Document:

EXHIBIT 10.14

                                     WARRANT

                              TO PURCHASE SHARES OF
                                 COMMON STOCK OF
                       UNITED SHIPPING & TECHNOLOGY, INC.

                                                                NOVEMBER 6, 2000

         This Certifies that, for good and valuable consideration,
______________ (the "Warrantholder"), is entitled to subscribe for and purchase
from the Company, at any time after the date hereof, and prior to June 16, 2005
(the "Expiration Date") up to 50,000 shares of the Company's Common Stock at a
purchase price of $11.00 per share (the "Purchase Price"), subject to adjustment
as hereinafter set forth.

         1. Definitions. For the purposes of this Warrant the following terms
shall have the following meanings:

                  "Commission" shall mean the Securities and Exchange
         Commission, or any other federal agency then administering the
         Securities Act.

                  "Company" shall mean United Shipping & Technology, Inc., a
         Utah corporation, and any corporation which shall succeed to, or
         assume, the obligations of said corporation hereunder.

                  "Common Stock" shall mean the shares of Common Stock of the
         Company, $0.004 par value.

                  "Other Securities" shall mean any stock (other than Common
         Stock) or other securities of the Company which the Warrantholder at
         any time shall be entitled to receive, or shall have received, upon the
         exercise of the Warrants, in lieu of or in addition to Common Stock, or
         which at any time shall be issuable or shall have been issued in
         exchange for or in replacement of Common Stock or Other Securities.

                  "Securities Act" shall mean the Securities Act of 1933, as
         amended, and the rules and regulations of the Commission thereunder, as
         in effect at the time.

                  "Subscription Form" shall mean the subscription forms attached
         hereto.

                  "Transfer" shall mean any sale, assignment, pledge, or other
         disposition of any Warrants and/or Warrant Shares, or of any interest
         in either thereof, which would constitute a sale thereof within the
         meaning of Section 2(3) of the Securities Act.

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<PAGE>

                  "Warrant Shares" shall mean the shares of Common Stock
         purchased or purchasable by the Warrantholder upon the exercise of the
         Warrants pursuant to Section 2 hereof.

                  "Warrantholder" shall mean the holder or holders of the
         Warrants or any related Warrant Shares.

                  "Warrants" shall mean this Warrant and any new warrants, of
         the same tenor and date as this Warrant, issued pursuant to Section 4
         hereof upon the exchange, transfer or replacement of this Warrant.

         All terms used in this Warrant which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Warrant.

         2. Exercise of Warrant, Issuance of Certificate, and Payment for
Warrant Shares. The rights represented by this Warrant may be exercised at any
time after the date hereof, and prior to the Expiration Date, by the
Warrantholder, in whole or in part (but not as to any fractional share of Common
Stock), by: (a) delivery to the Company of a completed Subscription Form, (b)
surrender to the Company of this Warrant properly endorsed and signature
guaranteed, and (c) delivery to the Company of a certified or cashier's check
made payable to the Company in an amount equal to the aggregate Purchase Price
of the shares of Common Stock being purchased, at its principal office or agency
in Minnesota (or such other office or agency of the Company as the Company may
designate by notice in writing to the holder hereof). The Company agrees and
acknowledges that the shares of Common Stock so purchased shall be deemed to be
issued to the holder hereof as the record owner of such shares as of the close
of business on the date on which this Warrant, properly endorsed, and the
Subscription Form shall have been surrendered and payment made for such shares
as aforesaid. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute or
cause to be executed and deliver to the Warrantholder a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in said Subscription Form. Each stock certificate so delivered shall
be in such denomination as may be requested by the Warrantholder and shall be
registered in the name of the Warrantholder or such other name as shall be
designated by the Warrantholder. If this Warrant shall have been exercised only
in part, the Company shall, at the time of delivery of said stock certificate or
certificates, deliver to the Warrantholder a new Warrant evidencing the rights
of such holder to purchase the remaining shares of Common Stock covered by this
Warrant. The Company shall pay all expenses, taxes, and other charges payable in
connection with the preparation, execution, and delivery of stock certificates
pursuant to this Section 2, except that, in case any such stock certificate or
certificates shall be registered in a name or names other than the name of the
Warrantholder, funds sufficient to pay all stock transfer taxes which shall be
payable upon the execution and delivery of such stock certificate or
certificates shall be paid by the Warrantholder to the Company at the time of
delivering this Warrant to the Company as mentioned above.

