Document:

Registration Rights Agreement

 Exhibit 10.1 

REGISTRATION RIGHTS AGREEMENT 

BETWEEN 

FORBES ENERGY SERVICES LTD. 

AND 

THE SHAREHOLDERS LISTED ON SCHEDULE A 

May 28, 2010 

 TABLE OF CONTENTS 

 

					
	ARTICLE 1 INTERPRETATION	  	1
			
	 1.1
	 	Definitions	  	1
	 1.2
	 	Interpretation Not Affected by Headings, etc.	  	4
	 1.3
	 	Accounting References	  	4
	 1.4
	 	Number, etc.	  	4
	 1.5
	 	Statutory References	  	4
	 1.6
	 	Date for Any Action	  	5
		
	ARTICLE 2 REGISTRATION RIGHTS	  	5
			
	 2.1
	 	Required Qualification	  	5
	 2.2
	 	Qualification	  	7
	 2.3
	 	Selection of Underwriters	  	8
	 2.4
	 	Qualification Expenses	  	8
		
	ARTICLE 3 REGISTRATION PROCEDURES	  	9
			
	 3.1
	 	Procedures	  	9
	 3.2
	 	Obligations of the Holders	  	12
		
	ARTICLE 4 DUE DILIGENCE; INDEMNIFICATION	  	12
			
	 4.1
	 	Preparation; Reasonable Investigation	  	12
	 4.2
	 	Indemnification	  	13
		
	ARTICLE 5 GENERAL	  	16
			
	 5.1
	 	No Inconsistent Agreements	  	16
	 5.2
	 	Remedies	  	16
	 5.3
	 	Amendments and Waivers	  	16
	 5.4
	 	Assignment	  	16
	 5.5
	 	Term	  	16
	 5.6
	 	Severability	  	17
	 5.7
	 	Delays or Omissions	  	17
	 5.8
	 	Descriptive Headings	  	17
	 5.9
	 	Governing Law; Submission to Jurisdiction	  	17
	 5.10
	 	Notices	  	18

 REGISTRATION RIGHTS AGREEMENT 

This registration rights agreement (this “Agreement”) is made the
28th day of May, 2010 between Forbes Energy Services Ltd.
(the “Corporation”), a company established pursuant to the laws of Bermuda, and the holders of the Convertible Preference Shares (as defined hereon) listed on Schedule A hereto (the “Holders”). 

WHEREAS in consideration of the agreement by the Holders to subscribe for and purchase Convertible Preference Shares pursuant to
the subscription agreement dated May 14, 2010 (the “Subscription Agreement”), and as an inducement to such Holders to consummate the transactions contemplated by the Subscription Agreement, the Corporation agrees to provide
inter alia for the right of the Holders to require the Corporation to prepare and file a preliminary prospectus and a final prospectus with the Commissions (as hereinafter defined) and, in certain limited circumstances described herein, the SEC (as
hereinafter defined), covering the Designated Qualifiable Securities (as hereinafter defined) to permit the sale thereof in such manner as the Holders may designate on the terms and conditions of this Agreement. 

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties
and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each party), the parties agree as follows: 

ARTICLE 1 

INTERPRETATION 
  

	1.1	Definitions 

 In this
Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms will have the respective meanings set out below and grammatical variations of such terms will have corresponding meanings: 

 

	 	(a)	“1933 Act” means the United States Securities Act of 1933, as amended, including the rules and regulations adopted by the SEC thereunder.

  

	 	(b)	“1934 Act” means the United States Securities Exchange Act of 1934, as amended, including the rules and regulations adopted by the SEC
thereunder. 

  

	 	(c)	“Affiliate” has the meaning ascribed thereto in the 1933 Act. 

 

	 	(d)	“Business Day” means any day, other than a Saturday or Sunday, upon which banks are open for business in Toronto, Ontario and Houston, Texas.

  

	 	(e)	“Commissions” means the securities commissions or other securities regulatory authorities in each of the provinces of Canada, other than Québec.

  

	 	(f)	“Common Share” means a common share of par value $0.01 in the capital of the Corporation. 

	 	(g)	“control person” has the meaning ascribed thereto in the Securities Act (Ontario). 

 

	 	(h)	“Convertible Preference Share” means a senior convertible preference share of par value $0.01 in the capital of the Corporation having those terms set
out in Schedule B of the Subscription Agreement which is convertible (in accordance with such terms) into Common Shares, initially, at a rate of 36 Common Shares per Convertible Preference Share. 

 

	 	(i)	“Corporation” means Forbes Energy Services Ltd. and any entity resulting from the amalgamation or merger of the Corporation with another entity or
other entities. 

  

	 	(j)	“Demand Qualifiable Securities” will have the meaning set out in subsection 2.1(a). 

 

	 	(k)	“Demand Qualification” will have the meaning set out in subsection 2.1(a). 

 

	 	(l)	“Designated Qualifiable Securities” will have the meaning set out in subsection 2.1(c). 

 

	 	(m)	“Distribution Period” has the meaning ascribed thereto in subsection 3.1(c). 

 

	 	(n)	“Effective Date” means the date on which the Corporation closes the Private Placement. 

 

	 	(o)	“Holders” means the shareholders listed on Schedule A hereto. 

 

	 	(p)	“misrepresentation” means (i) an untrue statement of material fact, or (ii) an omission to state a material fact that is required to be
stated or necessary to make a statement not misleading in light of the circumstances in which it was made. 

  

	 	(q)	“Person” means an individual, body corporate with or without share capital, partnership, joint venture, unincorporated association, syndicate, sole
proprietorship, trust, pension corporation, union, governmental agency, board, tribunal, ministry, commission or department and the heirs, beneficiaries, executors, legal representatives or administrators of an individual. 

 

	 	(r)	“Piggy Back Qualifiable Securities” will have the meaning set out in subsection 2.1(c). 

 

	 	(s)	“Piggy Back Qualification” will have the meaning set out in subsection 2.1(c). 

 

	 	(t)	“POP Issuer” means an issuer eligible to use the POP System or equivalent system established from time to time by the Commissions.

  

	 	(u)	“POP System” means the prompt offering prospectus qualification system under National Instrument 44-101—Short Form Prospectus Distributions of the
Canadian Securities Administrators or any successor policy, rule, regulation or similar instrument. 

  

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	 	(v)	“Private Placement” means the issuance and sale by the Corporation of 580,800 Convertible Preference Shares to the Holders at an issue price of $25.00
per Convertible Preference Share, for an aggregate subscription price of $14,520,000 in cash, all in accordance with the Subscription Agreement. 

  

	 	(w)	“Qualifiable Securities” means with respect to any Holder at any time, any Common Shares issued or issuable in respect of the conversion of Convertible
Preference Shares and any other Common Shares issued or issuable as a distribution made in respect of such Convertible Preference Shares and any other securities issued or issuable in respect of such Qualifiable Securities upon any stock split,
stock dividend, recapitalization or similar event. 

  

	 	(x)	“Qualification” means the qualification or registration of securities under the Securities Laws so as to permit the distribution of such securities to
the public in any or all of the provinces and territories of Canada and, if applicable pursuant to Section 2.2(b), in the United States, including all the states of the United States, subject to the limitations contained herein.

  

	 	(y)	“Qualification Expenses” means all expenses in connection with any Qualification pursuant to this Agreement including, without limitation, the
following: 

  

	 	(i)	all reasonable fees or commissions payable to an underwriter, investment banker, broker-dealer, manager or agent and fees, disbursements and expenses payable to counsel
on behalf of the Holders in connection with the qualification, registration and/or distribution of the Qualifiable Securities; 

  

	 	(ii)	all fees, disbursements and expenses of counsel and auditors to the Corporation; 

 

	 	(iii)	all expenses in connection with the preparation, translation, printing and filing of any preliminary prospectus, prospectus, registration statement or any other
offering document and any amendments and supplements thereto and the mailing and delivering of copies thereof to any underwriters and dealers; 

  

	 	(iv)	all filing fees of any Commission or, if applicable pursuant to Section 2.2(b), the SEC and any applicable U.S. state regulator; 

 

	 	(v)	all transfer agents’, depositaries’ and registrars’ fees and the fees of any other agent appointed by the Corporation; 

 

	 	(vi)	all expenses relating to the preparation of certificates; 

  

	 	(vii)	all fees and expenses of any securities exchange or over-the-counter market on which the Common Shares are then listed; and 

 

	 	(viii)	all expenses relating to “road shows” and marketing activities and all travel and lodging expenses in connection with such “road shows” and
marketing activities. 

  

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	 	(z)	“Qualification Period” means, with respect to a Holder, the period commencing 4 months plus one day following the Effective Date and terminating
November 28, 2017. 

  

	 	(aa)	“Requesting Holders” will have the meaning set out in subsection 2.1(a). 

 

	 	(bb)	“SEC” means the United States Securities and Exchange Commission. 

 

	 	(cc)	“Secondary Qualification” will have the meaning set out in subsection 2.1(c). 

 

	 	(dd)	“Securities Laws” means the applicable securities legislation of each of the provinces and territories of Canada, as well as the applicable federal and
state securities legislation of the United States, and all published rules, regulations, instruments, policy statements, orders, rulings, communiqués and interpretation notes issued thereunder or in relation thereto, as the same may hereafter
be amended or replaced. 

  

	 	(ee)	“Shareholder Group” means collectively, West Face Long Term Opportunities Limited Partnership, West Face Long Term Opportunities (USA) Limited
Partnership and West Face Long Term Opportunities Master Fund L.P. 

