Document:

Exhibit 10.4.2

 

Loan No. ML0936T1A

 

FIRST AMENDMENT TO PROMISSORY NOTE AND SUPPLEMENT

 

THIS FIRST AMENDMENT TO PROMISSORY NOTE AND SUPPLEMENT   (this “Amendment”) is
entered into as of September 12, 2005, between MONARCH
UTILITIES I L.P. (formerly known as Tecon Water Company, L.P.), a
Texas limited partnership (the “Company”), and CoBANK,
ACB,  a federally chartered
instrumentality of the United States (“CoBank”).

 

BACKGROUND

 

The Company and CoBank are parties to a Promissory
Note and Supplement dated as of May 1, 2002 and numbered ML0936T1 (the “Supplement”).
Since the date of the Supplement, the Company has changed its name from Tecon
Water Company, L.P. to Monarch Utilities I L.P. The parties now desire to amend
the Supplement to reflect the change in the Company’s name.

 

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

 

SECTION 1.         Amendment.  The
name of the Company is hereby amended from “Tecon Water Company, L.P.” to “Monarch
Utilities I L.P.”. Wherever in the Supplement the name “Tecon Water Company,
L.P.” appears, it shall be deemed to mean “Monarch Utilities I L.P.”

 

SECTION 2.         Confirmation. This Amendment reflects the entire understanding between the parties
with respect to the subject matter hereof. Except as modified hereby, the
Supplement shall remain in full force and effect as written.

 

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

 

	
   

  	
   

  	
  CoBANK, ACB,

  
	
   

  	
   

  	
  a federally chartered instrumentality

  
	
   

  	
   

  	
  of the United States

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Illegible

  
	
   

  	
   

  	
  Name:

  	
  Illegible

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MONARCH UTILITIES I L.P.,

  
	
   

  	
   

  	
  a Texas limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Texas Water Services Group, LLC,

  
	
   

  	
   

  	
   

  	
  a Texas limited liability company

  
	
   

  	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Shelley Farnham

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Shelley Farnham

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and SecretaryExhibit 10.4.3

 

Loan No. ML0936T2

 

PROMISSORY
NOTE AND SUPPLEMENT

 

THIS PROMISSORY NOTE AND SUPPLEMENT to the Master Loan Agreement dated as of May 1,
2002 (as amended or restated from time to time, the “MLA”) is entered into as
of May 1, 2002, between TECON WATER
COMPANY, L.P. (the “Company”) and CoBANK,
ACB (“CoBank”).

 

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 loans (each a “Loan”) to the Company from
time to time during the period set forth below in an aggregate principal amount
not to exceed $1,000,000 at any one time outstanding (the “Commitment”).
Within the limits and during the term of the Commitment, the Company may
borrow, repay and reborrow.

 

SECTION 2.   Purpose. The purpose of the Commitment is to finance
general partnership needs of the Company, and the Company agrees to use the
proceeds of the loans for those purposes.

 

SECTION 3.   Term. The term of the Commitment shall be from the
date hereof up to but not including the first anniversary of the date hereof,
or such later date as CoBank may, in its sole discretion, authorize in writing.

 

SECTION 4.   Availability. Loans will be made as provided in Section 2.02
of the MLA; provided, however, that no Loans will be made hereunder unless the
loan contemplated in that certain Promissory Note and Supplement dated as of
the date hereof and numbered ML0936Tl (the “First Supplement”) shall have been
made by CoBank and disbursed by the “Title Company” as contemplated in the “Closing
Agreement” (both as defined in the First Supplement).

 

SECTION 5.   Interest.

 

(A) Interest Rate Options. The Company agrees to pay interest on the
unpaid principal balance of the Loans in accordance with one or more of the
following interest rate options, as selected by the Company:

 

(1)           Weekly
Variable Rate Option. At
a rate per annum equal to the rate of interest established by CoBank on the
first “Business  Day” (as defined in the MLA) of each week (the “Variable
Rate  Option”). The rate established by CoBank shall be effective
until the first Business Day of the next week and may not exceed CoBank’s “National
Variable  Rate” (as_defined in the MLA) on that day. Each change
in the rate shall be applicable to all balances subject to this Variable Rate
Option and information about the then current rate shall be made available upon
telephonic request.

 

(2)           Quoted
Fixed Rate Option.   At a fixed rate to be quoted by CoBank in its
sole discretion in each instance (the “Quoted  Rate  Option”).
Under this option, balances of $100,000 or more may be fixed for such periods
as may be agreeable to CoBank in its sole discretion in each instance (each a “Quoted
Fixed Rate  Period”).