         3. Ownership of this Warrant. The Company may deem and treat the
registered Warrantholder as the holder and owner hereof (notwithstanding any
notations of ownership or writing made hereon by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for transfer as provided herein and then only if
such transfer meets the requirements of Section 5.

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<PAGE>

         4. Exchange, Transfer, and Replacement. Subject to Section 5 hereof,
this Warrant is exchangeable upon the surrender hereof by the Warrantholder to
the Company at its office or agency described in Section 2 hereof for new
Warrants of like tenor and date representing in the aggregate the right to
purchase the number of shares purchasable hereunder, each of such new Warrants
to represent the right to purchase such number of shares (not to exceed the
aggregate total number purchasable hereunder) as shall be designated by the
Warrantholder at the time of such surrender. Subject to Section 5 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the Warrantholder in person or by duly authorized
attorney, and a new Warrant of the same tenor and date as this Warrant, but
registered in the name of the transferee, shall be executed and delivered by the
Company upon surrender of this Warrant, duly endorsed, at such office or agency
of the Company. Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction, or mutilation of this Warrant, and, in
the case of loss, theft, or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor, in
lieu of this Warrant. This Warrant shall be promptly canceled by the Company
upon the surrender hereof in connection with any exchange, transfer, or
replacement. The Company shall pay all expenses, taxes (other than stock
transfer taxes), and other charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 4.

         5. Restrictions on Transfer. Notwithstanding any provisions contained
in this Warrant to the contrary, neither this Warrant nor the Warrant Shares
shall be transferable except upon the conditions specified in this Section 5,
which conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act in respect of the transfer of this Warrant or
such Warrant Shares. The holder of this Warrant agrees that such holder will not
transfer this Warrant or the related Warrant Shares (a) prior to delivery to the
Company of an opinion of counsel selected by the Warrantholder and reasonably
satisfactory to the Company, stating that such transfer is exempt from
registration under the Securities Act, or (b) until registration of such
Warrants and/or Warrant Shares under the Securities Act has become effective and
continues to be effective at the time of such transfer. An appropriate legend
may be endorsed on the Warrants and the certificates of the Warrant Shares
evidencing these restrictions. The holder of this Warrant further agrees that
such holder will not, for a period of 180 days from the date that a registration
statement covering securities offered by the Company is declared effective by
the Commission, offer to sell, contract to sell, or otherwise sell, dispose of,
loan, pledge or grant any rights with respect to the Warrant or the Warrant
Shares owned by the holder, otherwise than with the prior written consent of the
Company.

         6. Antidilution Provisions. The rights granted hereunder are subject to
the following:

                   (a) Stock Splits. In case at any time the Company shall
         subdivide its outstanding shares of Common Stock into a greater number
         of shares, the Purchase Price in effect immediately prior to such
         subdivision shall be proportionately reduced and the number of Warrant
         Shares purchasable pursuant to this Warrant immediately prior to such
         subdivision shall be proportionately increased, and conversely, in case
         at any time the Company shall combine its outstanding shares of Common
         Stock into a smaller number of shares, the Purchase Price in effect
         immediately prior to such combination shall be proportionately
         increased and the number of Warrant Shares purchasable upon the
         exercise of this Warrant immediately prior to such combination

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<PAGE>

         shall be proportionately reduced. Except as provided in this paragraph
         (a), no adjustment in the Purchase Price and no change in the number of
         Warrant Shares so purchasable shall be made pursuant to this Section 6
         as a result of or by reason of any such subdivision or combination.

