Exhibit
10.17.1.1


FIRST
AMENDMENT TO

MASTER LOAN AGREEMENT


THIS FIRST AMENDMENT TO MASTER LOAN AGREEMENT (this
“Amendment”) is entered into as of November 6, 2006, between MONARCH UTILITIES I L.P., a Texas limited partnership (the “Company”),
and CoBANK, ACB,  a federally chartered instrumentality of the
United States (“CoBank”).


BACKGROUND


CoBank
and the Company are parties to an Amended and Restated Master Loan Agreement
dated as of September 12, 2005 (the “MLA”). The parties now desire to amend the
MLA.


NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:


SECTION 1.         Definitions.  All capitalized terms used
in this Amendment and not otherwise defined herein shall have the meanings
given to those terms in the MLA.


SECTION 2.         Amendments.


(A)          Debt.
Section 6.02 of the MLA is hereby amended to add the
following sentence at the end thereof:  “For
purposes hereof, accounts payable to ECO Resources, Inc. for services rendered
to the Company in the ordinary course of the Company’s business and which are
paid by the Company on a regular basis (“ECO Accounts”) shall be considered to
be accounts payable and not debt.


(B)          Payments
of Debt to Southwest. Section 6.08(B) is hereby amended and
restated to read as follows: “(B) make any payments on any debt owing to
Southwest or any subsidiary of Southwest.”


(C)          Financial
Covenants.  Article 7
of the MLA is hereby amended and restated in its entirety to read as follows:


Unless otherwise agreed
to in writing by CoBank, while this Agreement is in effect:


SECTION
7.01.          Debt Service Coverage
Ratio. The Company and its consolidated Subsidiaries shall
have for each fiscal year of the Company, a Debt Service Coverage Ratio of not
less than 1.20 to 1:00.


SECTION
7.02.          Total Debt to EBITDA Ratio.
The Company and its consolidated Subsidiaries shall have a
ratio of Total Debt at the end of each fiscal year of the Company to EBITDA for
each fiscal year of the Company of not greater than 10 to 1.


SECTION
7.03.          Total Debt to
Capitalization Ratio.  The Company and its consolidated Subsidiaries
shall have at the end of each fiscal quarter of the Company, a ratio of Total
Debt to Total Capitalization of not more than .65 to 1.00.









 



SECTION
7.04.          Fiscal Year. The
Company will not change its fiscal year.


(B)          Definitions.


(1)           Debt
Service Coverage Ratio. The definition of “Debt Service
Coverage Ratio” is hereby amended to add the following sentence at the end
thereof: “Notwithstanding the foregoing: (1) in calculating net income,
management fees shall be excluded as long as such fees are not paid by the
Company; and (2) ECO Accounts shall not be considered to be Long-Term Debt.”


(2)          
EBITDA.  The definition
of “EBITDA” is hereby amended to add the following sentence at the end thereof:
“Notwithstanding the foregoing, in calculating EBITDA management fees shall be
excluded from operating expenses as long as such fees are not paid by the
Company.”


(3)           ECO
Accounts. There is hereby added in alphabetical order, a
definition of ECO Accounts reading as follows: “ECO Accounts shall have the
meaning set forth in Section 6.02 of the Agreement.


(4)           Total
Debt. The definition of “Total Debt” is hereby amended to add
the following sentence at the end thereof: “In calculating Total Debt: (1) all
long-term debt and other loans and advances from Southwest (other than loans
and advances for construction) shall be included; and (2) ECO Accounts shall be
excluded.”


SECTION 3.         Representations and Warranties.  The Company represents and warrants that: (A)
no consent, permission, authorization, order or license of any governmental
authority or of any party to any agreement to which the Company is a party or
by which it or any of its property may be bound or affected, is necessary in
connection with the execution, delivery, performance or enforcement of this
Amendment; (B) the Company is in compliance with all of the terms of the Loan
Documents and no Default or Event of Default exists; and (C) this Amendment has
been duly authorized, executed and delivered by the Company, and creates legal,
valid, and binding obligations of the Company which are enforceable in
accordance with their terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar Laws affecting the
rights of creditors generally.


SECTION 4.         Confirmation.  Except as amended hereby, the
MLA shall remain in full force and effect as written.


IN WITNESS WHEREOF, the parties
have caused this Amendment to be executed by their duly authorized officers as
of 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:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  



 


 



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