence as is satisfactory to Borrower
and the Administrative Agent of any available exemption from, United States
withholding taxes in respect of all payments to be made to such Person by
Borrower pursuant to this Agreement and (b) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Person, and
as may be reasonably necessary (including the re-designation of its Eurodollar
Lending Office, if any) to avoid any requirement of applicable Laws that
Borrower make any deduction or withholding for taxes from amounts payable to
such Person.  In the event that Borrower or the Administrative Agent
becomes aware that a participation has been granted pursuant to Section 11.8(e)
to a financial institution that is incorporated or otherwise organized under the
Laws of a jurisdiction other than the United States of America, any State
thereof or the District of Columbia, then, upon request made by Borrower or the
Administrative Agent to the Lender that granted such participation, such Lender
shall cause such participant financial institution to deliver the same documents
and information to Borrower and the Administrative Agent as would be required
under this Section if such financial institution were a
Lender.

     

    11.22 Waiver
of Right to Trial by Jury.  EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

     

    
      
        
        

      

      
        -93-

        
          

        

      

      
        
        

      

       

    

    11.23 Purported Oral
Amendments.  BORROWER
EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY
BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR
SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2.  BORROWER
AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR
ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE ADMINISTRATIVE AGENT OR
ANY LENDER THAT DOES NOT COMPLY WITH SECTION 11.2 TO
EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.

     

    11.24 Replacement of
Lender.  If
any Lender does not consent to a requested waiver or amendment hereof that is
consented to by the Requisite Lenders, then Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by, Section 11.8), all of
its interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided
that:

     

    (a) Borrower
shall have paid to the Administrative Agent the assignment fee specified in
Section
11.8(d),

     

    (b) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts); and

     

    (c) such
assignment does not conflict with applicable Laws.

     

    No Lender
shall be required to make such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling
Borrower to require such assignment and delegation cease to apply.

     

    11.25 USA
Patriot Act Notice.  Each Lender that is subject to the
Patriot Act (as hereinafter defined) and the Administrative Agent (for itself
and not on behalf of any Lender) hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Patriot Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender or the Administrative Agent, as applicable, to identify the
Borrower in accordance with the Patriot Act.

     

    [THIS
SPACE INTENTIONALLY LEFT BLANK -

    SIGNATURE
PAGES TO FOLLOW]

     

    
      
        
        

      

      
        -94-

        
          

        

      

      
        
        

      

    

     

    IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

     

    
      
        	 
      	 
      	
                AMERICAN
      STATES WATER COMPANY,

              
	 
      	 
      	
                a
      California corporation

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 
      	 
      	
                By

              	 
      	
                /s/
      Floyd E. Wicks

              
	 
      	 
      	 
      	 
      	
                Name:
      Floyd E. Wicks

              
	 
      	 
      	 
      	 
      	
                Title:
      President and Chief Executive Officer

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                By

              	 
      	
                /s/
      Robert J. Sprowls

              
	 
      	 
      	 
      	 
      	
                Name:
      Robert J. Sprowls

              
	 
      	 
      	 
      	 
      	
                Title:
      Sr. Vice President-Finance, Chief  Financial Officer, Treasurer
      and Corporate Secretary

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                Address
      for Borrower:

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                630
      East Foothill Boulevard

              
	 
      	 
      	
                San
      Dimas, California  91773-9016

              
	 
      	 
      	
                Attn:  Robert
      J. Sprowls

              
	 
      	 
      	
                Telecopier:  (909)
      394-1382

              
	 
      	 
      	
                Telephone:  (909)
      394-3600

              
	 
      	 
      	
                Website:  http://www.aswater.com

              
	 
      	 
      	
                With
      a copy to:

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                630
      East Foothill Boulevard

              
	 
      	 
      	
                San
      Dimas, California  91773-9016

              
	 
      	 
      	
                Attn:  Eva
      Tang

              
	 
      	 
      	
                Telecopier:  (909)
      394-1382

              
	 
      	 
      	
                Telephone:  (909)
      394-3600

              

      

    

     

     

    
      
        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	
                WELLS
      FARGO BANK, NATIONAL ASSOCIATION,

              
	 
      	
                as Administrative
      Agent

              
	 	 
	 	 
	 
      	
                By

              	
                /s/
      Deborah Moore

              
	 
      	 
      	
                Name:  Deborah
      Moore

              
	 
      	 
      	
                Title:    Administrative
      Agent

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                Address
      for notices to Administrative Agent for borrowings and
      payments:

              
	 
      	
                Wells
      Fargo Bank, National Association

              
	 
