Document:

exv10w29

EXHIBIT
10.29

	 	 	 	 	 
	When recorded mail to:

	 	
	 	OFFICIAL RECORDS OF

PINAL COUNTY RECORDER

LAURA DEAN-LYTLE

	 	 	 
	Pinal County Board of Supervisors

	 	DATE: 08/01/03 TIME: 1650
	P.O. Box 827

	 	FEE: 0.00
	Florence, Arizona 85232

	 	PAGES: 14
	 

	 	FEE NO: 2003-053301

(The above space reserved for recording information)

CAPTION HEADING

RE-RECORD Wastewater Treatment, Collection and Management Services Agreement

between the 387 Wastewater Improvement District and Sonoran Utility Services, L.L.C.

Necessary to re-record to include exhibit “A”. Original fee #2003-045209.

 

 

	 	 	 	 	 
	When recorded mail to:

	 	
	 	OFFICIAL RECORDS OF

PINAL COUNTY RECORDER

LAURA DEAN-LYTLE

	 	 	 
	Pinal County Board of Supervisors

	 	DATE: 07/03/03 TIME: 1632
	P.O. Box 827

	 	FEE: 0.00
	Florence, Arizona 85232

	 	PAGES: 8
	 

	 	FEE NO: 2003-045208

(The above space reserved for recording information)

CAPTION HEADING

Wastewater Treatment, Collection, and Management Services Agreement between the 387 Wastewater

Improvement District and Sonoran Utility Services, L.L.C.

 

 

WASTEWATER TREATMENT, COLLECTION, AND MANAGEMENT

SERVICES AGREEMENT

     This Wastewater Treatment, Collection, and Management Services Agreement (the “Agreement”) is
made and entered into this 25th day of June, 2003, by and between the 387 Wastewater Improvement
District (“District”), an improvement district organized pursuant to A.R.S. Section 48-901, et.
Seq., and Sonoran Utility Services, L.L.C., or its assignee, (hereinafter referred to as (“Sonoran
Services”).

WITNESSETH

     WHEREAS, the District was organized pursuant to the laws of the State of Arizona as hereinabove set forth, with boundaries established in Pinal County as more particularly set forth in
Exhibit A, attached hereto; and

     WHEREAS, the Pinal County Board of Supervisors serves as the Board of Directors for District
and desires to secure wastewater treatment and collection services for the District, as well as
management of the wastewater services during construction of the required Facilities, as
hereinafter defined, and during the operation of the Facilities; and

     WHEREAS, it is in the best interest of the District to enter into an agreement for the
provision of wastewater treatment, collection, and management services to fund the construction of
facilities, infrastructure, and operations; and

     WHEREAS, Sonoran Services is willing end able to fund the construction and operation of the
wastewater facilities in accordance with the terms of this Agreement; and

     WHEREAS, Sonoran Services makes assurances that it has substantial ability and experience
enabling it to construct, operate, and manage the Facilities and provide the wastewater services;
and

     WHEREAS, an agreement has been reached with Sonoran Services to construct, manage and operate
the Facilities within the District and provide the wastewater services.

     NOW, THEREFORE, the parties enter into this Agreement for and in consideration of the mutual
covenants, warranties and representations, and agree as follows:

	 	1.	 	Facilities. Sonoran Services shall construct, or cause to be constructed, a wastewater
collection system consisting of all wastewater treatment plant(s), transmission and collection
lines, lift stations, pumps, valves, connections, storage and disposal facilities (the
“Facilities”) necessary to collect, treat, and dispose of all wastewater flows originating within
the District, as that flow may increase, through facilities approved by the Final County Engineer,
the Arizona Department of Environmental Quality and/or the County Planning and Development Services
Department and or Pinal County Health

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Department, or their successor agency(ies). All Facilities shall become the property of Sonoran
Services after acceptance by Sonoran Services.

	 	2.	 	Location. Sonoran Services shall provide the Facilities described in Paragraph 1 above
at location(s) within the District mutually agreed upon by the parties.
	 
	 	3.	 	Real Property. Sonoran Services shall pay all costs of acquisition of real property
and/or rights, including any condemnation action initiated by District, for treatment plants, lift
stations, force and collection remains, and related sites that are necessary for Sonoran Services
to construct service related facilities. At no time will Sonoran Services lien the individual
property owners within the District for shortage of costs.
	 
	 	4.	 	Easements. The wastewater Facilities shall be constructed within established easements
or rights-of-way or upon property leased, purchased, or otherwise set aside for such use. These
easements shall provide Sonoran Services access to the wastewater system for purposes of
installation, repair, maintenance and removal of the Facilities. The proposed wastewater treatment
plant shall be constructed within the boundaries of the District on property that has been deeded
to Sonoran Services.
	 
	 	5.	 	Equipment. Sonoran Services shall provide all vehicles, construction equipment, tools
and instruments howsoever described (the “Equipment”) necessary to perform its obligations under
this Agreement The cost of such Equipment, and its operator(s) shall be charged to the District
only for the time during which the Equipment and operator(s) are performing services for the
benefit of the District.
	 
	 	6.	 	Capital Costs. No construction costs for the facilities shall be borne by District.
However, Sonoran Services shall recoup those costs and a return of, and on its investment in the
Facilities and an operating profit by collecting and retaining all Hook-Up Fees from property
owners, developer, and Customers, and through monthly service charges for wastewater services, all
as established under this Agreement.
	 
	 	7.	 	Line Extension Agreements. On-site facilities constructed by developers under line
Extension Agreements shall be refunded in accordance with those agreements as approved by the Board
of Directors of the District.
	 
	 	8.	 	Title. The District shall not obtain by terms of this Agreement and Sonoran Services
does not surrender, any ownership rights in the subject Real Property, Facilities, or Equipment.
	 
	 	9.	 	Service. Sonoran Services shall provide wastewater collection services to residential
and commercial properties within the district boundaries through four-inch (4”) lines or larger
consistent with requirements of ADEQ.

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	 	10.	 	Customers. Sonoran Services shall provide the wastewater services under this Agreement
to all property owners within the District, subject only to the property owners complying with all
District rules and regulations and their paying the rates and charges established pursuant to this
Agreement.
	 
	 	11.	 	District Employees. District may, but is not required to, have employees for its
performance under this Agreement. In the event it does hire any such employee, all costs associated
with those employees will be assigned directly to the District.
	 
	 	12.	 	Revenue Allocation. Sonoran Services shall fund all operations of District and retains
those portions of rates collected on behalf of District directly attributable to the construction,
operation and maintenance expenses. All fees and charges collected by Sonoran Services shall be
retained by Sonoran Services.
	 
	 	13.	 	Costs. Sonor in Services is responsible for, and will arrange the funding of all costs,
expenses and capital improvements, including but not limited to the following:

	 	13.1	 	Electric power and energy for the operation of the wastewater systems.
	 
	 	13.2	 	All chemicals required to treat the wastewater.
	 
	 	13.3	 	Required testing performed by a laboratory.
	 
	 	13.4	 	All employee related salaries and costs.
	 
	 	13.5	 	All rents, office, operating fees, vehicle, equipment, depreciation and tax expenses.
	 
	 	13.6	 	Insurance as may be required by the wastewater system.
	 
	 	13.7	 	Replacement of, and repairs to, the wastewater system.
	 
	 	13.8	 	All plant additions and improvements.
	 
	 	13.9	 	Legal counsel for the wastewater systems.
	 
	 	13.10	 	Engineering and accounting services.

	 	14.	 	Operating Shortfalls. Sonoran Services shall be responsible for any and all shortfalls
in operating expenses incurred by District during the period of this Agreement.
	 
	 	15.	 	Management. Sonoran Services shall manage and coordinate all aspects of construction
resulting from this Agreement and once constructed, manage all

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	 	 	 	daily operations in providing wastewater services to the District which include the following:

	 	15.1	 	Provide ADEQ a certified operator for the system.
	 
	 	15.2	 	Obtain all ADEQ Approvals to Construct, Approvals of Construction, and Operating Permits for
the Facilities.
	 
	 	15.3	 	Conduct all wastewater quality/system tests required by all applicable rules and regulations.
	 
	 	15.4	 	File all applicable regulatory agency requirements, including but not limited to those for
ADEQ, ADOR, and Pinal County.
	 
