**Exhibit 10.4.5**

 

**Loan No. RX0936T3**

 

**PROMISSORY NOTE AND SUPPLEMENT**

**(Single Advance Term Loan)**

 

**THISPROMISSORY NOTE AND SUPPLEMENT**(this “Promissory Note andSupplement”) is entered into as of September 12, 2005, between **MONARCH UTILITIES I L.P.,**a Texas limited partnership (the “Company”),and **CoBANK, ACB,** a federally chartered instrumentality of theUnited States (“CoBank”), and supplements that certain Amended and RestatedMaster Loan Agreement dated as of September 12, 2005, between the Companyand CoBank (as amended or restated from time to time, the “MLA”).

 

**SECTION 1.         The Term Loan Commitment.**  On the terms and conditions set forth in theMLA and this Promissory Note and Supplement, CoBank agrees to make a loan (the “Loan”)to the Company in a amount up to $20,000,000.00 (the “Commitment”). CoBank’s obligation to make the Loan shallexpire at 12:00 Noon, Company’s local time, on September 30, 2005, or suchlater date as CoBank may, in its sole discretion, authorize in writing. Underthe Commitment, amounts borrowed and later repaid may not be reborrowed.

 

**SECTION 2.         Purpose.**  The purpose of the Commitment is to: (A) refinanceall of the Company’s indebtedness to Southwest Water Company (“Southwest”);(B) finance capital expenditures; and (C) other corporate purposes.

 

**SECTION 3.         Availability.**Notwithstanding Section 2.02 of the MLA, the Loans will be made available: (A) on written request of anauthorized officer of the Company in form and content prescribed by CoBank (the“RequestforLoan”); (B) on a date to be agreed uponby the parties (the “ClosingDate”); (C) in a singleadvance; and (D) by wire transfer of immediately available funds to “RepublicTitle” (as defined in the MLA), as provided in the “Closing Agreement” (asdefined in the MLA). Notwithstanding the foregoing, the initial Loan to be madehereunder shall be made for the purpose of refinancing all of the Company’sindebtedness to Southwest.

 

**SECTION 4**.         **Interest**. TheLoan will bear interest at a rate per annum to be quoted by CoBank in its solediscretion on the date the Loan is made. Interest shall be calculated on theactual number of days the Loan is outstanding on the basis of a year consistingof 360 days and shall be payable monthly in arrears by the 20th dayof the following month.

 

**SECTION 5.         Loan Origination Fee.**In consideration of the Commitment, the Company agrees to pay to CoBank on thedate hereof, a loan origination fee in the amount of $50,000.00.

 

**SECTION 7.         Promissory Note.**  The Company promises to repay the Loan on June 30,2031. Until such date, no principal payments shall be due. In addition to theabove, the Company promises to pay interest on the unpaid principal balance ofthe Loan at the times and in accordance with the provisions set forth above.Notwithstanding the foregoing, if any date on which principal and interest aredue is not a “BusinessDay” (as defined in the MLA), then suchpayment shall be due and payable on the next Business Day and, during suchperiod, interest shall continue to accrue on the principal amount thereof.

 

**SECTION 8.         Security.**The Company’sobligations hereunder and, to the extent related hereto, the MLA shall besecured as provided in Section 2.04 of the MLA.

 

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**SECTION 9.**         **Prepayment.**TheCompany may, on one Business Day’s prior written notice, prepay the Loan inwhole or in increments of $1,000,000. Any prepayment shall be accompanied by apayment of accrued interest on the amount prepaid to the date of payment and asurcharge equal to the present value of the sum of: (1) the difference, if(a) is larger than (b), between: (a) the rate estimated by CoBank inaccordance with its standard methodology to be its all-in cost to fund theLoan; minus (b) the rate estimated by CoBank on the date of the prepayment(in accordance with its then standard methodology) to be its all-in cost tofund a new loan having a weighted average life equal to the weighted averagelife of the balance of the Loan being prepaid; plus (2) an amount equal toa yield of 1⁄2 of 1% on the amount being prepaid, calculated on a per annum basisthrough the final maturity of the Loan. In calculating the surcharge, thediscount rate shall be the rate determined in accordance with (1)(b) above.

 

**SECTION 10.       Conditions Precedent.**Inaddition to the conditions precedent set forth in Article 3 of the MLA,CoBank’s obligation to make the Loan is subject to the condition precedent thatCoBank shall have received a duly executed original copy of the Request forLoan.

 

**INWITNESS WHEREOF,** the parties have caused this Promissory Noteand Supplement to the MLA to be executed by their duly authorized officers asof the date shown above.

 
| **CoBANK,  ACB** |           | **MONARCH  UTILITIES I L.P.**        |
|------------------|----------------|--------------------------------------|
|             |           | a Texas limited  partnership         |
|             |           | By: Texas Water  Services Group, LLC |
|             |           | a Texas limited  liability company   |
|             |           | Its: General  Partner                |
|             |           |                                 |
| By:              | /s/ Illegible  |                                 |   | By: | /s/ Michael O.  Quinn |   |
|             |           |                                 |   |   |   |   |
| Title:           | Vice President |                                 |   | Title: | President |   |

 

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