  

	1.2	Interpretation Not Affected by Headings, etc. 

The division of this Agreement into Articles, sections and other portions and the insertion of headings are for convenience of reference
only and will not affect the construction or interpretation hereof. Unless otherwise indicated, all references to “section” or “subsection” followed by a number and/or a letter refer to the specified section of this Agreement.
The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement and not to any particular Article, section or other portion hereof and include any agreement or
instrument supplementary or ancillary hereto. 
  

	1.3	Accounting References 

All accounting terms not expressly defined herein will be construed in accordance with United States generally accepted accounting
principles, except where the context otherwise requires. 
  

	1.4	Number, etc. 

 Unless the
context otherwise requires, words importing the singular will include the plural and vice versa and words importing any gender will include all genders. 
  

	1.5	Statutory References 

Except as otherwise expressly provided in this Agreement, any references to a statute or regulation will be construed as a reference to
such statute or regulation in effect on the date of this Agreement as it may be amended, re-enacted or superseded from time to time. 
  

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	1.6	Date for Any Action 

 In
the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action will be required to be taken on the next succeeding day that is a Business Day. 

ARTICLE 2 

REGISTRATION RIGHTS 
  

	2.1	Required Qualification 

  

	 	(a)	Subject to the provisions hereof, Holders holding Qualifiable Securities (the “Requesting Holders”) may request the Corporation to effect a
Qualification of all or part of their Qualifiable Securities (such Qualification being hereinafter referred to as a “Demand Qualification”). Such a request will be in writing (such written request, a “Demand
Notice”) and will specify the number and the description of Qualifiable Securities to be sold (the “Demand Qualifiable Securities”), the intended method of disposition (including whether the disposition will be
underwritten) and the jurisdictions (which may only include Canada or any province thereof, other than Québec, or, if applicable pursuant to Section 2.2(b), the United States of America and the states thereof) in which the Requesting
Holders request that the Demand Qualification be effected. The Corporation will not be obligated to file a prospectus or registration statement in connection with a Demand Qualification except during the Qualification Period and will not be
obligated to file a prospectus or a registration statement within three months of the date of the receipt issued by the Commissions for any other final prospectus or the effective date of any other registration statement. In addition, the
Corporation will not be obligated to: (i) effect more than two Demand Qualifications under this Agreement for the Shareholder Group; or (ii) effect more than one Demand Qualification for the Shareholder Group during any six-month period.
For the purposes of this subsection, a Demand Qualification will not be considered as having been effected until a receipt has been issued for the final prospectus by the Commissions or, if applicable pursuant to Section 2.2(b), the
registration statement has been declared effective by the SEC, pursuant to which the Demand Qualifiable Securities are to be sold; provided, however, that a Demand Qualification will not be considered as having been effected if the Demand
Qualifiable Securities requested to be included in a registration hereunder are cut back pursuant to the provisions set forth below. 

In the event that the Corporation and/or any other securityholder of the Corporation proposes to offer and sell its securities as part of
any Demand Qualification initiated by the Requesting Holders under this Agreement and the Demand Notice requests that the Demand Qualification be for an underwritten offering, and if the managing underwriter or underwriters advise the Corporation in
good faith and in writing that the aggregate amount of securities requested to be included in such offering is sufficiently large to have a material adverse effect on the distribution or sales price of the Demand Qualifiable Securities in such
offering, then the Corporation will include in such Demand Qualification, to the extent of the amount that the managing 

 

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underwriter or underwriters believe may be sold without causing such material adverse effect, first, the Qualifiable Securities of the Requesting Holders requested to be included in the offering
under this subsection 2.1(a), and second, securities offered by the Corporation for its own account and/or by any other securityholder of the Corporation (in such proportions as between the Corporation and such other securityholders as determined by
the Corporation in its sole discretion). 
  

	 	(b)	The obligation of the Corporation pursuant to subsection 2.1(a) to comply with the request of the Requesting Holders for a Demand Qualification is subject to the
Corporation being entitled to postpone the filing of such prospectus or registration statement otherwise required to be prepared and filed by it pursuant hereto (or withdraw any prospectus or registration statement that has been filed by it pursuant
hereto), in each case for a reasonable period of time (not to exceed 90 days nor more than twice in any 365 day period) if the Corporation delivers a certificate within 10 days of its receipt of such Demand Notice signed by its Chief Executive
Officer or other senior executive officer or director stating that, in the good faith judgment of the Corporation’s board of directors, the Qualification and sale of the Demand Qualifiable Securities would be seriously detrimental to the
Corporation or its shareholders. The Corporation will not register any securities for its own account or that of any other securityholder of the Corporation during any such 90-day period. 

 

	 	(c)	 If during the Qualification Period the Corporation proposes to file a prospectus in Canada or, subject to Section 2.2(b), a registration statement
in the United States, in order to permit the Qualification of its Common Shares to be issued pursuant to an underwritten offering for its own account or for the account of any holder of Common Shares, in a form and manner that, with appropriate
changes, would permit the Qualification of Qualifiable Securities under such prospectus and/or registration statement, the Corporation will give reasonably prompt notice of its intention to do so to the Holders and will use all reasonable efforts to
include in the proposed distribution such number of Qualifiable Securities (the “Piggy Back Qualifiable Securities”, and together with any Demand Qualifiable Securities, the “Designated Qualifiable Securities”) as
any Holder will request (such Qualification hereinafter referred to as a “Piggy Back Qualification”, and together with any Demand Qualification, a “Secondary Qualification”) within 20 days (except in the case of a
“bought deal” where the Holders will have only six hours to make such request if given two days advance notice of such transaction) after the giving of such notice, upon the same terms (including the method of distribution) as such
distribution; provided that (i) the Corporation will not be required to include all such Piggy Back Qualifiable Securities in any such distribution by the Corporation if, in the case of an underwritten offering, the Corporation is advised in
good faith and in writing by its managing underwriter or underwriters that the inclusion of any such Piggy Back Qualifiable Securities would likely, in their opinion, materially and adversely interfere with the orderly sale and distribution of the
securities being offered by the Corporation or any such other securityholder, in which case first, the number of Common Shares of any other securityholder of the Corporation exercising such rights will be reduced as necessary on a pro-rata basis,
and second, the number of Piggy Back Qualifiable Securities will be reduced as necessary on a pro-rata basis, 

 

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(ii) the Corporation may at any time prior to the issuance of a receipt for such final prospectus or the effectiveness of any such registration statement pursuant to which the securities are to
be sold, at its sole discretion and without the consent of the Holders, withdraw such prospectus and registration statement and abandon the proposed distribution in which the Holders have requested to participate, provided that the Corporation will
pay, to the extent not prohibited by the Securities Laws, the Qualification Expenses in connection with such withdrawn prospectus or registration statement. The failure of a Holder to respond within the periods referred to in the immediately
preceding sentence will be deemed to be a waiver of the Holder’s rights under this subsection 2.1(c) with respect to such Piggy Back Qualification. A Holder may also waive its rights under this subsection 2.1(c) by giving written notice to the
Corporation. No Qualification of Qualifiable Securities under this subsection 2.1(c) will relieve the Corporation of its obligations to effect a Demand Qualification pursuant to subsection 2.1(a) hereof. The Holders will be entitled to unlimited
Piggy Back Qualifications. 

  

	 	(d)	Notwithstanding the other provisions of this Section 2.1, the Corporation shall not be obligated to effect a Demand Qualification if within five (5) Business
Days after receiving a Demand Notice, the Corporation notifies the holders of all Demand Qualifiable Securities of its intention to file a prospectus in Canada, or, subject to Section 2.2(b), a registration statement in the United States in
order to permit the Qualification of the issuance by the Corporation of its Common Shares for an underwritten public offering and within ninety (90) days after providing such notice, files a prospectus (or registration statement, if applicable)
for such offering. In such case, the holders shall have all the rights provided herein as if no such Demand Notice had been requested (including, for greater certainty any Piggy Back Qualification). If at any time the Corporation fails to pursue
diligently such prospectus or offering, the provisions of the preceding sentence shall not apply and the Corporation shall be obligated to satisfy its obligations Section 2.1(a). With respect to such offering, the Corporation shall have sole
authority to select or terminate the employment of underwriters, and to make all decisions in connection with the filing, effectiveness and consummation of the proposed offering, subject to the express provisions hereof. 

 

	2.2	Qualification 

  

	 	(a)	 The Corporation will effect a Secondary Qualification in Canada by way of a short-form prospectus prepared pursuant to the POP System if, at the time
of such Secondary Qualification, the Corporation is a POP Issuer and is able to do so in all of the jurisdictions in which the Secondary Qualification is to be effected, it being acknowledged that the Corporation will only be required to effect a
Secondary Qualification by way of a short-form prospectus in the provinces or territories of Canada in which it is then a reporting issuer or the equivalent. For greater certainty, it is acknowledged that in the event that the Corporation is not a
POP Issuer or is unable to utilize the POP System in one or more jurisdictions in which the Demand Qualification is to be effected, the Corporation will proceed by way of long-form prospectus. Notwithstanding the foregoing, the Corporation will not
be obligated to 

  

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proceed by way of a long-form prospectus if it agrees to effect a Secondary Qualification of such Designated Qualifiable Securities in the United States in accordance with the provisions of
subsection 2.2(b). 