      	
                201
      Third Street, 8th
      Floor

              
	 
      	
                San
      Francisco, California 94103

              
	 
      	
                Attn:  Deborah
      Moore

              
	 
      	
                Telecopier:  (415)
      512-9408

              
	 
      	
                Telephone:  (415)
      477-5379

              
	 
      	
                E-mail:
      mooredj@wellsfargo.com

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                With
      a copy to:

              
	 
      	
                333
      South Grand Avenue, Third Floor

              
	 
      	
                Los
      Angeles, California 90071

              
	 
      	
                Attn:  Julie
      Saavedra

              
	 
      	
                Telecopier:  (213)
      628-1415

              
	 
      	
                Telephone:  (213)
      253-6146

              
	 
      	
                E-mail:
      saavedj@wellsfargo.com

              

      

 

     

    
      
        
        

      

      
        S-2

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	
                WELLS
      FARGO BANK, NATIONAL ASSOCIATION,

              
	 
      	
                as a
      Lender

              
	 	 
	 	 
	 
      	
                By

              	
                /s/
      John N. Cate

              
	 
      	 
      	
                John
      N. Cate

              
	 
      	 
      	
                Vice
      President

              
	 
      	 
      	 
      
	 
      	
                Address:

              
	 
      	
                333
      South Grand Avenue, Third Floor

              
	 
      	
                Los
      Angeles, California 90071

              
	 
      	
                Attn:
      American States Water Account Officer

              
	 
      	
                Telecopier:  (213)
      687-3501

              
	 
      	
                Telephone:  (213)
      253-6226

              
	 
      	
                E-mail:
      john.n.cate@wellsfargo.com

              

      

    

     

    
      
        
        

      

      
        S-3

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	
                COBANK,
      ACB,

              
	 
      	
                as a
      Lender

              
	 	 
	 	 
	 
      	
                By

              	
                /s/
      David Dombirer

              
	 
      	 
      	
                Name:     David
      Dombirer

              
	 
      	 
      	
                Title:       Vice
      President

              
	 
      	 
      	 
      
	 
      	
                Address:

              
	 	 
	 	 
	 
      	
                5500
      South Quebec St.

              
	 
      	
                Greenwood
      Village, Colorado  80111

              
	 
      	
                Attn:
      David Dombirer

              
	 
      	
                Vice
      President

              
	 
      	
                Telecopier:  (303)
      796-1473

              
	 
      	
                Telephone:  (303)
      694-5848

              
	 
      	
                E-mail:
      dombid@cobank.com

              

      

    

     

    
      
        
        

      

      
        S-4

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	
                UNION
      BANK OF CALIFORNIA, N.A.,

              
	 
      	
                as a
      Lender

              
	 	 
	 	 
	 
      	
                By

              	
                /s/
      Susan K. Johnson

              
	 
      	 
      	
                Name:  Susan
      K. Johnson

              
	 
      	 
      	
                Title:    Vice
      President

              
	 
      	 
      
	 
      	
                Address:

              
	 	 
	 	 
	 
      	
                Energy
      Capital Services

              
	 
      	
                445
      South Figueroa St., 15th
      Floor

              
	 
      	
                Los
      Angeles, California  90071

              
	 
      	
                Attn:  Susan
      K. Johnson

              
	 
      	
                Vice
      President

              
	 
      	
                Telecopier:  (213)
      236-4096

              
	 
      	
                Telephone:  (213)
      236-4125

              
	 
      	
                E-mail:
      susan.johnson@uboc.com

              

      

    

     

    
      
        
        

      

      
        S-5

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	
                COMERICA
      BANK,

              
	 
      	
                as a
      Lender

              
	 	 
	 	 
	 
      	
                By

              	
                /s/
      Elise Walker

              
	 
      	 
      	
                Name:   Elise
      Walker

              
	 
      	 
      	
                Title:     Vice
      President

              
	 
      	 
      	 
      
	 
      	
                Address:

              
	 	 
	 	 
	 
      	
                611
      Anton Blvd., MC 4462

              
	 
      	
                Costa
      Mesa, California  92626

              
	 
      	
                Attn:  Elise
      Walker

              
	 
      	
                Telecopier:  (714)
      433-3226

              
	 
      	
                Telephone:  (714)
      433-3236

              
	 
      	
                E-mail:
      emwalker@comerica.com

              

      

    

     

    
      
        
        

      

      
        S-6

        
          

        

      

      
        
        

      

    

     

    
      
        	 
      	
                THE
      NORTHERN TRUST COMPANY,

              
	 