                  (b) Reorganization, Reclassification, Consolidation, Merger,
         or Sale. If any capital reorganization or reclassification or merger of
         the Company with another corporation, or the sale of all or
         substantially all of its assets to another corporation, shall be
         effected in such a way that holders of shares of Common Stock shall be
         entitled to receive Common Stock, Other Securities or assets with
         respect to or in exchange for shares of Common Stock, then, as a
         condition of such reorganization, reclassification, consolidation,
         merger or sale, lawful and adequate provision shall be made whereby the
         Warrantholder shall thereafter have the right to purchase and receive
         upon the basis and upon the terms and conditions specified in the
         Warrants and in lieu of the shares of Common Stock of the Company
         immediately theretofore purchasable and receivable upon the exercise of
         the Warrants such shares of Common Stock, Other Securities or assets as
         may be issued or payable with respect to or in exchange for a number of
         outstanding shares of Common Stock equal to the number of shares of
         Common Stock immediately theretofore purchasable and receivable upon
         the exercise of the Warrants had such reorganization, reclassification,
         consolidation, merger or sale not taken place, and in any such case
         appropriate provision shall be made with respect to the rights and
         interests of the Warrantholder so that the provisions of the Warrants
         (including, without limitation, provisions for adjustment of the
         Purchase Price and the number of shares purchasable upon the exercise
         of the Warrants) shall thereafter be applicable, as nearly as may be,
         in relation to any shares of Common Stock, Other Securities or assets
         thereafter deliverable upon the exercise of the Warrants.

         7. Special Agreements of the Company.

                  (a) Will Reserve Shares. The Company will reserve and set
         apart and have at all times the number of shares of authorized but
         unissued Common Stock deliverable upon the exercise of the Warrants,
         and it will have at all times any other rights or privileges provided
         for herein sufficient to enable it at any time to fulfill all of its
         obligations hereunder.

                  (b) Will Avoid Certain Actions. The Company will not, by
         amendment of its Articles of Incorporation or through any
         reorganization, transfer of assets, consolidation, merger, issue or
         sale of securities or otherwise, avoid or take any action which would
         have the effect of avoiding the observance or performance hereunder by
         the Company, but will at all times in good faith assist in carrying out
         of all the provisions of the Warrants and in taking all such actions as
         may be necessary or appropriate in order to protect the rights of the
         Warrantholder against dilution or other impairment.

         8. Provisions for Registration. Despite anything in this Warrant to the
contrary, the Warrantholder shall have the following rights regarding
registration of Warrant Shares which may be hereafter acquired upon exercise of
this Warrant.

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<PAGE>

                   (a) Required Registration. If at any time the Company
         receives the written request from the Holder of this Warrant, the
         Company shall prepare and file a registration statement under the
         Securities Act covering the Warrant Shares which are the subject of
         such requests and shall use its best efforts to cause such registration
         statement to become effective; provided, however, that all Warrant
         Shares covered by such registration statement shall be converted into
         Common Stock prior to inclusion in such registration statement. In
         addition, upon the receipt of the aforementioned request, the Company
         shall promptly give written notice to all other record holders of
         Warrant Shares that such registration is to be effected. The Company
         shall include in such registration statement such Warrant Shares for
         which it has received written requests to register by such other record
         holders within fifteen (15) days after the Company's written notice to
         such other record holders. The Company shall be obligated to prepare,
         file and cause to become effective only two (2) registration statements
         pursuant to this Section 8(a). In the event that the holders of a
         majority of the Warrant Shares for which registration has been
         requested pursuant to this Section determine for any reason not to
         proceed with a registration at any time before the registration
         statement has been declared effective by the Commission, and such
         holders thereafter request the Company to withdraw such registration
         statement, the holders of such Warrant Shares agree to bear their own
         expenses incurred in connection therewith and to reimburse the Company
         for the expenses incurred by it attributable to such registration
         statement, then, and in such event, the holders of such Warrant Shares
         shall not be deemed to have exercised their right to require the
         Company to register Warrant Shares pursuant to this Section 8(a).

