EXHIBIT 3
U.S. TRUST
X. Xxxxxxxxxxx Xxxxxxx
Senior Vice President
PERSONAL & CONFIDENTIAL
April 28, 2005
Xxxxxx X. Xxxx
Xxxxx Xxxx
0000 Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Dear Mr. & Xxx. Xxxx:
U.S. Trust Company, N.A. (Lender) is pleased to offer you a
line, on a demand basis, in the original principal amount
of FIVE MILLION FOURTY THOUSANDS DOLLARS ($5,040,000.00)
contingent upon your written acceptance of the terms and
conditions of this letter. We are relying on the terms and
conditions contained in this letter as your representations
and warranties in making the Loan. By executing this
letter, you acknowledge the accuracy of these statements
and recognize that Xxxxxx would not make the Loan except in
reliance on your representations and warranties contained
herein.
The loan shall be evidenced by Xxxxxx's standard demand
note form in the principal amount of the Loan. NOTHING IN
THIS LETTER IS INTENDED TO BE AN AMENDMENT TO, OR
MODIFICATION OF, OR LIMITATION OR RESTRICTION UPON, ANY
PROVISION OF THE DEMAND NOTE EVIDENCING THE LOAN
(including, without limitation, the provision to pay the
Lender principal and interest upon demand), and the
provisions of such demand note will be controlling and
fully effective notwithstanding anything herein to the
contrary.
Xxxxxxxx: XXXXXX X. XXXX, XXXXX XXXX, AND THE
XXXX XXXXXXXX XXXX TRUST
Lender: U.S. Trust Company, N.A. (the Bank).
Line Amount: Line of credit of up to FIVE MILLION
FOURTY THOUSAND DOLLARS ($5,040,000.00),
which shall be evidenced by Xxxxxx's demand
note for maximum line amount. Funds may be
borrowed but may not be re-borrowed
following payment during term of Xxxxxx's
commitment upon written request by Xxxxxxxx
to Lender. Lender may terminate commitment
to advance funds upon written notice to
Xxxxxxxx.
Guarantor: Xxxx Xxxxxxxx Xxxx
Purpose: To purchase 140,000 shares of San Xxxx
Water Corporation (SJW) from a family member
at a contracted purchase price of $36.00 per
share.
Availability: Immediately upon satisfactory completion
and mutual execution of all required
documentation.
Collateral: Portfolio of marketable securities custodied
by Xxxxxxx Xxxxxx & Co., Inc. in account
number 4136-2498 under the name of Xxxxxx X.
Xxxx, as Trustee of the Xxxx Xxxxxxxx Xxxx
Trust and in account number 2161-4349 under
the name of Xxxxxx X. Xxxx, as Trustee of
the Xxxxxx Xxxxxx Xxxx Revocable Trust U/A
09/18/1982. Xxxxxx's collateral advance
rate will not exceed 25% against SJW stock
with a value of $22 per share or greater.
Below $22 per share the Lender will not
consider SJW stock as collateral. The
Lender's collateral advance shall not exceed
80% against U.S. Treasury and Agency bonds,
Municipal and non-convertible Corporate
bonds, 50% against convertible Corporate
bonds and listed Common or Preferred Stock
with a share value greater than ten dollars.
The above-referenced securities aside from
SJW securities shall be fully marketable,
actively traded investment grade securities
that do not constitute "control" stock, or
are restricted in any manner. The above-
referenced portfolio of marketable
securities shall be comprised of three or
more issues with no security other than U.S.
Government Securities, comprising more than
50% of the total collateral value.
Interest: Accrued interest on the unpaid balance of
the Loan shall be charged on a monthly
basis, beginning on the first day of each
calendar month immediately following the
funding of the Loan and quarterly principal
reductions, beginning September 1, December
1, March 1, and June 1 of every year
thereafter until paid in full.
Interest Rate: A floating rate equal to two and one half
percent (2.50%) above the US Trust ARM LIBOR
(the "Index") is that 90-day LIBOR rate
established each Tuesday in the Wall Street
Journal, Eastern Edition. If Tuesday is a
non-business day, the next business day will
be used. The Borrower's Rate (the "Rate")
will be calculated by adding the Index in
effect on the day the commitment is entered
on the Bank's loan system (the "Boarding
Date"), to the agreed upon spread. The Rate
will remain in effect for ninety (90) days
from the boarding Date and all additional
advances made by the Borrowers during this
90-day period will accrue interest at that
Rate. The Index will change on that date
ninety (90) days from the boarding Date and
each ninety days thereafter for as long as
the commitment remains in effect.
Repayment: Absent demand interest charged on
outstanding balance will be due monthly and
principal payments of $250,000 will be due
every three months until paid in full.
Additional Terms:
1) You shall deliver to Lender detailed
personal financial statements and income tax
returns at least annually, while the loan is
unpaid, or as may be reasonably requested by
Xxxxxx.
2) You shall promptly notify Lender in
writing of any material change in your
financial condition or employment.
3) You shall not, while the Loan is unpaid,
(i) incur any additional borrowings other
than for reasonable and ordinary living
expenses, or (ii) guaranty loans from other
sources without first obtaining written
approval from Xxxxxx.
4) You shall not, while the Loan is unpaid,
further encumber by voluntary or involuntary
liens, any of your liquid assets. By liquid
assets is meant cash and readily marketable
securities.
5) This offer of a credit facility shall
automatically expire at 5:00 p.m. on May 5,
2005, unless an original copy of this letter
is executed by you in the appropriate spaces
below and received by Xxxxxx on or before
that time.
Please evidence your formal acceptance of the terms and
conditions of the above-described credit facility by
signing and returning this letter to my attention. Should
you have any questions or concerns prior to executing this
letter, please do not hesitate to call me. We are happy to
be of assistance, and we look forward to working with you
more closely in the future.
Sincerely,
U.S. TRUST COMPANY,N.A.
/s/ X. Xxxxxxxxxxx Xxxxxxx
-------------------------
X. Xxxxxxxxxxx Xxxxxxx
Senior Vice President
The Borrower agrees to and accepts the foregoing letter:
/s/ XXXXXX X. XXXX 5/4/05
------------------------- ----------
Xxxxxx X. Xxxx, as Trustee of the Date
Xxxx Xxxxxxxx Xxxx Trust
/s/ XXXXXX X. XXXX 5/4/05
------------------------- ----------
Xxxxxx X. Xxxx, as Trustee of the Date
Xxxxxx Xxxxxx Xxxx Revocable Trust
U/A 09/18/82
/s/ XXXXXX X. XXXX 5/4/05
------------------------- ---------
Xxxxxx X. Xxxx, as Individual Date
/s/ XXXXX XXXX 5/4/05
------------------------- ---------
Xxxxx Xxxx, as Individual Date
/s/ XXXX XXXXXXXX XXXX 5/4/05
------------------------- ---------
Xxxx Xxxxxxxx Xxxx, as Guarantor Date