	 	15.5	 	Inspect, maintain, repair, and operate all Facilities.
	 
	 	15.6	 	(Illegible) and prepare all Hook-Up Fee Agreements (HUF’s) and on-site Line Extension
Agreements (LXA’s) with developers as approved by District
	 
	 	15.7	 	Maintain all records, track all data, and make approved refunds for LXAs.
	 
	 	15.8	 	Inspect, manage, and supervise all on-site Facilities construction performed by developers.
	 
	 	15.9	 	Provide a customer service office within fifteen (15) miles of the District boundaries.
	 
	 	15.10	 	Provide all customer service functions related to initiating, operating, and maintaining
wastewater services to the District including: taking orders, receiving payments, responding to
complaints, answering inquires related to wastewater services and/or billing; provide on-site
hook-up, maintenance, wastewater shut-off’s, turn-on’s, as well as any other service functions as
deemed necessary by District.
	 
	 	15.11	 	Recommend appropriate customer fees, rates, and charges to the District Board of Directors
that are consistent with area rates.
	 
	 	15.12	 	Bill and collect all fees, rates and charges for wastewater services pursuant to the fees,
rates, and charges established by the District Board of Directors.
	 
	 	15.13	 	Pay all expenses and bills of District as required by this Agreement and as authorized by the
District Board of Directors.

	 	16.	 	Office. Sonoran Services shall provide adequate office space and shop/storage areas in
the vicinity of the District, which office and

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	 	 	 	shop/storage areas will permit Sonoran Services to perform its obligations under the Agreement
	 
	 	17.	 	Regulatory Filings. Sonoran Services shall be responsible for filing, maintaining, and
reporting all regulatory, health, tax and corporate documents necessary for the continued operation
of the wastewater system.
	 
	 	18.	 	Reports. Sonoran Services shall provide to the District for all capital construction
projects, repair and maintenance items, and all other expenses billed, copies of any and all
applicable permits, easements, detailed invoices, and as-built drawings specifying all materials,
labor and services contracted for on behalf of the District. Said records will be coded for
accounting purposes in accordance with Generally Accepted Accounting Principles.
	 
	 	19.	 	Fees, Rates, and Charges and Revisions. Sonoran Services shall provide initial
wastewater at the rates set forth in the attached schedule (Exhibit B hereto). The parties to this
Agreement acknowledge that the fees, rates, and charges are subject to change periodically but will
not exceed a maximum increase of three percent (3%) per calendar year and are subject to the
approval by the Board of Directors of the District.
	 
	 	20.	 	Insurance. Sonoran Services shall strange to have the District named as an additional
insured on its liability insurance coverage and shall maintain $5,000,000 liability insurance
during the term hereof. A copy of this coverage shall be filed with the Board of Directors of the
District on the date this Agreement is first signed and shall remain In effect throughout the term
of this Agreement.
	 
	 	21.	 	Indemnification. Sonoran Services agrees that they shall indemnify, defend and hold
harmless the District, the County, and their elected officials, officers, departments, employees,
commissions and agents, from and against any and all suits, actions, legal proceedings, claims,
demands, attorney fees, costs of litigation, or damages of any kind arising out of this
Agreement which are attributed to the alleged acts or omissions of Sonoran Services, their agents,
employees, or anyone acting under their direction or on their behalf, whether intentional or
negligent, in connection with or incident to this Agreement
	 
	 	22.	 	Term. To permit Sonoran Services to recover the substantial investment it is making in
the treatment and collection facilities necessary to perform under this Agreement, this Agreement
shall continue in full force and effect for thirty (30) years from the day and year first above
written and may be extended or renewed at any time during its term upon the request and mutual
agreement of the parties.
	 
	 	23.	 	Force Majeure. Sonoran Services shall not be liable to District nor to any of the
District’s customers, nor to any other person, firm or corporation

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	 	 	 	whatsoever, for or on account of any claim resulting from any condition that existed prior to the
date of this Agreement, or for any interruption or failure in delivery of service in accordance
with this Agreement, or for or on account of any loss, injury or damage occasioned thereby, where
such interruption or failure, either directly or indirectly, is caused by or results from any of
the following:

	 	23.1	 	Fire, lightning, flood, cold, windstorm, Act of God, invasion or force majeure.
	 
	 	23.2	 	Compliance with any orders, rules or regulations, whether valid or invalid, or any
governmental authority or agency.
	 
	 	23.3	 	Strikes, lockouts or labor disputes.
	 
	 	23.4	 	Interruption in supply or delivery, or any other failure to perform by any reason under any
contracted supplier of any service to Sonoran Services.
	 
	 	23.5	 	Breakdown, repair or replacement of any machinery, equipment, pipeline or other facility not
foreseeable or preventable through normal maintenance and only for periods reasonable to make
repairs.
	 
	 	23.6	 	Shortage of power, supplies, material or labor, or where such interruption or failure is
directly or indirectly due to any cause not reasonably preventable by
Sonoran Services or not
reasonably within its control.

	 	 	 	In case such interruption or failure shall be (Illegible) by any cause specified under Paragraphs
23.4, 23.5, and 23.6 above, Sonoran Services will endeavor to remedy or eliminate such cause as
expeditiously as is reasonably possible. In the event claims or causes of action are instituted by
third parties as a result of the interruptions as hereinabove specified, Sonoran Services shall
indemnify and defend District against all liability or loss.
	 
	 	24.	 	Notice. All notices under this Agreement shall be provided to the parties designated
below. Written notices may be provided by personal delivery, fax or mailing by registered or
certified mail, return receipt requested, to the address below. Notice of any change in address
shall be given in the same manner.

	 	 	 
	Sonoran
Utility Services, L.L.C.:

	 	District:
	George H. Johnson

	 	Stanley D. Griffis, Ph.D, Clerk
	5230 E. Shea Blvd.

	 	Pinal County Board of Supervisors
	Scottsdale, Arizona 85254

	 	P.O. Box 827

Florence, Arizona 85232

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	 	25.	 	Miscellaneous. The terms of this Agreement constitute the entire agreement between
the parties, and the parties represent that there are no other collateral agreements or side
agreements not otherwise provided for within the terms of this Agreement This Agreement may
not be changed, modified or rescinded except in writing, signed by all parties hereto. This
Agreement shall be subject to and governed by the laws of the State of Arizona. No waiver by a
party of any breach by the other party of any provision of this Agreement nor any failure by a
party to insist on strict performance by the other party of any provision of this Agreement
shall in any way be construed to be a waiver of any future or subsequent breach by a party or
bar the right of the other party to insist on strict performance. Each party is an independent
contractor and not an agent or employee of the other party. This Agreement shall insure to the
benefit of, be binding upon, and be enforceable by the parties hereto and their respective
successors and assigns.

     IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed as of the first
day and year written above.

	 	 	 	 	 	 	 	 	 	 	 
	387 WASTEWATER
IMPROVEMENT DISTRICT, a political
subdivision of the state of Arizona	 	 	 	SONORAN UTILITY SERVICES, L.L.C., an
Arizona corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Sandie Smith
	 	 
	 	By:
	 	/s/ George H. Johnson	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Sandie Smith, Chairman
	 	 
	 	 	 	George H. Johnson	 	 
	 

	 	Board of Directors
	 	 	 	 	 	Its: President	 	 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	ATTEST

 	 	 
	/s/ Stanley D. Griffis
 	 	 
	Stanley D. Griffis, Ph. D., Clerk 	 	 
	Board of Supervisors 	 	 
	 

Date: June 25, 2003 approved

          June 30, 2004 Signed

APPROVED
as to form this 30th day of June, 2003.