                   (b) Incidental Registration. Each time the Company shall
         determine to proceed with the actual preparation and filing of a
         registration statement under the Securities Act in connection with the
         proposed offer and sale for money of any of its Common Stock by it or
         any of its security holders, the Company will give written notice of
         its determination to all record holders of Warrant Shares. Upon the
         written request of a record holder of any Warrant Shares given within
         fifteen (15) days after receipt of any such notice from the Company,
         the Company will, except as herein provided, cause all such Warrant
         Shares, the record holders of which have so requested registration
         thereof, to be included in such registration statement, all to the
         extent requisite to permit the sale or other disposition by the
         prospective seller or sellers of the Warrant Shares to be so
         registered; provided, however, that (a) all such Warrant Shares to be
         so registered shall be converted into Common Stock prior to sale
         pursuant to such registration statement; (b) nothing herein shall
         prevent the Company from, at any time, abandoning or delaying any such
         registration initiated by it; and (c) if the Company determines not to
         proceed with a registration after the registration statement has been
         filed with the Commission and the Company's decision not to proceed is
         primarily based upon the anticipated public offering price of the
         securities to be sold by the Company, the Company shall promptly
         complete the registration for the benefit of those selling security
         holders who wish to proceed with a public offering of their securities
         and who bear all expenses in excess of $25,000 incurred by the Company
         as the result of such registration after the Company has decided not to
         proceed. If any registration pursuant to this Section shall be
         underwritten in whole or in part, the Company may require that the
         Warrant Shares requested for inclusion pursuant to this Section be
         included in the underwriting on the same terms and conditions as the
         securities otherwise being sold through the underwriters. If in the
         good

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<PAGE>

         faith judgment of the managing underwriter of such public offering the
         inclusion of all of the Warrant Shares originally covered by a request
         for registration would reduce the number of shares to be offered by the
         Company or interfere with the successful marketing of the shares of
         stock offered by the Company, the number of Warrant Shares otherwise to
         be included in the underwritten public offering may be reduced pro rata
         among the holders thereof requesting such registration to a number that
         the managing underwriter believes will not adversely affect the sale of
         shares by the Company. Those securities which are thus excluded from
         the underwritten public offering, and any other Common Stock owned by
         such holders, shall be withheld from the market by the holders thereof
         for a period, not to exceed one hundred eighty (180) days, which the
         managing underwriter reasonably determines is necessary in order to
         effect the underwritten public offering.

                  (c) Registration Procedures. If and whenever the Company is
         required by the provisions of Sections 8(a) or 8(b) to effect the
         registration of any Warrant Shares under the Securities Act, the
         Company will:

                           1. prepare and file with the Commission a
                  registration statement with respect to such Warrant Shares,
                  and use its best efforts to cause such registration statement
                  to become and remain effective for such period as may be
                  reasonably necessary to effect the sale of such Warrant
                  Shares, not to exceed three (3) months;

                           2. prepare and file with the Commission such
                  amendments to such registration statement and supplements to
                  the prospectus contained therein as may be necessary to keep
                  such registration statement effective for such period as may
                  be reasonably necessary to effect the sale of such Warrant
                  Shares, not to exceed three (3) months;

                           3. furnish to the security holders participating in
                  such registration and to the underwriters of the Warrant
                  Shares being registered such reasonable number of copies of
                  the registration statement, preliminary prospectus, final
                  prospectus and such other documents as such security holders
                  and underwriters may reasonably request in order to facilitate
                  the public offering of such Warrant Shares;