  

	 	(b)	Notwithstanding any other provision of this Agreement, the Corporation shall not be obligated to effect a Demand Qualification in the United States until six
(6) months following (i) the date on which the Corporation’s initial registration statement of its Common Shares under the 1933 Act is declared effective with the SEC or the Common Shares are listed on a national securities exchange
or automated quotation system in the United States and (ii) the Corporation registers the class of Common Shares with the SEC under the 1934 Act (“U.S. Registration”). Thereafter, upon receipt of a demand notice under
Section 2.1(a), the Corporation will effect a Secondary Qualification in the United States by way of a registration statement on Form F-1 or on such other form as will be available to enable the Holders to sell the Designated Qualifiable
Securities in compliance with the Securities Laws of the United States. In the event that after U.S. Registration, the Corporation is no longer a reporting issuer in Canada, the Corporation shall not be obligated to effect a Demand Qualification or
a Piggy Back Qualification in Canada. 

  

	2.3	Selection of Underwriters 

Upon being requested to provide an underwritten Demand Qualification, the Corporation will, with the approval of the Requesting Holders
(not to be unreasonably withheld), select the investment banker(s) and manager(s) to effect the distribution in connection with such Demand Qualification. 
  

	2.4	Qualification Expenses 

Except as expressly provided below, the Corporation will pay all Qualification Expenses in connection with a Secondary Qualification,
including the reasonable fees and expenses of the Holders’ legal counsel. The Holders will be solely responsible for the underwriting or other broker-dealer commissions and fees payable in respect of the sale of the Designated Qualifiable
Securities by netting from the proceeds of the sale of such Designated Qualifiable Securities any underwriting or other broker-dealer commissions or fees before payment of the net proceeds to the selling Holder(s). The Corporation will not be
obligated to reimburse the Holders for the fees and expenses of more than one U.S. and one Canadian law firm in connection with any Secondary Qualification and the fees of any other counsel or any other advisors to the Holders will be the sole
responsibility of the Holders. 
  

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 ARTICLE 3 

REGISTRATION PROCEDURES 
  

	3.1	Procedures 

 Subject to
Section 2.1(d), upon receipt of a request from the Requesting Holders pursuant to section 2.1, the Corporation will, subject to and in accordance with section 2.1, effect the Secondary Qualification as requested and, in particular, the
Corporation will promptly: 
  

	 	(a)	effect the Secondary Qualification in one or more Canadian provinces or territories in which the Corporation is then a reporting issuer or the equivalent, prepare and
file (in any event within 45 days after the later of (x) the date the request for Secondary Qualification has been delivered to the Corporation or (y) the commencement of the Qualification Period) a preliminary prospectus under and in
compliance with the Securities Laws of each Canadian jurisdiction in which the Secondary Qualification is to be effected and such other related documents as may be necessary to be filed in connection with any such preliminary prospectus and will, as
soon as possible after any comments of the Commissions have been satisfied with respect thereto, prepare and file under and in compliance with the Securities Laws of such Canadian jurisdiction a prospectus, and obtain receipts therefor and use its
commercially reasonable efforts to cause a receipt to be issued for such prospectus as soon as possible and will take all other steps and proceedings that may be necessary in order to permit the Qualification of the Designated Qualifiable Securities
for distribution by registrants who comply with the relevant provisions of the Securities Laws of such Canadian Jurisdiction (provided that, before filing all such documents referred to in this subsection 3.1(a), the Corporation will furnish to the
counsel to the Requesting Holders copies thereof and otherwise comply with section 4.1 hereof); 

  

	 	(b)	subject to Section 2.2(b), effect a Secondary Qualification in the United States, prepare and file (in any event within 45 days after the later of (x) the
date the request for Secondary Qualification has been delivered to the Corporation or (y) the commencement of the Qualification Period) with the SEC a registration statement on Form F-1 or such other form as is permitted under Securities Laws
of the United States from time to time, covering the distribution of all of the Designated Qualifiable Securities and such other related documents as may be necessary to be filed in connection with any such registration statement or other form and
take all other steps and proceedings that may be necessary in order to permit the Qualification of the Designated Qualifiable Securities for distribution in the United States (provided that, before filing all such documents referred to in this
subsection 3.1(b), the Corporation will furnish to the counsel to the Requesting Holders copies thereof and otherwise comply with section 4.1 hereof); 

  

	 	(c)	subject to Section 2.2(b), prepare and file with the applicable Commissions in the Canadian provinces and territories in which the Secondary Qualification is to be
effected and, if applicable under Section 2.2(b), with the SEC, such amendments and supplements to such preliminary prospectus, final prospectus and registration statement, as may be reasonably necessary to comply with the provisions of the
applicable Securities Laws with respect to the Qualification of the Designated Qualifiable Securities, and take such steps as are reasonably necessary to maintain the effectiveness of such final prospectus and registration statement, as applicable,
until the time at which the distribution of the Designated Qualifiable Securities is completed (but such requirement will only extend for a maximum period of 60 days from the date of the effectiveness of the prospectus and/or registration statement,
as applicable (the “Distribution Period”); 

  

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	 	(d)	subject to Section 2.2(b), use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies,
the resale by the Holders of the Designated Qualifiable Securities covered by a registration statement under such other securities or “blue sky” laws of such jurisdictions of the United States, as designated by the Requesting Holders,
acting reasonably, in the Demand Notice, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Distribution Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Distribution Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Designated Qualifiable Securities for sale in such jurisdictions; provided, however, that the Corporation will not be required in connection therewith or as a condition thereto to
(A) qualify to do business as a foreign corporation or dealer in any jurisdiction where it would not otherwise be required to qualify but for this subsection 3.1(d), (B) subject itself to any taxation in any such jurisdiction, or
(C) file a general consent to service of process in such jurisdiction (it being understood and agreed that the Corporation may be required to file a consent to service of process with respect to claims arising from the offering of Designated
Qualifiable Securities). The Corporation will promptly notify the Holders of the receipt by the Corporation of any notification with respect to the suspension of the registration or qualification of any of the Designated Qualifiable Securities for
sale under the securities or “blue sky” laws of any jurisdiction of the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose; 

 

	 	(e)	furnish to the Holders participating in such Qualification and the underwriter or underwriters of any such distribution if any, upon their request, such number of
copies of such preliminary prospectus, final prospectus, registration statement and any amendment and supplement thereto (including any documents incorporated therein by reference) and such other relevant documents as such Holders may reasonably
request in order to facilitate the distribution of the Designated Qualifiable Securities; 

  

	 	(f)	furnish to the Holders participating in such Qualification, the underwriter or underwriters of any such distribution if any and such other persons as such Holders may
reasonably specify: 

  

	 	(i)	an opinion of counsel to the Corporation addressed to the underwriter or underwriters of such distribution if any and dated the closing date of the distribution
covering any opinion reasonably requested by the either of them, including, without limitation, as to the Corporation’s legal status and capacity, the Corporation’s authorized capital, the validity of the Designated Qualifiable Securities,
the “eligibility for investment” of the Designated Qualifiable Securities, the enforceability of any underwriting agreement to which the Corporation is a party, and the Qualification of the Designated Qualifiable Securities; and

  

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	 	(ii)	such corporate certificates as are customarily furnished in securities offerings, and, in each case, covering substantially the same matters as are customarily covered
in such documents in the relevant jurisdictions and such other matters as the underwriters may reasonably request; 

  

	 	(g)	immediately notify the Holders participating in such Qualification of the happening of any event during the Distribution Period as a result of which the preliminary
prospectus, final prospectus or the registration statement, each as then in effect, would include a misrepresentation (insofar as such misrepresentation relates to or was made by the Corporation); 

 

	 	(h)	otherwise use its best efforts to comply with all applicable published policies, rules, regulations, forms, instruments, blanket orders and rulings of the applicable
Commissions and, if applicable under Section 2.2(b), the SEC, and any stock exchange and over-the-counter market on which the Common Shares are then listed; 

 

	 	(i)	provide a transfer agent and registrar for such Common Shares no later than the closing date of the offering; 

 

	 	(j)	cause all such Designated Qualifiable Securities to be listed on each securities exchange or over-the-counter market on which the Common Shares are then listed;

  

	 	(k)	if the distribution is an underwritten offering, enter into an underwriting agreement with the underwriter or underwriters for the distribution, such agreement to
contain such representations and warranties by the Corporation and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions and indemnification agreements consistent with section
4.2 and such other documents on such terms and conditions as are customary in secondary offerings and take all such other actions as permitted by law as the Holders participating in such Qualification or the underwriter or underwriters, if any,
reasonably request in order to expedite or facilitate the distribution of the Designated Qualifiable Securities; and 

  

	 	(l)	in the event of the issuance of any order or ruling suspending the effectiveness of a prospectus receipt or registration statement or any order suspending or preventing
the use of any prospectus or registration statement or suspending the Qualification of any of the Designated Qualifiable Securities by such prospectus or registration statement in any applicable province or territory of Canada or in the United
States, the Corporation will notify the Holders participating in such Qualification of such event and use its commercially reasonable efforts promptly to obtain the withdrawal of such order or ruling. 

