AMENDED AND RESTATED REVOLVING LINE OF CREDIT NOTE
AMENDED AND RESTATED REVOLVING LINE OF CREDIT NOTE
| $35,000,000.00 | Phoenix, Arizona | |
| December 9, 2005 |
FOR VALUE RECEIVED, the undersigned GLOBAL WATER RESOURCES, LLC, GLOBAL WATER MANAGEMENT, LLC
AND GLOBAL WATER RESOURCES, INC. (each individually and collectively, the “Borrower”) promise to
pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at 000 Xxxx
Xxxxxxxxxx, Xxxxxxx, Xxxxxxx 00000, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available funds, the principal sum
of Thirty-Five Million Dollars ($35,000,000.00), or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after each, and any
other term defined in this Note shall have the meaning set forth at the place defined:
(a) “Business Day” means any day except a Saturday, Sunday or any other day on which
commercial banks in Arizona are authorized or required by law to close.
(b) “Fixed Rate Term” means a period commencing on a Business Day and continuing for 1, 2,
3, 6 or 12 months, as designated by Borrower, during which all or a portion of the outstanding
principal balance of this Note bears interest determined in relation to LIBOR; provided however,
that no Fixed Rate Term may be selected for a principal amount less than Five Hundred Thousand
Dollars ($500,000.00); and provided further, that no Fixed Rate Term shall extend beyond December
9, 2007 (the “Maturity Date”). If any Fixed Rate Term would end on a day which is not a Business
Day, then such Fixed Rate Term shall be extended to the next succeeding Business Day.
(c) “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8
of 1%) and determined pursuant to the following formula:
LIBOR =
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Base LIBOR
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(i) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank as
the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for
the purpose of calculating effective rates of interest for loans making reference thereto, on the
first day of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an amount approximately
equal to the principal amount to which such Fixed Rate Term applies. Borrower understands and
agrees that Bank may base its quotation of the Inter-Bank Market Offered Rate upon such offers or
other market indicators of the Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank
Market.
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(ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected
changes in such reserve percentage during the applicable Fixed Rate Term.
(d) “Prime Rate” means at any time the rate of interest most recently announced within Bank at
its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s
base rates and serves as the basis upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Bank may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating rate per
annum equal to the Prime Rate in effect from time to time minus 1.25%, or (ii) at a fixed rate per
annum determined by Bank to be 1.25% above LIBOR in effect on the first day of the applicable Fixed
Rate Term. When interest is determined in relation to the Prime Rate, each change in the rate of
interest hereunder shall become effective on the date each Prime Rate change is announced within
Bank. With respect to each LIBOR selection hereunder, Bank is hereby authorized to note the date,
principal amount, interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule
attached to this Note, which notations shall be prima facie evidence of the accuracy of the
information noted.
(b) Selection of Interest Rate Options. At any time any portion of this Note bears
interest determined in relation to LIBOR, it may be continued by Borrower at the end of the Fixed
Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation
to the Prime Rate or to LIBOR for a new Fixed Rate Term designated by Borrower. At any time any
portion of this Note bears interest determined in relation to the Prime Rate, Borrower may convert
all or a portion thereof so that it bears interest determined in relation to LIBOR for a Fixed Rate
Term designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to
select a LIBOR option for all or a portion of the outstanding principal balance hereof, and at the
end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest rate
option selected by Borrower; (ii) the principal amount subject thereto; and (iii) for each LIBOR
selection, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone
(or such other electronic method as Bank may permit) so long as, with respect to each LIBOR
selection, (A) if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such notice is given to Bank
prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business
Day if Bank, at it’s sole option but without obligation to do so, accepts Xxxxxxxx’s notice and
quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted
by Bank, the quoted rate shall expire and any subsequent LIBOR request from Borrower shall be
subject to a redetermination by Bank of the applicable fixed rate. If no specific designation of
interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate
Term, Borrower shall be deemed to have made a Prime Rate interest selection for such advance or the
principal amount to which such Fixed Rate Term applied.
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(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon demand,
in addition to any other amounts due or to become due hereunder, any and all (i) withholdings,
interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed
by any domestic or foreign governmental authority and related in any manner to LIBOR, and (ii)
future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by
any domestic or foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are not included in
the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR
option available to Borrower hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be payable on the first
day of each month, commencing January 1, 2006.