	 	 	 	 	 
	ROBERT CARTER OLSON

PINAL COUNTY ATTORNEY

 	 	 
	By:  	/s/ Richard V. Husk
 	 	 
	 	Richard V. Husk 	 	 
	 	Deputy County Attorney 	 	 

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Exhibit
A

387 Waste Water Improvement District

Those portions of Sections 26,27, 28,33,34 Township 4 South Range 3 East; Sections 2,3,11.12
Township 5 South Range 3 East; Sections 21, 28 Township 4 South 4 East; Section 3 Township 5 South
4 East of the Gila and Salt River Base and Meridian. Pinal County, Arizona being more particularly
described as follows;

Beginning at the Northwest corner of Section 28 Township 4 South Range 3 East; thence East along
the north line of section 28 to the easterly line of Hamilton Ave.; thence southerly along said
easterly line to a point 77.46 feet north of the east west mid-section line of said Section 28;

Thence North 89 degrees 38 minutes 01 seconds east 397.78 feet;

Thence North 00 degrees 21 minuses 59 seconds west 360.00 feet;

Thence North 89 degrees 38 minutes 01 seconds east 290.00 feet;

Thence North 00 degrees 21 minutes 59 seconds west 345.00 feet;

Thence North 89 degrees 38 minutes 01 seconds 310.59 feet;

Thence South 00 degrees 09 minutes 24 seconds east 730.62 feet;

Thence North 89 degrees 09 minutes 29 seconds east 514.33 feet;

Thence South 00 degrees 45 minutes 20 seconds east 60.69 feet; to the east west mid-section line of
said Section 28; Thence East to the westerly ROW line of John Wayne Parkway/State Routs 347
(fka: Maricopa Road); Thence southerly along said west ROW line to the South line of Section
28; Thence West along the South line of section 28 to the Southwest
corner of section 28;
Thence North along the West line of section 28 to the West quarter corner of section 28;

Thence East 330.00 feet;

Thence North 660 feet;

Thence West 330.00 feet to the West section line of section 28;

Thence north along said West section line to the Northwest corner of section 28 and the Point of
Beginning.

The West half of section 27 township 4 south range 3 east lying south and west of Rail Road and
those portions of section 28 more particularly described in PCR Fee Number 2001-040284.

Groves 1 thru 23, Inclusive, of Maricopa Groves Unit 3 according to PCR Book 17 of Maps, Page 3

Those
portions of lots 5 and 6 Block 40, and lots 5 and 6 Block 42 of Maricopa Townsite according
to PCR Book 3 of Maps Page 6 lying West of the East line of section 27

Page 1 of 3

 

That portion of the North 1/2 of the Northeast 1/4 of section 27, lying East of Maricopa Groves Unit 3
and North of Maricopa Townsite

That portion of the northwest quarter of section 27 township 4 south range 3 east, lying East of
and adjacent to the northwest 1/4 of the northwest 1/4 and West of Groves 6 and 7 of Maricopa Groves
Unit 3

Except that portion conveyed to Maricopa Rotary in PCR Fee Number 2003- 004986

Also Excepting that portion of the Northwest 1/4 of section described as follows; Commencing at the
Southwest corner of Grove 7 of Maricopa Groves Unit 3, said point being on the Northwesterly line
of the Maricopa Rotary parcel described in PCR Fee Number 2003-004986. Thence North 54 degrees 19
minutes 31 seconds West 37.35 feet to the Point of Beginning;

Thence North 54 degrees 19 minutes 31 seconds West along the North line of said Maricopa Rotary
parcal 186.73 feet;

Thence North 00 degrees 52 minutes 51 seconds West 100.00 feet

Thence North 89 degrees 07 minutes 03 seconds East 150.00 feet;

Thence South 00 degrees 52 minutes 54 seconds East 211.22 feet; to the Point of Beginning.

The Northwest 1/4 of the Northwest 1/4 and the West 80.00 feet of the East 1/2 of the West 1/2 Section
26 Township 4 South Range 3 East

Lots
1,2,3,4, Block 40, and Lots 1,2,3,4, Block 42, Lots 1,2,3, Block 44 of Maricopa Townsite
according to PCR Book 3 of Maps Page 6

Except that portion of Lot 3 Block 44 lying in section 27

All of section 28 and the South 1/2 of section 21 Township 4 South Range 4 East

The Northeast 1/4 of section 3 Township 5 South Range 4 East;

The North 1/2 of the Northwest 1/4 and the Northeast 1/4 of Section 33 Township 4 South Range 3 East

The Southwest 1/4 of Section 34 Township 4 South Range 3 East;

Except any portion of the John Wayne Parkway ROW;

The North 1/2 of Section 3 Township 5 South Range 3 East;

Except the West 150 feet

Also Except the North 220.00 feet of the West 264.00 feet of the East 636.00 feet of GLO Lot 3

Also Except the North 210.00 feet of the East 210.00 feet of GLO Lot 3

Page 2 of 3

 

All of Sections 2 and 11 Township 5 South Range 3 East

The West 1/2 of Section 12 Township 5 South Range 3 East;

Except the
East
1/2
of the Northeast
1/4
of the Northwest 1/4,

Also Except the East 229.26 feet of the South 950.00 feet

That portion of the Southeast 1/4 of the Northeast 1/4 of Section 28 Township 4 South Range 3 East.
Lying East of John Wayne Parkway/State Route 347;

Except the
North 50 feet

Also Except the South 150.00 feet of the North 200.00 feet of the West 147.00 feet

Also Except the North 150.00 feet of the South 320.00 feet of the West 147.00 feet

Page 3 of 3

 

 

 

387 WASTEWATER IMPROVEMENT DISTRICT

Rates, Charges, and Fees

Rates effective January 1, 2003

MONTHLY RATES

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Monthly
	Water Motor Size	 	 	 	 	 	Charge
	 
	 	 	 	 	 	 	 	 
	3/4”
	 	 	 	 	 	$	38.50	 
	1”
	 	 	 	 	 	$	49.00	 
	11/2”
	 	 	 	 	 	$	63.00	 
	2”
	 	 	 	 	 	$	101.50	 
	3”
	 	 	 	 	 	$	385.00	 
	4”
	 	 	 	 	 	$	735.00	 
	6”
	 	 	 	 	 	$	1,015.00	 
	 
	 	 	 	 	 	 	 	 
	Effluent Sales	 	On a per 1,000 gallon basis

On a per Acre-Font basis	 	$
$	0.92
300.00	 
	 
	 	 	 	 	 	 	 	 
	OTHER WASTEWATER RATES	 	 	 	 
	Service Line Connection Charge
(Payable at (Illegible) of new Service Location)	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Per Service Line	 	$	350.00	 
	 
	 	 	 	 	 	 	 	 
	ADDITIONAL CHARGES	 	 	 	 
	A.	 	Establishment of Service	 	$	25.00	 
	 	 	Additional charge if after Hours:	 	$	15.00	 
	B.	 	Re-establishment of Service	 	 	(1	)
	C.	 	Deposit	 	 	 	 
	 
	 	1.	 	Residential	 	2 times estimated bill
	 
	 	2.	 	Commercial	 	2.5 times estimated bill
	 
	 	3.	 	Deposit Interest	 	 	3.00	%
	D.	 	Charge for NSF Check	 	$	15.00	 
	E.	 	Late Payment Charge	 	$	5.00	 
	F.
	 	Main Extension (Refundable per Agreement)	 	Cost

 

			
	(1)	 	Months off system times Minimum Monthly Charge

	 
	HOOK-UP FEES

All Hook-Up Fees are payable for each service line installed irrespective of whether a

lateral line is connected at the time of construction. HUF’s for all units within a subdivision are payable

in full at the time the Final Plat of the subdivision is recorded. HUF’s are

non-refundable by the District or its Management Contractors.

	 	 	 	 	 
	 	 	HUF
	Lateral Size	 	per Lateral
	4”

	 	$	1,000.00	 
	6”

	 	$	2,000.00	 
	8” or greater

	 	$	4,000.00	 

					
	 
	 
	 
	 
	 	Wastewater Rates

Exhibit B
	 	6/23/2003exv10w30

DO NOT DISCARD THIS PAGE. THIS COVER PAGE IS RECORDED AS PART OF YOUR DOCUMENT. THE CERTIFICATE OF
RECORDATION WITH THE FEE NUMBER IN THE UPPER RIGHT CORNER IS THE PERMANENT REFERENCE NUMBER OF THIS
DOCUMENT IN THE PINAL COUNTY RECORDER’S OFFICE.

Form RE-49

 

 

AGREEMENT RELATING TO ASSIGNMENT

OF MANAGEMENT AGREEMENT FOR

THE 387 WASTEWATER IMPROVEMENT DISTRICT

This Agreement is made among the 387 Wastewater Improvement District (the “387 District” or the
“District”), Sonoran Utility Services, L.L.C. (“Sonoran”) and Global Water Resources, LLC
(“Global”), with an Effective Date of September 1, 2005.