 

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	3.2	Obligations of the Holders 

In connection with any Secondary Qualification, the Holders participating in such Secondary Qualification will: 

 

	 	(a)	provide, in writing, such information with respect to such Holder including the number of securities of the Corporation held by such Holder as may be reasonably
required by the Corporation to comply with the applicable Securities Laws in each jurisdiction in which the Secondary Qualification is to be effected; 

  

	 	(b)	if required under applicable Securities Laws, execute any certificate forming part of a preliminary prospectus, final prospectus, registration statement or similar
document to be filed with the applicable Commissions or, if applicable under Section 2.2(b), the SEC; 

  

	 	(c)	immediately notify the Corporation of the happening of any event during the Distribution Period, as a result of which the preliminary prospectus, final prospectus or
the registration statement, as in effect, would include a misrepresentation insofar as such misrepresentation relates to such Holder or relates to information provided by such Holder to the Corporation in writing for inclusion in the preliminary
prospectus, final prospectus or the registration statement; 

  

	 	(d)	comply with all applicable published policies, rules, regulations, forms, instruments, blanket orders and rulings of the applicable Commissions and, if applicable under
Section 2.2(b), the SEC, and any stock exchange and over-the-counter market on which the Common Shares are then listed and to otherwise comply with applicable Securities Laws; and 

 

	 	(e)	not effect or permit to be effected sales of Designated Qualifiable Securities or deliver or permit to be delivered any prospectus or registration statement in respect
of such sale after notification by the Corporation of any order or ruling suspending the effectiveness of the prospectus or registration statement or after notification by the Corporation under subsection 3.1(g), until the Corporation advises such
Holder that such suspension has been lifted or that it has filed an amendment to such prospectus or registration statement and has provided copies of such amendment to such Holder. Such Holder will, if so directed by the Corporation, deliver to the
Corporation (at the Corporation’s expense) all copies, other than permanent file copies, then in such Holder’s possession of such prospectus covering the Designated Qualifiable Securities that was in effect at the time of receipt of such
notice. 

 ARTICLE 4 

DUE DILIGENCE; INDEMNIFICATION 
  

	4.1	Preparation; Reasonable Investigation 

In connection with the preparation and filing of any preliminary prospectus, final prospectus or registration statement as herein
contemplated, the Corporation will give the Holders and the underwriter or underwriters of such distribution, if any, and their respective counsel and other representatives, the opportunity to participate in the preparation of such documents and
each amendment thereof or supplement thereto, and will insert therein such material furnished to the Corporation in writing, which in the reasonable judgment of the Requesting Holders and their counsel should be included, and will, subject to the
prior execution and delivery to the Corporation 
  

 - 12 - 

 
of reasonable confidentiality agreements, give each of them such reasonable and customary access to the Corporation’s books and records and such reasonable and customary opportunity to
discuss the business of the Corporation with its officers and auditors as will be necessary in the reasonable opinion of the Requesting Holders, the underwriter or underwriters and their respective counsel, and to conduct all reasonable and
customary due diligence which the Requesting Holders, the underwriter or underwriters and their respective counsel may reasonably require in order to conduct a reasonable investigation for purposes of establishing, to the extent permitted by law, a
due diligence defense as contemplated by the Securities Laws of Canada and in order to enable such underwriters to execute any certificate required to be executed by them in Canada or the United States for inclusion in each such document.

  

	4.2	Indemnification 

  

	 	(a)	By Corporation 

 The
Corporation agrees to indemnify and hold harmless, to the extent permitted by law, the Holders, if applicable, and each Person who participates as an underwriter in the offerings or sale of the Designated Qualifiable Securities, their respective
directors, officers, employees, partners, members, shareholders and agents and each Person who controls such Holder (within the meaning of any applicable Securities Laws) against all losses (excluding loss of profits), claims, damages, liabilities
and expenses (in each case, as they are incurred) arising out of or based upon: (i) any information or statement contained in the preliminary prospectus, final prospectus, registration statement, any filing made in connection with the
Qualification under the securities or other “blue sky” laws or any amendment thereto which contains or is alleged to contain, a misrepresentation; (ii) any order made or inquiry, investigation or proceedings commenced or threatened by
any applicable Commission, the SEC, a court or other competent authority based upon any misrepresentation or alleged misrepresentation in the preliminary prospectus, the final prospectus, the registration statement, any amendment thereto or any
other document filed in connection therewith or based upon any failure or alleged failure to comply with applicable Securities Laws (other than any failure to comply with applicable Securities Laws by the Holders or the underwriter or underwriters);
and (iii) non-compliance or alleged non-compliance by the Corporation with any of the Securities Laws in connection with a Secondary Qualification and the distribution effected thereunder, except in the case of any of the foregoing insofar as
(A) any information or statement referred to in clause (i) or (ii) of this subsection 4.2(a) has been furnished to the Corporation by the Holders in writing pursuant to subsection 3.2(a) or the underwriter or underwriters expressly
for use therein; or (B) directly caused by any Holder’s or any underwriter’s failure to deliver to a purchaser of Designated Qualifiable Securities, a copy of the prospectus or the registration statement or any amendments or
supplements thereto or to otherwise comply with applicable Securities Laws or (C) any amounts paid in settlement of any claim if such settlement is effected without the prior consent of the Corporation, which consent will not be unreasonably
withheld, conditioned or delayed. 
  

 - 13 - 

	 	(b)	By Holders 

 Each of the
Holders, severally and not jointly, agrees to indemnify and hold harmless, to the extent permitted by law, the Corporation and each Person who participates as an underwriter in the offering or sale of the Designated Qualifiable Securities, their
respective directors, officers, employees, partners, members, stockholders and agents and each Person who controls the Corporation or such underwriter (within the meaning of any applicable Securities Laws) against all losses (excluding loss of
profits), claims, damages, liabilities and expenses (in each case as they are incurred) arising out of or based upon: (i) any information or statement contained in the preliminary prospectus, final prospectus, registration statement, any filing
made in connection with the Qualification under the securities or other “blue sky” laws or any amendment thereto which has been furnished to the Corporation by such Holder in writing expressly for use therein pursuant to subsection 3.2(a)
or section 4.1 which contains or is alleged to contain a misrepresentation; (ii) any order made or inquiry, investigation or proceedings commenced or threatened by any applicable Commission, the SEC, a court or other competent authority based
upon (A) any misrepresentation or alleged misrepresentation in the preliminary prospectus, the final prospectus, the registration statement, any amendment thereto or any other document filed in connection therewith based upon any information or
statement which has been furnished to the Corporation by the Holder in writing expressly for use therein pursuant to subsection 3.2(a) or section 4.1, or (B) any failure or alleged failure to comply with applicable Securities Laws by the
Holder; and (iii) the Holder’s failure to deliver to a purchaser of Designated Qualifiable Securities, a copy of the prospectus or the registration statement or any amendments or supplements thereto or to otherwise comply with applicable
Securities Laws, except in the case of any of the foregoing insofar as directly caused by the Corporation or any underwriter’s failure to deliver to a purchaser of Designated Qualifiable Securities a copy of the prospectus or the registration
statement or any amendments or supplements thereto or to otherwise comply with applicable Securities Laws; or (B) any amounts paid in settlement of any claim if such settlement is effected without the prior written consent of the Holder, which
consent will not be unreasonably withheld, conditioned or delayed. 
  

	 	(c)	Procedure 

 Any Person
entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party’s reasonable judgment, based
upon the written advice of counsel, a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel satisfactory to the
indemnified party, acting reasonably. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld).
The indemnified party will have the right to retain other counsel to act on his or its behalf, provided that the fees and disbursements of such other counsel will be paid by the 

 

 - 14 - 

 
indemnified party unless (i) the indemnifying party and the indemnified party will have mutually agreed to the retention of such other counsel; or (ii) the indemnifying party fails to
assume the defence of the claim within 15 Business Days of receiving notice as contemplated herein. In addition, an indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, based upon the written advice of counsel, a conflict of interest may
exist between such indemnified party and any other of such indemnified parties with respect to such claim and then only to the extent necessary to deal with the issue in conflict, and provided further that if such counsel determines, acting
reasonably, that it requires a legal firm qualified in another jurisdiction to assist it with the defence of such claim, the indemnifying party will also be responsible for such reasonable fees and expenses of such additional legal firm. No
indemnifying party may settle any claims without the express written consent of an indemnified party (such consent not to be unreasonably withheld where such consent does not contain any admission of liability). 

 

	 	(d)	Survival; Contribution 

Unless otherwise superseded by an underwriting agreement entered into in connection with an underwritten offering, the indemnification
provided for under this Agreement will survive the expiry of this Agreement and will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive any transfer of securities pursuant thereto. In the event the indemnification is unavailable in whole or in part for any reason under this section 4.2, the Corporation and the Holders participating in such
Qualification will contribute to the aggregate of all losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative benefits and relative fault of the Corporation and such Holders in connection with
the event giving rise to liability. The relative benefits shall be deemed to be in the same proportion as the total proceeds (net of discounts and commissions but before deducting expenses) received by the Corporation and the selling Holders. The
relative fault of the indemnifying party and of the indemnified party will be determined by reference to, among other things, whether the misrepresentation or alleged misrepresentation relates to information supplied by the indemnifying party or by
the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such misrepresentation; provided, however that, in any case, (1) no Holder will be required to contribute any
amount in excess of the public offering price of all such Holder’s Qualifiable Securities offered and sold by such Holder, and (2) no Person guilty of fraudulent misrepresentation (within the meaning of the 1933 Act) will be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation, and provided, further, that, in no event will a Holder’s liability pursuant to this subsection 4.2(d), when combined with the amounts paid or payable by such
Holder pursuant to subsection 4.2(b), exceed the proceeds from the distribution actually received by such Holder. 
  

 - 15 - 

 ARTICLE 5 

GENERAL 
  

	5.1	No Inconsistent Agreements 

The Corporation represents and warrants to the Holders that it has not entered into any agreement (after taking into account any amendment
thereof or waiver relating thereto) which is inconsistent with or violates the rights granted to the Holders pursuant to this Agreement. The Corporation covenants that it will not, without the prior written consent of the Holders, enter into any
agreement with any holder or prospective holder of any securities of the Corporation that would allow such holder or prospective holder to include such securities in any registration unless, under the terms of such agreement, such holder or
prospective holder may include such securities in any registration only to the extent that the inclusion of such securities will not reduce the number of the Qualifiable Securities that are included. 