(e) Default Interest. From and after the Maturity Date of this Note, or such earlier
date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest until paid in full at an increased
rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent
(4%) above the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the term of this
Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of
the limitations, terms and conditions of this Note and of any document executed in connection with
or governing this Note; provided however, that the total outstanding borrowings under this Note
shall not at any time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the holder hereof
less the amount of principal payments made hereon by or for any Borrower, which balance may be
endorsed hereon from time to time by the holder. The outstanding principal balance of this Note
shall be due and payable in full on the Maturity Date.
(b) Advances. Advances hereunder, to the total amount of the principal sum stated
above, may be made by the holder at the oral or written request of (i) Xxxxxxxx X. Xxxxxx, acting
alone, or (ii) any two of the following Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxx Xxxx or Xxxxx Xxxxx, so
long as Xxxxxxx X. Xxxxxx, Xxxxxx Xxxxxx and/or Xxxxxx Xxxx is one of the two requesting an
advance, who are authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at the office
designated above, or (iii) any person, with respect to advances deposited to the credit of any
deposit account of any Borrower, which advances, when so deposited, shall be conclusively presumed
to have been made to or for the benefit of each Borrower regardless of the fact that persons other
than those authorized to request advances may have authority to draw against such account. The
holder shall have no obligation to determine whether any person requesting an advance is or has
been authorized by any Borrower.
(c) Application of Payments. Each payment made on this Note shall be credited first,
to any interest then due and second, to the outstanding principal balance hereof. All
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payments credited to principal shall be applied first, to the outstanding principal balance of this
Note which bears interest determined in relation to the Prime Rate, if any, and second, to the
outstanding principal balance of this Note which bears interest determined in relation to LIBOR,
with such payments applied to the oldest Fixed Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to the Prime Rate at any time, in any amount and without
penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to LIBOR at any time and in the minimum amount of One Hundred
Thousand Dollars ($100,000.00); provided however, that if the outstanding principal balance of such
portion of this Note is less than said amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank providing this prepayment option to
Borrower, or if any such portion of this Note shall become due and payable at any time prior to the
last day of the Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall pay
to Bank immediately upon demand a fee which is the sum of the discounted monthly differences for
each month from the month of prepayment through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
| (i) | Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the last day of the Fixed Rate Term applicable thereto. | ||
| (ii) | Subtract from the amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid. | ||
| (iii) | If the result obtained in (ii) for any month is greater than zero, discount that difference by LIBOR used in (ii) above. |
Each Borrower acknowledges that prepayment of such amount may result in Bank incurring additional
costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such
costs, expenses and/or liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of the prepayment
costs, expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due,
the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum
2.0% above the Prime Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). Each change in the rate of interest on any such past due prepayment fee
shall become effective on the date each Prime Rate change is announced within Bank.
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EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of that certain
Amended and Restated Credit Agreement between Borrower and Bank dated as of December 9, 2005 as
amended from time to time (the “Credit Agreement”). Any default in the payment or performance of
any obligation under this Note, or any defined event of default under the Credit Agreement, shall
constitute an “Event of Default” under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the
holder’s option, may declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall immediately cease
and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of the holder’s in-house counsel), expended
or incurred by the holder in connection with the enforcement of the holder’s rights and/or
the collection of any amounts which become due to the holder under this Note, and the prosecution
or defense of any action in any way related to this Note, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or entity sign this
Note as a Borrower, the obligations of each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of Arizona.
AMENDMENT AND RESTATEMENT:
This Note constitutes an amendment and restatement of that certain Revolving Line of Credit Note,
dated July 7, 2005, in the original principal amount of TEN MILLION AND NO/100 Dollars
($10,000,000.00) (the “Original Note”) to the extent that the obligations covered by the Original
Note constitute a single, ongoing obligation of Borrower. The principal balance outstanding under
the Original Note as of the date hereof is $9,000,000.00. The Original Note is fully replaced by
this Note and the Original Note is of no further force or effect.
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.
BORROWER:
| GLOBAL WATER RESOURCES, L.L.C., | ||||
| a Delaware limited liability company | ||||
By:
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/s/ Xxxxxxx X. Xxxxxx
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| GLOBAL WATER MANAGEMENT, LLC, | ||||
| a Delaware limited liability company | ||||
By:
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/s/ Xxxxxxx X. Xxxxxx
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| GLOBAL WATER RESOURCES, INC., | ||||
| a Delaware corporation | ||||
By:
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/s/ Xxxxxx Xxxx
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