Recitals

1. On June 25, 2003 the 387 District entered into a Wastewater Treatment, Collection and
Management Services Agreement (“Management Agreement”) with Sonoran whereby Sonoran agreed to
construct, own and operate the facilities necessary for the 387 District to carry out its statutory
purpose of wastewater services to its member lands.

2. On or about June 1, 2005, the 387 District scheduled a date to commence a public hearing to
determine whether defau1t(s) should be declared under the Management Agreement.

3. On June 15, 2005 Sonoran and Global entered into an agreement whereby Sonoran assigned to Global
certain rights and obligations under the Management Agreement.

4. The 387 District believes that the assignment of the Management Agreement is not effective
without the consent of the 387 District, which consent has not been given. Sonoran and Global
believe that the Management Agreement may be assigned without the consent of the 387 District.

5. The 387 District believes that there have been past and current defaults in the Management
Agreement. Sonoran and Global do not believe that there have been defaults.

6. On June 30, 2005 Global applied to the Arizona Corporation Commission (“ACC”) for a
certificate of convenience and necessity to provide private water service to the lands located
within the 387 District. As part of that application Global submitted the petitions of the majority
of the landowners in the 387 District that would request dissolution of the 387 District and or
deannexation from the 387 District in the event the ACC approved the application for the
certificate of convenience and necessity.

7. The parties by this agreement wish to clarify the relative rights and obligations of the
parties, resolve the issues relating to the assignment and the alleged contract breaches and
amend the Management Agreement.

Agreement

Now therefore, for their mutual promises contained herein, and for other good and valuable
consideration, the parties agree:

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	1.	 	Assignment. Upon the effective date of the Agreement the 387 District consents to
the assignment of the Management Agreement to Global, consistent with the provisions of this
Agreement.
	 
	2.	 	Assumption of Liabilities by Global. Effective on March 30, 2005 Global assumes all
duties and responsibilities under the Management Agreement. This assumption shall not include the
obligation of indemnification (or any other obligation or liability) of the 387 District for acts
or omissions occurring before March 30, 2005, provided that Global provides satisfactory evidence
to the District that the insurance required by the Management Agreement has been procured and is in
place, covering acts and omissions from the inception of the Management Agreement.
	 
	3.	 	No Release of Sonoran. The assignment shall not release Sonoran from its
obligations under the Agreement with respect to acts or omissions, or performance of the Management
Agreement, occurring prior to March 30, 2005.
	 
	4.	 	Forgiveness of Contract Breach. Upon the Effective Date the District forgives all
contract breaches including but not limited to the following alleged contract breaches, to the
extent that they exist on the Effective Date:

	 	1.	 	Failure to construct usable wastewater treatment plants, transmission and
collection lines, lift stations, pumps, valves, connections, storage and/or disposal
facilities necessary to collect, treat, and dispose of all wastewater flows within the
District and as such flows may increase.
	 
	 	2.	 	Failure to provide and construct said Facilities at locations within the
District.
	 
	 	3.	 	Failure to pay all costs of acquisition of real property necessary for said
Facilities.
	 
	 	4.	 	Failure to provide an adequate, continuous wastewater services to District
customers
	 
	 	5.	 	Failure to provide required payment and performance bonds.
	 
	 	6.	 	Failure to provide required insurance coverages.
	 
	 	7.	 	Failure to inspect, maintain, and/or repair all necessary Facilities.
	 
	 	8.	 	Failure to obtain all necessary City of Maricopa permits.

5. Establishment of Indemnification Fund. The parties will establish an indemnification
fund for the purpose of indemnifying the District and its board members from currently pending and
unasserted claims arising out of acts or omissions of Sonoran during its performance under the
Management Agreement, and for the purpose of securing payment to the District for other amounts due
under this Agreement or under the Management Agreement. Initially the indemnification fund shall
consist of an irrevocable letter of credit issued and maintained by

2

 

Global, and delivered to the District in the amount of $1 million plus a pledge of $1 million of
the purchase money proceeds otherwise due from Global to Sonoran under the June 15, 2005
asset purchase agreement (“APA”) between those parties. The letter of credit shall be
substantially in the form attached as Exhibit One to this Agreement. At the time that the initial
payment under the APA is due from Global to Sonoran, the purchase money pledge amount of
$1 million will be replaced with cash, which will be deposited in an escrow account (it being the
intent of the parties that the cash component of the escrow after the initial payment under the
APA will be the lesser of $1 million or the remaining required indemnification fund). The
purchase money pledge agreement shall be substantially in the form attached as Exhibit Two to
this Agreement. The escrow account will be established substantially according to the escrow
agreement attached as Exhibit Three to this Agreement. This indemnification fund shall also
serve as the indemnification fund contemplated by the “Agreement Relating to Assignment of
Management Agreement for the 387 Water Improvement District”, entered into by Sonoran and
Global on even date herewith. Sonoran and Global will fund the indemnification account to
maintain at least the following balances:

	 	 	 
	Upon the Effective Date:

	 	$2,000,000, in the
	form referenced above.
	 	 

Upon the dismissal of the Lennar claims against Pinal County, the District, the District
Board members, and the Pinal County Board of Supervisors (hereinafter collectively referred
to as the “Related Parties”) and there are no other claims pending or threatened against
Districts and Related Parties arising out of or relating to the Agreements or the Operating
Agreements, or the operation of the Districts (“District Claims”), and the purchase money
pledge has been replaced by cash, the escrow will be reduced by $1,000,000 from the purchase
money pledge, letter of credit, or cash, or a combination of these, as determined by the
District.

Upon the dismantling or District-accepted alternative plan for usage of plant number one, and
there are no “District Claims” pending the escrow will be reduced by $500,000 from the
purchase money pledge, letter of credit, or cash, or a combination of these, as determined by
the District.

Upon one year following the dissolution of the District and there are no “District Claims”
pending the escrow will be reduced by $250,000 from the purchase money pledge, letter of
credit, or cash, or a combination of these, as determined by the District.

Upon two years following the dissolution of the District and there are no “District Claims”
pending the escrow will be reduced by $250,000 from the purchase money pledge, letter of
credit, or cash, or a combination of these, as determined by the District.

The 387 District shall provide twenty days written notice to Global in the event that it intends to
draw upon the letter of credit or the escrow.

3

 

6. Additional and Modified Management Agreement Terms. The Management Agreement will
continue according to its terms, except as modified as follows, which modifications shall be
effective as of March 30, 2005:

6.1 Global shall be substituted for Sonoran Services in the Management Agreement.

6.2 Replace paragraph 20 as follows:

20. Insurance and Reimbursement of Expenses

20.1 During the Term Global shall obtain and maintain on behalf of District and Global the
insurance coverage set forth in the attached Exhibit C [Exhibit Four to this Agreement] to
this Agreement, as the same may be amended by the mutual agreement of District and Global
from time to time. All costs associated with obtaining and maintaining the necessary
insurance coverage described herein shall be paid by Global. All applicable insurance
policies shall be issued by such companies authorized to do business in Arizona. District
shall be named an additional insured in all liability policies, and each such policy shall
contain a waiver by the insurer of the rights of recourse of subrogation by the insurer
against the other insured parties, to the extent such waiver is available under such
policies. All policies of insurance provided for in this Section 20, to the extent
obtainable, will have attached an endorsement that such policy may not be canceled or
materially changed without at least thirty (30) days prior written notice to District and
Global.

20.2 In the event Global enters into any leases, licenses, or concession agreement in
accordance with the provisions of this Agreement, any such leases, licenses, or concession
agreements shall require all such tenants, licenses and concessionaires to carry such
insurance and in such amounts as is normal and customary for the relevant tenant, licensee or
concessionaire, and to furnish certificates naming District and Global as an additional
insured.

20.3 In addition to the above described policies of insurance, Global shall reimburse the
District for the cost of its public officials errors and omissions coverage in an amount not
to exceed $5,000 per year.

20.4 To the extent any insurance coverage required under this Section is purchased on a
“claims-made” basis, such insurance shall cover all prior acts of the District from and
after the Effective Date, and such insurance shall be continuously maintained until at least
two years beyond the expiration or termination of the Agreement, or Global shall purchase
“tail” coverage, effective upon termination of any such policy or upon termination or
expiration of the Term, to provide coverage for at least two years from the occurrence of
either such event.