 

	5.2	Remedies 

 Any Person
having rights under any provision of this Agreement will be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The
parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. 

 

	5.3	Amendments and Waivers 

This Agreement will not be amended, waived or varied in its terms by oral agreement or by representations or otherwise without the prior
written consent of each of the Corporation and each of the Holders. 
  

	5.4	Assignment 

 This
Agreement and the rights and obligations of the parties hereto will bind and enure to the benefit of each of the parties hereto and their successors. The rights under this Agreement may be assigned by a Holder to a transferee of Qualifiable
Securities that is (i) an Affiliate of such Holder; provided that such transferee agrees in a written instrument to the Corporation to be bound by and subject to the terms and conditions of this Agreement. Nothing contained in this section 5.4
will be deemed to increase the number of Demand Qualifications provided pursuant to subsection 2.1(a). 
  

	5.5	Term 

 This Agreement will
expire upon the end of the Qualification Period with regard to all Holders, provided that in all cases the obligations of the parties under section 4.2 hereof will survive the expiry of this Agreement. 

 

 - 16 - 

	5.6	Severability 

 If one or
more provisions of this Agreement are held to be unenforceable under applicable law, portions of such provisions or such provisions in their entirety, to the extent necessary, will be severed from this Agreement, and the balance of this Agreement
will be enforceable in accordance with its terms. 
  

	5.7	Delays or Omissions 

 No
delay or omission to exercise any right, power or remedy accruing to any party to this Agreement, upon the breach or default of the other party will impair any such right, power or remedy of such non-breaching party nor will it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring; nor will any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of the party of any provisions or conditions of this Agreement, must be
made in writing and will be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to the parties, will be cumulative and not alternative. 

 

	5.8	Descriptive Headings 

 The
descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 
  

	5.9	Governing Law; Submission to Jurisdiction 

This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada
applicable therein. Each of the parties hereby irrevocably attorns and submits to the jurisdiction of the courts of the Province of Ontario in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents
referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by
such courts. 
  

 - 17 - 

	5.10	Notices 

 All notices,
requests, demands or other communications required or permitted to be given by one party to another under this Agreement will be given in writing and delivered by personal delivery or delivery by recognized commercial courier, sent by facsimile or
delivered by registered mail, postage prepaid, addressed as follows: 
  

	 	(a)	In the case of the Corporation: 

P.O. Box 2108 

Alice, Texas 

78333 

Attention:       L. Melvin Cooper 

Fax:                (361) 664-0599 

With a copy, which shall not constitute notice, to: 

Winstead PC 
 24
Waterway Avenue 
 Suite 500 

The Woodlands, Texas 

77380 

Attention:       R. Clyde Parker, Jr. 

Fax:                (281) 681-5901 

With a copy, which shall not constitute notice, to: 

Bennett Jones LLP 

4500 Bankers Hall East 

855 – 2nd Street S.W. 

Calgary, Alberta T2P 4K7 

Attention:       Paul M. Farion 

Fax:                (403) 265-7219 

 

	 	(b)	In the case of the Holders: 

 In
the case of West Face LP, West Face USA LP and West Face Master LP (each as defined in the Subscription Agreement): 
 c/o West
Face Capital Inc. 
 2 Bloor Street East 

Suite 810 
 Box
#85 
 Toronto, ON M4W 1A8 

Attention:       Peter Fraser 

Fax:                (647) 724-8910 

 

 - 18 - 

 With a copy, which shall not constitute notice, to: 

McCarthy Tétrault LLP 

Suite 5300 

Toronto Dominion Bank Tower 

Toronto-Dominion Centre 

Toronto, ON M5K 1E6 

Attention:       Andrew Parker 

Fax:                (416) 868-0673 

or at such other address or fax number of which the addressee may from time to time notify the addressor. Any notice delivered by personal delivery or by
courier to the party to whom it is addressed as provided above will be deemed to have been given and received on the day it is so delivered at such address. If such day is not a Business Day, or if the notice is received after 4:00 p.m.
(addressee’s local time), then the notice will be deemed to have been given and received on the next Business Day. Any notice sent by prepaid registered mail will be deemed to have been given and received on the sixth Business Day following the
date of its mailing. In the event of any disruption, strike or interruption in the Canadian or United States postal service after mailing and prior to receipt and deemed receipt of any such notice, notice will be deemed to be received on the sixth
Business Day following full resumption of the postal service. Any notice transmitted by facsimile will be deemed to have been given and received on the day in which transmission is confirmed. If such day is not a Business Day or if the facsimile
transmission is received after 4:00 p.m. (addressee’s local time), then the notice will be deemed to have been given and received on the first Business Day after its transmission. 

 

 - 19 - 

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

			
	By the Corporation
	
	FORBES ENERGY SERVICES LTD.
		
	By:	 	 /s/ John E. Crisp

		 	Name: John E. Crisp
		 	Title: President and Chief Executive Officer
	
	By the Holders
	
	WEST FACE LONG TERM OPPORTUNITIES LIMITED PARTNERSHIP by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 /s/ John R. Maynard

		 	Name: John R. Maynard
		 	Title: Chief Financial Officer
	
	WEST FACE LONG TERM OPPORTUNITIES (USA) LIMITED PARTNERSHIP by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 /s/ John R. Maynard

		 	Name: John R. Maynard
		 	Title: Chief Financial Officer
	
	WEST FACE LONG TERM OPPORTUNITIES MASTER FUND L.P. by its advisor, WEST FACE CAPITAL INC.
		
	By:	 	 /s/ John R. Maynard

		 	Name: John R. Maynard
		 	Title: Chief Financial Officer

  

 - 20 - 

 SCHEDULE A 

HOLDERS 
 West Face Long
Term Opportunities Limited Partnership 
 West Face Long Term Opportunities (USA) Limited Partnership 

West Face Long Term Opportunities Master Fund L.P.Credit Agreement

 Exhibit 10.1 

CREDIT AGREEMENT 

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of May 27, 2010, by and between SJW CORP., a California
corporation (“Corp”), and SJW LAND COMPANY, a California corporation (“Landco”) (with Corp and Landco sometimes hereinafter referred to individually and collectively as “Borrower” or “Borrowers”), and WELLS
FARGO BANK, NATIONAL ASSOCIATION (“Bank”). 
 RECITALS 

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to
Borrower on the terms and conditions contained herein. 
 NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows: 
 ARTICLE I 

CREDIT TERMS 

SECTION 1.1. LINE OF CREDIT. 

(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from
time to time up to and including June 1, 2012, not to exceed at any time the aggregate principal amount of Ten Million Dollars ($10,000,000.00) (“Line of Credit”), the proceeds of which shall be used first, to refinance
Borrower’s outstanding credit accommodations from Bank, and second, to finance general corporate purposes. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of May 27,
2010 (“Line of Credit Note”), all terms of which are incorporated herein by this reference. 
 (b) Letter of Credit
Subfeature. As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue or cause an affiliate to issue standby letters of credit for the account of Borrower in furtherance of corporate purposes (each,
a “Letter of Credit” and collectively, “Letters of Credit”); provided however, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Five Million Dollars ($5,000,000.00). The form and
substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion. Each Letter of Credit shall be issued for a term not to exceed one (1) year, as designated by Borrower; provided however, that no Letter of Credit
shall have an expiration date subsequent to the maturity date of the Line of Credit. The undrawn amount of all Letters of Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Each Letter of Credit
shall be subject to the additional terms and conditions of the Letter of Credit agreements, applications and any related documents required by Bank in connection with the issuance thereof. Each drawing paid under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this Agreement applicable to such advances; provided however, that if advances under the Line of Credit are not available, for any
reason, at the time any drawing is paid, then Borrower shall immediately pay to Bank the full amount drawn, together with interest thereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of
interest applicable to advances under the Line of Credit. In such event Borrower agrees that Bank, in its sole discretion, may debit any account maintained by Borrower with Bank for the amount of any such drawing. 

 (c) Borrowing and Repayment. Borrower may from time to time during the term of the
Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding
borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above. Notwithstanding the foregoing, Borrower shall maintain a zero balance on advances under the Line of Credit for a
period of at least thirty (30) consecutive days during each 12-month period commencing June 1, 2010. 
 SECTION 1.2.
INTEREST/FEES. 
 (a) Interest. The outstanding principal balance of each credit subject hereto shall bear interest at
the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith. 
 (b)
Computation and Payment. Interest shall be computed on the basis of a 360-day year, actual days elapsed. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.

 (c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to one-quarter percent (0.25%) per annum (computed
on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a quarterly basis by Bank and shall be due and payable by Borrower in arrears within ten (10) days
after each billing is sent by Bank. 
 (d) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the
issuance of each Letter of Credit equal to one and three hundred seventy-five thousandths percent (1.375%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment
or negotiation of each drawing under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit)
determined in accordance with Bank’s standard fees and charges then in effect for such activity and charges then in effect for such activity. The issuance fee described in (i) above and applicable to each Letter of Credit shall be payable
in successive advance installments over the term of the applicable Letter of Credit, with the first installment due on the date of its issuance and each installment thereafter due at the end of each ninety (90) day period thereafter; provided,
that if there is less than ninety (90) days remaining until the expiration of such Letter of Credit, the last installment shall be due on such expiration date. 