      	
                as a
      Lender

              
	 	 
	 	 
	 
      	
                By

              	
                /s/
      John E. Burda

              
	 
      	 
      	
                Name:     John
      E. Burda

              
	 
      	 
      	
                Title:       Vice
      President

              
	 
      	 
      	 
      
	 
      	
                Address:

              
	 	 
	 	 
	 
      	
                50
      S. LaSalle Street

              
	 
      	
                Chicago,
      Illinois 60675

              
	 
      	
                Attn:  John
      E. Burda

              
	 
      	
                Telecopier:  (312)
      444-7028

              
	 
      	
                Telephone:  (312)
      444-3455

              
	 
      	
                E-mail:
      John_Burda@notes.ntrs.com

              

      

    

     

    
      
        
        

      

      
        S-7

        
          

        

      

      
        
        
SCHEDULE
1.1
TO
CREDIT
AGREEMENT

    

     

    LENDER COMMITMENTS/PRO RATA
SHARES

    
 

    
      	
               

              Lender

            	 	
               

              Pro Rata
      Share

            	 	
              Amount  of

              Revolving
      Commitment

            
	
              Wells
      Fargo Bank, National Association

            	 	
              32.941176%

            	 	
              $28,000,000.00

            
	 	 	 	 	 
	
              CoBank,
      ACB

            	 	
              28.235294%

            	 	
              $24,000,000.00

            
	 	 	 	 	 
	
              Union
      Bank of California, N.A.

            	 	
              18.823529%

            	 	
              $16,000,000.00

            
	 	 	 	 	 
	
              Comerica
      Bank

            	 	
              14.117647%

            	 	
              $12,000,000.00

            
	 	 	 	 	 
	
              The
      Northern Trust Company

            	 	
                5.882353%

            	 	
              $  5,000,000.00

            
	 	 	 	 	 
	
                               Total

            	 	
                           100%

            	 	
              $85,000,000.00

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

     

     

    CONSENT, WAIVER AND OMNIBUS
AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND RELATED LOAN
DOCUMENTS

     

    This
Consent, Waiver and Omnibus Amendment to Amended and Restated Credit Agreement
and Related Loan Documents (this "Agreement"), dated as of October 11, 2005, is
entered into with reference to the Amended and Restated Credit Agreement (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") dated as of June 3, 2005, among American States Water Company,
a California corporation ("Borrower"), each lender from time to time a party
thereto (each a "Lender" and collectively, the "Lenders") and Wells Fargo Bank,
National Association, as Administrative Agent (in such capacity, the
"Administrative Agent") and Lead Arranger.  Capitalized terms not
otherwise defined herein shall have the meanings set forth for such terms in the
Credit Agreement.  Section references herein are to sections of the
Credit Agreement unless otherwise indicated.

     

    RECITALS

     

    This
Agreement is made with reference to the following facts:

     

    A.           Pursuant
to the terms of the Credit Agreement, the Lenders have made certain credit
facilities available to Borrower.

     

    B.           Southern
California Water Company, a California corporation and wholly-owned Subsidiary
of Borrower ("SCW") has changed its name (the "Name Change") to Golden State
Water Company, a California corporation ("GSW").

     

    C.           Pursuant
to the terms of that certain Note Purchase Agreement, dated as of October 11,
2005 (the "Note Purchase Agreement"), GSW desires to authorize, issue and sell
to CoBank, ACB ("CoBank"), as purchaser, $40,000,000 aggregate principal amount
of GSW's 5.87% Senior Note due December 20, 2028 (the "GSW Note").

     

    D.           CoBank
is a Lender under the Credit Agreement and an agricultural cooperative bank
subject to regulation by the Farm Credit Administration.  In order to
enter into the transactions contemplated by the Note Purchase Agreement, GSW
will be required to, among other things, purchase non-voting participation
certificates in CoBank (the "Participation Certificates") in such amounts and at
such times as CoBank may require in accordance with its bylaws and 2005 Capital
Plan, each as in effect on the Effective Date (the "Maximum Certificate Purchase
Amount").  CoBank will have a statutory lien (the "Statutory Lien") on
all of the Participation Certificates purchased by GSW to secure GSW's
obligations under the GSW Note.  Transactions contemplated by the
Purchase Agreement, the GSW Note, the Participation Certificates and the
Statutory Lien are hereinafter referred to as the "Note Purchase
Transactions".