                           4. use its best efforts to register or qualify the
                  Warrant Shares covered by such registration statement under
                  such state securities or blue sky laws of such jurisdictions
                  as such participating holders may reasonably request within
                  ten (10) days following the original filing of such
                  registration statement, except that the Company shall not for
                  any purpose be required to execute a general consent to
                  service of process or to qualify to do business as a foreign
                  corporation in any jurisdiction wherein it is not so
                  qualified;

                           5. notify the security holders participating in such
                  registration, promptly after it shall receive notice thereof,
                  of the time when such registration statement has become
                  effective or a supplement to any prospectus forming a part of
                  such registration statement has been filed;

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<PAGE>

                           6. notify such holders promptly of any request by the
                  Commission for the amending or supplementing of such
                  registration statement or prospectus or for additional
                  information;

                           7. prepare and file with the Commission, promptly
                  upon the request of any such holders, any amendments or
                  supplements to such registration statement or prospectus
                  which, in the opinion of counsel for such holders (and
                  concurred in by counsel for the Company), is required under
                  the Securities Act or the rules and regulations thereunder in
                  connection with the distribution of the Warrant Shares by such
                  holder;

                           8. prepare and promptly file with the Commission and
                  promptly notify such holders of the filing of such amendment
                  or supplement to such registration statement or prospectus as
                  may be necessary to correct any statements or omissions if, at
                  the time when a prospectus relating to such securities is
                  required to be delivered under the Securities Act, any event
                  shall have occurred as the result of which any such prospectus
                  or any other prospectus as then in effect would include an
                  untrue statement of a material fact or omit to state any
                  material fact necessary to make the statements therein, in the
                  light of the circumstances in which they were made, not
                  misleading;

                           9. advise such holders, promptly after it shall
                  receive notice or obtain knowledge thereof, of the issuance of
                  any stop order by the Commission suspending the effectiveness
                  of such registration statement or the initiation or
                  threatening of any proceeding for that purpose and promptly
                  use its best efforts to prevent the issuance of any stop order
                  or to obtain its withdrawal if such stop order should be
                  issued; and

                           10. not file any amendment or supplement to such
                  registration statement or prospectus to which a majority in
                  interest of such holders shall have reasonably objected on the
                  grounds that such amendment or supplement does not comply in
                  all material respects with the requirements of the Securities
                  Act or the rules and regulations thereunder, after having been
                  furnished with a copy thereof at least five (5) business days
                  prior to the filing thereof, unless in the opinion of counsel
                  for the Company the filing of such amendment or supplement is
                  reasonably necessary to protect the Company from any
                  liabilities under any applicable federal or state law and such
                  filing will not violate applicable law.

                   (d) Expenses. With respect to any registration, requested
         pursuant to Section 8(a) (except as otherwise provided in such section
         with respect to registrations voluntarily terminated at the request of
         the requesting security holders) and with respect to each inclusion of
         securities in a registration statement pursuant to Section 8(b) (except
         as otherwise provided in Section 8(b) with respect to registrations
         terminated by the Company), the Company shall bear the following fees,
         costs and expenses: all registration, filing and NASD fees, printing
         expenses, fees and disbursements of counsel and accountants for the
         Company, fees and disbursements of counsel for the underwriter or
         underwriters of such securities (if the Company and/or selling security
         holders are

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<PAGE>

         required to bear such fees and disbursements), all internal Company
         expenses, the premiums and other costs of policies of insurance against
         liability arising out of the public offering, and all legal fees and
         disbursements and other expenses of complying with state securities or
         blue sky laws of any jurisdictions in which the securities to be
         offered are to be registered or qualified. Fees and disbursements of
         counsel and accountants for the selling security holders, underwriting
         discounts and commissions and transfer taxes for selling security
         holders and any other expenses incurred by the selling security holders
         not expressly included above shall be borne by the selling security
         holders.

