KEITH COMPANIES INC
EXHIBIT 10.7
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<TYPE>EX-10.7
<SEQUENCE>7
<FILENAME>a70823ex10-7.txt
<DESCRIPTION>EXHIBIT 10.7
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<PAGE>   1

                                                                    EXHIBIT 10.7

                       THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as
of November 3, 2000, by and between THE KEITH COMPANIES, INC., a California
Corporation, JOHN M. TETTEMER & ASSOCIATES, LTD., a California Corporation,
(individually and collectively "Borrower"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Bank").

                                    RECITALS

WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of September 1, 1999, as amended from time to time ("Credit Agreement").

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

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

     1. Section 1. 1 (a) is hereby deleted in its entirety, and the following
substituted therefor:

        "(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 (the "Line of Credit"), the proceeds of which up to a maximum
        outstanding principal balance of $6,000,000.00 shall be used to finance
        working capital requirements (the "Working Capital Advances", which
        shall be available until September 3, 2001), and which up to a maximum
        outstanding principal balance of $3,500,000.00 (less the amount of Lease
        Obligations) shall be used for equipment purchases ("Equipment
        Advances", which shall be available until January 3, 2001), provided,
        however, that the aggregate outstanding principal balance of Working
        Capital Advances and Equipment Advances shall not any time exceed
        $8,500,000.00. Borrower's obligation to repay Working Capital Advances
        and Equipment Advances shall be evidenced by a promissory note
        substantially in the form of Exhibit A attached hereto ("Line of Credit
        Note"), all terms of which are incorporated herein by this reference.
        The term "Lease Obligations" means the aggregate amount of all lease
        obligations under leases entered into between Bank's equipment leasing
        affiliate or division as lessor and Borrower as lessee during the period
        when Equipment Advances are available."

     2. Section 1. 1 (b) is hereby deleted in its entirety, and the following
substituted therefor:

        "(b) Borrowing and Repayment. Borrower may from time to time during the
        term of the Line of Credit respect to Working Capital Advances borrow,
        partially or wholly repay its outstanding borrowings, and reborrow, and,
        with respect to Equipment Advances, borrow, partially or wholly repay
        its outstanding borrowings, but not 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. As of and
        after January 3, 2001, (i) no new Equipment Advances shall be available,
        and (ii) the availability for Working Capital Advances shall be limited
        to the lesser of (1) $6,000,000.00, or (11) an amount equal to
        $8,500,000.00 less the outstanding principal balance of Equipment
        Advances from time to time. Repayments of principal received by Bank
        shall be applied, prior to January 3, 2001 (unless Bank receives written
        instructions to the contrary prior to each payment), first to
        outstanding Working Capital Advances and then to outstanding Equipment
        Advances, and after January 3, 2001, first to the scheduled installment
        of the Equipment Advances if such an installment is then due and
        payable, second to outstanding Working Capital Advances and then as a
        prepayment of Equipment Advances (subject to the prepayment provisions
        set forth in the Line of Credit Note)."

     3. Except as specifically provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.

     4. Borrower hereby remakes all representations and warranties contained in
the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.

                                      -1-
<PAGE>   2

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

THE KEITH COMPANIES, INC.               WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Gary Campanaro                  By: /s/Stephanie Juneau
   -------------------                     --------------------
Title: CFO                              Title: Vice President

JOHN M. TETTEMER & ASSOCIATES, LTD.

By: /s/ Gary Campanaro
   -------------------
Title: CFO

                                      -2-
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