SECTION 1.3. COLLECTION OF PAYMENTS. Corp authorizes Bank to collect all principal, interest and fees due under the Line of Credit by
charging Corp’s deposit account number XXXXX with Bank, or any other deposit account maintained by Corp with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, the
full amount of such deficiency shall be immediately due and payable by Borrower. 
  

 2 

 ARTICLE II 

REPRESENTATIONS AND WARRANTIES 

Each Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement. 

SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and existing and in good standing under the laws of California, and
is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have
a material adverse effect on Borrower. 
 SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory note,
contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon their execution and delivery in accordance
with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms. 

SECTION 2.3. NO VIOLATION. The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision
of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound. 
 SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower’s knowledge
threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower
other than those disclosed by Borrower to Bank in writing prior to the date hereof. 
 SECTION 2.5. CORRECTNESS OF FINANCIAL
STATEMENT. The annual financial statement of Borrower dated December 31, 2009, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof,
(a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether
liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied. Since the dates of such financial statements there has been no material adverse change
in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing. 

SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with
respect to any year. 
  

 3 

 SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or instrument to
which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation of Borrower. 

SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law. 

SECTION 2.9. ERISA. Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended or recodified from time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a
“Plan”); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be
able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles. 

SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any
other material lease, commitment, contract, instrument or obligation. 
 SECTION 2.11. ENVIRONMENTAL MATTERS. Except as
disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of Borrower’s operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower
is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no
material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment. 

ARTICLE III 

CONDITIONS 

SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any credit contemplated by this Agreement is
subject to the fulfillment to Bank’s satisfaction of all of the following conditions: 
 (a) Approval of Bank
Counsel. All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel. 
  

 4 

 (b) Documentation. Bank shall have received, in form and substance satisfactory to
Bank, each of the following, duly executed: 
  

	 	(i)	This Agreement and each promissory note or other instrument or document required hereby. 

 

	 	(ii)	Corporate Resolution: Borrowing (2). 

  

	 	(iii)	Certificate of Incumbency (2). 

  

	 	(iv)	Disbursement Order. 

  

	 	(v)	Such other documents as Bank may require under any other Section of this Agreement. 

(c) Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or
business of Borrower, nor any material decline, as reasonably determined by Bank, in the market value of a substantial or material portion of the assets of Borrower. 

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of the following conditions: 
 (a)
Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage
of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist. 
 (b)
Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit. 

ARTICLE IV 

AFFIRMATIVE COVENANTS 

Each Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether
direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing: 
 SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other liabilities due under any of
the Loan Documents at the times and place and in the manner specified therein. 
 SECTION 4.2. ACCOUNTING RECORDS. Maintain
adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the
same, and to inspect the properties of Borrower. Bank will keep all information received under this Agreement (“Borrower Information”) confidential, and will not disclose such Borrower Information to any person or entity, except
disclosures: (a) to federal and state bank examiners, and other regulatory officials having jurisdiction over Bank; (b) to (i) 

 

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Bank’s representatives (including, without limitation, all other banks and companies affiliated with Wells Fargo & Company, and their legal counsel, auditors, and other professional
advisors retained by Bank or its affiliates on a need to know basis), (ii) syndication parties and loan participants, and (iii) any rating agency of Bank, provided that each such individual or entity is informed of the confidential nature
of the Borrower Information, and has agreed to treat the Borrower Information as confidential in accordance with terms and conditions no less protective than as set forth in this Agreement; (c) required by law or legal process in the opinion of
Bank’s representatives; or (d) otherwise authorized in writing by Borrower. In the event that Bank or any of its representatives is, in the opinion of Bank’s counsel, required by applicable law to disclose any Borrower Information,
then Bank, unless prohibited by law, will provide notice of the legal process to Borrower so that Borrower, at its sole option (but without obligation to do so), and at its sole expense, may attempt to seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement. Notwithstanding the provisions above, Borrower Information does not include information that: (w) is or becomes generally available to the public other than as a result of an
unauthorized disclosure by Bank or its representatives; (x) is or becomes available to Bank on a non-confidential basis by Borrower or any officer, employee, agent or representative of Borrower prior to its disclosure by Bank; (y) is or
becomes available to Bank from a source not known to Bank to be under an obligation of confidentiality to Borrower; or (z) is independently developed by Bank without the use of the Borrower Information. 

SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail satisfactory to Bank: 

(a) not later than 100 days after and as of the end of each calendar year, Corp’s 10K report filed with the Securities Exchange
Commission and an audited consolidated and consolidating financial statement of Corp, prepared by a certified public accountant acceptable to Bank, to include a balance sheet, an income statement, a statement of cash flow, a management report, an
auditor’s report, together with all supporting schedules and footnotes; 
 (b) not later than 55 days after and as of the
end of each quarter, Corp’s 10Q report filed with the Securities Exchange Commission and a financial statement of Corp, prepared by Corp, to include a balance sheet, an income statement, and a statement of cash flow; 

(c) contemporaneously with each annual and quarterly financial statement of Borrower required hereby, a certificate of the president or
chief financial officer of Borrower that said financial statements are accurate and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of
Default; 
 (d) from time to time such other information as Bank may reasonably request. 

SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary
for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s continued existence and with the requirements of all laws, rules, regulations and orders of
any governmental authority applicable to Borrower and/or its business. 
 SECTION 4.5. INSURANCE. Maintain and keep in force,
for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines 
  

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of business, including but not limited to fire, extended coverage, public liability, flood, property damage and workers’ compensation, with all such insurance carried with companies and in
amounts satisfactory to Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in effect. 

SECTION 4.6. FACILITIES. Keep all properties useful or necessary to Borrower’s business in good repair and condition, and from time
to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained. 

SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both
real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and
(b) for which Borrower has made provision, to Bank’s satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment. 

SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower with a claim in
excess of $5,000,000.00. 
 SECTION 4.9. NOTICE TO BANK. Promptly (but in no event more than five (5) days after the
occurrence of each such event or matter) give written notice to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would
constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency
with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any
other cause affecting Borrower’s property in excess of an aggregate of $5,000,000.00. 
 ARTICLE V 

NEGATIVE COVENANTS 

Each Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank’s prior
written consent: 
 SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended hereunder except for the purposes
stated in Article I hereof. 
 SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness
or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, and (b) any other liabilities of
Borrower existing as of, and disclosed to Bank prior to, the date hereof, (c) indebtedness secured by real property of Borrower, (d) any indebtedness or liabilities not in excess of an aggregate of $1,000,000.00 outstanding at any
time in total for Landco and Corp to persons or entities other than Bank or affiliates of Borrower, (e) any indebtedness or liabilities of Corp to any wholly-owned subsidiary of Corp, including Landco, and (f) any indebtedness or
liabilities of Landco to Corp. or to any other wholly-owned subsidiary of Corp. 
  

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 SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate
with any other entity; make any substantial change in the nature of Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity; nor sell, lease, transfer or otherwise dispose of
all or a substantial or material portion of Borrower’s assets except in the ordinary course of its business; provided, however, that Borrower shall be permitted to engage in any non-hostile mergers, acquisitions, or asset transfers other than
in the ordinary course of its business so long as (a) the aggregate amount involved in all such transactions does not exceed $5,000,000.00 during the term of this Agreement; (b) Borrower remains the surviving entity in the event of any
merger, (c) no Event of Default or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default exists at the time of such transaction or would result from the consummation of
any such transaction, immediately after giving effect thereto, and (d) any such merger or acquisition involves a line of business substantially the same as that which is presently engaged in by Borrower. Notwithstanding the foregoing, any
sale by Corp of its shares of common stock in California Water Service Group shall not be restricted by this Agreement. 

SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for
deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except (a) any
of the foregoing in favor of Bank, (b) except by way of issuing standby letters of credit pursuant to Section 1.1 (b) of this Agreement, and (c) guarantees by Corp in the ordinary course of business of the indebtedness of any
subsidiary in which Corp holds a 70% or greater ownership interest. 
 SECTION 5.5. LOANS, ADVANCES, INVESTMENTS. Make any loans
or advances to or investments in any person or entity, except (a) any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof, (b) loans or advances to the other Borrower or by Corp to any subsidiary in which Corp
holds a 70% or greater ownership interest, and (c) investments made by Corp in any subsidiary in which Corp holds a 70% or greater ownership interest. 

SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution either in cash, stock or any other property on
Borrower’s stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or hereafter outstanding in violation of any agreement to which Borrower is bound or if such
action would result in such a violation immediately after giving effect thereto. 
 SECTION 5.7. DISTRIBUTIONS FROM SAN JOSE
WATER COMPANY. Enter into any agreement with any other than Bank, or permit San Jose Water Company to enter into any agreement with any party other than Bank that would restrict the declaration or payment of dividends and distributions from San Jose
Water Company to Corp or limit San Jose Water Company’s ability to do so or Corp’s ability to receive the same. 

SECTION 5.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any
portion of Borrower’s assets now owned or hereafter acquired, except (a) any of the foregoing in favor of Bank or which is existing as of, and 

 

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disclosed to Bank in writing prior to, the date hereof, (b) voluntary liens on real property of Borrower, and (c) voluntary liens that secure other liabilities permitted under
Section 5.2 to the extent such liens are purchase money liens or liens on specific assets given in connection with indebtedness permitted under Section 5.2(d), (d) liens for unpaid taxes that either (i) are not yet delinquent or
(ii) are subject to a good faith protest by Borrower and for which, to the extent required by generally accepted accounting principles then in effect, proper and adequate book reserves are established by Borrower, and (e) liens arising by
operation of law or pursuant to contracts for warehousemen, landlords, carriers, mechanics, materialmen, laborers or suppliers, incurred in the ordinary course of business that (i) are not yet delinquent or (ii) are subject to a good faith
protest by Borrower and for which, to the extent required by generally accepted accounting principles then in effect, proper and adequate book reserves are established by Borrower, and (f) leases and subleases entered into by Landco in its
ordinary course of business. 
 ARTICLE VI 

EVENTS OF DEFAULT 

SECTION 6.1. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement: 

(a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.