     

    E.           Borrower
and GSW now desire that the Lenders (i) amend the Credit Agreement and the other
Loan Documents to reflect the Name Change and (ii) consent to the Note Purchase
Transactions and waive the provisions of Sections 6.9, 6.10 and 6.14 of the Credit
Agreement solely to the extent that such Sections would otherwise prohibit the
Note Purchase Transactions.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    F.           Subject
to the terms and conditions set forth herein, the Lenders are willing to so
amend the Loan Documents and so consent and waive such provisions of the Credit
Agreement.

     

    G.           Borrower,
GSW and the Administrative Agent, acting with the consent of
the  Lenders, hereby agree as follows:

     

    Article
12. Omnibus Amendment to Credit
Agreement and other the Loan Documents.  Each of the parties
hereto hereby agrees that (a) any and all references to Southern California
Water Company, a California corporation, or SCW contained in the Credit
Agreement and each of the other Loan Documents shall constitute references to
Golden State Water Company and GSW, respectively, (b) the definition of SCW is
hereby deleted from the Credit Agreement and each of the Loan Documents where
applicable and (c) the following definition is hereby added to the Credit
Agreement and each of the other Loan Documents where applicable:.

     

    "GSW" means Golden
State Water Company, a California corporation, a wholly-owned Subsidiary of
Borrower and the successor by name change to Southern California Water Company,
a California corporation.

     

    Article
13. Waiver and
Consent.  Each of the Lenders hereby (a) consents to the terms
of the Note Purchase Transactions as described in the Note Purchase Agreement
and the Note, each as in effect as of the date hereof (collectively, the "Note
Purchase Transaction Documents") and (b) waives the provisions of Sections 6.9, 6.10 and 6.14 of the Credit
Agreement solely to the extent that, absent such waiver, such provisions would
prohibit the Note Purchase Transactions; provided, however,
that  none of the waivers or consents contained herein shall permit,
or be deemed to permit, GSW to purchase Participation Certificates in an
aggregate amount which exceeds the Maximum Certificate Purchase
Amount.  The waivers and consents set forth in this Agreement are
one-time waivers only and shall be solely with respect to the Sections of the
Credit Agreement and the limited transactions described in this Section
1.

     

    Article
14. Effectiveness.  This
Agreement shall become effective on the date each of the conditions set forth
below shall have been satisfied (the "Effective Date"):

     

    (a) Documentation  The
Administrative Agent shall have received each of the following in form and
substance satisfactory to the Administrative Agent:

     

    (i)  duly
executed counterparts of this Amendment executed by the parties
hereto;

     

    (ii)  a
Certificate of a Senior Officer of Borrower certifying that (A) each of the
conditions to closing set forth in Section 3 of
the  Note Purchase Agreement have been satisfied in accordance with
their respective terms, (B) attached thereto are true, correct, complete and
duly executed copies of (1) the Note Purchase Transaction
Documents,  (2) the provisions of CoBank's bylaws setting forth the
requirement that  GSW purchase the Participation Certificates, (3)
CoBank's 2005 Capital Plan and (4) a copy of the amendment to the Amended and
Restated Articles of Incorporation of SCW effecting the Name Change, which
amendment shall be in full force and effect not later than 10 days following the
Effective Date; and

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (iii)  such
other assurances, certificates, documents or consents related to the foregoing
as the Administrative Agent or any Lender may reasonably request;
and

     

    (b) Fees and
Expenses.  Borrower shall have reimbursed Administrative Agent
and the Lenders for all of their respective reasonable costs and expenses
(including reasonable attorney's fees and expenses) incurred in connection with
the negotiation and drafting of this Agreement and the transaction contemplated
hereby.

     

    Article
15. Representations and
Warranties.  Except (i) for representations and warranties
which expressly speak as of particular date or are no longer true and correct as
a result of a change permitted by the Credit Agreement or the other Loan
Documents or (ii) as disclosed by Borrower and approved in writing by the
Requisite Lenders, Borrower hereby represents and warrants that each
representation and warranty made by Borrower in Article 4 of the
Credit Agreement (other than Sections 4.4,
4.6 (first
sentence), 4.9
and 4.16) are
true and correct as of the date hereof as though such representations and
warranties were made on and as of the date hereof.  Without in any way
limiting the foregoing, Borrower represents and warrants to the Administrative
Agent and the Lenders that no Default or Event of Default has occurred and
remains continuing or will result from the waivers, consents or transactions set
forth herein or contemplated hereby.

     

    Article
16. Confirmation.  In
all respects, the terms of the Credit Agreement and the other Loan Documents, in
each case as amended, waived or consented to hereby or herein, are hereby
confirmed.