20.5 Upon request by the District, Global shall reimburse the District for all reasonable
expenses that the District may incur in administering this Agreement or generally in the
operation of the District, including expenses of retained consultants and attorneys. Other
than normal day to day expenses, the District shall, where reasonably

4

 

feasible, give notice to Global that it intends to incur the expenses, and shall reasonably
consider the input of Global regarding methods of reducing the proposed expenses. The annual
budget for this section bas been established at a maximum of $20,000/annum which shall not be
exceeded except where agreed to in writing by the parties.

6.3 Replace paragraph 21 as follows:

21. Indemnification by Global. Global shall defend (by counsel reasonably
approved by District), indemnify and hold harmless the District and Pinal County, and
District’s and Pinal County’s respective officers, directors, members, shareholders,
employees, and agents from and against any and all claims, causes of action, liabilities,
damages, losses, fines, costs, fees and expenses (including reasonable attorneys’ fees and
expenses) arising from or relating to any of the operation or maintenance of the Facilities
and which accrue on or following March 30, 2005 (other than those arising as a result of the
gross negligence or fraud of the District or anyone acting on its behalf or the District’s
breach of this Agreement); any failure of Global to fully and timely fulfill its duties under
this Agreement or under any applicable law; Global’s willful, negligent or criminal
misconduct, negligence or fraud.

6.4 Replace paragraph 22 as follows:

22. Term and Termination.

22.1 Term. To permit Global to recover the substantial investment it is making
in the treatment and collection facilities necessary to perform under this Agreement, this
Agreement shall continue in full force and effect for thirty (30) years from the day and year
first above written and may be extended or renewed at any time during its term upon the
request and mutual agreement of the parties.

22.2 Termination by District. During the Term, District shall have the right to
terminate this Agreement upon the occurrence of one or more of the following events:

a. Global shall fail to keep, observe or perform any material covenant,
agreement, term or provision of this Agreement to be kept, observed or performed by
Global, and except for fraud and criminal misconduct (for which there shall be no cure
period), such breach shall continue for a period of ninety (90) calendar days after
written notice thereof to Global from District provided that Global promptly begins
and diligently pursues cure of the same; provided, however, that if the nature of the
breach is such that it cannot reasonably be cured within such ninety (90) calendar day
period, Global shall not be deemed to be in default hereunder if Global commences to
cure such breach within such ninety (90) calendar period and thereafter diligently
prosecutes the same to completion;

b. If Global shall apply for or consent to the appointment of a receiver, trustee or
liquidator of Global or of all or a substantial part of its assets, file a voluntary
petition in bankruptcy, admit in writing its inability to pay its debts as they become
due, make a general assignment for the benefit of creditors or file a

5

 

petition or an answer seeking reorganization or arrangement with creditors or to
take advantage of any insolvency proceeding;

c. If any order, judgment or decree shall be entered by any court of competent
jurisdiction, on the application of any creditor, adjudicating Global as bankrupt or
insolvent or approving a petition seeking reorganization of Global or appointing a receiver,
trustee or liquidator of Global or of all or a substantial part of its assets, and such
order, judgment or decree shall continue unstayed and in effect for any period of sixty (60)
calendar days, then District shall have the right, in its sole discretion, to terminate
this Agreement upon written notice thereof to Global given at any time after the period of
grace applicable to such event shall have expired, and this Agreement shall thereafter
terminate as of the date specified in such notice of termination;

d. In the event that the District shall be dissolved according to statute or according
to the request of the District landowners.

22.3 Procedure Upon Termination. Following termination pursuant to the provisions of
section 22.2 (but not including termination under section 22.2(d)in which case the District shall
have no further rights hereunder other than the provisions herein which expressly survive
termination) (“Termination Date”) it is the overall intent and obligation of the parties to take
such steps as may be reasonably necessary to insure continued uninterrupted service to District
customers. These steps shall include, without limitation:

a. District, or a contractor retained by the District, may, upon written notice, assume
operation of the Facilities, under all permits applicable to the operation of the
Facilities. The right of the District to operate the facilities shall continue for at least
one year, during which time the District may evaluate the most effective means to provide
future service to District customers. During the one year following termination, the
District shall have the option, but not the obligation, to purchase any or all of the assets
used by Global to provide the services required and assumed hereunder at their fair market
value.

b. Global shall deliver to District copies of all records in the possession of Global
pertaining to the accounting, management, maintenance, operation and use of the
Facilities.

c. To the extent reasonably necessary to facilitate the rights set forth in
subparagraph 22.3(a), Global shall assign and transfer to District all of Global’s right,
title and interest in and to all licenses and permits, if any, and any and all service
contracts approved by District with respect to the operation and management of the
Facilities, to the extent that the same are legally or contractually transferable by
Global.

22.4 Effect of Termination. The expiration or termination of this Agreement shall not
affect the rights of the terminating Party with respect to any damages it has suffered as a

6

 

result of any breach of this Agreement by the other Party, nor shall it affect the rights of
either party with respect to liability or claims accrued, or arising out of, events occurring
prior to the date of expiration or termination. Neither the right of termination nor the right to
sue for damages, nor any other remedy available to either Party hereunder, shall be exclusive of
any other remedy given hereunder or now or hereafter existing at law or in equity. The
indemnification, insurance and escrow provisions shall survive termination of this Agreement.

6.5 Replace paragraph 18 as follows:

18. Statements and Reports.

18.1 Annual Statements. Within sixty (60) calendar days following the end
of each Fiscal Year (or portion thereof) during the Term, Global shall cause to be
prepared and delivered to District financial statements for the Facilities, reflecting
the results of operations for the Facilities for the Fiscal Year then ended, which
statements need not be audited unless requested by District and/or Global. In the
event this Agreement terminates or is terminated at a time other than the end of a
Fiscal Year, Global shall provide such financial statements through the end of the
Term within sixty (60) calendar days of the Termination Date.

18.2 Books and Records. During the Term, Global will establish and cause
to be implemented a flow of financial and other information to District, at least on a
monthly basis, which will permit District to keep complete and accurate accounting
records of all matters and transactions relating to the management, operation and
maintenance of the Facilities. Such records shall be kept in the manner prescribed by
Generally Accepted Accounting Principles. Without limitation of the foregoing, Global
shall cooperate with District in the implementation of such bookkeeping, accounting or
administrative procedures as District and Global shall reasonably agree as necessary
to prepare and provide the financial statements and reports contemplated by this
Agreement.

6.6 Add the following language to the end of paragraph 15:

During the Term, District hereby retains Global as an independent contractor to operate,
maintain and otherwise manage the Facilities, and Global hereby agrees to operate, maintain
and otherwise manage the same throughout the Term, subject to all terms and conditions of
this Agreement. It is understood that Global assumes all risk and responsibility for the
operation of the Facilities and the business of the District other than with respect to
claims arising as a result of the gross negligence or fraud by the District or those actions
on its behalf or those claims arising as a result of the District’s breach of this Agreement.
Global shall have the duty and responsibility to manage the Facilities and the Business in a
first-class manner, offering first-class services and facilities in accordance with the terms
and conditions of this Agreement, and the reasonable instructions provided by District.
Global covenants with District to furnish its best skill and judgment in performing its
obligations hereunder, and shall at all times

7

 

provide such services in a manner which maintains the good name and business reputation
of the District and the Facilities. Global shall perform its duties and obligations under
this Agreement in an efficient, expeditious, prudent and economical manner, consistent with
the best interests of the District. Global is entering into this Agreement as an independent
contractor to provide the duties set forth in this Agreement.

6.7 Replace paragraph 19 as follows:

19. Fees. Rates, Charges and Revisions. The fees, rates and charges pursuant to which
Global shall provide water service to the District customers shall be as set forth on Exhibit
B attached hereto as modified by District Resolution 060105-387 DWID adopted on June 1, 2005.
Global shall comply with all legal requirements for providing retail utility service,
including without limitation laws regarding non-discrimination in service and pricing. Upon
the Effective Date Global shall submit its current fee structure to the District for
approval. Thereafter, any changes shall be submitted to the District and shall not be
effective until approved by the District.

