exv10w16






Exhibit 10.16




COLLATERAL ASSIGNMENT OF MEMBER INTEREST 

(PALO VERDE UTILITY COMPANY, LLC)




          THIS
COLLATERAL ASSIGNMENT OF MEMBER INTEREST (the “Assignment”) is made December 9, 2005, by
and between GLOBAL WATER RESOURCES, LLC (“Assignor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Assignee”) (Assignor and Assignee, collectively, the “Parties”).




RECITALS:




          A. Assignee has extended a line of credit (the “Loan”) to Global Water Management, LLC,
Assignor and Global Water Resources, Inc. (each individually and collectively, the “Borrower”),
pursuant to that certain Amended and Restated Credit Agreement of even date herewith (the “Credit
Agreement”) with the Loan evidenced by an Amended and Restated Revolving Line of Credit Note of
even date herewith (the “Note”) in the original principal amount of Thirty-Five Million Dollars
($35,000,000.00). Capitalized terms not otherwise defined herein shall have the same meaning as
set forth in the Credit Agreement.




          B. Assignor is the owner and holder of 100% of the Members’ in and to PALO VERDE UTILITY
COMPANY, LLC (the “Company”) (the “Membership Interests”).




          C. Assignor has agreed to secure the payment and performance of the Loan by assigning to
Assignee, as collateral security, the Membership Interests.




          D. Assignor acknowledges Assignee would not have made the Loan to Borrower but for the
execution of this Agreement by Assignor.




          NOW, THEREFORE, in consideration of the Loan, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agreed as follows:




     1. Recitals. The foregoing recitals are approved and incorporated herein by reference
as agreements of the Parties,



     2. Assignment. For the purpose of securing repayment of the Loan, and other amounts related
thereto, including but not limited to interest, late charges, default
interest, advances, costs,
service charges, and attorneys’ fees, and all extensions and renewals thereof and modifications
thereto, Assignor hereby assigns, transfers, and sets over to the
Assignee for collateral
purposes only all of its rights, powers, privileges, proceeds, distributions, and avails in the
Membership Interests now or hereafter created or reserved.



     3. No Encumbrances/Certificates. Assignor represents and warrants to Assignee that
(a) its Membership Interests is free and clear of all liens, and is not subject to any prior
assignments and (b) its Membership Interests is not evidenced by any certificate or other
instrument.



     4. Disbursements. Until and unless there has occurred a monetary default under the
Loan, all monies payable to Assignor from the Membership Interests shall be collected, held and
disbursed by the Assignor. In the event Borrower is in monetary default under the Loan,



 









 




Assignee may retain all such funds and apply same to the indebtedness secured hereby in such order
and manner as Assignee shall determine in its sole discretion,




     5. THIS SECTION INTENTIONALLY DELETED.



     6. Appear and Defend. Assignor agrees to appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of Assignee hereunder, and to pay
all costs and expenses of Assignee including the cost of evidence of title and reasonable
attorneys’ fees, in any such action or proceeding in which Assignee may appear or be named, and in
any suit brought by Assignee to foreclose this Assignment.



     7. Defaults and Remedies.




     a. Upon the occurrence of an Event of Default and during the continuation of such
Event of Default, the Assignee may cause the transfer and register in its name or in the
name of its designee the whole or any part of the Membership Interests, exercise any rights
or powers with respect thereto, collect and receive all distributions made thereon, sell in
one or more sales after ten (10) days notice of the time and place of any public sale or of
the time after which a private sale is to take place (which notice Assignor agrees is
commercially reasonable), but without any previous notice or advertisement, the whole or
any part of the Membership Interests and to otherwise act with respect to the Membership
Interests as though the Assignee was the outright owner thereof. Assignor hereby
irrevocably constitute and appoint the Assignee as the attorney-in-fact of Assignor, with
full power of substitution, to sign any document or take any act in order to do so,
provided, however, that the Assignee shall not have any duty to exercise any such right or
to preserve the same and shall not be liable for any failure to do so or for any delay in
doing so. Any sale shall be made at a public or private sale at the Assignee’s place of
business, or elsewhere to be named in the notice of sale, either for cash or upon credit or
for future delivery at such price as the Assignee may deem fair, and the Assignee may be
the purchaser of the whole or any part of the Membership Interests so sold and hold the
same thereafter in its own right free from any claim of the Assignor. Each sale shall be
made to the highest bidder, but the Assignee reserves the right to reject any and all bids
at such sale that, in its absolute discretion, it shall deem inadequate. Any purchaser or
any assignee of such purchaser of the Membership Interests, at such purchaser’s election,
may become a substitute member. Demands of performance, except as otherwise herein
specifically provided for, notices of safe, advertisements and the presence of property at
sale are hereby waived and any sale hereunder may be conducted by an auctioneer or any
officer or agent of the Assignee.