     

    [THIS
SPACE INTENTIONALLY LEFT BLANK -

    SIGNATURE
PAGE TO FOLLOW]

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    IN WITNESS
WHEREOF, Borrower, GSW and the Administrative Agent, acting with the consent of
the Lenders, have executed this Agreement as of the date first set forth above
by their duly authorized representatives.

     

    
      
        	
                AMERICAN
      STATES WATER COMPANY, a California corporation

              	
                WELLS
      FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and a
      Lender

              
	 	 
	By:           /s/ Floyd E.
    Wicks 	By:   /s/ John Cate 
	

                Name:    Floyd
      E.Wicks 

              	
                Name:   John
      Cate

              
	

                Title:      President
      & CEO 

              	
                Title:     Vice
      President

              
	 	 
	By:           /s/ Robert J. Sprowls	 
	
                Name:    Robert.
      J. Sprowls

              	 
	

                Title:     Sr.
      Vice President-Finance, Chief Financial
Officer, 

              	 
	Treasurer
      & Corporate Secretary 	 
	 	 
	
                GOLDEN
      STATE WATER COMPANY, a California corporation, successor by name change to
      Southern California Water Company, a California
corporation

              	
                THE
      NORTHERN TRUST COMPANY,

                as a
      Lender

              
	 	 
	By:           /s/ Robert J.
      Sprowls 	By:           /s/ John E.
  Burda 
	

                Name:  Robert J.
      Sprowls 

              	

                Name:       John
      E. Burda 

              
	Title:    Sr.
      Vice President-Finance, Chief Financial Officer, Treasurer &
      Corp. Secretary	

                Title:        Vice
      President 

              
	 	 
	
                COBANK,
      ACB,

                as a
      Lender

              	
                COMERICA
      BANK,

                as a
      Lender

              
	 	 
	By:           /s/ David W.
      Dornbrier 	By:           /s/ Elise
  Walker 
	Name:    David
      W. Dornbrier 	Name:    Elise
      Walker 
	Title:      Vice
      President 	

                Title       Vice
      President 

              
	 	 
	
                UNION
      BANK OF CALIFORNIA, N.A.

              	 
	 	 
	By:           /s/ Susan K. Johnson	 
	Name:    Susan
      K. Johnson 	 
	

                Title:      Vice
      President 

              	 

      

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    SECOND AMENDMENT TO AMENDED
AND RESTATED
CREDIT
AGREEMENT

     

    THIS
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment"), dated as
of August 25, 2008, is entered into with reference to the Amended and Restated
Credit Agreement (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement")
dated as of June 3, 2005, by and among AMERICAN STATES WATER COMPANY, a
California corporation ("Borrower"), each of
the lenders party thereto (each an "Original Lender" and
collectively, the "Original Lenders")
and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the
Lenders (in such capacity, the "Administrative
Agent") and lead arranger.  Capitalized terms used herein and
not otherwise defined shall have the meanings set forth for such terms in the
Credit Agreement.  Section references herein are to sections of the
Credit Agreement unless otherwise stated.

     

     

    RECITALS

     

    WHEREAS,
Borrower has requested that the Credit Agreement be modified as set forth in
this Amendment, including, without
limitation, that the amount of the Revolving Facility be increased by
$30,000,000 and that Borrower be provided with a one-time option to further
increase the amount of the Revolving Facility up to $15,000,000.

     

    WHEREAS,
the Administrative Agent, the Lenders and Borrower have agreed to make certain
changes in the terms and conditions set forth in the Credit Agreement, and have
agreed to amend the Credit Agreement to reflect said changes.

     

    NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree that the Credit Agreement shall be
amended as follows:

     

    1. Section 1.1 – Defined
Terms (New).  The following defined terms are hereby added to
Section 1.1 in
the appropriate alphabetical place:

     

    "Amendment No. 2"
means the Second Amendment to Amended and Restated Credit Agreement, dated as of
August 25, 2008, among Borrower, each of the Lenders party thereto and the
Administrative Agent.

     

    "Amendment No. 2 Effective
Date" means the "Effective Date" as defined in Amendment No.
2.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2. Section 1.1 – Defined
Term (Revision).  The definition of the term "Commitment" is hereby
amended to read in its entirety as follows:

     

    "Commitment" means,
with respect to each Lender, the commitment, if any, of such Lender to make
Advances (expressed as the maximum aggregate amount of the Advances to be made
by such Lender hereunder), as such commitment may be (a) reduced from time to
time pursuant to Section 2.6, (b)
increased pursuant to Section 2.10, and (c)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section
11.8.  The initial amount of each Lender's Commitment is set
forth on Schedule
1.1 or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Commitment, as applicable.  The aggregate
amount of the Lenders' Commitments on the Amendment No. 2 Effective Date is
$115,000,000.