 

1

 

(3)           LIBOR
Option. At a fixed
rate equal to the “LIBOR Rate” (as hereinafter defined) plus a spread equal to:
(A) in the case of years one through four, 1.75% per annum; and (B) in
the case of years five through ten, 2.00% per annum (the “LIBOR Option”).
Under this option rates may be fixed: (i) on two (2) “Banking Days’”
(as hereinafter defined) prior notice; (ii) on balances of $100,000 or
more; (iii) for “Interest Periods” (as hereinafter defined) of 1, 2, 3, 6,
9 and 12 months, as selected by the Company (but in no event beyond the final
maturity date of the Loans); and (iv) only during years one through ten.
For purposes hereof: (x) “LIBOR Rate” shall mean the rate indicated by Telerate
(rounded upward to the nearest thousandth and adjusted for any reserves required
to be maintain under Regulation D of the Board of governors of the Federal
reserve System or other federal law or regulation) as having been quoted by the
British Bankers Association at 11:00 AM London time three (3) Banking Days
before the commencement of the Interest Period for the offering of U.S. Dollar
deposits in the London interbank market for the Interest Period designated by
the Company; (y) “Banking Day” shall mean a day that is a Business Day and also
a day on which dealings in US Dollar deposits are being carried out in the
London interbank market and banks are open for business in New York and London;
and (z) “Interest Period” shall mean a period commencing on the day the LIBOR
Option becomes effective and ending on the numerically corresponding day in the
next calendar month or the month that is 2, 3, 6, 9 or 12 months thereafter, as
the case may be; provided, however, that: (I) in the event such ending day is
not a Banking Day, such period shall be extended to the next Banking Day unless
such next Banking Day falls in the next calendar month, in which case it shall
end on the preceding Banking Day; and (II) if there is no numerically
corresponding day in the month, then such period shall end on the last Banking
Day in the relevant month.

 

(B)          Elections.
Subject to the
limitations set forth above, the Company: (1) shall select the applicable rate
option each time it requests a Loan; (2) may, on any Business Day, elect
to convert balances bearing interest at the Variable Rate Option to the Quoted
Fixed Rate Option; (3) may, on the last day of any Quoted Fixed Rate
Period, elect to refix the rate under the Quoted Fixed Rate Option or convert
the balance to the Variable Rate Option; (4) may, on the last day of any
Interest Period, elect to convert the balance to the Variable Rate or Quoted
Fixed Rate Option; and (5) may, on two Banking Days’ prior notice, elect
to convert balances bearing interest at the Variable Rate Option or the Quoted
Fixed Rate Option to the LIBOR Option or refix a rate under the LIBOR Option;
provided, however, that balances bearing interest at the Quoted Fixed Rate
Option or the LIBOR Option may not be converted or continued until the last day
of the Quoted Fixed Rate Period or Interest Period applicable thereto. In the absence
of an election provided for herein, the Company shall be deemed to have elected
the Variable Rate Option. All elections provided for herein may be made
telephonically or in writing and must be received by 12:00 noon Company’s local
time on the applicable Business Day. Any election made telephonically, shall be
promptly confirmed in writing if so requested by CoBank. Notwithstanding the
foregoing in no event may the Company elect to fix a rate in such a manner as
to cause the Company to have to break any fixed rate balance prior to the
expiration of any fixed rate period in order to pay any installment of
principal hereunder.

 

(C)          Calculation
and Payment.   Interest shall be calculated on the actual number
of days each Loan is outstanding on the basis of a year consisting of 360
days.   In calculating interest, the date
each Loan is made shall be included and the date each Loan is repaid shall, if
received before 3:00 P.M. Mountain time, be excluded. Interest shall be
payable monthly in arrears by the twentieth (20th) day of the following month and on the date
each Loan is repaid.

 

SECTION 6.   Fees. In consideration of the Commitment, the
Company agrees to pay to CoBank:

 

2

 

(A) Loan Origination Fee. A loan origination fee in the amount of $5,000 less the
amount paid to CoBank on account of the Commitment pursuant to that certain
letter agreement dated as of December 21, 2001, between the Company and
CoBank.

 

(B) Commitment Fee. A commitment fee on the average daily unused portion of
the Commitment at the rate of 0.375% per annum (calculated on a 360 day basis),
payable monthly in arrears and on the date the Commitment terminates. Such fee
shall be payable for each month or portion thereof occurring during the
original or any extended term of the Commitment.

 

SECTION 7. Promissory Note. The Company promises to repay the unpaid
principal balance of each Loan as follows: (1) in 228 equal, consecutive
monthly installments, payable on the 20th day of each month, with
the first such installment due on 20th of the month following the
month in which the Commitment expires; provided, however, that in the case of
the last payment, such payment shall be in an amount equal to the then
outstanding principal balance of the Loans. In addition to the above, the
Company promises to pay interest on the unpaid principal balance of the Loans
at the times and in accordance with the provisions set forth above and to pay
the fees set forth in Section 5 hereof and any interest breakage
surcharges as provided herein. Notwithstanding the foregoing, if any date on
which principal and interest are due is not a Business Day, 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 balance 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.

 

SECTION 9.
Prepayment. The
Company may, on one CoBank Business Day’s prior written notice, prepay the
Loans in whole or in part together with accrued interest to the date of
prepayment on the amount prepaid and, in the event any balance bearing interest
at either the LIBOR Option or the Quoted Fixed Rate Option is prepaid, 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
being prepaid; 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 1.5% on the amount being prepaid, calculated on a per annum
basis through the balance of the fixed rate period. In calculating the
surcharge, the discount rate shall be the rate determined in accordance with (1)(b) above.
All partial prepayments shall be applied to principal installments in the
inverse order of their maturity and to such fixed and variable rate balances
outstanding on the portion prepaid as designated by CoBank.

 

3

 

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

  	
   

  	
  TECON WATER COMPANY, L.P.

  
	
   

  	
   

  	
  By:
  Texas Water Services Group, LLC,

  
	
   

  	
   

  	
  Its
  General Partner

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  By:

  	
  /s/ J. G. Boyles

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  J. G. Boyles

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  

 

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