                  (e) Copies of Prospectus; Amendments of Prospectus. The
         Company will furnish the Warrantholder with a reasonable number of
         copies of any prospectus or offering circular and one copy of the
         registration statement included in such filings and will amend or
         supplement the same as required during the nine (9) month period
         following the effective date of the registration statement, provided,
         that the expenses of any amendment or supplement made or filed more
         than three (3) months after the effective date of the registration
         statement, at the request of the Warrantholder, shall be borne by the
         Warrantholder.

                  (f) Conditions of the Company's Obligations. It shall be a
         condition of the Company's obligation to register the Warrant Shares
         hereunder that the Warrantholder agrees to cooperate with the Company
         in the preparation and filing of any such registration statement, or in
         its efforts to establish that the proposed sale is exempt under the
         Securities Act, as to any proposed distribution. It shall also be a
         condition of the Company's obligations under this Agreement that, in
         the case of the filing of any registration statement, and to the extent
         permissible under the Securities Act, and controlling precedent
         thereunder, the Company and the Warrantholder provide
         cross-indemnification agreements to each other in customary scope
         covering the accuracy and completeness of the information furnished by
         each.

         9. Notices. Any notice or other document required or permitted to be
given or delivered to the Warrantholder shall be delivered or sent by certified
mail to the Warrantholder at the last address shown on the books of the Company
maintained for the registry and transfer of the Warrants. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered or sent by certified or registered mail to the principal office of the
Company.

         10. No Rights as Shareholders; Limitation of Liability. This Warrant
shall not entitle any holder hereof to any of the rights of a shareholder of the
Company. No provisions hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a shareholder of the
Company whether such liability is asserted by the Company or by creditors of the
Company.

         11. Governing Law. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, without regard
to conflicts of laws principles.

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<PAGE>

         12. Miscellaneous. This Warrant and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The headings in this Warrant are for purposes
of reference only and shall not affect the meaning or construction of any of the
provisions hereof.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer, and to be dated as of November 6, 2000.

                                             UNITED SHIPPING & TECHNOLOGY, INC.

                                             By:
                                                 -------------------------------
                                             Peter C. Lytle
                                             Chief Executive Officer

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR UNDER THE SECURITIES LAWS OF ANY
OTHER STATE AND MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE 1933 ACT OR THE SECURITIES LAWS OF ANY APPLICABLE STATE;
OR (ii) SUCH REGISTRATION."

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<PAGE>

                             FULL SUBSCRIPTION FORM

To Be Executed By the Registered Warrantholder if It/
She/He Desires to Exercise in Full the Within Warrant

         The undersigned hereby exercises the right to purchase the
_____________ shares of Common Stock covered by the within Warrant at the date
of this subscription and herewith makes payment of the sum of
$____________________________ representing the Purchase Price of $__________ per
share in effect at that date. Certificates for such shares shall be issued in
the name of and delivered to the undersigned, unless otherwise specified by
written instructions, signed by the undersigned and accompanying this
subscription.

Dated:________________________________

                                       Signature:
                                                 -------------------------------

                                       Address:

                                       10
<PAGE>

                            PARTIAL SUBSCRIPTION FORM

To be Executed by the Registered Warrantholder if It/She/He
Desires to Exercise in Part Only the Within Warrant

         The undersigned hereby exercises the right to purchase __________
shares of the total shares of Common Stock covered by the within Warrant at the
date of this subscription and herewith makes payment of the sum of $____________
representing the Purchase Price of $_________ per share in effect at this date.

         Certificates for such shares and a new Warrant of like tenor and date
for the balance of the shares not subscribed for (if any) shall be issued in the
name of and delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.

         The shares hereby subscribed for constitute ______________ shares of
Common Stock (to the nearest whole share) resulting from adjustment of
______________ shares of the total of __________________ shares of Common Stock
covered by the within Warrant, as said shares were constituted at the date of
the Warrant.