     b. Assignor agrees that following the occurrence and during the continuance of an
Event of Default, it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in
force in order to prevent or delay the enforcement of this Assignment, or the absolute sale
of the whole or any part of the Membership Interests or the possession thereof by any
purchaser at any sale hereunder, and Assignor waives the benefit of all such laws to the
extent Assignor lawfully may do so. If an Event of Default has occurred and is continuing,
Assignor agrees that Assignor wilt not interfere with any right, power and remedy of the
Assignee provided for in this Assignment or now or hereafter existing at law or in equity
or by statute or otherwise, or the exercise or beginning of the exercise by the Assignee of
any one or more of such rights, powers or remedies. No failure or delay on the part of the
Assignee to exercise any such right, power or remedy and no notice or



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demand which may be given to or made upon Assignor by the Assignee with respect to any such
remedies shall operate as a waiver thereof, or limit or impair the Assignee’s right to take
any action or to exercise any power or remedy hereunder, without notice or demand, or
prejudice its rights as against Assignor in any respect.




     c. Assignor further agrees that a breach of any of the covenants contained
in this Section 7 will cause irreparable injury to the Assignee, that the Assignee has no
adequate remedy at law in respect of such breach and, as a consequence, agree that each
and every covenant contained in this Section 7 shall be specifically enforceable against
Assignor and Assignor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that the Loan is
not then due and payable in accordance with the agreements and instruments governing and
evidencing such obligations.



     8. Irrevocable Assignment. This Assignment is irrevocable and shall remain effective
with respect to Assignor until written approval of such revocation shall be furnished to the
Assignor by Assignee.



     9. Uniform Commercial Code. In addition to the rights and remedies granted to
Assignee hereunder or to which the Assignee may be entitled at law, in equity or by statute, to
the extent that the interest conveyed hereby shall be deemed to be a security interest under the
Uniform Commercial Code, Assignor shall be deemed to be the “debtor” and Assignee the “secured
party,” and the security interest conveyed hereby shall be foreclosed pursuant to the terms,
conditions, and provisions of the Uniform Commercial Code.



     10. No Further Encumbrance. Assignor herein covenants and agrees that its Membership
Interests shall not be further encumbered (other than taxes and assessments) and/or conveyed, in
any manner whatsoever, without Assignee’s express prior written consent.



     11. Assignor to Perform. Notwithstanding anything herein to the contrary. Assignee,
by accepting this Assignment, shall not, except as otherwise herein may be specifically provided,
be subject to any obligation, liability, or duty to perform any of the terms, covenants,
provisions, conditions, or agreements made by Assignor with respect to the Membership Interests,
but all thereof shall continue to rest upon, be kept and performed by Assignor as though this
Assignment had not been made. Assignor shall make all contributions and pay all costs, claims and
expenses arising directly or indirectly out of Assignor’s Membership Interests and shall indemnify
and hold Assignee harmless therefrom.



     12. No Waiver or Discharge. Assignor shall not be discharged, and the security herein
shall not be waived, or anyway affected or impaired, and the priority of Assignee’s liens
hereunder shall in no way be affected or implied, by any extension of time, the making of
additional advances or notes, any renewal or extension of the Loan, any modification to the terms
of the Loan, any decrease or increase in the interest rate of the Loan, the taking of further
security, releases of a part or all of the property securing the Loan, extinguishment or release
of this Assignment as to all or any part of Assignee’s Membership Interests, or any other act
except a release or discharge of this Assignment upon the full payment of the Loan secured by this
Assignment.



     13. Release. Upon payment of the Loan in full and any further amounts due and owing
to the Assignee under the provisions hereof, this Assignment shall become null and void and have
no further force and effect.



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     14. Construction. Wherever the context of this Assignment so requires, words used in
the masculine gender include the feminine and neuter; the singular number includes the plural and
plural the singular.



