Exhibit 10.4.5


 


Loan No. RX0936T3


 


PROMISSORY NOTE AND SUPPLEMENT


(Single Advance Term Loan)


 


THIS
PROMISSORY NOTE AND SUPPLEMENT (this “Promissory Note and
Supplement”) 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 the
United States (“CoBank”), and supplements that certain Amended and Restated
Master Loan Agreement dated as of September 12, 2005, between the Company
and 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 the
MLA 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 shall
expire at 12:00 Noon, Company’s local time, on September 30, 2005, or such
later date as CoBank may, in its sole discretion, authorize in writing. Under
the Commitment, amounts borrowed and later repaid may not be reborrowed.


 


SECTION 2.         Purpose.  The purpose of the Commitment is to: (A) refinance
all 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 an
authorized officer of the Company in form and content prescribed by CoBank (the
“Request  for  Loan”); (B) on a date to be agreed upon
by the parties (the “Closing  Date”); (C) in a single
advance; and (D) by wire transfer of immediately available funds to “Republic
Title” (as defined in the MLA), as provided in the “Closing Agreement” (as
defined in the MLA). Notwithstanding the foregoing, the initial Loan to be made
hereunder shall be made for the purpose of refinancing all of the Company’s
indebtedness to Southwest.


 


SECTION 4.         Interest. The
Loan will bear interest at a rate per annum to be quoted by CoBank in its sole
discretion on the date the Loan is made. Interest shall be calculated on the
actual number of days the Loan is outstanding on the basis of a year consisting
of 360 days and shall be payable monthly in arrears by the 20th day
of the following month.


 


SECTION 5.         Loan Origination Fee.
In consideration of the Commitment, the Company agrees to pay to CoBank on the
date 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 the
above, the Company promises to pay interest on the unpaid principal balance of
the Loan at the times and in accordance with the provisions set forth above.
Notwithstanding the foregoing, if any date on which principal and interest are
due is not a “Business  Day” (as defined in the MLA), then such
payment shall be due and payable on the next Business Day and, during such
period, interest shall continue to accrue on the principal amount thereof.


 


SECTION 8.         Security. The Company’s
obligations hereunder and, to the extent related hereto, the MLA shall be
secured as provided in Section 2.04 of the MLA.


 


1





















 


SECTION 9.         Prepayment. The
Company may, on one Business Day’s prior written notice, prepay the Loan in
whole or in increments of $1,000,000. Any prepayment shall be accompanied by a
payment of accrued interest on the amount prepaid to the date of payment and a
surcharge 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 in
accordance with its standard methodology to be its all-in cost to fund the
Loan; 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 to
fund a new loan having a weighted average life equal to the weighted average
life of the balance of the Loan being prepaid; plus (2) an amount equal to
a yield of 1⁄2 of 1% on the amount being prepaid, calculated on a per annum basis
through the final maturity of the Loan. In calculating the surcharge, the
discount rate shall be the rate determined in accordance with (1)(b) above.


 


SECTION 10.       Conditions Precedent. In
addition 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 that
CoBank shall have received a duly executed original copy of the Request for
Loan.


 


IN
WITNESS WHEREOF, the parties have caused this Promissory Note
and Supplement to the MLA 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:

  	
  /s/ Illegible

  	
   

  	
   

  	
  By:

  	
  /s/ Michael O.
  Quinn

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  



 


2