 (b) Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by
Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made. 

(c) Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other
Loan Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of twenty (20) days
from its occurrence. 
 (d) Any default in the payment or performance of any obligation, or any defined event of default, under
the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower or San Jose Water Company has incurred any debt or other liability (i) to Bank, or (ii) to any person or entity, to the
extent such debt or liability to such persons or entities other than Bank exceeds $1,000,000 in the aggregate. 
 (e) Borrower
shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general
assignment for the benefit of creditors; Borrower shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11
of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower shall file an answer admitting the
jurisdiction of the court and the material allegations of any involuntary petition; or Borrower shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower by any court of competent jurisdiction under the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors. 
  

 9 

 (f) The filing of a notice of judgment lien against Borrower; or the recording of any
abstract of judgment against Borrower in any county in which Borrower has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower; or the
entry of a judgment against Borrower, if the related claim involves at least Five Million Dollars ($5,000,000.00) or such other amount that would cause aggregate outstanding claims against Borrower in respect of any or all of the foregoing to exceed
Five Million Dollars ($5,000,000.00); or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower. 
 (g) There shall exist or occur any event or condition that Bank in good faith believes impairs, or is
substantially to impair, the prospect of payment or performance by Borrower of its obligations under any of the Loan Documents. 

(h) The dissolution or liquidation of Borrower; or Borrower, or any of its directors, stockholders or members, shall take action seeking
to effect the dissolution or liquidation of Borrower. 
 (i) Corp shall own and control less than one hundred percent
(100%) of the common stock of (i) San Jose Water Company and (ii) Landco. 
 (j) San Jose Water Company shall
enter into any agreement with any party other than Bank, or any event occurs that would restrict the declaration or payment of dividends and distributions from San Jose Water Company to Corp or limit San Jose Water Company’s ability to do so or
Corp’s ability to receive the same. 
 SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank’s option and without notice become immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by each Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a
beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be
in addition to any other rights, powers or remedies provided by law or equity. 
 ARTICLE VII 

MISCELLANEOUS 

SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan
Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of
any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

  

 10 

 SECTION 7.2. NOTICES. All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address: 
  

			
	BORROWER:	  	SJW CORP.
		  	110 W. Taylor Street
		  	San Jose, CA 95110
		
		  	SJW LAND COMPANY
		  	110 W. Taylor Street
		  	San Jose, CA 95110
		
	BANK:	  	WELLS FARGO BANK, NATIONAL ASSOCIATION
		  	121 S. Market Street,
2nd Floor
		  	San Jose, Ca 95113

 or to such other address as any party
may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt
or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt. 

SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel), expended or incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and the other Loan Documents, Bank’s continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank’s rights
and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary
proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity. 

SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank’s prior written consent. Bank reserves the right to sell,
assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents. In connection therewith, Bank may disclose all documents and information which Bank now
has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, or any collateral required hereunder. 
  

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 SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior credit agreements (including, without limitation, that certain Credit Agreement dated August 1, 2001, as
amended from time to time), negotiations, communications, discussions and correspondence concerning the subject matter hereof. This Agreement may be amended or modified only in writing signed by each party hereto. 

SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the sole protection and benefit of the parties
hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan
Documents to which it is not a party. 
 SECTION 7.7. TIME. Time is of the essence of each and every provision of this Agreement
and each other of the Loan Documents. 
 SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement. 

SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall
be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement. 
 SECTION 7.10.
GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 

SECTION 7.11 JOINT AND SEVERAL LIABILITY. 

(a) Each Borrower has determined and represents to Bank that it is in its best interests and in pursuance of its legitimate business
purposes to induce Bank to extend credit pursuant to this Agreement. Each Borrower acknowledges and represents that its business is related to the business of the other Borrower, the availability of the commitments provided for herein benefits both
Borrowers, and advances and other credit extensions made hereunder will be for and inure to the benefit of Borrowers, individually and together. 

(b) Each Borrower has determined and represents to Bank that it has, and after giving effect to the transactions contemplated by this
Agreement will have, assets having a fair saleable value in excess of its debts, after giving effect to any rights of contribution or subrogation which may be available to such Borrower, and each Borrower has, and will have, access to adequate
capital for the conduct of its business and the ability to pay its debts as such debts mature. 
 (c) Each Borrower agrees that
it is jointly and severally liable to Bank for, and each Borrower agrees to pay to Bank when due the full amount of, all indebtedness now existing or 

 

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hereafter arising to Bank under or in connection with the Line of Credit and all modifications, extensions and renewals thereof, including without limitation all interest which accrues thereon
and all fees, costs and expenses chargeable to Borrowers or either of them in connection with the Line of Credit. The obligations of Borrowers to Bank for the Line of Credit hereunder shall be in addition to any obligations of Borrowers to Bank
under any other agreement heretofore or hereafter given to Bank unless said other agreement is expressly modified or revoked in writing, and this Agreement shall not, unless expressly herein provided, affect or invalidate any such other agreement.

 (d) The liability of each Borrower for the Line of Credit shall be reinstated and revived and the rights of Bank shall
continue if and to the extent that for any reason any amount at any time paid on account of the Line of Credit is rescinded or must otherwise be restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise,
all as though such amount had not been paid. 
 (e) Each Borrower authorizes Bank, without notice to or demand on such Borrower,
and without affecting such Borrower’s liability for the Line of Credit, from time to time to: (a) alter, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of, the liabilities and
obligations of the other Borrower to Bank on account of the Line of Credit; (b) take and hold security from the other Borrower for the payment of the Line of Credit, and exchange, enforce, waive, subordinate or release any such security;
(c) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Bank in its discretion may determine;
(d) release or substitute any one or more of the endorsers or any guarantors of the Line of Credit, or any other party obligated thereon; and (e) apply payments received by Bank from the other Borrower to indebtedness of the other Borrower
to Bank other than the Line of Credit. 
 (f) Each Borrower represents and warrants to Bank that it has established adequate
means of obtaining from the other Borrower on a continuing basis financial and other information pertaining to the other Borrower’s financial condition, and each Borrower agrees to keep adequately informed from such means of any facts, events
or circumstances which might in any way affect its risks hereunder. Each Borrower further agrees that Bank shall have no obligation to disclose to it any information or material about the other Borrower which is acquired by Bank in any manner.

 (g) Each Borrower waives any right to require Bank to: (i) proceed against the other Borrower or any other person;
(ii) proceed against or exhaust any security held from the other Borrower or any other person; (iii) pursue any other remedy in Bank’s power; (iv) apply payments received by Bank from the other Borrower to the Line of Credit; or
(v) make any presentments or demands for performance, or give any notices of nonperformance, protests, notices of protest or notices of dishonor in connection with the Line of Credit. 

(h) Each Borrower waives any defense to its liability for the Line of Credit based upon or arising by reason of: (i) any disability
or other defense of the other Borrower or any other person; (ii) the cessation or limitation from any cause whatsoever, other than payment in full, of the liability of the other Borrower for the Line of Credit; (iii) any lack of authority
of any officer, director, partner, agent or other person acting or purporting to act on behalf of the other Borrower or any defect in the formation of the other Borrower; (iv) the application by the other Borrower of the proceeds of the Line of
Credit for purposes other than the purposes intended or understood by Bank or Borrowers; (v) any act or omission by Bank which directly or indirectly 

 

 13 

 
results in or aids the discharge of the other Borrower by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Bank against the other Borrower;
(vi) any impairment of the value of any interest in any security for the Line of Credit, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such
security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; or (vii) any modification of the obligations or liabilities of the other Borrower for the Line of
Credit, including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the indebtedness of either Borrower for the Line of Credit, including increase or decrease of the rate
of interest thereon. Until the Line of Credit and all indebtedness of each Borrower to Bank arising under or in connection with this Agreement shall have been paid in full, neither Borrower shall have any right of subrogation. Each Borrower waives
all rights and defenses it may have arising out of (A) any election of remedies by Bank, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for the Line of Credit, destroys its rights of
subrogation or its rights to proceed against the other Borrower for reimbursement, or (B) any loss of rights it may suffer by reason of any rights, powers or remedies of the other Borrower in connection with any anti-deficiency laws or any
other laws limiting, qualifying or discharging either Borrower’s indebtedness for the Line of Credit, whether by operation of Sections 726 or 580d of the Code of Civil Procedure as from time to time amended, or otherwise. Until the Line of
Credit and all indebtedness of each Borrower to Bank arising under or in connection with this Agreement shall have been paid in full, each Borrower waives any right to enforce any remedy which Bank now has or may hereafter have against the other
Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Bank. 

SECTION 7.12. ARBITRATION. 

(a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and
controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the
Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.

 (b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in California selected by the
American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and
(iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00
exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or
the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall
control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed
to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law. 
  

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 (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration
requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or
(iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of
the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph. 