     15. General Provisions. Except to the extent inconsistent with the express language of
the foregoing provisions of this Assignment, the following provisions shall govern the
interpretation, application, construction and enforcement of this Assignment.




     a. Notices. Any notice to a Party under this Assignment shall be in writing
and shall be effective on the earlier of (i) the date when received by such Party, or (ii)
the date which is five (5) days after mailing (postage prepaid) by certified or registered
mail, return receipt requested, addressed to such Party c/o Borrower at Borrower’s address
for notices as referenced in the Credit Agreement, or to such other address as shall have
previously been specified in writing by such Party to all Parties.




     b. Severability. If any provision of this Assignment is declared void or
unenforceable, such provision shall be deemed severed from this Assignment, which shall
otherwise remain in full force and effect.




     c. Additional Acts and Documents. Each Party agrees to do all such things and take all
such actions, and to make, execute and deliver such other documents and instruments, as
shall be reasonably requested to carry out the provisions, intent and purpose of this
Assignment including, but not limited to, any further acts required by Arizona
Administrative Code R14-2-803 and other similar laws, rules, statutes and codes related to
Assignee’s exercise of its remedies.




     d. Authority. Each Party represents and warrants to each other Party that this
Assignment has been duly authorized by all necessary action and that this Assignment
constitutes and will constitute a binding obligation of each such Party.




     e. Principal Residence/Place of Registration. Each Assignor represents and
warrants that if such Assignor is a person, Assignor’s principal
residence is in the state
of Arizona and if such Assignor is a registered organization, Assignor is registered in the
State of Arizona.




     f. Attorneys’ Fees. In the event suit is brought (or arbitration instituted) or an
attorney is required by any Party to this Assignment to enforce the terms of this
Assignment or to collect for the breach hereof or for the interpretation of any provision
herein in dispute, or in connection with any bankruptcy proceedings, the prevailing Party
shall be entitled to recover, in addition to any other remedy, reimbursement for reasonable
attorneys’ fees, court costs, costs of investigation and other related expenses incurred in
connection therewith.




     g. Successors and Assigns. This Assignment shall be binding upon and inure to
the benefit of the Parties, and their respective successors in interest and assigns, but
in no event shall any Party be relieved of its obligations hereunder without the express
written consent of each other Party.




     h. Counterparts. This Assignment may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the same
instrument, and each of said counterparts shall be deemed an original.



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     i. Time. Time is of the essence of this Assignment and each and every
provision hereof. Any extension of time granted for the performance of any duty under this
Assignment shall not be considered an extension of time for the performance of any other
duty under this Assignment.




     j. Waiver. Failure of any Party to exercise any right or option arising out
of
a breach of this Assignment shall not be deemed a waiver of any right or option with
respect to any subsequent or different breach, or the continuance of any existing breach.




     k. Governing Law. This Assignment shall be deemed to be made under, and shall
be construed in accordance with and shall be governed by, the laws of the State of Arizona.




     l. Exhibits. Any exhibit attached hereto shall be deemed to have been
incorporated herein by this reference, with the same force and effect as if fully set forth
in the body hereof.



          IN WITNESS WHEREOF, Assignor hereby sets its hand on the day and year first above written.




	 	 	 	 	 
	 	ASSIGNOR:




GLOBAL WATER RESOURCES, LLC, 
a Delaware limited
liability company

 	 
	 	By:  	/s/ William S. Levine
 	 
	 	 	William S. Levine, Manager 	 
	 	 	 	 



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ACKNOWLEDGMENT, ACCEPTANCE AND APPROVAL





               PALO
VERDE UTILITY COMPANY, LLC (the “Company”), hereby acknowledges, accepts and approves the
assignment of Members’ interest in the Company and of all rights to receive distributions of cash
payable by the Company to the Members, and hereby agrees that, upon and following notice from
Assignee that an Event of Default has occurred, it shall pay directly to WELLS FARGO BANK NATIONAL
ASSOCIATION, as Assignee in the above and foregoing Collateral Assignment of Member Interest, any
and all sums due or payable to the Members or any of them until it shall receive notice from
Assignee either (i) to discontinue direct payments, or (ii) that all sums under the Note and the
Loan Documents shall be fully paid.



               IN WITNESS WHEREOF, the undersigned have executed this instrument as of the 9th day of
December, 2005.



	 	 	 	 	 
	PALO VERDE UTILITY COMPANY, LLC, 

a Delaware limited liability company

 	 	 
	By:  	/s/ Trevor Hill
 	 	 
	 	Trevor Hill, Manager 	 	 
	 	 	 	 
	 




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