6.8 Add a new paragraph 25 as follows:

25. Assignment. This Agreement may not be assigned, directly or indirectly, by Global
without the prior written consent of District which may be given or withheld in its sole
discretion.

6.9. Add a new paragraph 26:

26. Contracts and Agreements. Global shall have no authority to enter into
agreements, make application, or otherwise act as agent for the District, except as
specifically provided under the Management Agreement, as amended herein.

6.10 Replace paragraph 2 as follows:

2. Location. Global shall provide the Facilities described in paragraph 1
above at locations mutually agreed upon by the parties.

6.11 Replace paragraph 4 as follows:

4. Easements. The Facilities shall be constructed within established
easements or rights of way or upon property leased, purchased or otherwise set aside for
such use. These easements shall provide Global access to the wastewater system for
purposes of installation, repair, maintenance, and removal of the Facilities.

7. Miscellaneous Terms

7.1 Entire Agreement. This Agreement and the Management Agreement as amended by this
Agreement, constitute the entire agreement between the parties with respect to the subject matter
hereof, and all prior or contemporaneous oral or written agreements, understandings, statements,

8

 

 representations or warranties between the parties other than those set forth herein or herein
provided for, are hereby superseded and merged herein.

7.2 Modifications. No modification or waiver of any provision of this Agreement shall
be binding upon the party against whom it is sought to be enforced, unless specifically set forth
in a writing signed by an authorized representative of that party. A waiver by any party of any of
the terms or conditions of this Agreement in any one instance shall not be deemed or construed to be
a waiver of such terms or conditions for the future, or of any subsequent breach thereof. The
failure by any party at any time to enforce any of the provisions of this Agreement, or to require
at any time performance of any of the provisions hereof, shall in no way be construed to be a
waiver of such provisions or to effect either the validity of this Agreement or the right of any
party to thereafter enforce each and every provision of this Agreement.

7.3 Attorney’s Fees and Costs. If either party to this Agreement shall bring any action,
suit, counterclaim, appeal, arbitration or mediation for any relief against the other, declaratory
or otherwise, to enforce the terms hereof or to declare rights hereunder (collectively “Action”),
the losing party shall pay to the prevailing party a reasonable sum for attorneys’ fees and costs
incurred in bringing and prosecuting such Action and/or enforcing any judgment, order, or ruling
(collectively “Decision”) granted therein, all of which shall be deemed to have accrued on the
commencement of such Action and shall be paid whether or not such Action is prosecuted to a
Decision. Any Decision entered in such Action shall contain a specific provision providing for the
recovery of attorneys’ fees and costs incurred in enforcing such Decision. The court or arbitrator
may fix the amount of reasonable attorneys’ fees and costs on the request of either party. For the
purposes of this section, attorneys’ fees shall include without limitation, fees incurred in the
following: (a) postjudgment motions and collection actions; (b) contempt proceedings; (c)
garnishment, levy, and debtor and third party examinations; (d) discovery; and (e) bankruptcy
litigation.

7.4 Section and Other Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

7.5 Successors. Except as otherwise specifically provided in this Agreement, this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns and other legal representatives.

7.6 Invalidity. If any material covenant, condition or provision herein contained is held
to be invalid, void or unenforceable, the remaining provisions and portions shall nevertheless be
carried into effect.

7.7 Counterparts. This Agreement may be executed in any number of counterparts, each of
which will be deemed to be an original, and all of which together will constitute one instrument.

7.8 Governing Law. This Agreement will be construed and enforced in accordance with and
governed by the substantive laws of the State of Arizona.

7.9 Costs and Expenses. Upon the Effective Date Sonoran shall reimburse the District for
all its reasonable expenses, including attorneys fees, incurred in connection with the negotiation
and

9

 

preparation of this Agreement, and in closing and carrying out the transactions contemplated hereby
but in no event shall such costs exceed $50,000.

7.10 Notices. Any notice or other communication to be given or served upon any party
hereto must be in writing, and delivered to the other parties (i) in person, (ii) by facsimile
transmission (with the original and a copy of the facsimile confirmation following in the United
States mail), (iii) by overnight delivery service (including Federal Express), or (iv) by certified
mail, return receipt requested. Such notice will be deemed received upon receipt or proof of
refusal to accept delivery. Notice or other communication will go to the parties at the following
addresses:

	 	 	 
	If to Districts:

	 	Terry Doolittle

Superintendent

387 Wastewater Improvement District

P. O. Box 827

Florence, AZ 85232
	 
	 	 
	If to Sonoran:

	 	Sonoran Utility Services, L.L.C.

1121 W. Warner Road, Suite 109

Tempe, AZ 85254
	 
	 	 
	If to Global:

	 	Global Water Resources, LLC

Attention: Trevor Hill

22601 North 19th Avenue, Suite 210

Phoenix, AZ 85027

This Agreement made as of the Effective Date:

10

 

11

 

EXIHIBIT ONE

WELLS FARGO BANK, N.A.

TRADE SERVICES DMSION, NORTHERN CALIFORNIA

ONE FRONT STREET, 21st FLOOR

SAN FRANCISCO, CALIFORNIA 94111

Contact Phone: 1(800) 798-2815 (Option 1)

Email: sftrade@wellsfargo.com

IRREVOCABLE LETTER OF CREDIT

     
                    
                    
               
                    Letter of Credit No. 
                   
                    

                   
                  
            Date:                  
   , 2005

387 Water Improvement District

387 Wastewater Improvement District

(collectively “387 District”)

Ladies and Gentlemen:

     At the request and for the account of Global Water Resources, LLC we hereby establish our
Irrevocable Letter of Credit in your favor in the amount of One Million Dollars ($1,000,000)
available with us at our above office by payment of your draft drawn on us at sight accompanied by
your and Escrow Agents signed and dated statement worded as follows:

“The undersigned individuals, including an authorized representative of 387
District and the Escrow Agent under that certain Agreements Relating to. Assignment
of Management Agreements for the 387 Water and Wastewater Improvement Districts
(“Agreements”), certifies that the amount drawn under Wells Fargo Bank, N.A. Letter of
Credit No.     is due pursuant to the terms of the Agreements and, specifically Section 5
thereof and the Escrow Instructions attached thereto. All conditions precedent to a
draw under the Letter of Credit as set forth in the Agreements and the Escrow
Instructions attached thereto have been fulfilled including, but not limited to, the
giving of all required notices and the passing of all agreed-upon cure periods.”

     The draft must also be accompanied by the original of this Letter of Credit for our
endorsement on this Letter of Credit of our payment of such draft.

     Only drafts drawn and presented under and in compliance with the terms of this Letter of
Credit will be honored, and such draft may be for less than the full amount of this Letter of
Credit.

     The draft must be marked “Drawn under Wells Fargo Bank, N.A. Letter of Credit No.                     .”

 

 

     If any instructions accompanying a drawing under this Letter of Credit request that payment is
to be made by transfer to an account with us or at another bank, we and/or such other bank may rely
on an account number specified in such instructions even if the number identifies a person or
entity different from the intended payee.

     This
Letter of Credit expires at our above office on December 31, 2005.

     This Letter of Credit is subject to the Uniform Customs and Practice For Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, and engages us in
accordance therewith.

	 	 	 	 	 
	 	 	Very truly yours
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, N.A.
	 
	 	 	 	 
	 

	 	BY:
	 	 
	 

	 	 	 	 
	 

	 	 	 	(AUTHORIZED SIGNATURE)

Agreed to and accepted by:

      

 

APPLICANT

      

 

AUTHORIZED SIGNATURE

2

 

EXHIBIT TWO

SECURITY AGREEMENT

1. Grant of Security Interest. For valuable consideration, the undersigned Sonoran Utility
Services, LLC, an Arizona limited liability company (“Debtor”), hereby grants and transfers to the
387 Wastewater Improvement District and the 387 Water Improvement District, both improvement
districts organized pursuant to A.R.S. Section 48-901 et. seq. (“Creditor”) a security interest
this       day of                     , 2005 in the following property of Debtor (collectively, the “Collateral”): One
Million Dollars out of the initial purchase proceeds due to the Debtor under that certain Purchase
and Sale Agreement by and among Global Water Resources, LLC and
Debtor dated June 15, 2005 together
with whatever is received when any of the foregoing or the proceeds thereof are sold, leased,
collected, exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including without limitation, all rights to payment (collectively “Proceeds”).