(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less
will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a
panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions
which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court
of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such
other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit
the controversy or claim to arbitration if any other party contests such action for judicial relief. 
 (e) Discovery. In
any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the
hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation
and that no alternative means for obtaining information is available. 
 (f) Class Proceedings and Consolidations. No
party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to
act in any arbitration in the interest of the general public or in a private attorney general capacity. 
 (g) Payment Of
Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding. 
  

 15 

 (h) Real Property Collateral; Judicial Reference. Notwithstanding anything herein to
the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest
specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration, the dispute shall
be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645. 
 (i) Miscellaneous. To the maximum extent practicable,
the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the
Loan Documents or any relationship between the parties. 
 (j) Small Claims Court. Notwithstanding anything herein to the
contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money
(excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court. 
  

 16 

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

									
		 		 		 	WELLS FARGO BANK,
	SJW CORP.	 		 	NATIONAL ASSOCIATION
					
	By:	 	 /s/ W. Richard Roth
	 		 	By:	 	 /s/ Kevin Herr

		 	W. Richard Roth	 		 		 	Kevin Herr
		 	President	 		 		 	Vice President
					
	By:	 	 /s/ David Green
	 		 		 	
		 	David Green	 		 		 	
		 	Chief Financial Officer	 		 		 	
				
	SJW LAND COMPANY	 		 		 	
					
	By:	 	 /s/ W. Richard Roth
	 		 		 	
		 	W. Richard Roth	 		 		 	
		 	President	 		 		 	
					
	By:	 	 /s/ David Green
	 		 		 	
		 	David Green	 		 		 	
		 	Chief Financial Officer	 		 		 	

  

 17 

			
	 WELLS FARGO
	  	REVOLVING LINE OF CREDIT NOTE
		
	 $10,000,000.00
	  	 San Jose, California

May 27, 2010

FOR VALUE RECEIVED, the undersigned SJW CORP. and SJW LAND COMPANY (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Bank”) at its office at Santa Clara Valley RCBO, 121 S. Market Street, 2nd Floor, San Jose, CA 95113, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of $10,000,000.00, or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein. 

1. DEFINITIONS: 
 As used
herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined: 

1.1 “Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in California are authorized or required
by law to close. 
 1.2 “Fixed Rate Term” means a period commencing on a Business Day and continuing for 1, 2, 3 or 6 months, as
designated by Borrower, during which all or a portion of the outstanding principal balance of this Note bears interest determined in relation to LIBOR; provided however, that no Fixed Rate Term may be selected for a principal amount less than
$500,000.00; and provided further, that no Fixed Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term shall be extended to the next
succeeding Business Day. 
 1.3 “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of 1%)
determined by dividing Base LIBOR by a percentage equal to 100% less any LIBOR Reserve Percentage. 
 (a) “Base LIBOR”
means the rate per annum for United States dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the purpose of calculating effective rates of interest for loans making
reference thereto, on the first day of a Fixed Rate Term for delivery of funds on said date for a period of time approximately equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the principal amount to which
such Fixed Rate Term applies. Borrower understands and agrees that Bank may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market. 
 (b) “LIBOR
Reserve Percentage” means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage during the applicable Fixed Rate Term. 
 1.4 “Prime Rate”
means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s base rates and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. 

2. INTEREST: 
 2.1 Interest. The outstanding
principal balance of this Note shall bear interest (computed on the basis of a 36O-day year, actual days elapsed) either (a) at a fluctuating rate per annum 1.00000% below the Prime Rate in effect from time to time, or (b) at a fixed rate
per annum determined by Bank to be 1.37500% above LlBOR in effect on the first day of the applicable Fixed Rate Term. When interest is determined in relation to the Prime Rate, each change in the rate of interest hereunder shall become effective on
the date each Prime Rate change is announced within Bank. With respect to each LlBOR selection option selected hereunder, Bank is hereby authorized to note the date, principal amount, interest rate and Fixed Rate Term applicable thereto and any
payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations shall be prima facie evidence of the accuracy of the information noted. 

 2.2 Selection of Interest Rate Options. At any time any portion of this Note bears interest determined in
relation to LlBOR, it may be continued by Borrower at the end of the Fixed Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation to the Prime Rate or to LlBOR for a new Fixed Rate Term designated by
Borrower. At any time any portion of this Note bears interest determined in relation to the Prime Rate, Borrower may convert all or a portion thereof so that it bears interest determined in relation to LlBOR for a Fixed Rate Term designated by
Borrower. At such time as Borrower requests an advance hereunder or wishes to select a LlBOR option for all or a portion of the outstanding principal balance hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank notice specifying:
(a) the interest rate option selected by Borrower; (b) the principal amount subject thereto; and (c) for each LlBOR selection, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone (or such other
electronic method as Bank may permit) so long as, with respect to each LlBOR selection, (i) if requested by Bank, Borrower provides to Bank written confirmation thereof not later than 3 Business Days after such notice is given, and
(ii) such notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business Day if Bank, at it’s sole option but without obligation to do so, accepts Borrower’s notice and
quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent LlBOR request from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have made a Prime Rate interest selection for such advance or the principal
amount to which such Fixed Rate Term applied. 
 2.3 Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon demand, in addition
to any other amounts due or to become due hereunder, any and all (a) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related
in any manner to LlBOR, and (b) future, supplemental, emergency or other changes in the LlBOR Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or
foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LlBOR to the extent they
are not included in the calculation of LlBOR. In determining which of the foregoing are attributable to any LlBOR option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding
upon Borrower. 
 2.4 Payment of Interest. Interest accrued on this Note shall be payable on the 1st day of each month, commencing June 1,
2010. 
 2.5 Default Interest. From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due
and payable by acceleration or otherwise, or at Bank’s option upon the occurrence, and during the continuance of an Event of Default, the outstanding principal balance of this Note shall bear interest at an increased rate per annum (computed on
the basis of a 36O-day year, actual days elapsed) equal to 4% above the rate of interest from time to time applicable to this Note. 

 3. BORROWING AND REPAYMENT: 

3.1 Borrowing and Repayment. Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note and of the Credit Agreement between Borrower and Bank defined below; provided however, that the total outstanding borrowings under this Note shall not at any time exceed
the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for Borrower, which balance may
be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on June 1, 2012. 

3.2 Advances. Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request
of (a) W. Richard Roth, Angela Yip, Suzy Papazian, Wendy Walker, Clarice Tam, David Green, anyone acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or (b) any person, with respect to advances deposited to the credit of any deposit account of Borrower, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of Borrower regardless of the fact that persons other than those authorized to request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by Borrower. 
 3.3 Application of Payments. Each payment made on this Note shall be credited
first, to any interest then due and second, to the outstanding principal balance hereof. All payments credited to principal shall be applied first, to the outstanding principal balance of this Note which bears interest determined in relation to the
Prime Rate, if any, and second, to the outstanding principal balance of this Note which bears interest determined in relation to LlBOR, with such payments applied to the oldest Fixed Rate Term first. 

4. PREPAYMENT: 
 4.1 Prime Rate. Borrower may
prepay principal on any portion of this Note which bears interest determined in relation to the Prime Rate at any time, in any amount and without penalty. 

4.2 LlBOR. Borrower may prepay principal on any portion of this Note which bears interest determined in relation to LlBOR at any time and in the minimum
amount of $100,000.00; provided however, that if the outstanding principal balance of such portion of this Note is less than said amount, the minimum prepayment amount shall be the entire outstanding principal balance thereof. In consideration of
Bank providing this prepayment option to Borrower, or if any such portion of this Note shall become due and payable at any time prior to the last day of the Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall pay to Bank
immediately upon demand a fee which is the sum of the discounted monthly differences for each month from the month of prepayment through the month in which such Fixed Rate Term matures, calculated as follows for each such month: 

(a) Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such
amount had it remained outstanding until the last day of the Fixed Rate Term applicable thereto. 
 (b) Subtract from the amount
determined in (a) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed Rate Term at LlBOR in effect on the date of prepayment for new loans made for such term and in
a principal amount equal to the amount prepaid. 
 (c) If the result obtained in (b) for any month is greater than zero,
discount that difference by LlBOR used in (b) above. 

 
Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such
costs, expenses and/or liabilities. Borrower, therefore, agrees to pay the above-described prepayment fee and agrees that said amount represents a reasonable estimate of the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to
pay any prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum 2.000% above the Prime Rate in effect from time to time (computed on the basis of a 360-day year, actual days elapsed).

 5. EVENTS OF DEFAULT: 

This Note is made pursuant to and is subject to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated
as of May 27, 2010, as amended from time to time (the “Credit Agreement”). Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an
“Event of Default” under this Note. 
 6. MISCELLANEOUS: 

6.1 Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by Borrower, and the obligation, if any, of
the holder to extend any further credit hereunder shall immediately cease and terminate. Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable
attorneys’ fees (to include outside counsel fees and all allocated costs of the holder’s in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder’s rights and/or the collection of any
amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity. 
 6.2 Obligations Joint and Several. Should more than one person or entity sign
this Note as a Borrower, the obligations of each such Borrower shall be joint and several. 
 6.3 Governing Law. This Note shall be governed by
and construed in accordance with the laws of the State of California. 
 IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above. 
  

			
	SJW CORP.
		
	By:	 	 /s/ W. Richard Roth

		 	W. Richard Roth, President
		
	By:	 	 /s/ David Green

		 	David Green, Chief Financial Officer
	
	SJW LAND COMPANY
		
	By:	 	 /s/ W. Richard Roth

		 	W. Richard Roth, President
		
	By:	 	 /s/ David Green

		 	David Green, Chief Financial Officer

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