     

    3. Section
2.10.  Section 2.10 is
hereby added to the Credit Agreement and shall read in its entirety as
follows:

     

    2.10           Optional Increase to the
Commitments.  Borrower may submit a one-time request in writing
that the Revolving Facility be increased by increasing the then effective
Commitments in an aggregate amount which does not result in the aggregate
principal amount of the Commitments being greater than $130,000,000 minus the amount of
any permanent reductions to the Commitments which have then occurred prior to
the date of any such request pursuant to Section 2.6(a),
provided that in connection
with any such increase, the interest rates payable with respect to all
Commitments (whether or not a part of the increased Commitments) shall be the
same (and, if necessary, the Credit Agreement will be amended
accordingly).  Any request under this Section 2.10
shall be submitted by Borrower to the Lenders through the Administrative Agent
not less than thirty (30) days prior to the proposed increase, specify the
proposed effective date and amount of such increase and be accompanied by a
Certificate signed by a Senior Officer of Borrower, stating that no Default or
Event of Default exists as of the date of the request or will result from
the requested increase.  Borrower's right under this Section 2.10 to
increase the aggregate Commitments shall terminate and be of no further effect
if not exercised prior to the ninetieth (90th) day preceding the Maturity
Date.  The consent of the Lenders shall not be required for an
increase in the amount of the Commitments pursuant to this Section 2.10;
accordingly, this Section 2.10
shall supersede any provisions in Section 6.10 or
11.2 to the
contrary.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (a)           Each
Lender may approve or reject a request to participate in an increase in the
amount of the Commitments in its sole and absolute discretion and, absent an
affirmative written response within five (5) Banking Days after receipt of such
request, shall be deemed to have rejected the request.  The rejection
of such a request by any number of Lenders shall not affect Borrower's right to
increase the Commitments pursuant to this Section
2.10.

     

    (b)           In
responding to a request under this Section 2.10, each
Lender that is willing to increase the amount of its Pro Rata Share of the
increased Commitments shall specify the amount of the proposed increase which it
is willing to assume.  Each consenting Lender shall be entitled to
participate ratably (based on its Pro Rata Share of the Commitments before
such increase) in any resulting increase in the Commitments, subject to the
right of the Administrative Agent to adjust allocations of the increased
Commitments so as to result in the amounts of the Pro Rata Shares of the Lenders
being in integral multiples of $100,000.

     

    (c)           If
the aggregate principal amount offered to be assumed by the consenting Lenders
is less than the amount requested or the aggregate principal amount offered to
be assumed by the consenting Lenders is less than the amount requested without
an increase in the interest rates payable with respect to all Commitments,
Borrower may (i) reject the proposed increase in its entirety,
(ii) accept the offered amounts, (iii) accept the offered amounts from
consenting Lenders not requesting an increase in the interest rates payable with
respect to all Commitments, or (iv) designate new lenders who qualify as
Eligible Assignees and which are reasonably acceptable to the Administrative
Agent as additional Lenders hereunder in accordance with clause (f) of
this Section 2.10
(each, a "New
Lender"), which New Lenders may assume the amount of the increase in the
Commitments that has not been assumed by the consenting Lenders or the amount of
the increase in the Commitments that has not been assumed by the consenting
Lenders without an increase in the interest rates payable with respect to all
Commitments.

     

    (d)           After
completion of the foregoing, the Administrative Agent shall give written
notification to the Lenders and any New Lenders of the increase to the
Commitments which shall thereupon become effective and in connection with such
notification the Administrative Agent will distribute to Borrower and the
Lenders a revised Schedule 1.1
reflecting the then applicable Pro Rata Shares of the Lenders.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (e)           Each
New Lender shall become an additional party hereto as a Lender concurrently with
the effectiveness of the proposed increase in the Commitments upon its execution
of an instrument of joinder to this Agreement, which is in form and substance
reasonably acceptable to the Administrative Agent and which, in any event,
contains the representations, warranties, indemnities and other protections
afforded to the Administrative Agent and the other Lenders which would be
granted or made by an Eligible Assignee by means of the execution of an
Assignment and Acceptance.