2. Obligations Secured. The obligation secured hereby is the requirement to pledge collateral
for the Indemnification Fund in accordance with the terms and conditions of Section 5 of the
Agreements (“Agreements”) Relating to the Management Agreements between Global Water Resources, LLC
and the Creditor dated effective September 1, 2005 (the “Indebtedness”).

3. Termination. This Agreement will terminate in accordance with the terms and conditions
of Section 5 of the Agreements.

4. Covenants of Debtor.

     (a) Debtor agrees to: (i) to execute and deliver such documents as Creditor reasonably
deems necessary to create, perfect and continue the security interests contemplated hereby;
(ii) not to change its name, and as applicable, its chief executive office, its principal
residence or the jurisdiction in which it is organized and/or registered without giving
Creditor prior written notice thereof; and (iii) to cooperate with Creditor in perfecting all
security interests granted herein.

     (b) Debtor agrees with regard to the Collateral and Proceeds: (i) that Creditor is
authorized to file financing statements in the name of Debtor to perfect Creditor’s security
interest in Collateral and Proceeds; (ii) not to permit any lien on the Collateral or
Proceeds except in favor of Creditor.

5. Powers of Creditor. Debtor appoints Creditor its true attorney in fact to perform any of the
following powers, which are coupled with an interest, are irrevocable until termination of
this Agreement and may be exercised from time to time by Creditor’s officers and employees, or
any of them, upon an Event of Default: (a) to perform any obligation of Debtor hereunder in
Debtor’s name or otherwise; (b) to give notice to account debtors or others of Creditor’s
rights in the Collateral and Proceeds, to enforce or forebear from enforcing the same and make
extension and modification agreements with respect thereto; (c) to release persons liable on
Collateral or Proceeds and to give receipts and acquittances and compromise disputes in
connection therewith; (d) to release or substitute security; (e) to receive, open and read
mail addressed to Debtor with

 

 

respect to the Collateral; (f) to verify facts concerning the Collateral and Proceeds by inquiry of
obligors thereon, or otherwise, in its own name or a fictitious name; (g) to endorse, collect,
deliver and receive payment under instruments for the payment of money constituting or
relating to Proceeds; (h) to exercise all rights, powers and remedies’ which Debtor would
have, but for this Agreement, with respect to all Collateral and Proceeds subject hereto.

6. Events of Default. The occurrence of any of the following shall constitute an “Event of
Default” under this Agreement: (a) any default in the payment or performance of any obligation, or
any defined event of default this Agreement; (b) any impairment of the rights of Creditor in any
Collateral or Proceeds

7. Remedies. Creditor shall have all other rights, powers, privileges and remedies granted to a
secured party upon default under the Arizona Uniform Commercial Code or otherwise provided by law,
including without limitation, the right (a) to contact all persons obligated to Debtor on any
Collateral or Proceeds and to instruct such persons to deliver all Collateral and/or Proceeds
directly to Creditor, and (b) to sell, lease, license or otherwise dispose of any or all Collateral
following not less than 20 days’ written notice to debtor and Global Water Resources, LLC. All
rights, powers, privileges and remedies of Creditor shall be cumulative. No delay, failure or
discontinuance of Creditor in exercising any right, power, privilege or remedy hereunder shall
affect or operate as a waiver of such right, power, privilege or remedy; nor shall any single or
partial exercise of any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power, privilege or
remedy.

8. Disposition of Collateral and Proceeds; Transfer of Indebtedness. In disposing of Collateral
hereunder, Creditor may disclaim all warranties of title, possession, quiet enjoyment and the
like. Any proceeds of any disposition of any Collateral or Proceeds, or any part thereof, may
be applied by Creditor to the payment of expenses incurred by Creditor in connection with the
foregoing, including reasonable attorneys’ fees, and the balance of such proceeds may be
applied by Creditor toward the payment of the Indebtedness.

9. Notices. All notices, requests and demands required under this Agreement must be in writing,
addressed to Creditor, Debtor and Global Water Resources, LLC at the following addresses:

	 	 	 
	If to Creditor:

	 	Terry Doolittle,

Superintendent

387 Districts

P. O. Box 827

Florence, AZ 85232
	 
	 	 
	With a copy to:

	 	Kenneth C. Sundlof, Jr.

Jennings, Strouss & Salmon, P.L.C.

201 E. Washington Street, 11th Floor

Phoenix, AZ 85004-2385

2

 

	 	 	 
	If to Debtor:

	 	Sonoran Utility Services, L.L.C.

1121 W. Warner Road, Suite 109

Tempe, AZ 85254
	 
	 	 
	If to Global Water Resources, LLC:

	 	Trevor Hill

Deer Valley Financial Center

22601 N. 19th Ave, Suite 210

Phoenix, AZ 85027
	 
	 	 
	With a copy to:

	 	Andrew Abraham

Burch & Cracchiolo, PA

PO Box 16882

Phoenix, AZ 85011

or to such other address as any party may designate by written notice to each other party, and
shall be deemed to have been given or made as follows: (a) if personally delivered, upon delivery;
(b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the
U.S. mail, fIrst class and postage prepaid; and (c) if sent by telecopy, upon receipt.

10. Successors; Assigns; Amendment. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives, successors and assigns of
the parties, and may be amended or modified only in writing signed by Creditor and Debtor.

11. Severability of Provisions. If any provision of this Agreement shall be held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or any remaining
provisions of this Agreement.

12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona.

     IN WITNESS WHEREOF, this Agreement has been duly executed as of                     .

	 	 	 	 	 
	 	 	DEBTOR
	 	 	Sonoran Utility Services, LLC
	 
	 	 	 	 
	 

	 	By
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	CREDITOR

3

 

4

 

EXHIBIT THREE

ESCROW INSTRUCTIONS

     Pursuant to Section 5 of the “Agreement Relating to Assignment of Management Agreement for the
387 Water Improvement District” and Section 5 of the “Agreement Relating to Assignment of
Management Agreement for the 387 Wastewater Improvement District”, both having an Effective Date of
September 1, 2005 (“Agreements”), made among the 387 Water Improvement District (the “387 Water
District”), the 387 Wastewater Improvement District (the “387 Wastewater District”) (collectively
the “Districts”), Sonoran Utility Services, L.L.C. (“Sonoran”) and Global Water Resources, LLC
(“Global”), Escrow Agent is hereby instructed to hold and disburse the Escrow Funds, according to
the following instructions:

     1. Defined Terms. Each capitalized term appearing herein shall have the meanings
ascribed herein or, if no meaning is ascribed herein, shall have the meaning ascribed to such term
in the Agreements.

     2. Delivery of the Escrow Funds. Upon the Effective Date, Global and Sonoran will
cause an irrevocable letter of credit to be issued and maintained by Global in the amount of $1
million (“Letter of Credit”) plus a pledge (by way of execution and delivery of a security
agreement to the Escrow Agent in a form approved by the parties hereto) of $1 million of the
purchase money proceeds under the APA as detailed in Section 5 of the Agreements (“Pledge”) to be
deposited with the Escrow Agent (the Letter of Credit and the Pledge, together with any replacement
thereof, are collectively referred to as the “Escrow Funds”). The Escrow Agent will hold the Escrow
Funds and allow them to be drawn upon/executed upon/released in accordance with Section 5 of the
Agreements and as set forth herein. Notwithstanding any other provision herein, there shall be no
draws on the Letter of Credit without the Districts giving all parties hereto not less than twenty
(20) days written notice of its intent to do so which notice shall further provide details of the
basis upon which the Districts believe they are entitled to draw on the Letter of Credit. At the
time that the initial payment under the APA is due from Global to Sonoran, the purchase money
pledge amount of $1 million will be replaced with cash, subject to the escrow fund reduction
provisions set forth below. The Escrow Fund is to serve as security for the performance of Global
and Sonoran of their respective obligations under the Agreements and under the Water Supply and
Management Services Agreement and the Wastewater Treatment, Collection and Management Services
Agreement, as amended (“Operating Agreements”).