Dated:__________________________

                                       Signature:
                                                 -------------------------------

                                       Address:

                                       11<PAGE>

                                EXHIBIT 10.11B
                     SECOND AMENDMENT TO CREDIT AGREEMENT
                     ------------------------------------

     THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment"), dated as of September 29, 2000, is entered into between BANK OF
 ---------
AMERICA, N.A. a national association ("Bank"), and SOUTHWEST WATER COMPANY, a
                                       ----
Delaware corporation ("Borrower").
                       --------

                                   RECITALS
                                   --------

     A.   Borrower and Bank have previously entered into that certain Credit
Agreement dated as of July 30, 1999, as amended by that certain First Amendment
to Credit Agreement dated as of June 30, 2000 (collectively, the "Credit
                                                                  ------
Agreement") pursuant to which Bank has made certain loans and financial
---------
accommodations available to Borrower. Terms used herein without definition shall
have the meanings ascribed to them in the Credit Agreement.

     B.   Borrower and Bank wish to amend the Credit Agreement under the terms
and conditions set forth in this Amendment. Borrower is entering into this
Amendment with the understanding and agreement that, except as specifically
provided herein, none of the Bank's rights or remedies as set forth in the
Credit Agreement is being waived or modified by the terms of this Amendment.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

     1.   Amendments to Credit Agreement.
          ------------------------------

          (a) The definition of "Maturity Date" as set forth in Section 1.01 of
                                 -------------
the Credit Agreement is hereby amended in its entirety to read as follows:

                    "Maturity Date":  July 31, 2002
                     --------------

          (b) The definition of "Consolidated Tangible Net Worth" set forth in
                                 -------------------------------
Section 1.01 of the Credit Agreement is hereby amended and restated in its
entirety to read as follow:

              "Consolidated Tangible Net Worth": At any date of determination,
               -------------------------------
the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficit) of the Borrower and its consolidated
Subsidiaries minus (i) treasury stock, (ii) intangible assets (including,
             -----
without limitation, franchises, patents, patent applications, trademarks, brand
names, goodwill, purchased contracts, deferred charges (including unamortized
debt discount and expense and organization costs) and research and development
expenses provided, however, that water rights shall not be considered an
intangible asset and (iii) receivables, advances, loans and all other amounts
due from employees, officers, shareholders, and/or affiliates (excluding
Borrower's wholly-owned Subsidiaries), on a consolidated basis determined in
conformity with GAAP."
<PAGE>

     2.   Effectiveness of this Amendment.  Bank must have received the
          -------------------------------
following items, in form and content acceptable to Bank, before this Amendment
is effective and before Bank is required to extend any credit to Borrower as
provided for by this Amendment.

          (a) Amendment. This Amendment fully executed in a sufficient number of
              ---------
     counterparts for distribution to Bank and Borrower.

          (b) Authorizations.  Evidence that the execution, delivery and
              --------------
     performance by Borrower and each guarantor or subordinating creditor of
     this Amendment and any instrument or agreement required under this
     Amendment have been duly authorized.

          (c) Representations and Warranties.  The representations and
              ------------------------------
     warranties set forth in the Credit Agreement must be true and correct.

          (d) Mellon Bank, N.A. and Borrower Amendment.  Execution and delivery
              -----------------------------------------
     to Bank of the Mellon Bank, N.A. and Borrower Amendment, which includes the
     same amendments contained in this Amendment.

          (e) Other Required Documentation.  All other documents and legal
              ----------------------------
     matters in connection with the transactions contemplated by this Amendment
     shall have been delivered or executed or recorded and shall be in form and
     substance satisfactory to Bank.

     3.   Representations and Warranties.  The Borrower represents and warrants
          ------------------------------
as follows:

          (a) Authority.  The Borrower has the requisite corporate power and
              ---------
     authority to execute and deliver this Amendment and to perform its
     obligations hereunder and under the Loan Documents (as amended or modified
     hereby) to which it is a party.  The execution, delivery and performance by
     the Borrower of this Amendment and the performance by Borrower of each Loan
     Document (as amended or modified hereby) to which it is a party have been
     duly approved by all necessary corporate action of Borrower and no other
     corporate proceedings on the part of Borrower are necessary to consummate
     such transactions.