     

    (f)           Subject
to the foregoing, any increase to the Commitments requested under this Section 2.10
shall be effective as of the date proposed by Borrower and shall be in the
principal amount equal
to (i) the amount which consenting Lenders are willing to assume as
increases to their respective Commitments plus (ii) the
amount offered by any New Lenders.  Upon the effectiveness of any such
increase, each Borrowing outstanding shall be refinanced with new Advances
reflecting the adjusted Pro Rata Shares of the Lenders in the Revolving Facility
if there is any change thereto and Borrower shall:

     

    (i)           issue
replacement Notes to each affected Lender and new Notes to each New Lender (in
each case, as may be requested by such Lender), and the percentage of Pro Rata
Shares of each Lender will be adjusted to give effect to the increase in the
Commitments;

     

    (ii)           execute
and deliver to the Administrative Agent such amendments to the Loan Documents as
the Administrative Agent may reasonably request relating to such increase;
and

     

    (iii)           pay
to the existing Lenders any breakage costs which are payable in connection with
the refinancing of any Borrowings in the manner contemplated by Section 3.6.

     

    4. Section
11.7.  Section 11.7 is
hereby amended and restated in its entirety and shall read as
follows:

     

    11.7           Execution of Loan
Documents.  Unless the Administrative Agent otherwise specifies
with respect to any Loan Document, (a) this Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, when taken together will be
deemed to be but one and the same instrument and (b) execution of any such
counterpart may be evidenced by telecopier or other electronic means of
transmission of the signature of such party.  The execution of this
Agreement or any other Loan Document by any party hereto or thereto will not
become effective until counterparts hereof or thereof, as the case may be, have
been executed by all the parties hereto or thereto.  Any party
delivering an executed counterpart of this Agreement or any Loan Document by
telecopier or other electronic means of transmission shall also deliver a
manually executed counterpart of such document, but failure to do so shall not
affect the validity, enforceability, or binding effect of such
document.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    5. Schedule 1.1 (Lender
Commitments/Pro Rata Shares).  Schedule 1.1 to the
Credit Agreement is hereby deleted and replaced with Schedule 1.1 to this
Amendment.

     

    6. Adjusting Purchase
Payments.  Revolving Credit Facility Usage as outstanding
immediately prior to the effectiveness of this Amendment (the "Existing Usage")
shall remain outstanding after giving effect to this Amendment.  On
the Effective Date, the applicable Lenders agree to purchase and sell undivided
interests in the Existing Usage (such purchases and sales to be free and clear
of Liens created, incurred, assumed or suffered to exist by, through or under
the Lenders selling such undivided interests, but otherwise without recourse or
warranty of any kind or nature whatsoever) by making or receiving Adjusting
Purchase Payments as specified in Exhibit A to this
Amendment (the "Adjusting Purchase
Payments") so that the Existing Usage will be properly allocated and
owing to the Lenders, as applicable, in accordance with the Pro Rata Shares
specified in Exhibit A to
this Amendment.  Each Lender making an Adjusting Purchase Payment
shall deliver it to the Administrative Agent and the Administrative Agent shall
forward such Adjusting Purchase Payments to the Lenders entitled thereto
promptly after receipt in accordance with the allocations specified in Exhibit A to this
Amendment.  As of the Effective Date, in addition to any other
Advances that may be made, each Lender shall be deemed as having Advances
outstanding in the amount of its Pro Rata Share of the Existing Usage consisting
of outstanding Advances.  In addition, as of the Effective Date, the
Lenders shall hold participations in the outstanding Letters of Credit as
provided in Section 2.5 in
accordance with their Pro Rata Shares.  As of the Effective Date,
without giving effect to any Advances to be made on the Effective Date, (a) the
outstanding principal balance of all Advances is [[$55,750,000]], and (b) the
Aggregate Effective Amount of all Letters of Credit is [[$11,131,000]].

     

    7. Amendment
Fee.  In consideration of the agreements set forth herein,
Borrower hereby agrees to pay (a) to the Administrative Agent for the ratable
accounts of the Original Lenders, an amendment fee (the "Amendment Fee") in
the amount set forth in a letter agreement heretofore entered into by and
between Borrower and the Administrative Agent (the "Fee Letter"), which
Amendment Fee shall be non-refundable when paid and is fully-earned as of (and
due and payable on) the Effective Date, (b) to the Administrative Agent for the
accounts of the Lenders who participate in the increase to the Revolving
Facility (the "Revolver Increase"),
a fee (the "Increase
Fee") in the amount set forth in the Fee Letter, which Increase Fee shall
be non-refundable when paid and is fully-earned as of (and due and payable on)
the date of the Revolver Increase, and (c) all other fees set forth in the Fee
Letter, as and when due under the terms of the Fee Letter.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    8. Effectiveness.  This
Amendment shall become effective on the date the Administrative Agent receives
each of the following (the "Effective
Date"):

     

    (a) duly
executed counterparts of this Amendment signed by the parties
hereto;

     

    (b) duly
executed counterparts of the Fee Letter;

     

    (c) duly
executed Notes for each Lender with a revised or new Commitment, as
applicable;

     

    (d) the
Amendment Fee; and

     

    (e) the
Increase Fee.