     4. Disposition of the Escrow Funds The Escrow Funds shall be held and disbursed by the
Escrow Agent in strict accordance with the following terms and conditions:

(a) From time-to-time, Districts may submit disbursement requests for amounts due to the
Districts under the Agreements. The disbursement request shall be accompanied by reasonable backup
and shall be simultaneously submitted to Global and Sonoran. Global and/or Sonoran shall have five
days to object to the amount requested. If Global or Sonoran does not object to the disbursement
request within the five day period, each shall be deemed to have approved the

 

 

 draw request. If Global or Sonoran objects, Global, Sonoran and Districts shall confer and
reach a mutually acceptable amount.

(b) Escrow Agent shall disburse funds to Sonoran as follows:

     1. Upon the dismissal of the Lennar claims against Pinal County, the District, the
District Board members, and the County Supervisors and there are no other claims pending or
threatened against Districts and Related Parties arising out of or relating to the Agreements
or the Operating Agreements, or the operation of the Districts (“District Claims”), and the
purchase money pledge has been replaced by cash, the escrow will be reduced by $1,000,000
from the purchase money pledge, letter of credit, or cash, or a combination of these, as
determined by the District.

     2. Upon the dismantling or District-accepted alternative plan for usage of plant number
one, and there are no “District Claims” pending the escrow will be reduced by $500,000 from
the purchase money pledge, letter of credit, or cash, or a combination of these, as
determined by the District.

     3. Upon one year following the dissolution of the District and there are no “District Claims”
pending the escrow will be reduced by $250,000 from the purchase money pledge, letter of
credit, or cash, or a combination of these, as determined by the District.

     4. Upon two years following the dissolution of the District and there are no “District
Claims” pending the escrow will be reduced by $250,000 from the purchase money pledge, letter
of credit, or cash, or a combination of these, as determined by the District.

     5. Liability, Duties and Obligations of Escrow Agent. The parties do hereby agree as
follows:

          (a) Escrow Agent undertakes to perform only such obligations as are expressly set forth
herein.

          (b) Except for Escrow Agent’s negligence or willful misconduct, Escrow Agent shall not be
liable for any action taken by it in good faith and authorized by or within the rights and powers
conferred upon it under these Instructions. Global and Sonoran shall indemnify and save harmless
Escrow Agent against all costs, damages, attorney’s fees, expenses and liabilities (except as
caused by the negligence or willful misconduct of Escrow Agent or the District), which it may incur
or sustain in connection with these Instructions or the escrow or any court action arising there
from (except for acts of gross negligence or willful misconduct on the part of Escrow Agent or the
District) and will pay the same upon demand.

          (c) In the event of any dispute with respect to the disposition of the Escrow Funds, Escrow
Agent shall disburse the undisputed portion thereof in strict compliance with the terms of these
Instructions, but Escrow Agent shall not be required (but may if it so elects) to affirmatively
commence any action by interpleader or otherwise.

2

 

     6. Expenses. Global agrees to pay all costs and expenses incurred by Escrow Agent of
any kind, whatsoever, pertaining to the Escrow Funds, or in connection with the services to be
rendered hereunder, including, but not limited to all charges of Escrow Agent for performing its
duties hereunder; provided, however, Global shall not be obligated to pay any costs or expenses
caused or arising from Escrow Agent’s or the District’s negligence or willful misconduct.

     7. Notices. Any notice or other communication to be given or served upon any party
hereto in connection with these Instructions must be in writing, and delivered to the other parties
(i) in person, (ii) by facsimile transmission (with the original and a copy of the facsimile
confirmation following in the United States mail), (iii) by overnight delivery service (including
Federal Express), or (iv) by certified mail, return receipt requested. Such notice will be deemed
received upon receipt or proof of refusal to accept delivery. Notice or other communication will go
to the parties at the following addresses:

	 	 	 
	If to Districts:

	 	Terry Doolittle

Superintendent

387 Water Improvement District and

387 Wastewater Improvement District

P. O. Box 827

Florence, AZ 85232
	 
	 	 
	If to Sonoran:

	 	Sonoran Utility Services, L.L.C.

1121 W. Warner Road, Suite 109

Tempe, AZ 85254
	 
	 	 
	If to Global:

	 	Global Water Resources, LLC

Attention: Trevor Hill

22601 North 19th Avenue, Suite 210

Phoenix, Arizona 85027
	 
	 	 
	If to Escrow Agent:

	 	LandAmerica/Lawyers Title

Attention: Judy Sorensen

2425 East Camelback Road, Suite 700

Phoenix, AZ 85016

3

 

     Any party may change its address, facsimile number or telephone number for the purpose of this
paragraph by giving written notice of such change to each of the other parties in the manner herein
provided. To be effective, such notice of change must expressly state that it is given for the
purpose of changing the notice provisions of these Instructions.

This Agreement made as of the Effective Date:

	 	 	 	 	 
	SONORAN UTILITY SERVICES, L.L.C.	 	 
	By
	 	 
	 	 

	 	 	 
	 	 

	 	 	 	 	 

	Its
	 	 
	 	 

	 	 	 
	 	 

ACCEPTANCE

 

     The foregoing instructions are hereby accepted this       day of                     , 2005.

	 	 	 	 	 
	 	 	ESCROW AGENT:
	 
	 	 	 	 
	 

	 	By
	 	 
	 

	 	 	 	 
	 

	 	Its:
	 	 
	 

	 	 	 	 

4

 

EXHIBIT FOUR

INSURANCE COVERAGES

	 	 	 	 	 	 	 
	Coverage	 	Carrier	 	Rohey Number	 	Limit of Insurance
	Property

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$2,910,000 Building

$120,000 EDP

$236,700 Owned, Scheduled, Leased/Rented Equipment

$4,030,000 Business Income/Extra Expense
	Crime

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$100,000 Employee Dishonesty; Forgery or Alteration;

Money Securities Inside/Outside; Computer Fraud
	General Liability

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$3,000,000 Aggregate; $1,000,000 Per Occurrence

$1,000,000 Employee Benefits Liability

$3,000,000 Personal Injury and Advertising Injury Per Occurrence

$1,000,000 Damage to Premises Rented to You-Any One Premises

$10,000 Medical Expense

$5,000 Non-Monetary Liability Per Incident
	Professional 

Liability

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$1,000,000 Aggregate; $1,000,000 Each Claim
	Wrongful Acts 

Liability (D&O)

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$1,000,000 Wrongful Acts Aggregate; $1,000,000 Each
Claim
	Employment 

Practices Liability

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$1,000,000 Aggregate; $1,000,000 per claim
	Automobile

	 	Arch Insurance

Corporation
	 	GWPKG0051600
	 	$1,000,000 Per Accident

$5,000 Medical Payments-Per Person

$1,000,000 Uninsured/Underinsured Motorists Coverage

$50,000 Limit per Vehicle-Physical Damage Hired Vehicles
	Umbrella

	 	Arch Insurance

Corporation
	 	GWUFP0051600
	 	$10,000,000 Per Occurrence

$10,000,000 Aggregate

5

 

	 	 	 
	STATE OF ARIZONA

	 	)
	 

	 	) SS
	COUNTY OF PINAL

	 	)

I hereby certify that this is a true copy of the official records on file in the office of the
Recorder of Pinal County located in

	 	 	 
	DKT/PG or Fee No:

	 	2005-134948
	 

	 	 

	 	 	 
	Pages:

	 	          thru     23     of     23
	 

	 	 

	 	 	 
	Date:

	 	10/05/2005
	 

	 	 

Witness my hand and official seal:

Laura Dean-Lytle,

Recorder of Pinal County

     DO NOT REMOVE FROM DOCUMENT, THIS IS NOW PART OF THE DOCUMENT.

 

	 	 	 	 	 	 	 	 	 
	Voter Registration

	 	520-866-7101
	 	Casa Grande Satellite Office:
	 	Recordings
	 	520-866-7486
	Voter Outreach

	 	520-866-7127
	 	820 E. Cottonwood Ln A-2 Casa Grande
	 	Fax
	 	520-866-7487
	Micrographics Division

	 	520-866-7117
	 	Apache Junction Satellite Office:
	 	Recordings
	 	480-983-7038 or 520-866-6179
	TDD Phone

	 	520-866-7166
	 	575 N. Idaho Rd. — Suite 110 Apache Junction
	 	Fax
	 	520-866-6190

6

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