          (b) Enforceability.  This Amendment has been duly executed and
              --------------
     delivered by the Borrower. This Amendment and each Loan Document (as
     amended or modified hereby) is the legal, valid and binding obligation of
     Borrower, enforceable against Borrower in accordance with its terms, and is
     in full force and effect.

          (c) Representations and Warranties.  The representations and
              ------------------------------
     warranties contained in each Loan Document (other than any such
     representations or warranties that, by their terms, are specifically made
     as of a date other than the date hereof) are correct on and as of the date
     hereof as though made on and as of the date hereof.

          (d) No Default.  No event has occurred and is continuing that
              ----------
     constitutes an Event of Default.

                                       2
<PAGE>

     4.   Choice of Law.  The validity of this Amendment, its construction,
          -------------
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of California governing contracts only to be performed in that
State.

     5.   Counterparts.  This Amendment may be executed in any number of
          ------------
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument.  Delivery of
an executed counterpart of a signature page to this Amendment or the Consent by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment or such Consent.

     6.   Due Execution.  The execution, delivery and performance of this
          -------------
Amendment are within the power of Borrower, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.

     7.   Reference to and Effect on the Loan Documents.
          ---------------------------------------------

          (a) Upon and after the effectiveness of this Amendment, each reference
     in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words
     of like import referring to the Credit Agreement, and each reference in the
     other Loan Documents to "the Credit Agreement", "thereof" or words of like
     import referring to the Credit Agreement, shall mean and be a reference to
     the Credit Agreement as modified and amended hereby.

          (b) Except as specifically amended above, the Credit Agreement and all
     other Loan Documents, are and shall continue to be in full force and effect
     and are hereby in all respects ratified and confirmed and shall constitute
     the legal, valid, binding and enforceable obligations of Borrower to Bank.

          (c) The execution, delivery and effectiveness of this Amendment shall
     not, except as expressly provided herein, operate as a waiver of any right,
     power or remedy of Bank under any of the Loan Documents, nor constitute a
     waiver of any provision of any of the Loan Documents.

          (d) To the extent that any terms and conditions in any of the Loan
     Documents shall contradict or be in conflict with any terms or conditions
     of the Credit Agreement, after giving effect to this Amendment, such terms
     and conditions are hereby deemed modified or amended accordingly to reflect
     the terms and conditions of the Credit Agreement as modified or amended
     hereby.

     8.   Ratification.  Borrower hereby restates, ratifies and reaffirms each
          ------------
and every term and condition set forth in the Credit Agreement, as amended
hereby, and the Loan Documents effective as of the date hereof.

                                       3
<PAGE>

     9.   Estoppel.  To induce Bank to enter into this Amendment and to continue
          --------
to make advances to Borrower under the Credit Agreement, Borrower hereby
acknowledges and agrees that, after giving effect to this Amendment, as of the
date hereof, there exists no Event of Default and no right of offset, defense,
counterclaim or objection in favor of Borrower as against Bank with respect to
the Obligations.

     IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first above written.

                              "Borrower"

                              SOUTHWEST WATER COMPANY,

                              a Delaware corporation

                              By: /s/ THOMAS C. TEKULVE
                                  ---------------------
                              Name: Thomas C. Tekulve
                              Title:  Vice President - Finance

                              By: /s/ PETER J. MOERBEEK
                                 -----------------------
                              Name: Peter J. Moerbeek
                              Title: Chief Financial Officer

                              "BANK"

                              BANK OF AMERICA, N.A.,
                              A National Association

                              By: /s/ DEBORAH L. MILLER
                                  ---------------------
                              Name: Deborah L. Miller
                              Title: Senior Vice President

                                       4

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