     

    9. Except as
specifically provided herein, all terms and conditions of the Credit Agreement
remain in full force and effect, without waiver or modification.  This
Amendment and the Credit Agreement shall be read together, as one
document.  This Amendment shall constitute a Loan
Document.

     

    10. Borrower
hereby remakes all representations and warranties contained in the Credit
Agreement (except to the extent such representations and warranties expressly
speak as of a prior date) and reaffirms all covenants set forth
therein.  Borrower further certifies that as of the date of, and after
giving effect to, this Amendment, there exists no Event of Default as defined in
the Credit Agreement, nor any condition, act or event which with the giving of
notice or the passage of time or both would constitute any such Event of
Default.

     

    [Remainder
of page intentionally left blank; signature pages follow.]

     

    IN WITNESS WHEREOF, the parties hereto
have caused this Amendment to be executed as of the day and year first above
written.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              BORROWER

            
	 	 
	 	 
	 	 
	 	AMERICAN
      STATES WATER COMPANY, 
	 	 
	 	a
      California corporation 
	 	 
	 	By:     /s/
      Robert J. Sprowls 
	 	 
	 	Name:       Robert
      J. Sprowls 
	 	 
	 	Title:         Executive
      Vice President – Finance,
	 	Chief
      Financial Officer, Treasurer & Corporate 
	 	

              Secretary 

            

    

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              ADMINISTRATIVE
      AGENT

            
	 	 
	 	

              WELLS
      FARGO BANK, NATIONAL 

              ASSOCIATION, 

            
	 	 
	 	as
      Administrative Agent 
	 	 
	 	 
	 	 
	 	 
	 	By:     /s/
      DuVon G. Davis 
	 	 
	 	Name:       DuVon
      G. Davis 
	 	 
	 	Title:         Vice
      President 

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              LENDERS:

            
	 	 
	 	

              WELLS
      FARGO BANK, NATIONAL 

              ASSOCIATION,

            
	 	 
	 	as
      a Lender 
	 	 
	 	By:     /s/ DuVon G.
      Davis 
	 	 
	 	Name:       DuVon
      G. Davis
	 	 
	 	Title:         Vice
      President

    

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              COBANK,
      ACB,  

            
	 	 
	 	as a
      Lender 
	 	 
	 	By:     /s/
      David W. Dornbrier 
	 	 
	 	Name:       David
      W. Dornbrier 
	 	 
	 	Title:         Vice
      President 

    

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              UNION
      BANK OF CALIFORNIA, N.A.,

            
	 	 
	 	as a
      Lender 
	 	 
	 	By:     /s/
      Harvey R. Horowitz 
	 	 
	 	Name:       Harvey
      R. Horowitz 
	 	 
	 	Title:         Vice
      President 

    

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              COMERICA
      BANK,

            
	 	 
	 	as a
      Lender 
	 	 
	 	By:      /s/
      Elise Walker 
	 	 
	 	Name:      Elise
      Walker 
	 	 
	 	Title:        Vice
      President 

    

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              THE
      NORTHERN TRUST COMPANY,

            
	 	 
	 	as a
      Lender 
	 	 
	 	By:      /s/
      John E. Burda 
	 	 
	 	Name:        John
      E. Burda  
	 	 
	 	

              Title:          Senior
      Vice President 

            

    

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    EXHIBIT A

     

    

     

    ADJUSTING
PURCHASE PAYMENTS

     

    

     

    [see
attached]

     

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 1.1

     

    

     

    LENDER
COMMITMENTS/PRO RATA SHARES

     

    

     

    
      	
              Lender

            	
              Pro Rata Share

            	
              Commitment Amount

            
	 	 	 
	
              Wells
      Fargo Bank, National Association

            	
              __________%

            	
              $____________

            
	 	 	 
	
              CoBank,
      ACB

            	
              __________%

            	
              $____________

            
	 	 	 
	
              Union
      Bank of California, N.A.

            	
              __________%

            	
              $____________

            
	 	 	 
	
              Comerica
      Bank

            	
              __________%

            	
              $____________

            
	 	 	 
	
              The
      Northern Trust Company

            	
              __________%

            	
              $____________

            

    

     

     

    15

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